Transpo Law Reviewer 3D Tesoro

ATENEO LAW SCHOOL
3-D
L.T.J.F.
2nd
TRANSPORTATION AND PUBLIC UTILITIES

LAW REVIEWER
PART 1: TRANSPORTATION LAW
I. GENERAL CONCEPTS
Common Carriers
TRANSPORTATION LAW
[ATTY. TESORO]
Semester S.Y. 2013-2014
Exercise extraordinary diligence in the

vigilance over the goods and for the
safety of the passengers
Exercise of diligence does not only apply
to the safety of the passengers but also
extends to the maintenance of the
vehicle and equipment
In strictly complying with the itinerary or
schedule indicated in the contract
Common carriers are:

Persons, corporations, associations, firms Passengers
Engaged in the business of carrying or
transporting passengers or goods or both Types
For compensation
1. Passenger one who travels in a public
Offering their services to the public
conveyance by virtue of a contract
2. Passenger-for-hire a person riding on a
driver's pass or a similar arrangement to
Characteristics
look after livestock being transported,
An entity is a common carrier under the
with the consent of the carrier
Civil Code even if it did not secure a
3. Accommodation passengers persons
Certificate of Public Convenience
who paid nothing for the service of the
An entity is a common carrier whether
carrier; considered as invited guests
the business of carrying persons or
goods is a principal or ancillary activity
Characteristics of a Passenger
Although the clientele is limited, the
One who has put himself in the charge of
regularity of the activities of the carrier
the carrier and has been received by
may indicate that the same is a common
such carrier.
carrier
Must have the bona fide intention to use
The means of transportation need not be
the facilities of the carrier AND present
limited to motorized vehicles. Pipeline
himself to the carrier for transportation
operators are common carriers
in the place and manner provided
petroleum products are transported
Awaiting transportation on the carrier's
through pipelines
premises (eg: station, waiting room, etc)
ordinarily viewed as assuming the
Common and Private Carrier
status of a passenger
Common Carrier
Private Carrier
Undertaking is part of a
general business
Undertaking is a single
transaction
Bound to exercise
extraordinary diligence
Bound to exercise
ordinary diligence
Cannot be exempt from

May validly enter into a
liability for the negligence stipulation exempting
of its agents or employees itself for the negligence
of its agents or
employees
Duties and Obligations
Trespassers
One who rides upon any part of the
vehicle which is unsuitable or which he
knows is not intended for passengers
One who secures free passage by fraud
or stealth
Strangers who are unlawfully on the
premises of the carrier
Not entitled to the rights of a passenger
and is precluded from recovery for any
injury sustained through the negligence
Sources:
Aquino,Timoteo B. and Ramon L. Hernando, Essentials of Transportation and Public Utilities Law (2011 ed.).
Ateneo Law School Bar Ops 2013, Transportation Law Reviewer.
San Beda College of Law, Transportation Law Reviewer.
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of the carrier.
Contract of Carriage
Perfection
Contract to Carry
Agreement to carry
the passenger or
goods at some future
date
Assumption of obligation
upon the actual use of its
facilities by the passenger or
when the goods are
unconditionally placed in the
control and possession of the
carrier
Consensual
Real (delivery is required)
TRANSPORTATION LAW
[ATTY. TESORO]
Tesoro Sez (His Personal Opinion):

There is only 1 contract concerned when a
passenger deals with a common carrier. He
disagrees with the Supreme Court Rulings that
there are 2 separate contracts involved
contract to carry (consensual) and contract of
carriage (real). There is only 1 contract of
carriage which commences at the negotiation
and perfected by mere consent. The carrier's
obligation (to safely carry the passengers, etc)
commences at the consummation stage of the
contract not during the perfection stage of
the contract of carriage (real contract there
is delivery) as determined by jurisprudence.
Contract to Carry
Consensual in nature
Mere meeting of the minds with respect
to the subject matter and consideration
perfects the contract
Issuance of the tickets or payment of the
fare is of no matter in the perfection of
the contract since it is consensual
NOTE: Atty. Tesoro does not make any

distinction between a contract to carry and a
contract of carriage, precisely because he
disagrees with the idea that there are 2
contracts involved. He uses the term contract
of carriage to describe the single consensual
contract between the passenger and the
common carrier.
Aircraft When the passenger had
checked in at the departure counter,
passed through customs and immigration
and proceeded to the ramp of the
aircraft
Buses and Street Cars When the
passenger is already attempting to board
the conveyances
Trains When the passenger has
purchased a ticket and has presented
himself at the proper place and in a
proper manner for transportation
Case Doctrines
Parties Involved
Contract of Carriage of Persons
Passenger
Carrier
Contract of Carriage of Goods
Shipper
Carrier
Consignee
Nueca v MRR Mere purchase of a ticket does

not itself create the relation of carrier and
passenger but it is an element in the inception
of the relation. The person, to be a passenger,
must have a bona fide intention to use the
facilities of the carrier and present himself to
the carrier for transportation in the place and
manner provided.
Lara v Valencia Accommodation passengers
(carrier did not charge any fee for the service)
are invited guests of the owner/driver of the
carrier. Thus the carrier is only required to
observe ordinary care and is not duty bound to
observe extraordinary diligence of a common
carrier.
Heirs of Canas v Dabatos Even if the
passengers did not pay any money as fare,
there can be other forms of valuable
considerations in exchange for the
Sources:
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[ATTY. TESORO]
transportation fare. Patronizing the business of

the carrier is a prestation or service rendered by
the shipper of the goods to the carrier and it is
a valid and legal consideration, in return for
which the shipper is permitted to go along in
the boat.
exclusion of human agency from the cause of

injury or loss. If the crew of the carrier still set
sail despite the knowledge of the typhoon and
they ignored the typhoon advisory, they took a
calculated risk, thus the defense of fortuitous
event cannot be raised.
Tamayo v Pascua The act of allowing and

enabling a person to board the bus by slowing
down is a manifestation of its offer to take the
person as a passenger. The concurrence of the
offer and the acceptance of the person by
boarding the bus already perfects the contract
of carriage.
Benito v PANAM A stipulation in the ticket

granting the common carrier the power to
substitute alternate aircraft and change
schedules without notice to the passenger is
void since it goes against public policy. To give
full force to the stipulation would amount to
permitting the carrier to unilaterally modify its
contract with its passengers.
Dangwa Co v CA A public utility bus, once it

stops, is in effect making a continuous offer to
bus riders. It becomes the duty of the driver
and conductor, every time the bus stops, to do
no act that would have the effect of increasing
the peril to a passenger while he was
attempting to board the same. A person, by
stepping and standing on the platform of the
bus is already considered as a passenger and it
entitled to all the rights and protection
pertaining to the contractual relation.
Guerrero v Madrigal Shipping A passenger
ticket is in itself a complete written contract by
and between the shipper and passenger. It has
all the elements of a contract:
1. Consent passenger boards the ship and
the carrier accepts him
2. Consideration fare paid by passenger
3. Object the transportation of the
passenger from one place to another
PAL v CA The duty to exercise the utmost
diligence on the part of common carriers is for
the safety of passengers as well as for the
members of the crew or complement operating
the carrier.
Vasquez v CA A typhoon is normally
considered as a fortuitous event, which is a
defense of the common carrier from any
liability. However, there must be an entire
Vda de Abelo v PAL In an action based on a

contract of carriage, the court need not make
an express finding of fault or negligence on the
part of the carrier in order to hold it responsible
to pay the damages. By the contract of
carriage, the carrier assumes the express
obligation to transport the passenger to his
destination safely and observe extraordinary
diligence.
Bacarro v Castano Even if the direct cause of
the accident was another vehicle which
sideswiped the carrier, it can be said that there
was still contributory negligence on the part of
the carrier since it maintained a fast speed
while trying to overtake the other vehicle.
Gatchalian v Delim Because what is involved
is the liability of a common carrier for injuries
sustained by passengers in respect of whose
safety a common carrier must exercise
extraordinary diligence, any purported waiver of
any claims for damages against the common
carrier must be construed strictly against the
common carrier.
Necessito v Paras The carrier, while not
insurer of the safety of his passengers, should
nevertheless be held to answer for the flaws of
his equipment (parts of the vehicle, engine
maintenance, etc) if such flaws are at all
Sources:
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discoverable. Thus, any equipment failure due
to poor maintenance of the carrier, cannot be
considered as a fortuitous event. The good
reputation of the manufacturer of the
equipment or part is not a defense.
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transportation (domestic sea)

Carriage of Goods
Suppletory law governing
by Sea Act (COGSA) foreign maritime (high seas)
trade and transportation
Warsaw Convention
Applies to all international

carriage of persons, baggage
or cargo by aircraft
Quisumbing, Sr. v CA Robbery on board or the

hijacking of the aircraft may be considered as a
fortuitous event provided it is proved that the
common carrier has faithfully complied with the Common Duties of Carriers
1. Safety of passengers
requirements of government agencies and
2. Vigilance over the cargo
adhered to the established procedures of the
3. Maintenance of the vehicle
industry in providing security for its passengers.
4. Compliance with the terms of the contact
(not deviating from the prescribed route,
Yobido v CA A tire explosion cannot be
no delay in the transportation, etc.)
considered as a fortuitous event if there are
human factors involved in the situation. The fact
Safety of Personnel
that the tire was new did not imply that it was
Includes the passengers, crew of the
free from manufacturing defects. An accident
carrier and the cargadores (as staff of
caused either by defects in the automobile or
the shipper)
through the negligence of its driver is not a
In case of death or injuries of the

fortuitous event that would exempt the carrier
passengers, common carriers are
from liability for damages.
presumed to have been at fault.
Carrier's responsibility over the safety of

Gacal v PAL The failure of the common carrier
its passengers begins from the time the
to detect the aircraft hijackers may be
passenger presents itself at the place of
considered as a fortuitous event when it was
the carrier for transportation (airport,
impossible for the carrier to perform its
bus station, etc). This responsibility
obligation in a normal manner. In the case at
continues up to the time the passenger
bar the event happened during martial law
disembarks AND had a reasonable time
when the military took control of airport
to leave the carrier's premises.
security, including the frisking of passengers
But the passenger also has the duty to

and the inspection of luggage.
observe due diligence to avoid injuries to
himself. Contributory negligence of the
II. DUTIES AND OBLIGATIONS
passenger may mitigate the liability of
the carrier.
Controlling Laws
Damages and injuries to passengers
Law/ Convention
Scope and Application
caused by third persons may exempt
Civil Code
Primary law governing all
carrier from liability provided it can be
forms of contracts of carriage,
proved that the carrier was in no position
whether goods or passengers
to prevent or avoid the acts of such third
Code of Commerce Suppletory law governing
persons. (Gacal v PAL)
(Arts. 349-379)
overland or river transport of

goods (domestic shipping)
Code of Commerce: Suppletory law governing

Maritime Commerce domestic maritime trade and
Vigilance Over Cargo

General Rule: Common carriers are
responsible for the loss, destruction or
Sources:
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deterioration of the goods.
Exceptions: If the loss or destruction is due to:
1. Flood, storm, earthquake, lightning or
other natural disasters or calamities
2. Act of public enemy in war
3. Act or omission of shipper or owner of
goods
4. Character of the goods and defects in the
packaging (but carrier must still exercise
due diligence to lessen or forestall loss)
5. Act of competent public authority
The law of the country to which the
goods are to be transported shall govern
the liability of the carrier for their loss,
destruction or deterioration.
Even if the loss, destruction or
deterioration of the goods is due to the
nature of the goods or the faulty nature
of the packaging, the carrier must still
exercise due diligence to lessen the loss.
The carrier's duty to observe due
diligence continues to be in force even:
During the time the goods are stored
in a warehouse of the carrier.
When the goods are temporarily
unloaded or stored in transit unless
the shipper has made use of the right
of stoppage in transitu.
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carrier from responsibility.

Stipulations limiting the carrier's liability
cannot be availed of in case the carrier
delays the transportation without just
cause.
If there is an agreement as to the road
or route over which the conveyance is to
be made, the carrier may NOT change
the route unless by reason of force
majeure.
Transshipment is the transfer of goods
from the vessel stipulated in the contract
to another vessel before the place of
destination named in the contract has
been reached
Transshipment of freight without legal
excuse, however competent and safe the
vessel into which the transfer is made, is
a violation of the contract and subjects
the carrier to liability.
Case Doctrines
PAL v CA Flight diversion due to a fortuitous
event (inclement weather) did not terminate the
air carriers contract with its passengers. The
relation of the passenger and carrier continues
until the former has been landed at the port of
destination and has left the carriers premises.
Maintenance of Vehicle/Conveyance
The effort exerted by the carrier in the
maintenance of its vehicles must be
proportionate (or greater than) the wear
and tear experienced by the vehicle.
Any equipment failure due to poor
maintenance of the carrier cannot be
considered as a fortuitous event.
The good reputation of the manufacturer
of the equipment or part is not a
defense. (Necessito v Paras)
PAL v CA (188 SCRA 461) The carriers

agents, by allowing to board, persons who were
not among those with valid confirmations and
who consequently had no right to be given
preference in taking said flight, deliberately
created a situation that would place petitioner in
arrant violation of its contract with its
passengers who were bumped off by reason
thereof. The carrier may not be allowed to
relieve itself from any difficult situation created
by its own lack of diligence in the conduct of its
affairs in a manner prejudicial to its passengers.
Diversions and Delays

If the common carrier negligently incurs
delay in the transportation of goods, a
natural disaster shall NOT free the
Sulpicio Lines v CA The carrier is liable for the

death of the cargadores of the shippers goods
despite the fact that there is no passengercarrier relationship between the cargadores
Sources:
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and the carrier. What is involved was a breach
of the contract to carry goods between the
carrier and the shipper and the safety of the
cargadores is necessarily a part of such
contract.
La Mallorca v CA The relation of carrierpassenger does not cease at the moment the
passenger alights from the carriers vehicle, but
continues to until the passenger has had a
reasonable opportunity to leave the carriers
premises.
Aboitiz Shipping Corp. v CA The passengercarrier relationship will not ordinarily terminate
until the passenger has, after reaching his
destination, safely alighted from the carriers
conveyance or has a reasonable opportunity to
leave the carriers premises. All persons who
remain on the premises a reasonable time after
leaving the conveyance (eg: persons remaining
in the premises to claim their baggages) are to
be deemed passengers.
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out for them. They are under the obligation to

avoid a situation which would be hazardous for
their passengers and make their safety
dependent upon the diligence of other drivers.
Isaac v A.L Ammen Transportation Co. - Where
a carrier's employee is confronted with a sudden
emergency, the fact that he is obliged to act
quickly and without a chance for deliberation
must be taken into account and the failure on
his part to exercise the best judgment possible
does not establish lack of care and skill on his
part which renders the company, liable. Of
course, this emergency rule only applies when
the carrier's employee is not negligent in the
first place.
Brinas v People It was negligence on the

conductor's part to announce the next flag stop
when the said stop was a full 3 minutes away.
The announcement, which caused the
passengers to stand up and proceed to the
nearest exit, was premature and erroneous. The
carrier is thus liable for the injuries sustained by
Landingin v Pantranco Part of the carrier's
the passengers who stood up and were thrown
duty in ensuring the safety of its passengers is
off the train believing that their stop was up
to maintain the vehicle or conveyance used. The ahead.
mere fact that the bus was inspected only
recently and found to be in order would not
Cangco v MRR If the accident was caused by
exempt the carrier from liability unless it is
the negligence of the passenger, no liability is
shown that the particular circumstances under
imposed on the carrier, where as if the accident
which the bus would travel were also considered was caused by the negligence of the latter, and
(eg: if the bus always travels with a full load of
the passenger's negligence contributed to his
passengers and cargo and the it traverses a
injury, then the damages should be
mountainous route, naturally the vehicle is
apportioned. But in this case, it is not
subjected to more wear and tear. The carrier
negligence per se for a passenger to alight from
must then prove that it took extra measures to
a slowly moving train. (The fact that the place is
counteract the increased stress on the vehicle.
familiar to the passenger and it was his daily
In other words, the amount of maintenance
custom to get on and off the train at this station
must be proportionate to, if not greater than,
was taken into account by the Court to reach
the wear and tear the vehicle is subjected to.)
this conclusion).
Batangas Transportation Co. v Caguimbal Bus
drivers are under the obligation to stop at a safe
location where their passengers may embark
and disembark not just anywhere they like
and expect other drivers and vehicles to watch
PNR v CA If the carrier failed to observe

extraordinary diligence but at the same time the
passenger is guilty of contributory negligence,
the amount of damages the carrier is liable for
may be reduced.
Sources:
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Bayasen v CA Skidding means the partial or

complete loss of control of the car under
circumstances not necessarily implying
negligence since it may occur without fault. If
the proximate cause of the accident was the
skidding of the rear wheels of the vehicle and
not the unreasonable speed of the vehicle, then
it is a valid defense being an unforeseen event.
Trans-Asia Shipping Lines v CA The failure of
the common carrier to maintain in seaworthy
condition its vessel involved in a contract of
carriage is a clear breach of its duty.
In case a voyage already begun should be
interrupted, the passengers shall be obliged to
pay only the fare in proportion to the distance
covered, without right to recover for losses and
damages if the interruption is due to fortuitous
event or force majeure, but with a right to
indemnity if the interruption should have been
caused by the captain exclusively. (Art. 698,
Code of Commerce)
III. WARSAW CONVENTION
Application
All international carriage of persons,
baggage or cargo performed by aircraft
for reward. It applies equally to
gratuitous carriage by aircraft performed
by an air transport undertaking.
Requisites for application:
Must be an international flight
The 2 countries (origin and
destination) must both be signatories
When Not Applicable:
When public policy is contradicted
If the requirements under the
Convention are not complied with.
International Transportation
Any transportation in which the place of
departure and the place of destination are
situated either:
1. Within the territories of two High
Contracting Parties regardless of whether or
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not there be a break in the transportation or

