IV.

TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION-

Assurance vs. CA, 208 SCRA 343, NDC vs. CA, 164 SCRA 593)

contract whereby, a person, natural or juridical, obligates, to transport persons, goods or both, from one place to another by land, air or water for a price or compensation.

CHARACTERISTICS CARRIER:

OF

COMMOM

COMMON CARRIER- one that holds itself out

as ready to engage in the transportation for hire as a public employment and not as a casual occupation.

persons, firms, corporations or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. (Art.1732, New Civil Code) Art. 1732 of the New Civil Code avoids any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does the law distinguish between a carrier offering its services to the general public that is the general community or population and one who offers services or solicits business only from a narrow segment of the general population. (De Guzman vs. CA, September 15, 1993)

1. undertakes to carry for all people indifferently and thus, is liable for refusal without sufficient reason (Lastimoso vs. Doliente, October 20, 1961) 2. cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the traffic in these goods 3. no monopoly is favored (Batangas Trans vs. Orlanes, 52 PHIL 455) 4. provides public convenience

PRIVATE CARRIER- not engaged in business

of carrying as a public employment, undertakes to deliver goods or passengers for compensation (requires only ordinary diligence) (Home Insurance Co. vs. American Steamship Agency, 23 SCRA 24)

DISTINCTIONS :
COMMON CARRIER 1. holds himself out for all people indiscriminately 2. requires extraordinary diligence 3. subject to State regulation 4. parties may not agree on limiting the carriers liability except when provided by law 5. presumption of fault or negligence applies PRIVATE CARRIER 1. contracts with particular individuals or groups only 2. ordinary diligence is required 3. not subject to State regulation 4. parties may agree on limiting the carriers liability provided not contrary to law, morals or good customs 5. no fault or negligence is presumed

GOVERNING LAWS: (in the order mentioned)

A. Coastwise 1) New Civil Code (Art. 1732-1766) primary law 2) Code of Commerce suppletory law NOTE: COGSA inapplicable even if the parties expressly provide for it B. Foreign Ports to Philippine Ports 1) New Civil Code primary law 2) Code of Commerce 3) Carriage of Goods by Sea Act C. Philippine Ports to Foreign Ports laws of the country to which the goods are to be transported. (Eastern Shipping vs. IAC, 150 SCRA 463, American Home

CASO FORTUITO
Requisites: 1. event independent of human will; 2. occurrence makes it impossible for debtor to fulfill the obligation in a normal manner;

3. obligor must be free of participation in, or, aggravation of, the injury to the debtor; and 4. impossible to foresee or impossible to avoid. (Juntilla vs. Fontanar, 136 SCRA 624; Vasquez vs. CA, 138 SCRA 553)

A common carrier is held liable for the flaws of its equipment (tire blow-out, knuckles failure) if such defects are discoverable and such cannot be considered a caso fortuito. This is because the passenger has no privity with the manufacturer of the defective equipment and thus, has no remedy against him while the carrier has. (Necessito vs. Paras, 104 Phil 75) Hijacking of the carrier truck does not fall among the five categories of exempting causes. The common carrier is presumed to be at fault or to have acted negligently unless there is proof of extraordinary diligence on the part of the common carrier. The duty of extraordinary diligence is reached where the goods are lost as a result of robbery attended by grave or irresistible threat, violence or force. (De Guzman vs. CA, September 15, 1993).

corruption in the government transportation offices. A certificate of public convenience is a special privilege conferred by the government. Abuse of this privilege by the grantees thereof cannot be countenanced. (LITA ENTERPRISES INC. VS CA, 129 SCRA 79) EFFECTS OF THE SYSTEM AND LIABILITIES OF THE REGISTERED OWNER AND THE ACTUAL OWNER OF THE MOTOR VEHICLE:

NOTE: In Quisumbing Sr. vs. CA, 189 SCRA 213, an action against an airline company to recover damages for the loss of certain valuables belonging to passengers after a(n) hijacking robbery was dismissed. The Court considered hijacking robbery a caso fortuito. It ruled: the mandatory use of the most sophisticated electronic detection devices, the imposition of severe penalties, the development of screening procedures, the compilation of hijackers behavioral profiles, the assignment of sky marshalls, and the weight of outraged world opinion may have minimized hijackings but all these proved ineffective against truly determined hijackers.

KABIT SYSTEM: VOID AND INEXISTENT UNDER ART. 1409, NEW CIVIL CODE
This is a system whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate under such license, for a fee or percentage of such earnings. This has been identified as one of the root causes of the prevalence of graft and

1. The transfer, sale, lease or assignment of the privilege granted is valid between the contracting parties but not upon the public or third persons. (Gelisan vs. Alday, 154 SCRA 388) 2. The registered owner is primarily liable for all the consequences flowing from the operations of the carrier because to rule otherwise would be utterly subversive to the thrust of public policy herein involved. The public has the right to assume that the registered owner is the actual or lawful owner thereof. It would be very difficult and often impossible, as a practical matter, for the public to enforce their rights of action that they may have for injuries inflicted by the vehicle if they should be required who the actual owner is. It would also open the door to collusion between the registered owner and the actual owner and to shifting liability from the carrier to one without financial capability to meet the resulting damages. (Benedicto vs. IAC, 187 SCRA 547) 3. The registered owner cannot recover from the actual owner and the latter cannot obtain transfer of the vehicle to himself, both being in pari delicto. The Court will not aid either party to enforce an illegal contract, but will leave them both where it find them. Where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other. (Teja Marketing vs. IAC, 148 SCRA 347 ) 4. For the better protection of the public, both the registered owner and the actual owner are jointly and severally liable with the driver. (Zamboanga Transportation Co. vs. CA)

CONTRACT OF ADHESION- one that is

unilaterally drafted and printed in advance by monopolies, insurance companies, carriers and

money lenders and the only participation of the carrier party is the signing of his signature or his adhesion thereto (Eastern Shipping Lines vs. Margarine, 93 SCRA 257)

their seats, and the subsequent fall by them as a consequence of the jerking, resulting in deaths and injuries to them, is negligence. (Brinas vs. People, 125 SCRA 687)

NEW CIVIL CODE PROVISIONS ON COMMON CARRIERS (ART. 1732-1766)

1. REQUIREMENT OF EXTRAORDINARY DILIGENCE Common carriers, from the nature of their
business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over goods and for the safety of the passengers transported by them according to all the circumstances of each case (Art. 1733, in relation to Art. 1755)

The mere fact that the bus was inspected the day before the accident is not sufficient to rebut the presumption of negligence, where the bus was overloaded in spite of the fact that its route consisted of mountainous, circuitous and ascending roads. (Landingin vs. Pangasinan, 33 SCRA 284) Where a vessels departure was delayed by repairs, and on managements instruction, the first port of call was bypassed, the event is not fortuitous to be exempt from liability. (Sweet Lines vs. CA, 121 SCRA 769)

Rationale: The business of common carriers is impressed with a special public duty such that the public must of necessity rely on their skill and care over the goods and/or passengers transported. Also, with the development in science and invention, transportation has become more rapid, but more complicated and hazardous, so the public is forced to trust all the more in the utmost diligence and foresight of common carriers. (Commission Report on the Proposed Civil Code) When the officers and the crew were aware of the typhoon but decided to proceed with the voyage believing that the weather was still good, although, according to the weather forecast, they were already within the typhoon zone, the sinking of the vessel proves that required extraordinary diligence was not duly observed. (Vasquez cs. CA, 138 SCRA 553) A common carrier neglects its duty to transport its passengers safely when a passenger died because the floor of its bus gave way after a tire blow out caused by overcrowding, overspeeding and weak flooring. (M. Ruiz Highway Transit, Inc. vs. CA, 11 SCRA 98) The announcement by a train conductor of the next flag stop, three minutes ahead of time, causing the passengers to rise from

2. RULES ON NEGLIGENCE

PRESUMPTION

OF

A. In the carriage of goods. In case of loss, destruction and deterioration of the goods, common carriers are presumed to be at fault or have acted negligently, unless they prove that they exercise extraordinary diligence. In the transport of goods, mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. (Coastwise Lighterage Corp. vs. CA, 245 SCRA 796 B. In the carriage of passengers. The same presumption applies.

The courts need not make an express finding of fault or negligence of common carriers, the law imposes upon common carriers strict liability, as long as it is shown that there exists a relationship between the passenger and the common carrier and that injury or death took place during the existence of the contract.

Reason for the presumption: Because as to when and how goods were damaged in transit is a matter peculiarly within the knowledge of the carrier and its employees. (Mirasol vs. Dollar, 53 PHIL 124) Also, the contract between the passenger and the carrier imposes on the latter to transport the passenger safely, hence the burden of explaining should fall on the carrier.

NOTE: The doctrine of res ipsa loquitor applies.

3. DEFENSE OF COMMON CARRIERS

Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: Flood, Storm, earthquake, lighting, or other natural disaster or calamity. Act of the public enemy in war, whether international or civil Act or omission of the shipper or the owner of goods The character of the goods or defects in the packing or in the containers. Order or act of competent authority (Art1734, NCC).

1. 2. 3. 4. 5.

still be liable for damages, but such shall be equitably reduced. When the shipper declared an inaccurate weight of the equipment transported causing it to fall when it is being unloaded, the carrier was still held liable for damages because such accident could have been avoided if the carrier had exercised reasonable attention in overseeing the unloading of the equipment. However, the liability was reduced as the shipper was liable for contributory negligence. (Compania Maritima vs. CA, 164 SCRA 685)

D. CHARACTER OF THE GOODS OR DEFECTS IN THE PACKING OR IN THE CONTAINER Even if the damage should be caused by the
inherent defect/character of the goods, the common carrier must exercise due diligence to forestall or lessen the loss. The carrier, knowing the fact of improper packing of the goods upon ordinary observation, still accepts the goods notwithstanding such condition, is not relieved of liability or loss or injury resulting therefrom. (Southern Lines, Inc. vs. CA, 4 SCRA 258)

Reason for the exceptions: Because the carrier is not an insurer of the safety of its passengers and is not absolutely and at all events to carry them safely and without injury. (Santos vs. Dela Cruz, December 2, 1959)

A. NATURAL DISASTER
Requisites for the Defense: 1. must be the proximate and only cause of the loss 2. carrier must exercise due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster (Art. 1739, NCC) 3. carrier had not negligently incurred in delay in transporting the goods (Art. 1740, NCC)

E. ORDER/ACT OF PUBLIC AUTHORITY Said public authority must have the power to
issue the order. Consequently, where the officer acts without legal process, the common carrier will be held liable. NOTE: Diligence in the selection and supervision of employees under Articles 21802181, NCC, cannot be interposed by the common carrier to prevent damages because the liability of the carriers arises from the breach of the contract of carriage. The defense under said articles is applicable to negligence in quasidelicts. (Del Prado vs. Manila Electric Co., 52 PHIL 900)

B. ACTS OF PUBLIC ENEMY

Requisites for the Defense: 1. the act must be the proximate and only cause of the loss 2. carrier must exercise due diligence to prevent or minimize the loss before, during or after the act causing the loss, deterioration or destruction of the goods (Art. 1739, NCC)

F.

STIPULATIONS LIMITING LIABILITY OF COMMON CARRIERS

C. CONTRIBUTORY NEGLIGENCE OF THE SHIPPER If the shipper or owner merely contributed to

the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the carrier, the carrier shall

1. IN THE CARRIAGE OF GOODS- the common carrier and the shipper may agree on the carriers observance of diligence to a degree less than extraordinary provided it be a) In writing, signed by the shipper or owner;

b) Supported by a valuable consideration other than the service rendered by the carriers; and c) Reasonable, just and not contrary to public policy. (Art. 1744).