transshipment, or
2. Within the territory of a single High
Contracting Party, if there is an agreed
stopping place within a territory subject to
the sovereignty, mandate or authority of
another power, even though that power is
not a party to the Convention.
Transportation to be performed by several
successive air carriers shall be deemed to be
one undivided transportation, if it has been
regarded by the parties as a single operation,
whether it has been agreed upon under the
form of a single contract or of a series of
contracts, and it shall not lose its international
character merely because one contract or a
series of contracts is to be performed entirely
within a territory subject to the sovereignty,
suzerainty, mandate, or authority of the same
High Contracting Party. (Art. 1 Sec.3)
Documents Involved
1. Passenger ticket
2. Baggage check - for checked-in baggage
3. Air way bill cargo to be shipped by air
Liability of Carrier for Damages
1. Death or injury of a passenger if the
accident causing it took place on board
the aircraft or in the course of its
operations of embarking or
disembarking; (Art. 17)
2. Destruction, loss or damage to any
baggage or goods, if it took place during
the transportation by air; (Art. 18) and
3. Delay in the transportation of
passengers, baggage or goods. (Art. 19)
Transportation by Air
The period during which the baggage or
goods are in the charge of the carrier,
whether in an airport or on board an
aircraft, or, in case of a landing outside
an airport, in any place whatsoever.
It includes any transportation by land or
Sources:
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water outside an airport if such takes
place in the performance of a contract
for transportation by air, for the purpose
of loading, delivery, or transshipment.
NOTE: The Hague Protocol amended the
Warsaw Convention by removing the provision
that if the airline took all necessary steps to
avoid the damage, it could exculpate itself
completely. (Art. 20(1)). (Alitalia v IAC, 192
SCRA 9)
Limitation of Liability
As amended by Guatemala Protocol
General Rule is that the parties may
stipulate a higher limit of liability but
NOT lower than what is stated in the
convention.
An agreement relieving the carrier from
liability or fixing a lower limit is null and
void. (Art. 23)
Carrier is not entitled to the foregoing
limit if the damage is caused by willful
misconduct or default on its part. (Art.
25)
1. Passengers
General Rule: $100,000 per passenger
Exception: Agreement to a higher limit
2. Checked-in Baggage
General Rule: $20 per kilogram
Exception: In case of special declaration of
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the
declared sum unless it proves the sum is
greater than actual value.
3. Hand-carried baggage
General Rule: $1000/passenger
4. Goods to be shipped
General Rule: $20 per kilogram
Exception: In case of special declaration of
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the
declared sum unless it proves the sum is
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greater than actual value.

When
1.
2.
3.
4.
Limitation is Not Applicable

Willful misconduct
Default amounting to willful misconduct
Accepting passengers without a ticket
Accepting goods without airway bill or
baggage without baggage check
Action for Damages

A. Notice of claim
A written complaint must be made within:
a. 3 days from receipt of baggage
b. 7 days from receipt of goods
c. In case of delay, 14 days from receipt of
baggage/goods
The complaint is a condition precedent. Without
the complaint, the action is barred except in
case of fraud on the part of the carrier. (Art. 26)
B. Prescriptive period
Action must be filed within 2 years from:
date of arrival at the destination
date of expected arrival
date on which the transportation
stopped. (Art. 29)
Various Successive Carriers
A. Passengers
General Rule: Action is filed only against the
carrier in which the accident or delay occurred.
Exception: Agreement or contract whereby the
first carrier assumed liability for the whole
journey.
B. Carriage of baggage or goods
1. Passenger or consignor can file an action
against the first carrier and the carrier in
which the damage occurred
2. Passenger or consignee can file an action
against the last carrier and the carrier in
which the damage occurred.
Sources:
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These carriers are jointly and severally
liable for the baggage and cargo. (Art.
30)
Under a general pool partnership
agreement, the ticket-issuing airline is
the principal in a contract of carriage
while the endorsee-airline is the agent.
The obligation of the former remained
and did not cease even when the breach
occurred not on its own flight but on that
of another airline which had undertaken
to carry the passengers to one of their
destinations. (China Airlines vs. Chiok)
Jurisdiction
At the option of the plaintiff, the action for
damages may be filed in the:
Court of domicile of the carrier;
Court of its principal place of business;
Court where it has a place of business
through which the contract has been
made; or
Court of the place of destination. (Art.
28(1))
NOTE: It is the passengers ultimate
destination not an agreed stopping place that
determines the country where suit is to be filed.
The forum of action provided in Art. 28(1) is a
matter of jurisdiction rather than of venue.
(Santos III vs. Northwest; 2A C.J.S.)
Case Doctrines
United Airlines v Uy (Warsaw Convention) A
cause of action arising from the damage of the
luggage and the loss of its contents are within
the bounds of the Warsaw Convention. But a
cause of action arising from the humiliating
treatment received from the airline employee is
not included.
American Airlines vs. CA - A contract of
international carriage by air, although
performed by different carriers under a series of
airline tickets constitutes a single operation.
They act as agent of each other in the issuance
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of tickets to contracted passengers to boost

ticket sales worldwide and at the same time
provide passengers easy access to airlines
which are otherwise inaccessible in some parts
of the world.
Alitalia v CA The Warsaw Convention does not
operate as an exclusive enumeration of the
instances of an absolute limit of the extent of
liability. It does not preclude the application of
the Civil Code and other pertinent local laws. It
does not regulate or exclude liability for other
breaches of contract by the carrier, or
misconduct of its employees, or for some
particular or exceptional type of damage.
PanAm v. IAC The Warsaw Convention was
applied as regards the limitation on the carriers
liability, there being a simple loss of baggage
without any improper conduct on the part of the
officials or employees of the airline or other
special injury sustained by the passenger.
KLM Royal v. Tuller The Warsaw Convention
has invariably been held inapplicable, or as not
restrictive of the carriers liability, where there
was satisfactory evidence of malice or bad faith
attributable to its officers and employees.
IV. BILLS OF LADING
Contracts of Transportation
A contract for transportation shall be
considered commercial:
When it involves merchandise or any
commercial goods
When the carrier is a merchant or is
customarily engaged in making
transport for the public (Art. 349
Code of Commerce)
A bill of lading may be considered as a
contract but it is not a necessary
element for the perfection of a contract
of carriage in general. In maritime
commerce, it is expressly provided that
the captain and the shipper are obliged
to draft the bill of lading (Art. 706)
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Shipper as well as the carrier may
mutually demand of each other the
issuance of a bill of lading.
In the absence of a bill of lading,
disputes shall be determined by the legal
proofs which the parties may present,
according to the general provisions of
the code of commerce. (Art. 354)
In maritime commerce, a bill of lading is
required. In overland transportation, a
bill of lading is NOT required.
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[ATTY. TESORO]
As a contract of adhesion, any

ambiguities are strictly construed against
the one who drafted it.
As evidence, the bill of lading must be
properly pleaded and formally offered in
evidence. Parol evidence rule applies.
As a Document of Title
A bill of lading is also a symbol of the
goods covered by it.
Bill of lading becomes a negotiable
instrument provided it contains the
Functions
words of negotiability (Art.1507 Civil
1. As a receipt
Code).
2. As a contract
Negotiation of the document has the
3. As a document of title
effect of manual delivery so as to
constitute the transferee the owner of
As a Receipt
the goods.
It is an acknowledgment that the goods
Negotiation results in the same transfer
have been received by the carrier
of ownership because transfer of the
After the contract has been complied
document likewise transfers control over
with, the bill is returned to the carrier
the goods.
and by virtue of the exchange of the bill
Title of goods described in a bill of lading
for the article transported, the respective
running to the consignee by name and
obligations shall be considered cancelled.
not to his order, nor to bearer, cannot be
(Art. 353 par. 2)
transferred by means of a mere
If the bill of lading cannot be returned by
indorsement by the consignee. Had the
the consignee, he shall give the carrier a
bill of lading run to their order, then title
receipt for the goods delivered and this
would have passed by the indorsement
will have the same effects as the return
of it, or had it payable to the bearer,
of the bill of lading.
then in that case, by mere delivery of it.
Under COGSA, the bill of lading is prima
In this case, the freight was deliverable
facie evidence of the receipt of goods by
to the consignees by name and their
the carrier
interest could be transferred only by
document purporting to convey the
As a Contract
property. (Dela Riva v Lizarraga
Stipulates the rights and obligations of
Hermanos, 7 Phil 309)
the parties
When the consignee is a third-person,
Bill of Lading In International Shipping*
there is a stipulation pour autrui
(stipulation demanded by the shipper
Parties Involved
from the carrier in favor of consignee)
1. Shipper the one sending the goods;
A kind of contract of adhesion the only
usually a seller
participation of the party is the signing of
2. Consignee the person entitled to
his signature. Contract is usually drafted
received the goods; usually a buyer
by the carrier alone and unconditionally
3. Financial Intermediary one facilitating
accepted by the shipper.
the financial transaction between the
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buyer and the seller; usually a bank
4. Carrier the one shipping the goods
Steps
1. Buyer and seller, who are located in
different countries, perfect a contract of
sale.
2. Seller (as shipper) delivers the goods to
the carrier.
3. Carrier issues a bill of lading to the
seller.
4. Carrier proceeds to ship the goods.
5. Seller gives bill of lading to the bank in
exchange for the price of the sale.
(NOTE: at this point, the buyer has not
paid yet. The bank is paying the seller
out of its own account.)
6. Buyer (as consignee) goes to the bank's
branch or agent in the place where the
goods are to be delivered to pay the
purchase price. In exchange, the bank
gives him the bill of lading.
7. When the goods arrive, the buyer
surrenders the bill of lading to the
carrier. (NOTE: if Art. 353 of the Code
of Commerce is to be incorporated, the
consignee may give the carrier a receipt
for the goods in case the bill of lading
becomes lost or destroyed)
8. Upon such exchange, any obligations
and actions shall be considered
cancelled, unless the consignee files a
claim. (either under Art. 366 of the
Code of Commerce or under COGSA)
*Based on the usual practice in international shipment.
Source: http://howtoexportimport.com
Kinds of Bills of Lading

1. On Board which states that the goods
have been received on board the vessel
which is to carry the goods.
2. Received for Shipment which states
that the goods have been received for
shipment with or without specifying the
vessel by which the goods are to be
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
shipped.
3. Through Bill of Lading issued by a
carrier who is obliged to use the facilities
of other carriers as well as his own for
the purpose of transporting the goods
from the city of the seller to the city of
the buyer.
4. Spent Bill of Lading where the goods
are already delivered but the bill of
lading is not returned.
5. Clean Bill of Lading one which does
NOT contain any notation indicating any
defect in the goods.
6. Foul Bill of Lading - one which contains
a notation indicating any defect in the
goods.
7. Custody Bill of Lading where the
goods are already received by the carrier
but the vessel indicated therein has not
yet arrived in port. The goods are not yet
placed on board the vessel.
8. Port Bill of Lading where the vessel
that will transport the goods is already in
port.
Change of Bill of Lading
The shipper may change the consignee
stated in the bill of lading provided:
Shipper does NOT change the place
where delivery is to be made.
Shipper returns the bill of lading
previously issued by the carrier.
This results in the novation of the
contract.
Expenses arising from the change of
consignee shall be defrayed by shipper.
Containerization
A system where the shipper loads his
cargoes in a specially designed container,
seals it and delivers it to the carrier for
transportation. It is devised to facilitate
the expeditious loading and unloading of
cargoes. (US Lines v Commissioner of
Customs)
The bill of lading contains the following
phrases:
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s.t.c. - Said to Contain

Shipper's Load and Count
These phrases indicate that the carrier
does NOT participate in the counting of
the merchandise, the loading thereof
inside the container and the sealing of
the container. The carrier merely relies
on what the shipper states in the bill of
lading or cargo manifest.
Under this arrangement, the carrier is
not obliged to check and conduct an
inventory of the goods the shipper has
the sole responsibility for the quantity,
description and condition of the cargo.
What the carrier concerns itself with is
NOT the condition of the cargo inside the
container but the condition of the
container itself (exterior condition).
Thus, a statement in the Bill of Lading
that the shipment was in apparent good
condition is sufficient to sustain a finding
of absence of defects in the
merchandise, but this will create a prima
facie presumption only as to the external
condition and not to that not open to
inspection (PCIC v Unknown Owner of
M/V National Honor, 463 SCRA 202)
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
knowledge of the actual condition of the goods

inside the container, the carrier cannot be held
liable in case of any discrepancies between what
is declared in the bill of lading and the actual
contents of the containers.
Reyma Brokerage v Phil Home Assurance
Where the carrier makes an explicit
acknowledgment of the declarations of the
shipper in the bill of lading, it guarantees the
correctness of the weight, value, quality, etc. of
the goods. It is an express admission of the
carrier that the goods were received as declared
by the shipper, so in case of shortage or other
discrepancies, the carrier makes itself liable.
(this is an exception to the doctrine in US Lines)
V. RIGHTS AND OBLIGATIONS
Keng Hua Paper v CA A bill of lading delivered

and accepted constitutes the contract of
carriage, even though not signed.
Liabilities and Obligations of Carrier

The liability of the carrier shall begin
from the moment he receives the
merchandise in the place indicated for
their reception (Art. 355)
Should no delivery period be fixed, the
carrier is under the obligation to forward
the goods in the first shipment of the
same or similar class of merchandise.
Any damages by reason of delay shall be
suffered by the carrier. (Art. 358)
Carrier is obliged to follow the route
stated in the contract, unless prevented
by force majeure. (Art. 359)
PC Ailmal Co v Macondray Bill of lading is

prima facie evidence of the receipt of the
merchandise by the carrier.
General Rule: Damages suffered by the goods

by reason of accident or force majeure shall be
for the account of the shipper.
Robles v Santos The bill of lading is not

essential to the contract, although it may
become obligatory by reason of the regulations
or as a condition imposed in the contract.
Exceptions:
1. The contrary is expressly stipulated in
the contract.
2. If the carrier was not able to prove the
accident or force majeure.
3. If the accident occurred on account of
the negligence of the carrier. (NOTE: A
combination of negligence AND force
majeure does not exempt carrier from
Case Doctrines
US Lines v Commissioner of Customs Where

the words said to contain appear, the carrier
simply admits the information furnished by the
shipper in the bill of lading. Having no
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liability)
Exception to the Exceptions: If the shipper
committed fraud or misrepresentations in the
bill of lading.
Rights of Carrier
Right to refuse to accept packages which
appear unfit for transportation (Art. 356)
Right to inspect the contents of the
package if only by reason of wellfounded suspicion (Art. 357). He shall
examine it:
Before witnesses, in the presence of
the shipper or consignee. -OR Before a notary.
If shipper's declaration is correct,
carrier bears cost of repackaging.
If carrier's declaration is correct,
shipper bears cost of repackaging.
Right to be compensated for the cost of
taking another route by reason of force
majeure. (Art. 359)
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Abandonment by Consignee
Right of consignee to refuse to receive
the goods delivered to him.
Instances when consignee may abandon
the goods delivered:
1. Incomplete or partial delivery. (goods
delivered cannot be used without the
others not yet delivered)
2. The goods are damaged and
rendered useless.
3. Delay due to the fault of the carrier.
How Right is Exercised:
1. Incomplete or Partial Delivery (Art. 363)
Consignee must prove that he cannot
make use of the delivered goods
without the others.
2. Damaged Goods (Art. 365)
Consignee leaves the goods in the
hands of the carrier -AND Demand payment at current market
prices.
3. Delay in Delivery (Art. 371)
Inform the carrier in writing of the
abandonment before the arrival of
the goods at the point of destination.
Carrier shall satisfy the total value of
the goods as if they have been lost.
NOTE: Among all the instances of
abandonment, this is the only
situation where a limitation on
liability of the carrier is provided. See
section VI. for explanation.
Claims by Consignee (Arts. 366-367)