When a passenger is carried gratuitously, a stipulation limiting the common carriers liability for negligence is valid, but not for willful acts on gross negligence (Art. 1758, NCC).

1. 2. 3. 4.

5. 6.

7.

The following stipulations are considered unjust, unreasonable and contrary to public policy: the goods are transported at the risk of the owner or shipper the carrier will not be liable for any loss, destruction or deterioration of the goods the carrier need not observe any diligence in the custody of the goods the carrier shall exercise a degree of diligence less than that of a good father of a family over the movable transported the carrier shall not be responsible for the acts or omissions of his or its employees the carriers liability for acts committed by thieves or robbers who do not act with grave or irresistible threat, violence or force is dispensed with or diminished the carrier is not responsible for the loss, destruction or deterioration of the goods on account of the defective condition of the car, vehicle, ship or other equipment used in the contract of carriage.

NOTE: The diligence required in the carriage of the goods may be reduced by only one degree, from extraordinary to ordinary diligence or diligence of a good father of a family. (Art. 1744, Art. 1745, no.4, NCC) In the transport of passengers, the diligence required may be reduced by two degrees from extraordinary to ordinary diligence or even to simple negligence but ot to gross negligence. (Art. 1758, NCC)

G. DURATION OF RESPONSIBILITY OF COMMON CARRIERS

1. GOODS. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered actually or constructively by the carrier to the consignee or to the person who has the right to receive them. (Art. 1736, NCC) It remains in full force and effect even when they are temporarily unloaded or stored in transit unless the shipper or owner has made use of the right of stoppage in transitu. (Art. 1737, NCC) It continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination until the consignee has bee advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. (Art. 1738, NCC) 2. PASSENGERS. Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carriers conveyance or had a reasonable opportunity to leave the carriers premises. All persons who remain on the premises within a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all

Other Valid stipulations limiting the carriers liability: 1. A stipulation that the common carriers liability is limited to the value of the goods appearing in the bill of lading unless the shipper or owner declares a greater value (HEACOCCK VS MACONDRAY, 42 PHIL 205) 2. A contract fixing the sum to be recovered by the owner or shipper for the loss, destruction or deterioration of the goods, if it is reasonable and just under the circumstances and has been fairly and freely agreed upon (Art. 1750, NCC) 3. An agreement limiting the common carriers liability for delay on account of strikes or riots (Art. 1748, NCC)

2. IN THE CARRIAGE OF PASSENGERS The extraordinary responsibility of a common carrier for the safety of passengers imposed by law cannot be dispensed with or lessened by stipulation, by posting of notices, by statements on tickets or otherwise (Art. 1757, NCC).

the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. (La Mallorca vs CA, July 27 1966; Abiotiz Shipping Corporation vs CA, November 6, 1989) In case of flight diversion due to bad weather or other circumstances beyond the pilots control, the relation between the carrier and the passenger continues the latter has been landed at the port of destination and has left the carriers premises. The carrier should necessarily exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. (PHILIPPINE AIRLINES VS CA, 226 SCRA 423)

could have prevented or stopped the act. (1763, NCC) The carrier is liable when its personnel allowed a passenger to drive the vehicle causing it to collide with another vehicle resulting to the injuries suffered by the other passengers.(MRR VS BALLESTEROS, 16 SCRA 641)

I. RULES ON PASSENGERS BAGGAGES As to baggage of passengers, the law

makes a distinction between: 1. BAGGAGE IN THE CUSTODY OF THE PASSENGERS OR THEIR EMPLOYEE

H.

LIABILITY OF THE CARRIER FOR ACTS OF ITS EMPLOYEES AND OTHER PASSENGERS
For acts of Employees Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the formers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees. (1759, NCC) The liability of the carrier for the personal violence of its employees or agents upon its passengers extends only to those acts that the carrier could foresee or avoid through the exercise of the degree of diligence required. The carrier is not liable for acts of employee not on duty or in the line of duty. (DE GILLACO VS MRR, 97 PHIL884; MARANAN VS PEREZ, 20 SCRA 412)

1.

under this, the baggage is in the personal custody of the passenger or his employee in that the baggage while in transit will be considered as necessary deposits. The common carrier shall be responsible for the baggage as depositaries, provided that notice was given to them or its employees and the passenger took the necessary precautions which the carrier has advised them relative to the care and vigilance of their baggage. In case of loss due to the fault of the passenger, the carrier will not be liable . The act of thief will not be force majeure unless the same is committed by armed men an through irresistible force (Article 1754, NCC)

2. BAGGAGE NOT IN SUCH CUSTODY, BUT IN THAT OF THE CARRIER (Article 1733 to 1573 of the NCC) carrier who has in his custody the baggage of a passenger to be carried like any other goods is required to observe extraordinary diligence. In case of loss or damage the carrier is presumed negligent. 1) CAUSE OF ACTION ARISING FROM THE NEGLIGENT ACT OF THE CARRIER The injured passenger can avail of any of the three causes of action arising from the negligent act of the common carrier: 1)culpa contractual Art.1759, NCC only the carrier could be held liable, not the driver because the there is no privity between the driver and the passenger

2. For acts of other Passengers

A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carriers employees, through the exercise of the diligence of a good father of a family

2)culpa acquiliana Art. 2180, NCC the carrier and driver are solidarily liable as joint tortfeasors 3)culpa criminal Art. 100, Revised Penal Code the carrier could be held liable only if driver be convicted and declared insolvent, making him subsidiarily liable.

However, the carrier cannot limit is liability for injury to, or loss of, goods shipped where such injury or loss was caused by its own negligence (SHEWARAM VS. PAL, 17SCRA 606).