Applicable only to cases of claims for
damage to goods received by consignee
Filing of notice of claim is a condition
precedent to the accrual of a right of
action for damages against the carrier.
Non-filing of notice bars recovery
If damage is apparent file claim
immediately
If damage is not apparent file claim
Remedy of Carrier (Art. 369)
within 24 hours from receipt of goods
In case consignee cannot be found or
A longer period may be stipulated but
refuses to pay or receive the goods:
not a shorter one.
Carrier may: deposit the goods in
Receipt of goods may mean actual
court, hold the goods or return it to
or constructive delivery by the carrier
the shipper or sender.
(see Rosario Farmers v MRR)
If the shipper cannot be found
Rule does not apply to:
deposit goods in court.
Misdelivery cases
This deposit having all the effects of
Claims for refund; not for damages.
delivery.
When the cargo never arrived or was
never received by the consignee.
Query: Does this provision contemplate a
Breach of contract by the carrier.
situation where the consignee unjustly refuses
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TRANSPORTATION LAW
[ATTY. TESORO]
to receive the goods and not where he exercises possession of the cargo. But notice by the
his right of abandonment?
carrier that the cargo has already arrived
amounts to a constructive delivery of the cargo,
Case Doctrines
which automatically releases the carrier of the
extraordinary responsibility for the cargo. The
Samar Mining v Nordeutscher A carrier is
24 hour period begins to run from the time of
liable for the loss of goods even after discharge constructive delivery.
from ship if such goods were deposited in the
warehouse of the carrier, but NOT if the goods
Cordoba v Warner The 24 hour period runs
are stored in the warehouse of a third party.
from the moment the consignee has such
possession that he may exercise the ordinary
RCL v Netherlands Insurance Cargoes while
control of ownership. It cannot commence when
being unloaded generally remain under the
the goods are still in the hands of the customs
custody of the carrier.
authorities since the consignee obviously cannot
exercise any right of dominion over the goods
Mariano v Admiral Line Where a carrier fails to while in the hands of the Government.
deliver the goods within a reasonable time,
although he makes himself liable for damages,
New Zealand Insurance v Choa Joy Art. 366
the consignee cannot refuse to accept the
does not apply when the cargo was never
goods. In cases of delay, prior demand for
received by the consignee. The failure of the
delivery is necessary before the consignee may
carrier to deliver the cargo to the consignee is a
waive all title to the goods and sue for
breach of its contract, thus it forfeited its right
conversion (sue for the value of the goods).
to invoke in its favor Art. 366.
Go Pun v Fieldman's Insurance The liability of
the common carrier and the insurer of the
goods lost or damaged while in transit is
solidary, not joint.
Phil-Am Gen v Sweet Lines Art. 366 applies to

cases for recovery of damage on account of loss
or damage to cargo, but NOT to an action for
refund for overpayment.
Eastern Shipping Lines v IAC Fire may not be

considered a natural disaster or calamity as it
arises almost invariably from some act of man
or by human means. It does not fall under the
category of Acts of God unless caused by
lightning or other natural disaster.
Federal Express v American Home Assurance

The fundamental reason for requiring the giving
of notice of loss or damage to the goods:
1. To inform the carrier that the cargo has
been damaged and that it is being
charged with liability therefor -AND2. To give the carrier an opportunity to
Lu Do v Binamira While delivery of the cargo
examine the nature and extent of the
to the customs authorities is not the delivery to
injury to safeguard itself from false and
the person who has the right to receive them
fraudulent claims.
contemplated by the Civil Code, it is unfair that
the carrier is held liable for any loss during this
VI. LIMITATIONS OF LIABILITY
interregnum since the carrier loses its control of
the goods to the government.
Sources of Limitations and Defenses
Limitations under Civil Code
Rosario Farmers v MRR The time prescribed in
General provisions for all forms of
Art. 366 of the Code of Commerce begins to run
contracts of carriage.
from the moment the shipper or consignee has
Mostly refers to the contractual
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stipulations between the carrier and
shipper or passenger.
Limitations under Code of Commerce
Refers to the defenses and limitations
that may be availed of by the carrier
itself in the course of the shipment.
Contemplates specific situations in
the course of shipment, whether
overland or river transportation.
Limitations under Maritime Commerce
Found under Title II Code of
Commerce
Applies to the affairs and business of
the sea, ships, their crew and to
marine conveyance of persons and
property.
Mostly refers to the liabilities of the
persons involved in maritime
commerce: ship agent, shipowners,
captain, etc.
Prescription
A period for a party to file his claim
and upon expiration thereof, the right
to file the claim is barred forever.
Various prescriptive periods provided
by the different laws
Civil Code
Civil Code still serves as the primary law
on contracts of carriage and the code of
commerce applies suppletorily.
There is always the presumption that the
carrier is at fault and it is his duty to
rebut such presumption.
A. For the Carriage of Goods
General Rule: Exercise extraordinary diligence
over the care of the goods.
Exception: Stipulation limiting the liability to a
degree less than extraordinary diligence is valid
provided it is:
1. In writing, signed by shipper
2. Supported by valuable consideration
other than the service of the carrier
(example: higher premium)
3. Reasonable and just
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Exception to the Exception: If the carrier,

without just cause, delays the transportation,
the stipulation of limited liability cannot be
availed of in case of loss, deterioration or
destruction of the goods. The delay must be
coupled with the loss, deterioration or
destruction of the goods. (Art. 1747 Civil Code)
Absolute Defenses No Liability
Flood, storm, earthquake, lightning or
other natural disasters or calamities
Act of public enemy in war
Act or omission of shipper or owner of
goods
Character of the goods and defects in the
packaging (but carrier must still exercise
due diligence to lessen or forestall loss)
Act of competent public authority
Mitigating Defenses Limited Liability
Contributory negligence of the shipper
Delay due to strikes (if stipulated)
Stipulation limiting liability to the value
of the goods stated in the bill of lading
(unless shipper declares a higher value)
A fixed sum that may recovered, freely
and fairly agreed upon.
B. For the Carriage of Passengers
General Rule: Exercise extraordinary diligence
over the care of its passengers.
Exceptions: NO EXCEPTIONS. Carrier cannot
lessen degree of diligence even if with consent
of the parties or with valuable consideration
Absolute Defenses No Liability
Acts or negligence of other persons
provided the carrier was in no position to
prevent the same
Mitigating Defenses Limited Liability
Stipulation limiting liability when a
passenger is carried gratuitously (but not
for gross negligence)
Contributory negligence of passenger
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Duty of passenger to observe due
diligence to avoid injury to himself
No Limitation of Liability (Void)
When there are fine prints on tickets
lessening the liability of the carrier
Reduction of fare does not justify any
limitation of liability
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
his lien over the goods but he can still

file an action as an ordinary creditor.
NOTE: The 8-day limitation in the Code of
Commerce has been amended by Art. 2249 of
the New Civil Code providing for a 30 day period
Maritime Commerce
Real and Hypothecary Nature

The liabilities of the shipowners or ship
agents, arising from the operation of a
In Case No Abandonment by Consignee
ship, are confined to the value of the
The consignee accepts the delayed goods
vessel, equipment and freight or
and carrier has to pay damages
insurance. (No vessel, no liability). This
Indemnity cannot exceed the current
rule applies only to shipowners or ship
price of the goods on the day and place
agents and NOT to the carriers.
where it was to be delivered (Art. 371)
Purpose is to offset against the hazards
Example: Goods were sent from point A
of sea voyages and to encourage ship
where its price was $10. Goods arrived
building in maritime commerce.
late to point B (destination) where the
The vessel stands as guaranty for the
price depreciated to $8. Consignee may
settlement of the shipowner's obligations
demand damages not exceeding $8.
Total destruction of the vessel
extinguishes maritime liens because
Transportation Charges Not Paid
there is no longer any res to which it can
The consignee has 24 hours from time of
attach. (Monarch Insurance Co. v. CA)
delivery within which to pay the
transportation charges (Art. 374)
In case of delay in making payment, the Application
1. Art. 587 civil liability for indemnities to
carrier may demand the judicial sale of
third persons
the goods to answer for the
2. Art. 590 indemnities from negligent
transportation charges (Art. 374)
acts of the captain (not the shipowner or
The goods transported are obligated to
ship agent)
answer for the transportation charges
3. Art. 837 collision
and expenses caused by the same during
4. Art. 643 liability for wages of the
their transportation and until their time
captain and the crew and for advances
of delivery (Art. 375)
made by the ship agent if the vessel is
The preference of the carrier for
lost by shipwreck or capture
payment shall not be affected by the
insolvency of the consignee.
The right of preference of the carrier and Abandonment
It is how the doctrine of limited liability
the lien on the goods shall prescribe
is exercised or enforced.
after 30 days from time of delivery.
Abandonment amounts to an offer to the
After the lapse of 30 days from the date
injured party of the value of the vessel.
of delivery, the cargo is released from
The creditor's acceptance of the
any maritime lien for unpaid freight.
abandonment is compulsory as he
(Ouano v Court of Appeals)
cannot refuse it. (Doctrine of Limited
If the right prescribes, the carrier loses
Code of Commerce
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Liability of Shipowners and Ship Agents,
96 SCRA 309)
It is an indispensable requirement before
the shipowners or ship agent can enjoy
the benefits of the limited liability rule.
NOTE: This is NOT the same as the right
of abandonment exercised by the
consignee this is exercised by the ship
owners and ship agents.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
abandonment of his share or interest

in the vessel before a notary.
Prescription
Law or
Convention
Art 366 Code
of Commerce
General Rule: Liability of the shipowner or ship

agent is limited to that portion of the vessel
which he has interest in and he is entitled to
abandon.
Period to File
Notice or Protest
Non- apparent
Damage - Within
24 hours after
receipt
Period to File
Action in Court
Written Contacts
10 years
Verbal Contracts
6 years
Apparent Damage
- Immediately
upon receipt
COGSA
Exceptions:
1. There is no abandonment (acts of the
shipowner or ship agent are inconsistent
with that of abandonment)
2. Injury or death of a passenger is due to
the fault of the shipowner or the
concurring negligence of the shipowner
Warsaw
and the captain.
Convention
3. The vessel is insured Insurer's claim
against shipowner is not affected by the
limited liability rule. The insurer as
subrogee is entitled to the benefits of the
limited liability rule.
4. Claims under workmen's compensation
5. Voyage is NOT maritime (ex: by river)
6. Liability for the repairs, equipment and
provisions of the vessel completed
BEFORE its loss.
7. Unseaworthiness of the vessel.
8. Any damages arising from the negligence
NOTE: For both
of the shipowner.
Non- apparent
Damage - Within
3 days from
delivery
Within 1 year
from date of
delivery or from
date when the
goods should
Apparent Damage have been
- Immediately
delivered
upon receipt
Damage to
baggage 3 days
from receipt
2 years from
date of arrival of
the aircraft
Damage to goods
7 days from
receipt
Delay in delivery
21 days from
receipt
NOTE: Protest
must be in writing
the Code of Commerce and the

Warsaw Convention, filing of notice is a condition
precedent when filing an action in court. Failure to file
a notice or protest bars the right to file court action.
NOTE: If the damage or injury is solely the

captain's fault, then the shipowner or ship agent
may still exercise the right of abandonment to
Case Doctrines
limit their liability.
How Abandonment is Exercised
By ship agent or a sole shipowner no
prescribed form of abandonment is
required.
By a shipowner in cases of co-ownership
Mirasol v Robert Dollar Co. - Where the limited

liability clause is printed in fine letters at the
back of the bill of lading, which the shipper did
not sign, he cannot be bound by its terms.
Manila Railroad v Transatlantica A carrier is
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liable upon its contract of carriage for damages
to the cargo by reason of the negligence of a
contracting company in discharging the cargo
from the ship's hold. The consignee cannot sue
the contracting company for lack of privity in
the contract (between the carrier and the
contracting company). The consignee's remedy
is to go after the carrier.
C.F. Sharp v Commissioner of Customs Any
vessel transporting unlawful cargo shall be
subject to forfeiture. There is a presumption
that the vessel is engaged in smuggling, thus
the burden is shifted to the vessel's owner to
prove that the cargo is lawful.
Commissioner of Customs v CTA Forfeiture
proceedings are proceedings in rem. The fact
that the carrier had no actual knowledge that
the vessel was carrying illegal goods does not
render the vessel immune from forfeiture. This
is because forfeiture proceedings is instituted
against the vessel itself.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Dela Torre v CA The only person who could

avail of the limited liability rule is the shipowner.
Charterers cannot invoke this as a defense.
Chua Yek Hong v IAC For the exception to the
limited liability rule to apply, the loss must be
due to the fault of the shipowner or to the
concurring negligence of the shipowner and the
captain.
Heirs of Amparo v CA The limited liability rule
(Art. 587 Code of Commerce) speaks only of
situations where the fault is committed solely by
the captain. In cases where the shipowner is
likewise to be blamed, Art 587 does not apply.
VII. PERSONS IN MARITIME COMMERCE
Parties Involved
Shipowner
Maybe a sole owner, co-owners or a
juridical entity (corporation or
partnership)
Shewaram v PAL Where the limited liability
Person who is primarily liable for
clause of the carrier is printed at the back of the
damages sustained in the operation of a
ticket in very fine print that it is hard to read,
vessel
this would not warrant the presumption that the
passenger was aware of those conditions and
Ship Agent
freely agreed to them.
A person entrusted with provisioning the
vessel or who represents her in the port
Aboitiz Shipping v CA The package/container
in which she happens to be
contemplated should be related to the unit in
While the captain is acting on behalf of
which the shipper packed the goods, not a large
the shipowner, the captain is NOT
metal object, functionally a part of the ship, in
necessarily the ship agent
which the carrier caused them to be contained.
Ship agents may be akin to an officer
representing a juridical entity (eg: Board
Aboitiz Shipping v CA Real and Hypothecary
of directors as agents of a corporation)
nature of maritime law means that the liability
of the carrier (assuming the carrier is also the
Ship Agent
Civil Law Agent
shipowner) in connection with losses related to
Represents the vessel
Represents the principal
maritime contracts is confined to the vessel.
Appointment must be
Appointment is
Claimants or creditors are limited in their
recorded in the
consensual
recovery to the remaining value of the
merchant's
registry
of
accessible assets, in this case, the insurance
the province
proceeds and pending freightage of the voyage.
Personally liable with the
Personally liable only
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ship owner for the lawful
acts of the captain
2nd
when agent act in excess
of his authority
Liabilities and Defenses

Both ship agent and shipowner shall be
civilly liable for the acts of the captain:
in maintaining, repairing and
supplying the ship
for indemnities in favor of 3rd persons
in the care of the goods in the ship
The shipowner is solidarily liable with the
ship agent (Wing Kee v Bark)
In case of a co-owned ship, each coowner is civilly liable in the proportion of
his interest in the common fund
General Rule: Shipowners and ship agents are
liable for the acts of the captain
Exception: If the captain acts in excess of the
powers conferred upon him
Exception to the Exception: If the obligations
contracted by the captain were invested for the
benefit of the vessel, the shipowners and ship
agents are liable
Defenses In Case of Co-Ownership
Abandonment
A co-owner may exempt himself from his
liability by abandonment of the part of
the vessel belonging to him
But abandonment must be done before a
notary
TRANSPORTATION LAW
[ATTY. TESORO]
the vessel UNTIL he delivers it on the

discharging wharf at the port of
unloading
Force majeure exempts captain from any
liability
Other liabilities of the captain to the ship
agent (and of the agent to 3rd persons):
Damages suffered by the vessel or
cargo by reason of negligence of the
captain
Thefts and robberies committed by
the crew
Losses, fines and confiscations
imposed for the violation of the laws
of customs, police, health and
navigation
Losses and damages caused by
mutinies on board the vessel if he
fails to make full use of his authority
to avoid them
Undue use of powers
Deviating from the shipping route
without sufficient cause
Non-observance of the regulations to
prevent collisions
General Rule: Captain is not personally liable
for the obligations he may have contracted
which shall devolve upon the ship agent
Exception: When the captain has expressly
bound himself personally or has signed a bill of
exchange or promissory note in his name
Case Doctrines
Proportion of Interest
Co-owners of a vessel shall be liable in
the proportion of their interest in the
common fund
This is not to say that the co-owner's
liability is limited to what he invested but
only proportionate to what he invested
Madrigal Shipping v Ogilive Where the

contract is for a definite voyage, the crew of the
ship may not be discharged (thus they are
entitled to their wages) until after the contract
shall have been performed, except by reason of
serious insubordination, robbery, theft, habitual
drunkenness or damage to the vessel or its
cargo by reason of malice or negligence.
Captains and Ship Masters