LIABILITY OF SUCCESSIVE AIR CARRIERS:

An airline ticket providing that carriage by successive air carriers is to be regarded as a single operation is to make the (issuer carrier) liable for the tortious conduct of the other carrier. A printed provision in the ticket limiting liability only to its own conduct is not enough to rebut that liability (KLM ROYAL DUTCH AIRLINES VS. CA)

RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS1. INTER-ISLAND- if goods arrived in damaged condition: Art 366, CODE OF COMMERCE). a. If damage is apparent, the shipper must file a claim immediately; or b. If damage is not apparent, he should file a claim within 4 hours from delivery

The filing of claim under either (1) or (2) is a condition precedent for recovery. If the claim is filed, but the carrier refuses to pay: enforce carriers liability in court by filing a case a. within 6 year, if no bill of lading has been issued; or b. within 10 years, if a bill of lading has been issued.

BILL OF LADING- written acknowledgment of

receipt of goods and agreement to transport them to a specific place to a person named or to his order. It is not indispensable for the creation of a contract of carriage (COMPANIA MARITIMA vs. INSURANCE CO. OF NORTH AMERICA, 12 SCRA 213)

ON BOARD BILL OF LADING- issued when

the goods have been actually placed aboard the ship with very reasonable expectation that the shipment is as good as on its way.

FUNCTIONS OF A BILL OF LADING:

(MAGELLAN, MANUFACTURING vs. CA 201 SCRA 2021) 1. best evidence of the existence of the contract of carriage of cargo; 2. commercial document whereby, if negotiable, ownership may be transferred by negotiation; and 3. receipt of cargo.

2. OVERSEAS- where goods arrived in a damaged condition from a foreign port to a Philippine port of entry; a. upon discharge of goods, if the damage is apparent , claim should be filled immediately; or b. if damage is not apparent, claim should be filled within 3 days from delivery. Filing of claim is not condition precedent, but an action must be filed against the carrier within a period of 1 year from discharge; if there is no delivery, the undelivered or lost cargo), or from delivery to the arrastre (in case of damaged cargo).

LIMITATIONS AS TO CARRIERS LIABILITY

A stipulation in the bill of lading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight is valid (ORG. VS. CA AND PAL, 91 SCRA 223).

EXEMPTION FROM LIABILITY

A common carrier may be freed from liability for loss or damage if it proves any of the following circumstances: a. natural disaster; b. act of the public enemy in war; c. act or omission of the shipper; d. character of the goods and defect in packaging;

e. order of competent public authority (MARITIME CO. VS. CA 171 SCRA 61). DOCTRINE OF COMBINED/CONNECTING CARRIERS Under Art. 373, Code of Commerce, the original carrier that entered into the contract of carriage shall be liable for damages caused by its connecting carriers. Such carrier is liable if connecting carriers refuse to carry passengers. (KLM VS CA, 65 SCRA 237)

j.

preferred mortgage registered prior in time.

DOCTRINE OF LIMITED LIABILITY- Because of real and hypothecary nature of maritime law, liability of ship owners is limited to the amount of interest in said vessel such that where vessel is entirely loss, obligation is extinguished. (LUZON STEVEDORING VS. CA AND ESCANO, 156 SCRA 169) The interest extends to vessels appurtenances and equipment, freightage and insurance proceeds. (CHUA VS. IAC, 166 SCRA 183) Exceptions: 1) injury or damage due to shipowners fault 2) claims under Workmens Compensation; 3) repair on vessel before loss; 4) vessels not abandoned; 5) the vessel is insured.

MARITIME COMMERCE
MERCHANT VESSEL vessel engaged in maritime commerce,
whether foreign or otherwise. constitutes property which may be acquired and transferred by any of the means recognized by law. They shall continue to be considered as personal property. (Art. 573, 585, Code of Commerce)

CHARACTERISTICS TRANSACTION:

OF

MARITIME

1) Real- similar to transactions over property with respect to effectively against third persons which is done through registration as shown by the limitation of the liability of the agents to the actual value of the vessel and the freight money; and the right to retain the cargo and embargo and detention of the vessel; and 2) Hypothecary- the liability of the owner of the value of the vessel is limited to the vessel itself (Doctrine of Limited Liability) PREFERENCE OF CREDITS - Mortgage of a vessel properly registered becomes of preferred mortgage lien which shall have priority over all claims against the vessel in an extrajudicial foreclosure for: a. credit in favor of the public treasury; b. judicial costs of the proceedings; c. pilotage and tonnage charges and other sea and port charges; d. salaries of depositaries and keepers of the vessel e. captain and crews wages; f. general average; g. salvage, including contract salvage; h. maritime liens arising prior in time to the recording of the preferred mortgage; i. damages arising out of tort; and

PARTICIPANTS IN MARITIME COMMERCE 1. shipowners and ship agents 2. captains and masters of the vessel 3. officers and crew of the vessel 4. supercargoes A. SHIPOWNERS AND SHIP AGENTS
SHIPOWNER person who has possession, control in management of the vessel and the consequent right to direct her navigation and receive freight earned and paid, while his possession continues; SHIP AGENT person entrusted with provisioning and representing the vessel in the port in which it may be found; also includes the shipowner;

CIVIL LIABILITIES OF THE SHIPOWNER AND THE SHIP AGENTS:

1) For acts of the captain and for the obligations contracted to repair, equip and provision the vessel 2) Indemnities in favor of third persons arising from the conduct of the captain in the care of the goods loaded in the vessel

POWERS, FUNCTIONS AND LIABILITIES OF THE SHIP AGENTS:

1) Capacity to trade 2) Discharge duties of the captain, in case of the latters absence 3) Contract in the name of the owners with respect to repairs, details of equipment, armament, and all that relate to the requirements of navigation 4) Order a new voyage, make a new charter or insure the vessel after obtaining authorization from the shipowners 5) Render an account of the results of each voyage

INHERENT POWERS OF THE CAPTAIN:

1) appoint crew in the absence of ship agent; 2) command and direct crew; 3) impose correctional punishment on those who, while on board vessel, fail to comply with his orders or are wanting in discipline; 4) make contracts for the charter of vessel in the absence of ship agent. 5) supply, equip, and provision the vessel; and 6) order repair of vessel to enable it to continue its voyage.

DUTY OF SHIP AGENT TO DISCHARGE THE CAPTAIN AND MEMBERS OF THE CREW:
If the seamen contract is not for a definite period or voyage, he may discharge them at his discretion. If for a definite period, he may not discharge them until after the fulfillment of their contracts, except on the following grounds: -insubordination in serious matters -robbery -theft -habitual drunkenness -damage caused to the vessel or to its cargo through malice or manifest or proven negligence

SOURCES OF FUNDS TO COMPLY WITH THE INHERENT POWERS OF THE CAPTAIN:

(in successive order) 1) from the consignee of the vessel 2) from the consignee of the cargo 3) by drawing on the ship agent 4) by a loan on bottomry 5) by sale of part of the cargo

DUTIES OF THE CAPTAIN:

1) bring on board the proper certificate and documents and a copy of the Code of Commerce 2) keep a Log Book, Accounting Book and Freight Book 3) examine the ship before the voyage 4) stay on board during the loading and unloading of the cargo 5) be on deck while leaving or entering the port 6) protest arrivals under stress and in case of shipwreck 7) follow instructions of and render an accounting to the ship agent 8) leave the vessel last in case of wreck 9) hold in custody properties left by deceased passengers and crew members 10) comply with the requirements of customs, health, etc. at the port of arrival

B. CAPTAINS AND MASTERS OF THE VESSEL THREE-FOLD CAPTAIN: CHARACTER OF THE

1) general agent of the shipowner; 2) technical director of the vessel; 3) representative of the government of the country whose flag he navigates

QUALIFICATIONS OF THE CAPTAIN:

1) Filipino citizen; 2) legal capacity to contract; 3) passed the required physical and mental examinations required for licensing him as such

LIABILITIES OF THE SHIP AGENT/SHIP OWNER FOR ACTS DONE BY THE CAPTAIN TOWARDS PASSENGERS AND CARGOES, MAKING THEM SOLIDARILY LIABLE TO THE LATTER:

1. damages to vessel and to cargo due to lack of skill and negligence 2. thefts and robberies of the crew 3. losses and fines for violation of laws 4. damages due to mutinies 5. damages due to misuse of power 6. for deviations 7. for arrivals under stress 8. damages due to non-observance of marine regulations

1) have the qualifications required by the marine or navigation laws and regulations 2) not to be disqualified in accordance therewith for the discharge of his duties

DUTIES OF THE SAILING MATE:

1) provide himself with maps and charts with astronomical tables necessary for the discharge of his duties 2) keep the Binnacle Book 3) change the course of the voyage on consultation with the captain and the officers of the boat, following the decision of the captain in case of disagreement 4) responsible for all the damages caused to the vessel and the cargo by reason of his negligence

NO LIABILITY FOR THE FOLLOWING:

1) damages caused to the vessel or to the cargo by force majeure 2) obligations contracted for the repair, equipment, and provisioning of the vessel unless he has expressly bound himself personally or has signed a bill of exchange or promissory note in his name

2) SECOND MATE take command of the vessel in case of the inability or disqualification of the captain and the sailing mate, assuming in such case their powers and responsibilities. DUTIES OF THE SECOND MATE: 1) preserve the hull and rigging of the vessel 2) arrange well the cargo 3) discipline the crew 4) assign work to crew members 5) inventory the rigging and equipment of the vessel, if laid up 3) ENGINEERS officers of the vessel but have no authority except in matters referring to the motor apparatus. When two or more are hired, one of them shall be the chief engineer. DUTIES OF THE ENGINEERS: 1) in charge of the motor apparatus, spare parts, and other instruments pertaining to the engines 2) keep the engines and boilers in good condition 3) not to change or repair the engine without authority of the captain

GROUNDS CAPTAIN:
1) 2) 3) 4) 5)

FOR

DISCHARGE

OF

insubordination in serious matters robbery theft habitual drunkenness damage caused to the vessel or to its cargo through malice or manifest or proven negligence

B. OFFICERS AND CREW OF THE VESSEL

The following are the officers and crew of the vessel: 1) Sailing Mate/First Mate 2) Second Mate 3) Engineers 4) Members of the crew 1) SAILING MATE/FIRST MATE second chief of the vessel who takes the place of the captain in case of absence, sickness, or death and shall assume all of his duties, powers and responsibilities. QUALIFICATIONS OF THE SAILING MATE:

4) inform the captain of any damage to the motor apparatus 5) keep an Engine Book 6) supervise all personnel maintaining the engine 4) MEMBERS OF THE CREW hired by the ship agent, where he is present and in his absence, the captain hires them, preferring Filipinos, and in their absence, he may take in foreigners, not exceeding 1/5 of the crew. CLASSES OF SEAMANS CONTRACTS: 1. by the voyage 2. by the month; and 3. by share of profits or freightage JUST CAUSES FOR THE DISCHARGE OF SEAMAN WHILE CONTRACT SUBSISTS: 1) perpetration of a crime 2) repeated insubordination, want of discipline 3) repeated incapacity and negligence 4) habitual drunkenness 5) physical incapacity 6) desertion CAUSES OF REVOCATION OF VOYAGE: 1) war 2) blockade 3) prohibition to receive cargo at destination 4) embargo 5) inability of the vessel to navigate RULES IN CASE OF DEATH OF A SEAMAN: The seamans heirs are entitled to payment as follows: 1) if death is natural a) compensation up to time of death if engaged on wage b) if by voyage-half of amount if death occurs on voyage out; and full, if on voyage in c) if by shares-none, if before departure; full, if after departure 2) if death is due to defense of vessel, full payment 3) if captured on defense of vessel, full payment