Liable for the cargo from the time it is
delivered to him at the dock or alongside
Switzerland Insurance v Ramirez The law does

not make the liability of the ship agent
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dependent upon the solvency of the shipowner.
Wing Kee v Bark When the agents buy in their
own names, but really for the account of their
principal, the seller has the option to look to
either for payment, unless 1) he trusted the
agent; or 2) by the usage and understanding of
the business the agent only is held; or 3) unless
the special circumstances of the case show that
only the agent was intended to be bound and
the seller knew it.
Inter-Orient Maritime v NLRC The captain of a
vessel is a confidential and managerial
employee. He commonly performs 3 roles: 1)
he is a general agent of the shipowner, 2) he is
commander and technical director of the vessel,
3) he is a representative of the country under
whose flag he navigates.
Compagnie de Commerce v Hamburg Amerika
Port of refuge In the absence of instructions
from the shipper whose goods are found aboard
a vessel lying in a port of refuge, whose master
has compelled to abandon the attempt to
transport the cargo, the duty clearly rests upon
the master to make such other advantageous
disposition of the property of the absent shipper
(ex: if the cargoes are perishable, they must be
sold immediately)
Abandonment Where the master relinquishes
the attempt either to carry on the goods on his
own ship or to send them to their destination in
another ship, he thereby wholly abandons any
claim for freight in respect to them.
VIII. CARRIAGE OF GOODS BY SEA ACT
Application
Transport of goods by sea
Foreign shipment (from a foreign port to
the Philippines)
Covered by a bill of lading or a similar
document of title
The term Goods do not include:
Live animals -AND-
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Cargo carried on deck as stated by

the contract of carriage
NOTE: Even in foreign transportation of goods,

the Civil Code remains the primary governing
statute and the COGSA is merely suppletory.
NOTE: COGSA may also apply to domestic
trade when agreed upon by the parties and it is
a stipulated in their contract.
Obligations of Parties
Carrier
Use due care with respect to the cargo
Provide a seaworthy vessel
Shipper
Deemed to have guaranteed to the
carrier the accuracy of the marks,
quantity, number and weight of the
shipment
Shipper shall indemnify the carrier
against all loss, damages and expenses
arising from such inaccuracies
Notice of Claim
General Rules:
1. If the damage is apparent (external),
notice must be given at the time of the
removal of the goods into the custody of
the persons entitled to receive the same.
2. If the damage is not apparent, notice
must be given within 3 days from
delivery.
Exception: Notice need not be given if the
goods have been the subject of a joint
inspection at the time of their receipt.
Giving of notice is NOT a condition
precedent in filing an action in court
Prescriptive Period
Carrier's liability is extinguished if no suit
is filed in court within 1 year
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1 year period continuous to run against
an insurer in cases of subrogation
Period is not applicable:
In cases of misdelivery or conversion
Actions for damages in due to delay
Claims for refund of shipping fees
In such cases, the Civil Code
provisions on prescription shall apply
(10 years for written contracts)
When Deemed Commenced
After delivery of goods in cases of
damaged goods
After the date when the goods should
have been delivered - in cases of loss
NOTES:
The one-year period shall run from
delivery of the last package and is not
suspended by extrajudicial demand.
(Dole Phils.,Inc. vs. Maritime Co.,148
SCRA 118)
The one-year period shall run from
delivery to the arrastre operator and not
to the consignee. (Union Carbide Phils
Inc. v Manila Railroad Co., 77 SCRA 359)
When Deemed Suspended
Actions filed in court
By express stipulation of the parties to
the contrary
Defenses Against Liability
1. If there is fraudulent misrepresentation
as to the value and nature of the goods
by the shipper
2. Damage resulted from the dangerous
nature of the goods loaded without
consent of the carrier
3. If unseaworthiness was not due to the
negligence of the carrier
4. If the deviation was to save life or
property at sea
5. Prescription
6. Fortuitous Events
Limitation of Liability
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General Rule: Shipper is allowed to recover a

maximum of USD 500.00 per package or per
freight unit (ex: per weight or volume)
Exception: When the shipper declares a higher
amount and such amount is the real value of
the goods.
NOTE: Per package means each unit shipped
by the shipper stated in the bill of lading and
not the container van housing those units.
COGSA vs. Art 366 Code of Commerce
COGSA
Code of Commerce
Applies to international
shipping
Applies to domestic
shipping
Covers maritime
transportation only
Covers land, sea and air

transportation
Notice of claim must be

written
Notice of claim may be

written or verbal
For apparent damages

notice must be given
immediately at the time
of removal of the goods
For apparent damages

claim must be made
immediately at the time
of receipt of goods
For latent damages

notice must be given
within 3 days from
delivery
For latent damages

claim must be made
within 24 hours from
receipt of goods
Notice of claim is NOT

mandatory or a condition
precedent in instituting a
court action
Notice of claim is
mandatory or a condition
precedent in instituting a
court action
Prescriptive period for

filing a case in court is 1
year from date of
delivery- COGSA
Prescriptive period is 10
years (written contract)
or 6 years (verbal
contract) Civil Code
Case Doctrines
Chua Kuy v Everrett - A mere proposal for
arbitration or the fact that negotiations have
been made for the adjustment of the
controversy between the parties does NOT
suspend the running of the prescriptive period,
unless there is an agreement to the contrary.
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Ang v American Steamship Inc. - The 1 year

period of prescription does not apply to
misdelivery cases. The applicable period is the
one provided under the Civil Code: 10 years for
breach of a written contract or 4 years for torts.
Mitsui OSK Lines v CA Deterioration of goods
due to delay in their transportation constitutes
loss or damage within the meaning
contemplated by COGSA. Thus it falls within the
1 year prescriptive period.
Tan Lao v American President Lines There is
no distinction between the damages to goods
and damages to shipper. Whatever damage or
injury is suffered by the goods while in transit
would result in the loss or damage to either the
shipper or consignee. In either case, the action
must be brought within the 1 year prescriptive
period.
Sveriges v Qua Chee Gan The 1 year
prescriptive period does not apply where the
shipper seeks to recover what it had paid the
carrier for the cargo the latter failed to load for
shipment (refund cases).
American Insurance v Maritima The
transshipment of the cargo from Manila to Cebu
was not a separate transaction from that
originally entered into by the carrier. The fact
that the transshipment was made via an interisland vessel did not operate to remove the
transaction from the operation of COGSA.
Union Carbide v Manila Railroad Co. - The term
delivery contemplated by the prescription
period of COGSA means delivery to the arrastre
operator and not delivery to the consignee. The
1 year period runs from the delivery of the
carrier to the arrastre operator. If the 1 year
period is computed to run from the delivery to
the consignee, it will generate confusion
between loss or damage sustained by the goods
while in the carrier's custody and the loss or
damage caused to the goods while in the
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[ATTY. TESORO]
arraste operator's custody.

FH Stevens v Lloyd Where an action was
commenced in the municipal court and it was
dismissed for lack of jurisdiction, the period
within which plaintiff could bring a new action in
the proper court was renewed for another year.
Rizal Surety v Macondray COGSA
contemplates not only of damage but also of
loss. If the goods were lost and no delivery was
made, then the 1 year period should be
computed from the date when the goods should
have been delivered. If the carrier arrived in
Manila on Nov 2 and left it on Nov 4, it was on
the latter date that the carrier had the last
opportunity to deliver the goods. The period of
1 year commenced to run from Nov 5. (First day
excluded; last day included Art. 13 Civil Code)
Eastern Australian v Great American Insurance
By providing that $500 is the maximum
liability, the law does not disallow an agreement
for liability at a lesser amount. Art. 1749 of the
Civil Code expressly allows the limitation of the
carrier's liability.
Mayer Steel Pipe v CA The 1 year prescriptive
period extinguishes the liability of the carrier
not the liability of the insurer. This is because
the insurer's liability is not based on the
contract of carriage but on the contract of
insurance. After the 1 year period, no suit may
be brought against the carrier either by the
shipper, consignee or the insurer. But this does
not mean that the shipper may no longer file a
claim against the insurer after such period.
Dole Philippines v Maritime Company - Written
extrajudicial demand by the creditor does not
toll the running of the 1 year prescriptive period
IX. CHARTER PARTIES
As a Contract
A contract whereby an entire ship or a
part of it is leased by the owner to a
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merchant or other person for a specified

time, or use for commercial purposes
Bareboat Charter shipowner leases the
entire vessel to the charter
Contract of Affreightment space in the
vessel is leased for a specific voyage or
period
Time Charter fixed period
Voyage Charter specific voyage
As Evidence
Order of preference as evidence
1. Charter party
Copy of the broker
Copy of the parties (as long as
forgery is not an issue)
2. Bill of Lading
3. Proofs of the parties
If the charter party is executed with the
intervention of a broker, and there is
Elements
conflict between the copies of the
1. Consent of the shipowner and charterer
contracting parties, the copy kept by the
2. Existing vessel placed at the disposition
broker in his registry shall govern.
of the charterer
The contracts shall also be admitted in

3. Freight (Consideration)
evidence even though a broker has not
4. Formalities required by law
taken part there in if the contracting
parties acknowledge their signatures to
Charter Party and Bill of Lading
their own (no allegation of forgery).
Charter party remains to be the contract
If no broker intervened, doubts shall be
between the shipowner and the charterer
resolved by what is provided for in the
Bill of lading merely operates as
bill of lading.
evidence of the receipt of goods
In the absence of a bill of lading, by
If the charter party is unsigned
proofs submitted by the parties.
(incomplete contract), the bill of lading is
deemed to be the contract in force
Obligations of the Captain
Bareboat Charter
Contract of Affreightment
Charter parties executed by the captain
Charterer becomes
Owner remains liable as
shall be valid but should he execute
liable to others caused
carrier and must answer
them in violation of the orders of the
by its negligence
for any breach of duty
ship agent or shipowner, the latter shall
The charterer provides
The shipowner retains
have a right of action against the captain
crew, food and fuel.
possession, command and
If during the voyage the vessel should be
The charterer is liable
navigation of the ship, the
rendered unseaworthy, the captain shall
as if he were the
charterer merely having
be obliged to charter another vessel at
owner, except when
use of the space in the
his expense. For this purpose, he shall
the cause arises from
vessel in return for his
look for a vessel not only in the port of
the unworthiness of
payment of the charter
the vessel.
hired.
arrival but also in other ports within a
Charterer regarded as
Charterer is not regarded
distance of 50 kilometers.
owner pro hac vice for
as owner.
If the captain fails to furnish a
the voyage
replacement vessel, the shippers, after
Owner of vessel
The vessel owner retains
demand to the captain, may charter one
relinquishes
possession, command and
and apply to the judicial authority for
possession, command
navigation of the ship
summary approval of the charter party
and navigation to
which they have made.
charterer
If the captain fails to find a replacement
Common carrier is
Common carrier is not
vessel, despite his efforts, he shall
converted to private
converted to a private
carrier.
carrier.
deposit the cargo to the shippers.
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2nd
The captain shall lose freightage and

shall indemnify the charterers if the
latter should prove that the vessel was
not in a condition to navigate at the time
of receiving the cargo.
If a declaration of war or blockage takes
place during the voyage:
The charter party shall subsist
The captain must proceed to the
nearest safe and neutral port and
request and await orders from the
shipper. Expenses incurred shall be
paid as general average.
If, by orders of the shipper, the cargo
should be discharged at the port of
arrival, freightage shall be paid in full
If the captain receives no order from
the shipper, the cargo shall be
deposited in court and subsequently
sold to pay for the freightage.
When Freightage Shall Accrue
In the absence of any stipulations in the
contract or should they be ambiguous,
the following rules shall be observed:
TRANSPORTATION LAW
[ATTY. TESORO]
common safety of the vessel and its

cargo.
2. When the cargo is lost by reason of
shipwreck, stranding or seized by pirates
or enemies.
When Cargo is Still Liable
Merchandise or cargo sold by the captain
to pay for the necessary repairs or for
urgent and unavoidable requirements,
shall pay freightage.
If the vessel or merchandise should be
recovered or salvaged, the freightage
corresponding to the distance covered by
the vessel shall be paid, without
prejudice to what may be due by reason
of average.
Merchandise which is damaged or
reduced on account of its own defects or
bad condition of the packaging, shall pay
full freightage.
General Rule: The cargo shall be liable for the

payment of the freightage expenses and duties.
The cargo stands as security or guaranty for the
payment of the cost of transportation.
Sale of the Goods

The goods loaded shall be liable for their
freightage for a period of 30 days from
the date of their delivery or deposit.
During this period, the sale of the same
may be requested, even though there be
other creditors and the case of
insolvency of the shipper or consignee
should occur. This right may not be used
if the goods, after being delivered, were
turned over to a third person for valuable
consideration.
The captain may turn over the goods to
the court for their deposit and
subsequent sale when:
The consignee should not be found.
The consignee should refuse to
receive the cargo.
The goods run the risk of
deteriorating and the expenses of
preservation and custody should be
disproportionate to the value thereof.
Exceptions:
1. When the cargo is jettisoned for the
Rights and Obligations of Owners

Maximum discrepancy in the capacity of
If Vessel has been

Chartered:
When Freightage Starts

to Run
By months or by days
From the day the loading

of the vessel has begun
For a fixed period
From the very starting

day of that period
If freightage is charged according to

weight, the payment shall be made
according to gross weight of the cargo.
Merchandise and Freightage
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the vessel between what is stated in the

ship registry and its actual capacity: 2%
Should there be several charter parties
and all of the cargo cannot be
accommodated, and none would want to
rescind the contract, preference shall be
given to the person who is first in
loading his cargo. The others shall have
preference in the order of the dates of
their charter.
Should there be no priority among the
charterers, they may load pro rata to the
amounts of weight or space they may
have engaged. The person from whom
the vessel was chartered shall be obliged
to indemnify them for the losses.
The shipowner may effect a substitution
of the vessel provided:
The substitute vessel is seaworthy
The capacity of the original vessel is
less than 3/5 full.
After 3/5 of the vessel's capacity is
loaded, there can be no substitution
without consent of the charterers or
shippers.
The shipowner shall be liable for all
losses caused by the voluntary delay of
the captain in putting to sea provided he
has been requested to put to sea at the
proper time through a notary or judicially
If there are goods placed on board the
vessel clandestinely, the captain may:
Unload the merchandise before
leaving port -OR Transport the goods and charge the
highest price which may have been
stipulated for said voyage.
Obligations of Charterers
A charterer may subcharter the whole or
a part of the vessel provided:
There is no prohibition in the first
charter (original)
The conditions of the first charter are
not changed
The price agreed upon is paid in full
A charterer who loads goods different
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[ATTY. TESORO]
from that contracted upon, without the

knowledge of the shipowner or captain,
and which results to damage due to
confiscation, embargo, detention and
other causes to the shipowner, shall be
liable to indemnify the parties injured.
Should illicit cargo be shipped by the
charterer, with the knowledge of the
shipowner or captain, said charterer
shall be jointly liable with the shipowner
for all damages caused to the other
shippers.
If the charterer, without the occurrence
of any cases of force majeure, should
wish to unload his merchandise before
arriving at the port of destination, he
shall pay full freightage, the expenses of
unloading the cargo and other damages
suffered by the other shippers.
In charters for transportation of general
freight, any of the shippers may unload
the merchandise before the beginning of
the voyage by paying one half of the
freightage, the expenses of unloading
the cargo and other damages suffered by
the other shippers.
Once the vessel has been unloaded and
the cargo has been placed at he disposal
of the consignee, the latter must
immediately pay the captain the
freightage due, and other expenses.
Charterers and shippers cannot abandon
merchandise damaged on account of its
own inherent defect or fortuitous event
for the payment of the freightage and
other expenses (NOTE: Art. 687 does
NOT refer to a consignee)
However, abandonment may be proper if
the cargo should consist of liquids and
should they have leaked out and what
remains is 25% of its contents or less.
Rescinding the Charter Party

How Charter Party is Rescinded
1. By the charterer
2. By the shipowner, ship agent or any
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person from whom the vessel is
chartered
3. By operation of law (automatic)
A. Rescission by the Charterer
1. Abandonment If before loading the
vessel he should abandon the charter, he
must pay half of the freightage.
2. Misrepresentation If there is an error
or discrepancy with the capacity of the
vessel or in the statement of the flag
under which the vessel sails, the
charterer is entitled to rescind the
charter party.
3. Delay If the vessel should not be
placed at the disposal of the charterer
within the period and manner agreed
upon.
4. Fortuitous Event If, after the vessel has
sailed, it should return to the port of
departure, on account of risk from
pirates, enemies or bad weather AND the
shippers decide to unload the cargo.
5. Emergency Repairs If a vessel should
make a port during the voyage to make
urgent repairs, and the charterers should
prefer to dispose of the merchandise.
In the second and third cases
(misrepresentation and delay in the delivery of
the vessel), the person from whom the vessel
was chartered shall be liable for the losses
suffered by the charterer.
In the fourth case (fortuitous event):
The person from whom the vessel was
chartered shall have a right to the
freightage in full.
If the charter is made by months, the
charterers shall pay full freightage for 1
month if the voyage is for a port in the
same waters (ex: within the Philippines).
2 months if the voyage is for a port in
different waters.
In the fifth case (emergency repairs):
When the delay does not exceed 30
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[ATTY. TESORO]
days, the shippers shall pay full

freightage.
Should the delay exceed 30 days, the
shippers shall only pay the freight in
proportion to the distance covered.
B. Rescission by the Shipowner or Agent
1. Delay by Charterer If, after the
termination of the extra lay days, the
charterer does not place the cargo
alongside the vessel.
2. Vessel is Sold If the vessel is sold
before the charterer has begun to load
the vessel.
Delay by Charterer the charterer must pay
half of the freightage stipulated on top of the
demurrage due.
Vessel is Sold Contemplates 2 scenarios
Should the purchaser load the vessel for
his own account the charter party is
rescinded but the charterer is entitled to
damages.
Should the purchaser NOT load the
vessel for his own account The charter
party shall be respected.
In both cases, the vendor shall indemnify
the charterer for any loss suffered and
also the purchaser if the vendor fails to
inform him of the existing charter party.
C. Automatic Rescission
The charter party is deemed rescinded and all
obligations extinguished if any of the cases
occur before the vessel departs from port:
1. Declaration of war or interdiction of
commerce with the power to whose ports
the vessel was to make its voyage
2. Blockade of the port of destination, or
the outbreak of an epidemic after the
contract was executed.
3. Prohibition to receive at said port the
merchandise
4. Indefinite detention, by reason of an
embargo of the vessel by order of the
government.
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5. Impossibility of the vessel to navigate
without fault of the captain or ship agent
In these cases, the cost of unloading shall be
for the account of the charterer.
Case Doctrines
Guzman v William X An agreement by which a
party binds itself to tow another vessel for a
certain consideration is not a charter party but a
contract for the hire of services, and is subject
to the provisions of the Civil Code.
Puromines v CA A contract of affreightment is
one where the shipowner leases part or all of
the vessel's space to haul good for others. The
shipowner retains possession, command and
navigation of the ship, the charterer merely
having use of the space in the vessel.
Responsibilities of ownership rests on the
shipowner and the charterer is usually free from
liability to third persons in respect of the ship.
International Harvester v Hamburg-American
The outbreak of war between two states does
not abrogate a contract between a subject of
one of the belligerents and the subject of a
neutral state. If the carrier's destination is an
enemy port but it carriers the cargo of a neutral
state, the carrier is absolved from its obligation
from transporting the cargo, however it is liable
for the cost of forwarding the cargo by another
carrier, the full freight having received at the
commencement of the voyage.
NOTE: The prepayment of the freight seems to
qualify the liability of the carrier to forward the
cargo to the port of destination.
Marimperio v CA In a contract of sub-lease,
the personality of the lessee does not disappear
and he does not transmit absolutely his rights
and obligations to the sub-lessee. The sublessee generally does not have any direct action
against the owner of the thing leased as lessor
to require the compliance of the obligations
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[ATTY. TESORO]
contracted with the plaintiff as lessee.

Market Developers Inc. v IAC a charter party
may be executed orally, in which case the terms
thereof, not having been reduced to writing,
shall be those embodied in the bill of lading.
National Union v Stolt-Nielsen In a charter
party, a bill of lading operates as a receipt for
the goods and as document of title, but not as
varying the contract between the charterer and
the shipowner.
Ouano v CA
There is no subchartering where the
Charter party allowed cargo of another
to be shipped on the chartered vessel
subject to the Charter party
management because possession,
operation and management of the vessel
remained with the charterer.
In a bareboat charter, the shipowner has
NO LIEN on the cargo because the
charterer is deemed owner pro hac vice
X. VESSELS AND SHIP ACQUISITION
Definition
Any barge, lighter, bulk carrier . fishing
boat or any other artificial contrivance
utilizing any source of motive power,
designed, used or capable of being used
as a means of transportation (PD 474)
artificial contrivance - man-made
As long as human work is applied on the
thing designed to be used as a means of
transportation, it is a vessel
Ordinary log made to float on a river
not a vessel
Log hollowed out for passenger
seating a vessel
Ownership and Acquisition
Vessels are considered personal property
Mortgage of a vessel is subject to the
chattel mortgage law, but registry is to
be made with the Maritime Industry
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Authority (MARINA) and not in the local
register of deeds.
Acquisition may be through sale,
donation or prescription.
Deeds of sale of vessels must also be
registered with the MARINA.
Prescription
Requisites:
1. Person who claims ownership must
be in continuous possession
2. Possession must be for 3 years
3. Possession is in good faith
A possessor is in good faith if he is not
aware of the flaw or defect in his title.
If the possessor is in bad faith, the
acquisitive prescription is extraordinary
and there must be an uninterrupted
possession for 10 years.
A captain cannot acquire by prescription
the ship which he is in command.
Co-ownership of a Vessel
All part owners shall be liable in
proportion to their respective ownership
for expenses:
of repairs to the vessel
maintenance, equipment and
provisioning of the vessel
other expenses incurred by virtue of
a resolution of the majority,
Resolutions of the majority relating to
the sale of the vessel shall be binding on
the minority.
Part owners of vessels shall enjoy the
right of preemption and redemption in
sales made to stranger
Sale of Vessels
Voluntary Sale
The rigging, tackle, stores and engine of
the vessel shall always be understood as
included in the sale of the vessel if they
are owned by the vendor at the time of
the sale.
Voluntary sale of the vessel terminates
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TRANSPORTATION LAW
[ATTY. TESORO]
all contracts between the ship agent and

the captain.
Arms, munitions of war, provisions and
fuel shall not be included in the sale.
Vendor shall be under the obligation to
deliver to the purchaser a certificate of
the record of the vessel in the registry
up to the date of the sale
If the sale takes place:
Vessel
While on voyage
Freightage
Payment of Crew
Belongs to
buyer
Obligation of
buyer
After arrival at
Belongs to
port of destination seller
Obligation of
seller
Involuntary Sale
When the vessel is damaged beyond
repair and is rendered useless
Rules of Public Auction:
Appraisal of the vessel
Notice to persons interested to take
part in the auction
Publication and posting of the order
or decree of the public auction
Publication must be repeated every
10 days. Period for the auction shall
not be less than 20 days.
If public auction should take place in
a foreign port, the special provisions
governing such cases shall be
observed.
Sale in a Foreign Port
Bill of sale shall be executed before the
consul of the Republic of the Philippines
of the port where the vessel terminates
her voyage.
For the bill of sale to be binding to third
persons, it must be recorded in the
registry of the consulate.
The consulate shall immediately forward
a true copy of the bill of sale to the
registry of vessels of the port where said
vessel is recorded and registered.
Right of Redemption
Sources:
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Part owners shall enjoy the right of
preemption and the right of redemption
in the sales made to a stranger.
Redemption to buy back from the
vendee what was sold to him.
Preemption right of purchasing before
others. (like a right of first refusal)
How to exercise right:
1. Right given only to part owners of
the vessel sold
2. Vendee is a stranger
3. Exercise right within 9 days following
the record of the sale in the registry
4. Buyer must deliver the price at once
Civil Code provision (Art. 1620):
A co-owner may exercise the right of
redemption in case the shares of any
or all of the co-owners are sold to a
third person.
If the price for alienation is grossly
excessive, the redemptioner shall pay
only a reasonable one.
Should 2 or more co-owners desire to
exercise the right of redemption,
they may only do so in proportion to
the share they may respectively have
in the owned in common
Case Doctrines
Overseas Factors v South Seas Shipping The
fact that the freight was already included in the
purchase price of the goods paid by the
purchaser did not free the cargo from the
carrier's lien if the freight has not yet been fully
prepaid by the charterer.
Plumelet v Morales Shipping Freightage may
be claimed by the shipowner direct from the
shipper. The shipowner may retain the cargo at
the port of destination until freightage is paid.
Rubiso v Rivera The requisite of registration in
the registry of the purchase of a vessel is
necessary and indispensable in order that the
purchaser's rights may be maintained against a
claim filed by third persons.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Atienza v CA No authority to operate a vessel

can be granted independently of a certificate of
ownership and vessel registry. The denial or
revocation of the a shipowner's authority to
operate a vessel is a logical consequence of the
cancellation of the certificates of ownership and
vessel registry.
XI. SHIP MORTGAGE DECREE
Ship Mortgage Decree (PD 1521)
The purposes are to accelerate the
growth and development of the shipping
industry in the Philippines and to finance
the acquisition, purchase, construction or
initial operation of vessels.
Who may constitute a ship mortgage:
Filipino Citizens
Partnerships or corporations at least
60% Filipino-owned
Mortgage may be made with any bank or
other financial institution, whether
foreign or domestic.
No mortgage shall be valid against any
person other than the mortgagor and a
person having actual notice thereof, until
such mortgage is recorded in the
Maritime Industry Authority (MARINA).
The MARINA replaces the Philippine
Coast Guard as the agency administering
the annotation and/or cancellation of any
mortgage over vessels.
Preferred Mortgages
The ship mortgage must be recorded or
registered, otherwise the same is void
except as to the parties or persons with
actual notice thereof.
Formal Requisites:
1. The mortgage is recorded in MARINA
2. Affidavit of good faith (that the
mortgage is made in good faith and
without any design to defraud any
existing or future creditor)
3. The mortgage does NOT stipulate
that the mortgagee waives the
Sources:
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preferred status thereof.
4. The mortgage includes the whole of
any vessel of domestic ownership
A mortgage which includes property
other than a vessel shall not be held a
preferred mortgage unless the mortgage
provides for a separate discharge of such
property.
Any preferred mortgage lien in case of a
foreign vessel shall be subordinate to
maritime liens for repairs, supplies,
towage or other necessaries performed
or supplied in the Philippines.
2nd
Maritime Lien
TRANSPORTATION LAW
[ATTY. TESORO]
Preferred Mortgage
Special property right

given by law as security
Must be registered to be
valid and effective
In certain instances,
some liens are superior
over the preferred
mortgage
Shall have priority over

all other claims except for
the 7 liens mentioned in
sec. 17 of PD 1521.
May be waived anytime

by agreement.
The mortgage does NOT

stipulate that the
mortgagee waives the
preferred status thereof.
Foreclosure Proceedings
1. Jurisdiction of Court
The Regional Trial Court has
jurisdiction in all actions in admiralty
and maritime jurisdiction where the
demand or claim exceeds P300,000
or, in Metro Manila, where such
demand or claim exceeds P400,000.
(Sec 19(3) B.P. 129)
2. Filing of Suit
Notice of action shall be given to the
master or caretaker of the vessel
AND the person who has recorded a
notice of claim of an undischarged
lien upon the vessel.
For judicial foreclosures, Rule 68 of

Maritime Lien
the Rules of Court shall apply.
It is a privileged claim on a vessel for
3.
Arrest
of Vessel
some service rendered to it to facilitate
Applicant
may apply ex-parte for an
its use in navigation.
order
for
the
arrest of the mortgaged
It is a special property right in a ship
vessels.
given to a creditor by law as a security
Applicant files a bond not exceeding
for a debt or a claim with a right to have
applicant's claim.
the ship sold and debt paid out of the
Adverse party may file a counter
proceeds.
bond for the discharge of the order of
The transfer of ownership over the vessel
arrest for double the value of the
does NOT extinguish the lien.
claim.
Enforcement of the maritime lien is in
Bond is good for only 1 year

the nature and character of a proceeding
4.
Sale
of the vessel
quasi in rem.
May
be judicial or extrajudicial
Ranking of preference:
Vessel
shall be sold free from all
1. Preferred Claims
pre-existing
claims
2. Preferred Mortgage
But
the
mortgagee
may ask the
3. Other Claims
Preferred Claims
The following claims are forms of
maritime liens. They are superior over
preferred mortgages.
Their priority is in the order stated:
1. Fees and taxes due to the Government
2. Crew's wages
3. General Average
4. Salvage
5. Maritime liens arising prior in time of
recording of the preferred mortgage
6. Damages arising from tort
7. Preferred mortgage registered prior in
time
Sources:
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5.
court to require the buyer a new

mortgage on the vessel to cover
the balance of the original
mortgage
If such new mortgage is given,
the mortgagee shall not be paid
from the proceeds of the sale - he
will rely on the new mortgage.
Who may bid
Citizens of the Philippines
Corporations 60% Filipino-owned
A foreign mortgagee or foreign
national whose country:
Has diplomatic relations with
the Philippines
Grants reciprocal rights to
Filipino citizens
Distribution of proceeds of sale
The preferred maritime lien shall have
priority over the preferred mortgage
Next, pay the preferred mortgage
Finally, pay the other creditors. Proceeds
shall be divided pro rata in case it is
insufficient.
Unsatisfied credits may be enforced by
personal action against the debtor.
Prescription
As provided by the Civil Code:
Mortgage Action 10 years (Art.1142)
Action upon an obligation created by law
10 years (Art.1144)
Maritime Torts 4 years (Art.1146)
Case Doctrines
Crescent Petroleum v M/V Lok Maheshwari
Whether or not a contract is maritime
depends not on the place where the
contract was made but on the subject
matter of the contract, making the true
criterion a maritime service or a
maritime transaction. (American Rule)
PD 1521 was enacted primarily to
protect Filipino suppliers and was not
intended to create a lien from a contract
of supplies between foreign entities
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
delivered in a foreign port.

International Harvester v Aragon
Admiralty has jurisdiction over all
maritime contracts, in whatever form,
wherever they were executed or are to
be performed, but not over non-maritime
contracts.
Admiralty has jurisdiction of a
proceeding in rem or in personam for the
breach of contract of affreightment,
whether evidenced by a bill of lading or a
charter party.
Philippine Refining Co. v Jarque The mere
mortgage of a ship without reference to
navigation or perils of the sea does NOT confer
admiralty jurisdiction. Failure to conform to the
requisites of a mortgage of a vessel makes the
same like any other chattel mortgage as to its
requisites and validity. Absent any affidavit of
good faith renders the mortgage unenforceable
against third persons.
XII. LOANS ON BOTTOMRY AND
RESPONDENTIA
Definitions and Concept
Loan on Bottomry
A loan guaranteed by the vessel
itself, repayable upon the arrival at
destination.
May be contracted by the shipowner
or ship agent. Outside of the
residence of the owners - the
captain.
As a general rule, the captain may
NOT enter into a loan on bottomry.
But if it is necessary for him to do so,
he must apply for one before:
The judicial authority of the port,
if in the Philippines
The Philippine consul, if in a
foreign country
If there be none, to any local
authority
Loan on Respondentia
Sources:
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2nd
TRANSPORTATION LAW
[ATTY. TESORO]
2. Loss due to the barratry on the part of

Where the goods are hypothecated
the captain;
as security for a loan, repayable upon
3. Loss due to the fault or malice of the
arrival at destination.
borrower;
May be entered into only by the
4. The vessel was engaged in contraband;
owner of the goods or cargo.
5. The cargo loaded on the vessel be
In both forms of loans, there is a marine
different in from that stated in the
risk upon which the loan is predicated
contract. Exception to this exception:
and payment of the loan is conditioned
Unless this change should have been
only upon the safe arrival of the security
made by reason of force majeure.
at the point of destination.
If the security, whether it may be the
Distinguished from Simple Loan
ship or the cargo, should be lost due to
perils of the sea, the lender (bottomry or
Bottomry/Respondentia
Simple Loan
respondentia) shall lose the principal of
Must have a collateral
May or may not have a
the loan (but not the interest or
collateral
premium).
Must be a vessel or cargo Collateral may be real or

subject to maritime risks personal property
Characteristics
Repayment is dependent Absolutely repayable
1. Shipowner borrows money for the use,
on the safe arrival of the
equipment or repair of the vessel.
collateral of the loan
2. For a definite period or term and with
extraordinary interest called premium.
Not subject to usury law Subject to usury law
3. Secured by pledge of the vessel or a
Must be in writing
May be verbal or written
portion thereof in case of a loan on
Must be recorded in the
Need not be registered
bottomry or pledge of goods in case of a
registry
of
vessels
except to bind 3rd parties
loan on respondentia.
4. Loan repayment is conditioned on the
Loss of the collateral
Loss of collateral does
safe arrival of the vessel for bottomry or
extinguishes obligation
not extinguish obligation
safe arrival of the goods for respondentia The last lender is a
The first lender is a
and obligation to repay is extinguished if
preferred creditor
preferred creditor
the pledged goods are lost.
5. Obligation to pay is extinguished if
When Contract is Considered Simple Loan
vessel is lost due to specified marine
1. If the lender loaned an amount larger
perils in the course of the voyage or
than the value of the object due to
within limited time. (the loan may cover
fraudulent means employed by the
a only specific period of the voyage and
borrower, the loan on the amount in
not necessarily the entire voyage)
excess of the value of the object as
appraised by experts is a simple loan.
General Rule: The obligation of the borrower
2. If the full amount of the loan contracted
to pay the loan is extinguished if the goods
in order to load the vessel should not be
given as security are absolutely lost by reason
used for the cargo, the balance shall be
of an accident of the sea, during the voyage
returned (the balance is treated as
designated, and if it is proven that the goods
simple loan).
were on board.
3. If the goods on which money is taken
not be subjected to maritime risk, the
Exceptions:
contract shall be considered a simple
1. Loss due to inherent defect of the thing;
Sources:
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loan, with the obligation on the part of
the borrower to return the principal and
interest at the legal rate, if that agreed
upon should not be lower.
Form of the Loans
May be executed by means of a:
1. Public Instrument
2. Policy signed by the contracting
parties and the broker taking part
therein
3. Private Instrument
The instrument shall be recorded in the
registry of vessels. If there is no registry,
the obligation is still valid but the loan
will not have preference over other
credits.
Contracts not reduced in writing shall not
be the basis of a judicial action.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Bottomry/Respondentia
1. The insurable interest of the owner of a
ship hypothecated by bottomry is only
the excess of the value over the amount
secured by bottomry. (Sec. 101,
Insurance Code)
2. The value of what may be saved in case
of shipwreck shall be divided between
the lender and the insurer in proportion
to the interest of each one. (Art. 735)
NOTE: If a vessel is hypothecated by bottomry
only the excess is insurable, since a loan on
bottomry partakes of the nature likewise of an
insurance coverage to the extent of the loan
accommodation. The same rule would apply to
the hypothecation of the cargo by respondentia.
(Pandect of Commercial Law and Jurisprudence,
Justice Jose Vitug, 1997 ed.)
XIII. DEMURRAGE
Preference and Payment
Loans made during the voyage shall
have preference over those made before Definitions
Demurrage
the clearing of the vessel, and they shall
Amount stipulated in the charter
be graduated by the inverse order of
their dates.
party to be paid to the shipowner for
any delay in the sailing of his ship.
Loans for the last voyage shall have
preference over prior ones.
In the form of a penalty or liquidated
Should several loans have been made at
damages for delays.
the same port of arrival under stress and
Applicable to voyage charter parties
for the same purpose, all of them shall
not for time or bareboat charter
be paid pro rata.
parties.
In case of shipwreck, the amount liable
Lay time
for the payment of the loan shall be
Time for the loading or unloading of
reduced to the proceeds of the goods
the cargo. Period must be stipulated.
saved, after deducting the cost of the
During lay time, the charterer or
salvage. If the loan should be on the
carrier is not charged anything.
vessel or any of its parts, the freightage
earned during the voyage, for which the
Lay Time
loan was contracted, shall also be liable
for the payment of the loan.
How to Determine Lay Time
Should there be any delay in the
Count the number of working days
repayment of the principal and premiums
Holidays and Sundays are not covered
of the loan, only the principal shall bear
Customs of the port are observed (ex:
legal interest.
holidays and rest days of the port)
Consider also the weather working
Concurrence of Marine Insurance and Loan on
days - there is work when the weather
Sources:
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permits it (work stops during a storm)
If lay time is not specified or there is no
demurrage clause, damages for
detention instead of liquidated damages
are claimed.
When Deemed Commenced (Requisites)
1. Ship is an arrived ship
2. Readiness to load or unload (a factual
issue)
3. Notice of such readiness
Meaning of Arrived Ship
Location of the ship before it is
considered to have arrived as defined
by the charter party. May either be:
Berth Charter Party
Port Charter Party
Berth Charter Party
When the ship arrives at a
designated parking space in port
Port Charter Party
When the ship arrives within the
vicinity or area of the port
Depends on the geographical
boundaries of the port
Near clause the ship gets as close as
possible to the port to be considered as
an arrived ship.
Exceptions to Lay Time
When lay time is not counted for
demurrage computation:
1. Delay brought about by the shipowner's
fault (ex: failure to maintain the ship)
2. Strike of port workers
3. Acts of Government
4. Other exceptions in the charterer party
extending lay time
If the Loading or Unloading is Completed Before
Expiration of Lay Time
Charterer has to return the ship to the
shipowner regardless of the lay time
remaining.
Bonus (dispatch money)
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Case Doctrines
Plumelet v Morales Shipping Demurrage is not
chargeable to the ship agent if he had not
agreed to pay for it.
O'Farrel v Manila Electric Co. The delay of
taking the cargo at the port of origin, resulting
from the failure of the supplier to make prompt
delivery was not imputable to the buyer (buyer
is the shipper and consignee at the same time
in this case) and the latter is not liable for
demurrage incident to such delay.
XIV. ARRASTRE
Definition
The hauling of cargo on the wharf or
between the establishment of the
consignee or shipper and the ship's
tackle.
Stevedoring on the other hand, involves
the loading or unloading of cargo on or
from a vessel on port. It consists of the
handling of cargo from the hold of the
ship to the dock.
Responsibility of the arrastre operator
begins from the time the merchandise
are place upon the wharves or piers or
delivered along sides of ships and lasts
until the delivery of the cargo to the
consignee.
Functions include:
1. Receive, handle, care for and deliver
all merchandise imported and
exported, upon or passing over
Government-owned wharves and
piers in the port.
2. Record or check all merchandise
which may be delivered to said port
at ship side and in general.
3. Furnish light and water services and
other incidental services in order to
undertake its arrastre service.
Nature of Operations
Nature of the arrastre operator's services
Sources:
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2nd
TRANSPORTATION LAW
[ATTY. TESORO]
are NOT maritime. The services are not