4) if captured due to carelessness, wages up to the date of the capture NO LIABILITY UNDER THE FOLLOWING CIRCUMSTANCES: 1) if, before beginning voyage, captain attempts to change it, or a naval war with the power to which the vessel was destined occurs 2) if disease break out and be officially declared an epidemic in the port of destination 3) if the vessel should change owner or captain COMPLEMENT OF THE VESSEL all persons on board, from the captain to the cabin boy, necessary for the management, maneuvers, and service, thus including the crew, the sailing mates, engineers, stokers and other employees on board not having specific designations, but shall not include the passengers or the persons whom the vessel is transporting. D. SUPERCARGOES person who discharges administrative duties assigned to him by ship agent or shippers, keeping an account and record of transaction as required in the accounting book of the captain.

CHARTER PARTY-

contract by virtue of which owner or agent binds himself to transport merchandise or persons for a fixed price. contract by which an entire ship, or some principal part thereof is let by the owner to another person for a specified time or use. (PUROMINES VS. CA 220 SCRA 281)

CLASSES OF CHARTER PARTY

(PLANTERS PRODUCT Case: LITONJUA SHIPPING CO. INC. vs. NATIONAL SEAMENS BOARD, 176 SCRA 189) 1. BAREBOAT OR DEMISE- charterer provides crew, food and fuel, charterer is liable as if he were the owner, except when such arises from the unworthiness of the vessel. OWNER PRO HAC VICE a bareboat charterer, to whom full possession and control of the vessel is delivered, for a period of time; charterer is considered as owner of the vessel

for the voyage or service stipulated. The master of the vessel is the agent of the charterer and not of the shipowner. The charterer, and not the general owner of the vessel is held liable for the expenses of the voyage including the wages of the seamen. 2. TIME CHARTER vessel is chartered for a period of time or duration of voyage; owner retains possession and control of the vessel; charterer acquires the right to use the carrying capacity, facilities of the vessel and could designate destinations. 3. VOYAGE OR TRIP CHARTER- contract for hire of vessel for one or series of voyages usually for purposes of transporting goods for charterer. 4. CONTRACT OF AFREIGHTMENT- owner leases the boat or part of it for the carriage of goods. RIGHTS AND OBLIGATIONS IN A CHARTER PARTY A. OF THE SHIP OWNER OR SHIP AGENT 1) if the vessel chartered wholly, not to accept cargo from others 2) to observe represented capacity 3) to unload cargo clandestinely placed 4) to substitute another vessel if load is less than 3/5 of capacity 5) to leave the port if the charterer does not bring the cargo within the lay days and extra lay days allowed 6) to place in a vessel in a condition to navigate 7) to bring cargo to nearest neutral port in case of war or blockade B. OF THE CHARTERER 1) to pay the agreed charter price 2) to pay freightage on unboarded cargo 3) to pay losses to others for loading uncontracted cargo and illicit cargo 4) to wait if the vessel needs repair 5) to pay expenses for deviation RESCISSION OF A CHARTER PARTY A. At Request of Charterer

1) by abandoning the charter and paying half of the freightage 2) error in tonnage or flag 3) failure to place the vessel at the charterers disposal 4) return of the vessel due to pirates, enemies or bad weather 5) arrival at a port for repairs B. At Ship Owners Request 1) if the extra lay days terminate without the cargo being placed alongside the vessel 2) sale by the owner of the vessel before loading by the charterer

PRIMAGE- bonus to be paid to the captain

after the successful voyage.

DEMURRAGE sum due, by express

contract, for the detention of the vessel, in loading and unloading, beyond the time allowed in the contract of afreightment, and to any other improper detention or delay beyond the time set for loading.

SALVAGE- services one person render to

the owner of a ship or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are unable to protect or secure. CONTRACT OF TOWAGE - contract whereby one vessel, usually motorized, pulls another, whether loaded or not with merchandise, form one place to another, for a compensation. It is a contract for services rather than a contract of carriage.

USUAL FORMS OF CONSUMMATING CONTRACTS:

1. 2. 3. 4. C.I.F cost, insurance and freight; F.O.B.- free on board; F.A.S.- free alongside ship; and C and F- cost and freight.

TRANSHIPMENT OF GOODS- act of taking

cargo from one ship and loading it in another, if done without legal excuse, however, competent and safe the vessel into which the transfer is made is a violation of contract and infringement

of right of shipper and subjects carrier to liability if freight is lost event by cause otherwise excepted (MAGELLAN MANUFACTURING vs. CA , 201 SCRA 102) LOAN OF BOTOMMRY- loan made by shipowner or shipagent guaranteed by vessel itself and repayable upon arrival of vessel at destination. LOANS ON RESPONDENTIA loan, taken on security of cargo laden on a vessel, and repayable upon safe arrival of cargo at destination. COMMON ELEMENTS OF LOANS BOTTOMRY AND RESPONDENTS: ON

DISTINCTIONS :
LOANS ON BOTTOMRY/RESPON DENTIA 1. Not subject to Usury Law 2. Liability of the borrower is contingent on the safe arrival of the vessel or cargo at destination 3. The last lender is a preferred creditor ORDINARY LOAN

1. Subject to Usury Law 2. Not subject to any contingency

3. The first lender is a preferred creditor

1) Exposure of security to marine peril 2) Obligation of the debtor conditioned only upon safe arrival of the security at the point of destination. FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA: May be executed by means of: 1) public instrument 2) policy signed by the contracting parties and the broker taking part therein 3) private instrument CONTENTS OF THE LOAN CONTRACT: 1) kind, name and registry of the vessel 2) name, surname and domicile of the captain 3) names, surnames and domiciles of the borrower and the lender 4) amount of the loan and the premium stipulated 5) time for repayment 6) goods pledged to secure repayment 7) voyage during which the risk is run WHO MAY CONTRACT: 1) Bottomry general rule: the owner; if owner is absent; captain; 2) Respondentia only the owner of the cargo.