Failure to file the claim within the
related to the trade and business of
prescribed period relieves the arrastre
navigation or to the use or operation of
operator of any liability.
vessels.
The reckoning period has been
Relationship between its clients are
interpreted by the courts liberally to
purely contractual in nature.
promote equity, justice and fairness.
The terms and conditions of prescriptive
The management contract usually states
periods and limitation of liabilities are
that the reckoning period for the filing of
governed by the parties' contractual
notice will run from the moment the
agreement usually called a
shipment is discharged from the vessel.
management contract
However, the Court has interpreted this
Relationship between the arrastre
period, instead, to run from the date the
operator and a consignee is akin to that
consignee learns of the loss, damage or
of a warehouseman and a depositor.
misdelivery of the goods.
A management contract is also binding
If the loss or damage is apparent, the
on the consignee since he benefits from
prescriptive period runs from the
the services of the arrastre operator,
moment the consignee accepts the
making the contract a sort of a
goods.
stipulation pour autrui.
Degree of diligence required of an
Provisional Claims
This remedy is available to the consignee
arrastre operator is the same as that
required of a common carrier and a
A provisional claim is one which
warehouseman (extraordinary diligence).
sufficiently identifies the goods being
referred to by the consignee in the claim
Limitation of Liabilities
but the value of the said goods are not
specified therein.
General Rule: The arrastre operator and the
A provisional claim is sufficient as long
customs broker are NOT solidarily liable with the
as it describes the goods sufficiently to
carrier fore the damages sustained by the
permit its identification by the arrastre
cargo.
operator and the determination by the
latter of the facts relevant thereto.
Exception: When there is sufficient evidence
Filing a provisional claim is substantial
that the shipment sustained damage while in
compliance with the rule of filing a notice
the successive possession of the said parties.
of loss or damage, thus suspending the
prescriptive period.
Prescriptive Period
Rules on Provisional Claims (Malayan
There is a stipulated period where the
Insurance v Manila Railroad):
consignee may file a notice of loss or
A provisional claim filed before the
damage to the arrastre operator
goods were discharged from the
usually 15 days. (but length of period is
carrying vessel is not the claim
still dependent on what the parties
contemplated in the management
agreed on in the management contract)
contract (which states that the claim
The notice of loss or damage is a
must be filed after discharge of
condition precedent to holding the
cargo) since the same is premature
arrastre operator liable or to filing a
and speculative.
court action (unless the contrary is
A provisional claim filed after the
stipulated in the management contract)
discharge from the carrying vessel
Sources:
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and within the 15-day prescriptive
period is a sufficient compliance with
the proviso therein.
Limitation on the Value of the Goods
General Rule: The arrastre operator may fix a
limit on the amount of liability on the
management contract.
Exception: When the consignee declares a
higher value for the cargo, said value will be
followed.
The limitation on the operator's liability
does NOT apply if the value of the cargo
is communicated to the operator before
the discharge of the cargoes.
The arrastre operator cannot be made
liable for the full value of the goods
where the consignee has paid the
arrastre charges only on a basis much
lower than the true value of the goods.
(Asian Terminals v Daehan Insurance)
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
The PPA has valid authority to charge a

reasonable rate for arrastre and
stevedoring services contracted out to
private operators.
When the PPA enters into a management
contract, it only performs a proprietary
function, thus judicial notice is
inapplicable.
Case Doctrines
Chiok Ho v Compania Maritima It is not
enough that the consignee be notified of the
discharge of the shipment in order that the 15day prescriptive period in filing a claim may be
applicable. It is equally important to indicate the
date when the shipment was actually delivered
to the consignee in order that he may be given
the chance to discover if there is something
missing or lost in the shipment.
Summa Insurance v CA A management

contract, which is a sort of stipulation pour
autrui is also binding on the consignee because
it is incorporated in the gate pass and delivery
Burden of Proof
receipt which must be presented by the
In a claim for loss, the burden of proof to consignee before delivery can be effected to it.
Thus, the insurer, as successor-in-interest of the
show compliance with the obligation to
consignee, is likewise bound by the
deliver the goods to the appropriate
management contract.
party devolves upon the arrastre
operator.
The arrastre operator must do more than American Insurance v Manila Port Services
merely show the possibility of that some The 15-day period should be reckoned from:
The date the consignee or claimant
other party could be responsible for the
learns of the loss or damage -ORloss or the damage.
The date when the exercise of due
It must also prove that it exercised due
diligence information regarding the loss
care in the handling of the goods.
or damage should have been obtained
(ex: notice through the consignee's
Regulatory Agency
broker is notice to the consignee)
The PPA is a government-owned and
controlled corporation in charge of
MA-AO Sugar Central v Manila Port Service
administering the ports in the country.
Meaning of discharge of last package in
The Philippine Ports Authority (PPA) has
counting the 15-day period If 40 of the 44
the power to revoke the temporary
cartons composing the shipment were
permits of arrastre operators, assuming
the existence of valid temporary permits, discharged on June 24, and 4 additional cartons
and take over the operations of the port. were discharged on July 10 of the same year,
Sources:
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the computation of the 15-day period must start
NOT from June 24 but from July 11, the day
following the event.
New Zealand Insurance v Navarro A request
for a bad order examination by the consignee
operates as a formal claim for loss or damages
since the arrastre operator was able to verify
and ascertain not only the existence of its
liability but also the exact amount thereof.
Asian Terminals v Malayan Insurance
Presentation in evidence of the marine
insurance policy is not indispensable before the
insurer may recover from the common carrier.
The subrogation receipt, by itself, is sufficient to
establish the relationship between the insurer
and the assured shipper and also the amount
paid to settle the insurance claim.
XV. CAPTAINS AND CREWS OF VESSELS
Captains and Masters of Vessels
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
to the port of destination in accordance

with the ship agent's instructions.
3. Discipline the crew members; hold
preliminary investigation on the crimes
committed on board the vessel on the
high seas and turn over the suspects to
the authorities at the first port touched.
4. Make contracts for the charter of the
vessel in the absence of the ship agent
or of its consignee, acting in accordance
with the instructions received from the
shipowner.
5. To make, in similar urgent cases and on
a voyage for the repairs to the hull,
engines and equipment of the vessel
which are absolutely necessary in order
for the vessel to continue and conclude
her voyage. If the vessel should arrive at
a point where there is a consignee of the
vessel, the captain shall act in
concurrence of the latter.
When the captain has no funds and does not
expect to receive any from the ship agent, he
shall procure the same in the successive order:
Qualifications
Must be Filipinos, having legal capacity
1. Request funds of the consignees of the
to bind themselves in accordance with
vessel or the correspondents of the ship
this code (Code of Commerce).
agent.
Must prove that they have the skill,
2. Applying to the consignees of the cargo.
capacity and qualifications required to
3. Drawing on the ship agent.
command the vessel as established by
4. Borrowing the amount by means of
maritime laws, ordinances or regulations.
bottomry loan.
If the owner of a vessel desires to be the
5. Sell a sufficient amount of cargo to cover
captain, but does not have the legal
the necessary repairs and expenses.
qualifications, he shall limit himself to
the financial administration of the vessel.
In case of applying for bottomry loan or the sale
He shall entrust the vessel's navigation
of the cargo, the captain must apply, by
to a qualified person.
presenting the certificate of registry and the
instruments proving the obligation contracted,
Inherent Powers
to the following:
1. Appoint the crew in the absence of the
Judicial authority of the port, if in the
ship agent; Propose said crew, should
Republic of the Philippines
there be a ship agent present. But the
Philippine consul, if in a foreign port

ship agent cannot employ any crew
The local authority, in the absence of the
member against the express refusal of
the captain.
2 officials mentioned above.
2. Command the crew and direct the vessel
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2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Inherent Duties (Art. 612 Code of Commerce)

substituted by another person without
Have the following documents on board:
the consent of the ship agent. Should he
do so, he shall be liable for the acts of
Roll of persons who make the crew
the substitute. The captain and the
Inventory of the hull, engine and
substitute may both be discharged by
equipment of the vessel
the ship agent.
Contracts entered with the crew
If the provisions and fuel of the vessel
List of passengers
are consumed before arriving at the port
Health certificate
of destination, the captain shall decide,
Certificate of registry
with the consent of the officers of the
Charters or their authenticated copies
same, to make the nearest port to get a
Invoices or manifest of the cargo
supply of either; but if there are persons
Copy of the Code of Commerce
on board who have provisions of their
Have the following record books:
own, he may compel them to turn said
Log book to record the conditions
provisions over for the common
of the vessel and the weather
consumption of all persons of board,
Accounting book to record the
paying the price thereof immediately, or,
amounts collected and paid for the
at the least, at the first port reached.
account of the vessel
The captain may NOT contract loans on
Freight book to record the entry
respondentia secured by cargo; any
and exit of all the goods, stating the
contract shall be void (NOTE: but the
names of the shippers, consignees
captain MAY contract loans on bottomry
and the ports of loading and
secured by the vessel)
unloading
Should the captain contract a loan on

Conduct an examination of the vessel to
bottomry, he cannot borrow money for
ensure it is seaworthy.
his own transactions, except, on the
To give an account to the ship agent
portion of the vessel which he may own,
from the port where the vessel arrives
provided:
notify the ship agent of the names of the
No money has been previously
shippers, freightage earned, amounts
borrowed on the whole vessel
borrowed on bottomry loan, etc.
There does not exist any other kind

To remain on board in case of danger to
of lien or obligation on the vessel.
the vessel, until all hope to save her is
lost (the captain goes down with the
Pirates and Perils of the Sea
ship)
If the captain shall encounter pirates or
men of war against his flag, when on
Obligations and Restrictions
voyage, he shall be obliged to go to the
A captain who navigates for freight
nearest neutral port, inform the ship
cannot make any separate transaction
agent or shippers and wait an occasion
for his own account. Should he do so,
to sail under convoy or until the danger
the profit will belong to the other
is over.
persons in interest, and the losses shall
Should he be attacked by pirates and
be for the captain's exclusive account.
after having tried to avoid the encounter
A captain who fails to make the voyage
and should the cargo be forcibly taken
shall indemnify for all the losses his
away from him, he shall make an entry
action may cause, except if he is
in his freight book and prove the facts
prevented by fortuitous event.
before the competent authority at the
A captain may not have himself
Sources:
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2nd
TRANSPORTATION LAW
[ATTY. TESORO]
first port he touches. After the force

or offer suggestions to the pilot.
majeure has been proven, he shall be
A pilot is personally liable for damages
exempted from any liability
caused by his own negligence or default
A captain whose vessel has gone through
to the owners of the vessel, and to third
a hurricane or who believes that the
parties for damages sustained in
cargo has suffered damages or averages,
collisions. The shipowner is only exempt
shall make a protest before the
from liability for the negligence of the
competent authority at the first port he
pilot if the latter is actually in charge and
touches within 24 hours following his
solely in fault.
arrival. He shall ratify his protest, within
the same period, with the proof of the
Officers and Crews of Vessels
facts, it not being permitted to open the
hatches [of the vessel] until this has
Sailing Mate
been done.
The second chief of the vessel
If the vessel has been wrecked, the
Shall take the place of the captain in
captain shall follow the same procedure
case of absence, sickness or death,
on protest and he shall appear before
except, when the ship agent orders
the nearest authority and make a sworn
otherwise.
statement of the facts.
In case of disagreement with the captain
as to the navigation or management of
Pilots in Maritime Law
the vessel, he shall make the proper
A pilot is a person duly qualified and
protest in the logbook.
licensed to conduct a vessel into or out
The entry must be signed by him and
of ports, or in certain waters.
by another one of the officers
Pilots include both:
He shall obey the captain, who shall
Those whose duty is to guide vessels
be the only person liable for the
into or out of ports, or in particular
consequences of his order.
waters -AND The protest serves as evidence to
Those entrusted with the navigation
exempt the sailing mate from any
of vessels on the high seas.
liability arising from the orders of the
Pilots are responsible for a full
captain.
knowledge of the channel and of the
navigation only so far as they can
Sailors
accomplish it through the officers and
The captain must maintain a crew, at
crew. They cannot be held responsible
least 80% of which, are Filipino sailors.
for damage when the evidence shows
In foreign ports, where the captain could
that the officers and crew of the ship
not find a sufficient number of Filipino
failed to obey their orders.
sailors, he may make up the crew with
A pilot is in sole command of the ship
foreigners, with the consent of the
and supersedes the master of the vessel
consul of marine responsibilities.
for the time being. He becomes master
A sailor who has been contracted to
pro hac vice of a vessel piloted by him.
serve on a vessel cannot rescind his
But the master of the ship does not
contract nor fail to comply therewith
surrender his vessel to the pilot and the
except by reason of a legitimate
pilot is not the master the master is
impediment which may have occurred to
not wholly absolved from his duties while
him.
a pilot is on board, and may advise with
A sailor cannot pass from the service of
Sources:
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2nd
one vessel to another without obtaining

the written consent of the captain of the
vessel in which he may be.
Should he violate the above-mentioned
rule, the second contract shall be void
and he shall lose the wages earned on
his first contract.
The captain who entered into the second
contract with the erring sailor shall also
be personally liable to the captain of the
vessel to which the sailor first belonged
for that part of the indemnity, which the
sailor could not pay.
The captain cannot discharge a sailor
during the time of his contract except for
sufficient cause such as:
Perpetration of a crime on board the
vessel
Repeated offenses of insubordination
Incapacity and repeated negligence
Habitual drunkenness
Any occurrence which incapacitates
the sailor to carry out his work
except for those provided for in Art.
644 (Sickness of the sailor)
Desertion
Revocation of Voyage and Crew Wages
When the voyage is revoked by the will
of the ship agent or the charterers, the
crew shall be entitled to wages
depending on the scenario:
Revocation by Will
Amount of Wages
Before vessel departs

port
1 month's salary
Fixed wage for the

voyage and the duration
of the revoked voyage is
approximately 1 month
15 days, discounting in
all cases the sums
advanced
After the vessel has put

to sea
Saliors engaged for fixed

wages receive entire
amount
Sailors engaged for
monthly wages receive
entire amount
TRANSPORTATION LAW
[ATTY. TESORO]
Revocation by the ship

agent or charterer by
giving a different
destination other than
what was agreed upon
AND the crew members
disagree thereto
Half of the amount fixed

in the first case
(revocation before vessel
departs port) - half of 1
month's salary
Reevocation by a change
in destination AND the
crew members accepts
the changes
If the change gives rise

to a longer voyage
salary shall increase
If the change gives rise
to a shorter voyage NO
reduction of wages
If the revocation should arise from a just

cause independent of the will of the ship
agent or charterers, AND the vessel has
not left the port, the crew shall be
entitled to collect wages earned only up
to the day on which the revocation took
place.
Just causes for revocation of voyage:
Declaration of war or interdiction of
commerce with the power to whose
territory the vessel was bound
Blockade at the port of destination
Outbreak of an epidemic after the
agreement
Prohibition to receive in said port the
goods which make up the cargo of
the vessel
Detention or embargo of the same by
order of the government, or for any
other reason independent of the will
of the ship agent
In ability of the vessel to navigate
Revocation by Just Cause
Declaration of war,
prohibition to receive
goods, blockade or
outbreak of an epidemic
Amount of Wages
Sailors are paid according
to the time they may
have served thereon if
the voyage ends
If the voyage is to be
continued, the captain or
crew may mutually
demand the enforcement
of the contract
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Detention or embargo
2nd
Crew paid monthly they
shall continue to receive
half of the wages
If detention exceeds 3
months contract shall
be rescinded and the
crew shall be paid what
they should have earned
according to the contract
Fixed wage for the
voyage the contract
must be complied within
the terms agreed upon
Inability of the vessel to

navigate
The crew shall not have

any other right than to be
entitled to recover the
wages earned
The captain shall
indemnify the crew for
the losses if the vessel's
inability is caused by his
negligence or lack of skill
If the vessel and her cargo should be

totally lost by reason of capture or
wreck, all rights of the crew to demand
any wages shall be extinguished, as well
as that of the ship agent for the recovery
of the advances made.
If a portion of the vessel or cargo should
be saved, the crew engaged on wages,
including the captain, shall retain their
rights on the salvage. Sailors who are
engaged on shares shall not have any
right to the salvage of the hull, but only
on the portion of the freightage saved.
Sickness of the Sailor
General Rule: A sailor who falls sick shall not
lose his right to wages during the voyage.
Exception: If the sickness is the result of his
own fault, he will lose his right to wages.
TRANSPORTATION LAW
[ATTY. TESORO]
the common funds in the form of a loan.

If the sickness is caused by an injury in
the service or defense of the vessel, the
cost of the medical attendance shall be
deducted from the freightage proceeds.
Death or Capture of the Sailor
Time of Death
Wages Received
Sailor dies during the

voyage
Heir shall be given the

wages earned AND not
received according to his
contract.
Sailor dies a natural

death
Heir shall be given what

may have been earned up
to the date of his death.
Sailor dies and contract Sailor dies on the voyage

is for a fixed sum for
out (departure) wages
the whole voyage
shall be half the amount
earned.
Sailor dies on the return
voyage wages shall be
paid in full.
Sailor dies and contract Sailor dies after the voyage
is made on shares
has begun heirs shall be
paid the entire portion due
to the sailor
Sailor dies before vessel's
departure from port heirs
shall receive nothing
Sailor dies in the
defense of the vessel
Heirs shall receive full

amount of wages or the full
part of profits due to him
(sailor shall be considered
as living up to the end of
the voyage)
Sailor is captured in the GR: Sailor shall be

defense of the vessel
considered as present and
entitled to the same
benefits as the rest
EX: If he is captured due
to his carelessness or
accident, he shall only
receive the wages due up
to the day of his capture.
Medical expenses shall be defrayed from

Sources:
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2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Vessel as Security for Wages

The vessel, her engines, rigging,
equipment and freightage shall be liable
for the wages earned by the crew
engaged per month or for the trip.
After a new voyage has been
undertaken, credits of such kind
pertaining to the preceding voyage shall
lose their right of preference.
Case Doctrines
Exemptions of Officers and Crew

The officers and crew of the vessel shall
be exempted from all obligations
contracted in the following cases:
1. If, before the beginning of the voyage,
the captain attempts to change it, or
there occurs a naval war with the power
to which the vessel was destined.
2. Outbreak of a disease AND is officially
declared epidemic in the port of
destination.
3. If the vessel should change owner or
captain.
Stolt-Nielsen Marine v NLRC The ship's log

books are prima facie evidence of the incident
only if the logbook itself containing such entries
or photocopies of the pertinent pages are
presented in evidence. The log book is a
respectable record that can be relied upon to
authenticate the charges filed and procedure
taken against the employees prior to their
dismissal.
Supercargoes
Person charged with the administrative
duties which the ship agent or shippers
may have assigned to them.
The supercargo assumes the powers and
liabilities of the captain with regard to
that part of the administration
legitimately conferred upon the latter.
But the captain retains the powers and
liabilities which are inseparable from his
authority and office.
General Rule: Supercargoes cannot make any
transaction for their own account during the
voyage.
Exception: If they have special authorization
from or agreement with the principals.
Exception to the Exception: Ventures which,
in accordance with the custom of the port of
destination, they are permitted to do.
Vir-Jen Shipping v NLRC The contract made

by the National Seamen Board (NSB) merely
embodies the basic minimums which must be
incorporated as part of an employment contract.
It is not meant to be a collective bargaining
agreement, thus the seamen may petition their
employer for higher salaries.
Wallem Maritime Services v NLRC A copy of

an official entry in the ship captain's handbook
is legally binding and serves as an exception to
the hearsay rule.
XVI. TOWAGE AND PRIVATE CARRIERS
Towage
A contract where one vessel is hired to
bring another vessel to another place.
Refers to a service rendered to a vessel
by towing for the mere purpose of
expediting her voyage without reference
to any circumstances of danger.
A contract whereby a vessel, usually
motorized, pulls another from one place
to another for compensation.
It is a service contract NOT a contract
for the carriage of goods
Only the owner of the towing vessel can
ask for compensation for the towage.
Not the captain, even if the owner
waived the claim for the towage, unless
the owner assigned or conveyed his
right to the captain.
Obligations and Liabilities
Sources:
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L.T.J.F.
2nd
Degree of diligence the tug (towing

vessel) must observe Ordinary
diligence.
The tug is liable for the reasonable care
and of the tow and that reasonable care
is measured by the dangers and hazards
to which the tow is or may be exposed.
The duty of the tug to a tow is a
continuous one from the time service
commences until it is completed.
The responsibility of the tug includes:
the proper and safe navigation of the
tug on the journey
furnish safe, sound and suitable
appliances and instrumentalities for
the service to be performed (eg: a
seaworthy tugboat).
Private Carriers
Common Carrier
Undertaking is part of a
general business
Private Carrier
Undertaking is a single or
isolated transaction
Holds itself out to carry

The undertaking is not
the goods or passengers part of the business or
for the general public or occupation
a limited clientele
Bound to exercise
extraordinary diligence
Bound to exercise
ordinary diligence
Presumption of fault or
No presumption of fault
negligence in case of
or negligence applies
damage or injury in the
performance of its duties
Cannot be exempt from
liability for the
negligence of its agents
or employees
May validly enter into a

stipulation exempting
itself for the negligence of
its agents or employees
Much of the distinction between a

common and a private carrier lies in the
character if the business, such that if the
undertaking is a single transaction, not
part of the general business, the entity
offering such service is a private carrier.
The concept of a common carrier does
not change merely because individual
contracts are executed or entered into
TRANSPORTATION LAW
[ATTY. TESORO]
with patrons of the carrier.

The public at large is not involved, as in
the case of a vessel chartered for the use
of a single party
In a contract of private carriage, the
parties are free to contract respecting
the liability for damage to the goods and
other matters.
In an action against a private carrier the
burden to prove that the carrier was
negligent or not seaworthy rests on the
plaintiff.
Jurisprudential Test of a Common Carrier (FPIC
v CA, 300 SCRA 661):
1. Engaged in the business of carrying
goods for others as a public employment
and must hold himself out as ready to
engage in the transportation of goods
generally as a business and not as a
casual occupation.
2. He must undertake to carry goods of the
kind to which his business is confined.
3. He must undertake to carry by the
method by which his business is
conducted and over his established roads
4. The transportation must be for hire
Charters and Private Carriers
In a time or voyage charter, the ship
remains as a common carrier provided it
holds itself out to carry the goods for the
general public or a limited clientele.
It is only when the charter includes both
the vessel and its crew (as in a bareboat
charter), that a common carrier becomes
private, insofar as the particular voyage
covering the charter-party is concerned.
In a bareboat charter:
The carrier is private in nature only
as between the ship owner and the
charterer.
But when the charterer (owner pro
hac vice) hold himself out to carry
the goods for the general public, he
is a common carrier as far as the
public is concerned.
Sources:
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Obligations and Liabilities

As a private carrier, the stipulation
exempting the owner from liability for
the negligence of its agent is valid. The
stipulation would only be void if the strict
public policy governing common carriers
is applied.
Freight Forwarder (Unsworth Transport v CA)
Refers to a firm holding itself out to the
general public to provide transportation
of property for compensation and, in the
ordinary course of business:
1. To assemble and consolidate or provide
for break-bulk and distribution
operations of the shipments
2. To assume responsibility for the
transportation of goods from the place of
receipt to the place of destination
3. To use any part of the transportation a
carrier subject to the federal law
pertaining to common carriers.
A freight forwarder's liability is limited to
the damages arising from its own
negligence, including negligence in
choosing the carrier. However, where the
forwarder contracts to deliver the goods
instead of merely arranging for their
transportation, it becomes liable as a
common carrier for the loss or damage
to the goods.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
common carrier since its covenant with its

customers is simply to make travel
arrangements in their behalf. Under the law, a
travel agency, not being a common carrier, is
not bound to observe extraordinary diligence.
Loadstar Shipping v Pioneer Asia A common
carrier remains as such, notwithstanding the
charter of the whole or portion of a vessel by
one or more persons, provided the charter is
limited to the ship only, as in the case of a time
charter or voyage charter where the shipowner
retains possession and control of the vessel.
Loadmasters v Glodel Brokerage A customs
broker is also regarded as a common carrier,
the transportation of goods being an integral
part of its business.
XVII. SUCCESSIVE CARRIAGE
Code of Commerce Provisions (Art 373)

A carrier who delivers merchandise to a
consignee by virtue of combined services
with other carriers assume the
obligations of the carriers who preceded
him.
The carrier making the delivery must
reserve his right to proceed against the
other carriers if he should not be directly
responsible for the fault which gives rise
to the claim of the shipper or consignee.
The carrier making the delivery shall also
Case Doctrines
assume all the actions and rights of
those who may have preceded him in the
FPIC v CA The mere fact that the carrier had a
transportation.
limited clientele does not exclude it from the
The shipper or consignee shall have an
definition of a common carrier.
immediate right of action:
Against the carrier who executed the
Loadstar Shipping v CA A certificate of public
transportation contract -ORconvenience is NOT a requisite for the incurring
Against the other carriers who
of liability under the Civil Code governing
received the goods transported
common carriers. The mere fact the carrier does
without reservation.
not have a certificate of public convenience does
The reservations made by the other
NOT automatically make it a private carrier.
carriers shall not exempt them from
liabilities they may have incurred by
Crisostomo v CA A travel agency is not a
reason of their own acts.
Sources:
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International Air Carriage

[SEE DISCUSSION UNDER PART III OF
THIS REVIEWER ON THE WARSAW
CONVENTION]
Case Doctrines
Mapa v CA If the place of departure and the
place of destination are all in the territory of the
United States, or of a single High Contracting
Party, then the contracts of carriage cannot
come within the purview of the first or second
category of international transportation.
KLM v CA Art 30 of the Warsaw Convention
(rules in determining which carrier is liable in
case of successive carriage) is not applicable
where an airline refuses to transport a
passenger with confirmed reservations.
American Airlines v CA Where an airline
accepts an unused portion of a conjunction
ticket, such airline tacitly recognizes its
commitment under the IATA (International Air
Transport Association) pool arrangement to act
as agent of the principal airline. Its undertaking
should be taken as part of a single operation
under the contract of carriage executed by the
passenger and the principal carrier.
China Airlines v Chiok Under a general pool
partnership agreement, the ticket-issuing airline
is the principal in a contract of carriage while
the endorsee-airline is the agent. The obligation
of the ticket-issuing airline remained and did
not cease, regardless of the fact that another
airline had undertaken to carry the passengers
to one of their destinations.
XVIII. ARRIVALS UNDER STRESS AND
COLLISIONS
Arrivals Under Stress
Arrival of a vessel at the nearest and
most convenient port not of destination
on account of:
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Lack of provisions
Well-founded fear of seizure,
privateers or pirates
By reason of any accident of the sea
disabling it to navigate.
If the arrival is legitimate, the ship agent
or ship owner shall always be liable for
the expenses of such arrival.
If the arrival is improper, the ship agent
or ship owner shall be liable for damages
in addition to the expenses. The ship
agent shall also be jointly liable with the
captain.
Proper Arrival
Improper Arrival
Lack of provisions
Lack of provisions arising

from the failure to take
the necessary provisions
for the voyage or if they
should be lost through
negligence.
Well-founded fear of
seizure, privateers or
pirates
If the risk of enemies or

pirates should not have
been well known (no
well-founded fear),
manifest and based on
justifiable facts.
By reason of any
accident of the sea
disabling the vessel to
navigate
If the defect of the vessel

should have been caused
by reason of her not
being repaired or
maintained in a
convenient manner for
the voyage or by reason
of some erroneous order
of the captain or
whenever malice,
negligence or lack of skill
on the part of the captain
exists in the act causing
the damage.
Unloading of the Cargo

Should it be necessary to unload the
cargo, the captain must request
authorization from:
If in a Philippine port the judge or
court of competent jurisdiction AND
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with the knowledge of the person

interested in the cargo.
If in a foreign port the Filipino
consul, if there is one.
If the unloading occurred in a Philippine
port, the expenses shall be defrayed by
the shipowner or ship agent.
If the unloading occurred in a foreign
port, the expenses shall be for the
account of the owners of the
merchandise, for whose benefit the act
took place.
If the unloading occurred for both
reasons, the expenses shall be defrayed
in proportion of the value of the vessel
and that of the cargo.
If the entire cargo or a part thereof
should appear to be damaged, or there
is imminent danger of being damaged,
the captain may request the judge or
court or the consul the sale of the cargo.
The person taking cognizance of the
matter shall authorize the sale after an
examination of experts and other
formalities required by the case.
The custody and preservation of the
unloaded cargo shall be in the charge of
the captain, who shall be responsible for
the same, except in cases of force
majeure.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
indemnified by the pilots.

Determination of Liabilities
Cause of Collision
Party Liable
Fault, negligence or lack

of skill of the captain or
crew member
Shipowner is liable for

the losses and damages
Fortuitous Event
Each vessel and its

cargo shall bear its own
damages
Cannot be determined
Each vessel shall suffer
which vessel is at fault or its own damages and
if both vessels are at fault both shall be solidarily
responsible for the
losses and damages
suffered by their cargoes
A vessel forced to collide
with another one by a
third vessel
Owner of the third

vessel shall indemnify
the damages caused
Collisions in Foreign Waters or the High Seas