NOTE: Under existing laws, the parties to a loan, whether ordinary or maritime, may agree on any rate of interest. (CB Circular 905). EXCEPTIONS TO THE HYPOTHECARY NATURE OF BOTTOMRY AND RESPONDENTIA: 1) loss due to inherent defect; 2) loss due to the barratry on the part of the captain; 3) loss due to the fault of malice of the borrower; 4) that the vessel was engaged in contraband; and 5) that the cargo loaded on the vessel be different in form that agreed upon..

ACCIDENTS IN MARITIME COMMERCE (Averages, Arrival Under Stress, Collision, Shipwreck):

1. AVERAGES- an extra-ordinary or accidental expense incurred during the voyage in order to preserve the cargo, vessel or both; and all damages or deteriorations suffered by the vessel from departure to the port of destination, and to the cargo from the port of loading to the port consignment. CLASSES: a. Particular or Simple Average - expenses or damage cause to vessel or cargo not inured to common benefit and borne by respective owners.

The owner of the goods which gave rise to the expense or suffered the damage shall bear this average.

b. Gross or General Average - damage and expenses deliberately caused in order to save the vessel, its cargo or both from renal and known risk. - All the persons having an interest in the vessel and the cargo therein at the time of the occurrence of the average shall contribute to satisfy this average. REQUISITES: 1) common danger 2) deliberate sacrifice 3) success 4) proper formalities and legal steps PROCEDURE FOR RECOVERY: 1) There must be a resolution of the captain, adopted after a deliberation with the other officers of the vessel and after hearing all persons interested in the cargoes. If the latter disagree, the decision of the captain should prevail but they shall register their objections. 2) The resolution must be entered in the logbook, stating the reasons and motives for the dissent, and the irresistible and urgent causes if he acted in his own accord. It must be signed, in the first case, by all persons present in the hearing. In the second case, by the captain and all the officers of the vessel. 3) The minutes must also contain a detail of all the goods jettisoned and those injuries caused to those on board. 4) The captain shall deliver it to the maritime judicial authority of the first port he may make, within 24 hours after his arrival, and to ratify it immediately under oath. ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON: 1) those which are on the deck, preferring the heaviest one with the least utility and value 2) those which are below the upper deck, beginning with the one with greatest weight and smallest value

2. ARRIVAL UNDER STRESS- arrival of vessel at a port of destination on account of lack of provision, well founded fear of seizure, pirates, or accidents of sea disabling navigation. When not lawful: a. lack of provisions due to negligence to carry according to usage and customs; b. risk of enemy not well known or manifest c. defect of vessel due to improper repair; and d. malice, negligence, lack of foresight or skill of captain. Who bears expenses: The ship owner bears all the expenses except when it is unlawful arrival, the ship owner also answers for damages to the owners of the cargo and the passengers. 3. COLLISIONS- impact of 2 vessels both of which are moving. ZONES OF TIME IN THE COLLISSION OF VESSELS (URRUTIA AND CO. VS. BACO RIVER PLANTATION CO., 26 PHIL 632). 1. 1 ZONE all time up to the moment when risk of collision begins; ND 2. 2 ZONE time between moment when risk of collision begins and moment it becomes a practical certainty; RD 3. 3 ZONE time when collision is certain and time of impact. RULES ON COLLISSION OF VESSELS (Arts. 826, 827, 828, 830, 831, and 832, Code of Commerce) 1. The collision may be due to the fault, negligence or lack of skill of the captain, sailing mate, or any other member of the complement of the vessel. The owner of the vessel at fault be liable for losses or damage (826 Code of Commerce) 2. The collision may be due to the fault of both vessels. Each vessel shall suffer its own losses, but as regards the owner of cargoes both vessels shall be jointly and severally liable. (827, CC)
ST

3. If it cannot be determined which vessel is at fault. Each vessel shall also suffer its own losses and both shall be solidarily liable for losses o damages on the cargoes. (828, CC) 4. The vessels may collide with each other through fortuitous event or force majeure. In this case each shall bear its own damage. (830, CC). 5. Two vessels may collide with each other without their fault by reason of a third vessel. The third vessel will be liable for losses and damagea (831, CC) 6. A vessel which is properly anchored and moored may collide with those nearby reason of storm or other cause of force majeure. The vessel run into shall suffer its own damage and expense (832, CC) PREQUISITE TO RECOVERY: Protest should be made within 24 hours before the competent authority at the point of collision or at the first port of arrival, if in the Philippines and to the Philippine consul, if the collision took place abroad. Injuries to persons and damage to cargo of owners not on board on collision time, need not be protested. DOCTRINE OF INSCRUTABLE FAULT In a collision, the vessel at fault shall indemnify the damages sustained or losses incurred (Article 826, Code of Commerce), and if both vessels were at fault, each shall suffer its own damages, and both Articles 827-828, Code of Commerce). This solidarity expressed in Article 827 of the Code of Commerce has been held to preclude a common carrier operating a vessel from interposing the defense of due diligence in the selection and supervision of its employees in an action against it by a shipper of the other colliding vessel as distinguished from the ordinary rule in liabilities for tort or culpa aquiliana. Under the doctrine of inscrutable fault, where fault is established but it cannot be determined which of the two vessels were at fault , both shall be deemed to have been at fault.

NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall be limited only to the value of the vessel with all its appurtenances and freightage earned during the voyage. When the latter is not sufficient to cover all the liabilities, the indemnity due by reason of the death or injury of persons shall have preference. (Art. 837,838, Code of Commerce)

ALLISION- impact between a moving vessel and a stationary one. ERROR IN EXTREMIS- sudden movement rd made by a faultless vessel during the 3 zone of collision with another vessel which is at fault nd during the 2 zone. Even if such sudden movement is wrong, no responsibility will fall on said faultless vessel (URRUTIA CASE)

4. SHIPWRECK- loss of the vessel at sea as a consequence of its grounding, or running against an object in sea or on the coast. If the wreck was due to malice, negligence or lack of skill of the captain, the owner of the vessel may demand indemnity from said captain.

CARRIAGE OF GOODS BY SEA ACT (COM. ACT NO. 65)

COGSA is suppletory to the Civil Code and the Code of Commerce in the Carriage of goods from foreign parts to the Philippines (EASTERN SHIPPING VS. IAC, 150 SCRA 463).

PRESCRIPTIVE PERIODS suit for loss or

damage to the cargo should be brought within one year after. a. delivery of the goods; or b. the date when goods should be deliver

NOTICE OF DAMAGE
If the damage is externally apparent, it should be given on receipt of the goods; if the damage is externally visible, then within three

days from receipt. Failure to give notice however, does not bar the filing of the suit if made within one year.

CONVENIENCE AND NECESSITY (VDA. DE LAT VS. PSC): 1) grantee must be a citizen of the Philippines or a corporation or entity 60% of the capital of which is owned by such citizens. 2) grantee must have sufficient financial capability to undertake the services 3) the service will promote public interest and convenience in a proper and suitable manner NOTE: primordial considerations: public interest, necessity, and convenience. GROUNDS FOR THE REVOCATION OF THE CERTIFICATE: When the holder: 1) violates or contumaciously refuses to comply with any order, rule or regulation of the commission 2) is a mere dummy 3) ceases operations by placing his buses in storage 4) abandons the service GROUND FOR SUSPENSION: When the operator willfully or contumaciously refuses to comply with any order, rule or regulation. But such can only be suspended upon prior notice and hearing. The only exception is when it is necessary to avoid serious and irreparable damage or inconvenience to the public or private interest, in which case, a suspension not more than 30 days may be ordered, prior to the hearing. (Soriano vs. Medina, 164 SCRA 36) POWERS REQUIRING PRIOR NOTICE AND HEARING: 1) issuance of certificate of public convenience and certificate of public convenience and necessity 2) fixing of standards and qualifications 3) fixing of standards for measuring quantity 4) establishment of rules to secure accuracy of all meters and all measuring appliances 5) compel operators to furnish proper service 6) extension of facilities

PUBLIC SERVICE LAW

PURPOSES 1) to protect the public against unreasonable charges and poor, insufficient service 2) to protect and secure investments in public services 3) to prevent ruinous competition PUBLIC SERVICE includes every person that now or hereafter may own operate, manage or control in the Philippines for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier or public utility, ice plants, power and water supplies communication and similar public services. CERTIFICATE OF PUBLIC CONVENIENCE (CPC) an authorization issued by the PSC for the operation of public services for which no franchise, either municipal or legislative, is required by law, e.g., common carriers CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY- authorization issued by the PSC for the operation of PS for which a prior franchise is required by law. e.g. telephone and other services. NOTE: A certificate of public convenience constitutes neither a franchise nor a contract, confers no property right, and is a license or a privilege. The holder of said certificate does not acquire a property right in the route covered thereby. Nor does it confer upon the holder any proprietary right or interest or franchise in the public highways. Revocation of this certificate deprives him of no vested right. New and additional burdens, alteration of the certificate, or even revocation or annulment thereof is reserved to the State. (LUQUE VS. VILLEGAS, 30 SCRA 408) CONDITIONS THAT MUST CONCUR IN THE GRANT OF CERTIFICATE OF PUBLIC

POWERS EXERCISABLE WITHOUT PRIOR NOTICE AND HEARING: 1) investigation of public utility companies 2) require public services to pay expenses of investigation 3) valuation of properties of public utilities 4) examination and test of measuring appliances 5) grant of special permits to make extra or special trips in territories specifdied in the certificate 6) uniform accounting system and furnishing of annual reports 7) investigation of accidents 8) compel compliance with the laws and regulations UNLAWFUL ACTS OF PUBLIC UTILITY COMPANIES: 1) engage in public service business without first securing the proper certificate 2) provide or maintain unsafe, improper or inadequate service as determined by the proper authority 3) commit any act of unreasonable and unjust preferential treatment to any particular person, corporation or entity as determined by the proper authority 4) refuse or neglect to carry public mail upon request ACTS REQUIRING PRIOR APPROVAL: 1) establish and maintain individual or joint rates 2) establish and operate new units 3) issue free tickets 4) issue any stock or stock certificates representing an increase of capital 5) capitalize any franchise in excess of the amount actually paid to the Government 6) sell, alienate, mortgage or lease property, certificates or franchise NOTE: Under Sec. 20g of C.A. 146, the sale, etc. may be negotiated and completed before the approval by the proper authority. Its approval is not a condition precedent to the validity of the contract. The approval is necessary only to protect public interest. PRIOR OPERATOR RULE

rule allowing an existing franchised operator to invoke a preferential right within the authorized territory as long as he renders satisfactory and economical service. It subordinates the PRIOR APPLICANT RULE which gives the first applicant priority only if things and circumstances are equal. The granting of preference to an old operator applies only when said operator has made an offer to meet the increase in traffic or demand for service and not when another operator, even a new one, has made the offer to serve the new line or increase the service on said line. The rule of preference protects only those who are vigilant, in meeting the needs of the travelling public. (TIONGSON VS. PSC, 36 SCRA 241) PRIOR APPLICANT RULE presupposes a situation when two interested persons apply for a certificate to operate a public utility in the same community over which no person has as yet granted any certificate. If it turns out, after the hearing, that the circumstances between the two applicants are more or less equal, then the applicant who applied ahead of the other, will be granted the certificate.