The vessel must reach a foreign port (if
it doesn't it is considered a shipwreck)
The Filipino consul in said foreign port
shall hold a summary investigation of the
accident, forwarding the proceedings to
the Secretary of the Department of
Foreign Affairs for continuation and
conclusion.
Limitation of Liabilities
Collisions
Collision the impact of two vessels
Real and Hypothecary Nature
both of which are moving
Rules on the limitation of liability under
Allision the striking of a moving vessels
Maritime Law applies in cases of
against one that is stationary
shipwrecks.
Applicable law in determining liabilities is
The civil liability of shipowners shall be

not the Civil Code on quasi-delict, but on
limited to the value of the vessel with all
the provisions of the Code of Commerce.
its appurtenances and freightage earned
As a result, the tort doctrines of Last
during the voyage.
Clear Chance and Contributory
Negligence are NOT applicable.
If the colliding vessels should have pilots Error in Extremis
In collision between vessels, there exists
at the time of their collision, their
3 divisions or zones of time. In each
presence shall not exempt the captains
zone, certain rules apply.
from the liabilities they incur. But the
3 Zones or Divisions of Time

captains shall have the right to be
The first division covers all the time
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up to the moment when the risk of
collision may be said to have begun.
The second division covers the time
between the moment when the risk
of collision begins and the moment
when it has become practically
certain.
The third division covers the time
between the moment when the
collision has become a practical
certainty and the moment of actual
contact.
Applicable rules in each zone:
First zone No rules apply.
Second zone Burden is on the
vessel required to keep away and
avoid the danger.
Third zone The vessel which has
forced the privileged vessel into
danger is responsible even if the
privileged vessel has committed an
error within that zone.
Maritime Protest
A protest is a written statement, under
oath, made by the master of the vessel,
after the occurrence of the accident or
disaster in which the vessel or cargo is
lost or injured, with respect to the
circumstances attending to such
occurrence.
Usually intended to show that the loss or
damage resulted from a peril of the sea
or from some other cause for which
neither the ship master or owner is
responsible. It concludes with the protest
against any liability of the owner for such
loss or damage.
Maritime protest in required in:
Arrival under stress
Shipwrecks
Collisions
The action for recovery of losses and
damages arising from collisions cannot
be admitted if a protest is not presented:
Within 24 hours following the arrival
of the vessel at the first port.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Before the competent authority of

the point where the collision took
place, or at the first port of arrival of
the vessel (if in Philippine territory)
or to the consul of the Philippines (if
collision occurred in a foreign state)
And the captain shall ratify the
protest within 24 hours.
Case Doctrines
Government of PI v Phil. Steamship Co. In
case of a collision between two vessels, both
are solidarily liable for the loss of cargo carried
by either, not only in cases where both vessels
may be at fault but also in a case where only
one vessel was at fault, but the evidence does
not show which.
Where two ships are both negligent, with the
result that a collision occurs and one is sunk
with total loss of both ship and cargo, the owner
of the other vessel is liable to any shipper of
cargo on board the sunken vessel to the full
extent of the value thereof. It makes no
difference that the negligence imputable to the
two vessels may have differed somewhat in
character and degree and that the negligence of
the sunken ship was somewhat more marked
than that of the other.
Sarasola v Sonuta Where it appears that the
negligence of vessel A was the primary cause of
the collision and it further appears that the
negligence of vessel B was the secondary cause,
the provisions of Art. 827 of the Code of
Commerce (each vessel suffers its own loss)
apply, and vessel B cannot recover damages
from vessel A for the collision.
XIX. SHIPWRECKS AND SALVAGE
Shipwrecks
Denotes all types of loss or wreck of a
vessel at sea either by being swallowed
up by the waves, by running against
another vessel or thing at sea or on
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coast where the vessel is rendered
incapable of navigation.
The goods saved from the wreck shall be
specially bound for the payment of the
expenses of the respective salvage, and
the amount thereof shall be paid by the
owners of the former before they are
delivered to them.
General Rule: Each owner, whether of the
vessel or cargo, shall bear his own loss.
Exception: If the shipwreck or stranding should
be caused by the malice, lack of skill or
negligence of the captain, or the vessel was
insufficiently repaired and prepared, the ship
agent or the shippers may demand indemnity
from the captain.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
If several vessels navigate under convoy

and any of them should be wrecked, the
cargo saved shall be distributed among
the rest in proportion to the amount
which one can receive (according to the
respective capacities of each vessel)
If any captain should refuse to receive
the corresponding cargo, without
sufficient cause, the captain of the
wrecked vessel shall enter a protest
against him.
Protest of the captain of the wrecked
vessel:
1. Protest is entered into before 2 sea
officials
2. Protest states the losses and
damages resulting therefrom
3. The complaint is ratified within 24
hours after arrival at the first port
Obligations of Captains
A captain who may have taken on board Salvage (Act No. 2616)
the goods saved from the wreck shall
Compensation to persons by whose
continue his course to the port of
voluntary assistance a ship at sea or her
destination. On arrival, he shall deposit
cargo or both have been saved in whole
the same, with judicial intervention, at
or in part from an impending peril, or
the disposal of their legitimate owners.
such property recovered from actual peril
In case of changing his course, should he
or loss, in cases of shipwrecks, derelict
be able to unload them at the port of
or recapture.
which they were consigned, the captain
A service which one person renders to
may make said port if the shippers or
the owner of a ship or goods by his own
supercargoes and the officers and
labor, preserving the goods or ship which
passengers consent thereto.
the owner or those entrusted with the
All expenses of this arrival shall be
care of them either abandoned in
defrayed by the owners of the cargo as
distress at sea or are unable to protect.
well as the payment of the freight.
Derelict a ship or cargo which is
If there should be no person interested
abandoned and deserted at sea by those
in the cargo who can pay the expenses
who are in charge of it, without any hope
and freightage, the court may order the
of recovering it, or without any intention
sale of the part of the salvage necessary
of returning it.
to cover the same. This shall also be
Salvage is not contractual in nature.
done when:
The compensation is in the form of a
The preservation of the cargo is
reward and not measured through
dangerous -ORquantum meruit.
In the period of 1 year, its legitimate
Elements of a Valid Salvage
owners has not been ascertained.
1. Marine Peril
2. Service voluntarily rendered when not
Wrecks of Vessels Under Convoy
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required as an existing duty or from a
special contract
3. Success, in whole or in part, or that the
services rendered contributed to such
success
Factors in Computing Reward:
1. Labor expended by the salvors
2. Promptitude, skill and energy displayed
in rendering the salvage service
3. Value of the property and equipment
employed in rendering the service and
the danger to which such property was
exposed
4. Risk incurred by the salvors in securing
the property from the impending peril
5. Value of the property saved
6. Degree of danger from which the
property was rescued
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
2. The collector of customs, municipal

treasurer or mayor shall:
1. Safeguard and make an inventory of
the things saved
2. Put up for sale at a public auction the
things saved which may be in danger
of immediate loss AND no objection
is made to such sale
3. Advertise within 30 days subsequent
to the salvage in one local newspaper
of all the details of the disaster, with
a statement requesting all interested
persons to make their claims
3. If the owner shall claim the vessel or
cargo saved, the authorities shall deliver
the same provided:
1. There is no controversy over their
value
2. A bond is given by the owner to
secure payment of the expenses and
the proper reward
4. If there is controversy or the bond is not
given, the Regional Trial Court shall
decide on the matter
Remedies of the Salvor

In case the Salvor is not compensated,
he may claim a maritime lien on the ship
or cargo rescued.
In case several persons intervened in the
Persons Not Entitled to Reward
salvage, the reward shall be divided
1. Crew of the vessel shipwrecked or which
between them in proportion to the
was in danger of shipwreck
service which each one may have
2. He who shall have commenced the
rendered. In case of doubt, it shall be
salvage in spite of the opposition of the
divided in equal parts.
captain or his representative
In case a vessel has been saved or
3. He who shall have failed to deliver the
assisted by another vessel, and in the
rescued vessel or cargo to the collector
absence of an agreement to the
of customs, the municipal treasurer or to
contrary, the reward for salvage shall be
the municipal mayor
divided between the owner, captain and
the crew of the rescuing vessel in the
Salvage vs. Towage
following manner:
Owner of vessel of the reward
Salvage
Towage
Captain of the reward
Crew of the salvaging
Crew of the towing ship
Crew of the reward
ship is entitled to
does not have any
Procedure of Salvage
1. The saved vessel or cargo shall be
delivered to the Collector of Customs of
the port and in the absence of the
Collector, to the municipal treasurer or to
the municipal mayor.
salvage, and can look to

the salvaged vessel for
their share.
interest or rights with the

remuneration pursuant to
the contract.
Salvor takes possession

and may retain
possession until he is
paid or compensated.
Tower has no possessory

lien; only an action for
recovery of sum of
money.
Sources:
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Court has power to
reduce the amount of
remuneration is
unconscionable.
2nd
Court has no power to
change the amount in the
towage contract even if
unconscionable.
PART 2: PUBLIC UTILITIES LAW

XX. PUBLIC UTILITIES AND SERVICES
TRANSPORTATION LAW
[ATTY. TESORO]
bancas moved by oar or sail, and

tugboats and lighters
Airships within the Philippines
except as regards the fixing of
the maximum rates on freight
and passengers
Radio companies except with
respect to the fixing of rates
Public services owned and
operated by the National
Government, or by any
government-owned and controlled
corporation, except with respect
to the fixing of rates
o
Concept
Short definition: A public utility is a
business or service engaged in regularly
supplying the public with some
commodity or service of public
consequence such as electricity, gas,
water, transportation, telephone or
License to Operate
telegraph service (NPC v CA 279, SCRA
The authorization to operate a public
408).
utility may either be through:
Long definition: see Sec. 13(b) of
o Legislative Franchise grant
Commonwealth Act No. 146.
straight from Congress
Public utilities are privately owned and
o License or permit issued by
operated businesses whose services are
regulatory agency power to
essential to the general public.
issue licenses is delegated by
Principal determinative characteristic of a
Congress
public utility is that of service to, or
Certificate of Public Convenience an
readiness to serve, an indefinite public or
authorization to operate a public service
portion of the public as such with has a
issued by the appropriate government
legal right to demand and receive its
agency
services and commodities. The true
Certificate of Public Convenience and
criterion is whether the public may enjoy
Necessity an authorization issued by
it by right or only by permission.
the appropriate government agency for
2 characteristics of a public utility:
the operation of a public service for
o Private character considered as
which a prior franchise is required by law
a private enterprise owned and
Factors to be Considered when granting
operated by private entities, thus
a Certificate of Public Convenience:
the owners and operators have a
o The service will promote public
right to a reasonable return of
interest (paramount
their investments.
consideration)
o Public character engaged in
o Citizenship requirement
providing services to the general
o Financial capacity of the grantee
public, thus impressed with public
o Ability and willingness to provide
interest.
excellent and efficient service to
Things exempted from the requirement
the public.
of securing a certificate of public
o Whether or not the grant will
convenience:
result in the ruinous competition
o Warehouses
in the market.
o Vehicles drawn by animals and
Sources:
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2nd
Ownership Regulation
Constitutional provision No franchise,
certificate or any other form of
authorization for the operation of a
public utility shall be granted except to:
o Citizens of the Philippines -ORo Corporations or associations
organized under the laws of the
Philippines at least 60% of whose
capital is owned by Filipinos.
The capitalization requirement under the
Constitution is limited only to those
entities which will operate the public
utility not own its equipment.
Police power of the State justifies the
regulation of public convenience.
Ownership of public utilities is subject to
regulation by the State, including
capitalization requirements.
NOTE: The right to operate a public utility may
exist independently and separately from the
ownership of the facilities thereof.
Consequently, a corporation is not subject to
the 60% Filipino equity requirement under the
Constitution if it will just own the equipment or
properties that will be used by another entity
which shall operate the public utility. (Tatad v
Garcia, Jr., 243 SCRA 436)
Regulation of Rates
Regulation of rates charged by the public
utility is in line with the policy of the
State to protect the public against
arbitrary and excessive charges.
But this power to regulate does not give
the State the right to prescribe rates
which are so low as to deprive the public
utility of a reasonable return on
investment.
Regulatory Agencies
Agency
Department of
Transportation and
Communications (DOTC)
Land Transportation
Franchising Regulatory
Industry or Area
Railroad carriers
Land Transportation
TRANSPORTATION LAW
[ATTY. TESORO]
Board (LTFRB)
Land Transportation
Office (LTO)
Maritime Industry
Authority (MARINA)
National
Telecommunications
Commission (NTC)
Energy Regulatory
Commission (ERC)
National Water Resources
Council (NWRC)
Registration of drivers
and motor vehicles
Water transportation
Communication
utilities, radio and TV
broadcasting systems
and similar utilities
Electric or power
companies
Water resources
Powers and Functions

Regulate the rates charged by the public
utilities.
Investigate any matter regarding the
quality of services provided by the public
utility
Issue permits and certificates for the
operation of a public utility and revoke
the same
Case Doctrines
JG Summit v CA - If the public benefit is merely
incidental, it is not a public use. There must be,
in general, a right which the law compels the
owner to give to the general public.
People v Quasha Mere formation of a public
utility corporation without the requisite Filipino
capital is NOT prohibited. What is prohibited is
the granting of franchise for the operation of a
public utility already in existence but without
the requisite Filipino capital.
Veneracion v Congson Ice Plant The authority
of the commission to issue ex parte a
provisional permit to operate proposed public
service is based on the superior and imperative
necessity of meeting an urgent public need.
Republic v PLDT Regulatory agencies have no
authority to pass upon actions for the taking of
private property under the sovereign right of
eminent domain.
Sources:
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Abe-Abe v Manta The National Water

Resources Council has exclusive original
jurisdiction over disputes regarding water rights
for irrigation purposes.
Chamber of Filipino Retailers v Villegas The
privilege of doing business at a definite location
in the city market partakes the nature of a
lease. A public market is not a public service or
utility contemplated by the Public Service Act.
Thus the City of Manila may fix the rates for the
use of the public markets without prior approval
of the Public Service Commission.
Luzon Stevedoring v PSC Public utility is not
defined by the number of people actually
served. Nor does the mere fact that the service
is rendered only under contract prevent a
company from being a public utility. The casual
or incidental service devoid of public character
and interest is not brought within the category
of public utility.
XXI. WATER UTILITES
Water Code of the Philippines (PD 1067)
The following belong to the State (Art. 5):
1. Rivers and their natural beds;
2. Continuous or intermittent waters of
springs and brooks running in their
natural beds and the beds themselves;
3. Natural lakes and lagoons;
4. All other categories of surface waters
such as water flowing over lands, water
from rainfall whether natural, or
artificial, and water from agriculture
runoff, seepage and drainage;
5. Atmospheric water;
6. Subterranean or ground waters;
7. Seawater.
The following waters found on private lands
belong to the State (Art. 6):
1. Continuous or intermittent waters rising
on such lands;
2. Lakes and lagoons naturally occurring on
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
such lands;
3. Rain water falling on such lands;
4. Subterranean or ground waters; and,
5. Water in swamps and marshes.
The owner of the land where the water is found
may use the same for domestic purposes
without securing a permit, provided that such
use shall be registered, when required by the
Council. The Council, however, may regulate
such when there is wastage, or in times of
emergency.
The use of water resources shall be
regulated by the National Water
Resources Council
Document evidencing the right to
appropriate water water permit
Only citizens of the Philippines, of legal
age, as well as juridical persons, who are
duly qualified by law to exploit and
develop water resources, may apply for
water permits.
Water permits may be revoked after due
notice and hearing on grounds of nonuse; gross violation of the conditions
imposed in the permit.
The permits may also be transferred to
other persons with prior approval of the
Council.
Provincial Water Utilities Act (PD 198)
Formation of local water districts (LWD)
within a municipality, city, province or
portions thereof
Purposes of Local Water Districts:
1. Acquiring, installing, improving,
maintaining and operating water
supply and distribution systems
within the boundaries of such districts
2. Providing, maintaining and operating
waste-water collection, treatment
and disposal facilities
3. Conduct such other functions and
operations incidental to water
resource development, utilization and
disposal within such districts
Sources:
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Powers of the Local Water Districts:
1. Purchase, construct, or otherwise
acquire works, water, water rights,
land, rights and privileges useful or
necessary to convey, supply, store,
collect, treat, dispose of or make
other use of water for any purpose
authorized by this Title.
2. Sell water, pursuant to generally
applicable rules and regulations, to
any person for use within the district.
3. The District may require the filing of
a written application for service,
payment of established charges or
deposits and execution of water
service contract.
4. Enter into contracts with any person
for the purpose of performing any
functions of the district: Provided,
that the Board of Directors may not
by contract delegate any of the
discretionary powers vested in the
board by this Title.
5. Commence, maintain, intervene in,
defend and compromise actions, and
proceedings to prevent interference
with or deterioration of water quality
or the natural flow of any surface,
stream or ground water supply which
may be used or useful for any
purpose of the district or be a
common benefit to the lands or its
inhabitants.
Local Water Utilities Administration
Attached to the National Economic and
Development Authority (NEDA)
While the Local Water Districts monitor
the extraction and distribution of the
water resources, the Local Water Utilities
Administration interacts with the
investor-owned public utility or
cooperative corporation which owns or
operates a water system serving an
urban center in the Philippines.
Exclusive Franchise: No Franchise shall
be granted to any other person or
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
agency for domestic industrial or

commercial water service within the
district or any portion thereof unless and
expect to the extent that the board of
directors of said district consents there
to by resolution duly adopted, such
resolution, however, shall be subject to
review by the Administration.
Purposes:
1. Prescribe minimum standards and
regulations to assure acceptable
standards of construction materials
and supplies, maintenance,
operation, personnel, training,
accounting and fiscal practices for
local water utilities;
2. Furnish technical assistance and
personnel training programs for local
water utilities;
3. Monitor and evaluate local water
standards;
4. To effect system integration, joint
investment and operations district
annexation and deannexation
whenever economically warranted;
Bureau of Fisheries (PD 43, Sec. 6.B.14)
Sec. 6.B.14 Designate and set the boundaries
of Fishery Districts and submit to the Council, a
program within one (1) year after the passage
of this Act for the Organization of District
Fishery Corporations or Cooperatives to be
composed of the various components of the
industry in each district which shall engage in
the buying, processing, storing and marketing
of fish and fishery products. To serve this
purpose, the Bureau shall promote in each of
the Fishery Districts to be established under this
Act, the establishment of adequate refrigerating
plants for ice making, storage and quickfreezing to be owned preferably by the District
Fishery Corporation or Cooperatives: Provided,
That the refrigerating and cold storage plants
belonging to the Bureau shall be sold to the
District Fishery Corporations or Cooperatives
under such terms and conditions promulgated
by the Bureau, subject to the approval of the
Sources:
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2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Council: Provided, further, That ice-making, cold

or any other evidence of member or
storage and quick-freezing facilities may be
patron interest by a cooperative.
established by any person, corporation or
cooperative in any part or municipal franchise,
General Rule: Whenever two or more public
notwithstanding the provisions of the law to the service entities are affected by and have
contrary.
competing or conflicting interests with respect
to the granting, repeal, alteration or
XXII. ENERGY AND ELECTRICITY
conditioning of the same franchise or franchises,
and one or more of such entities are
National Electrification Administration (PD 269)
cooperatives, the NEA shall accord preference to
Attached agency of the Department of
a cooperative over any other type of public
service entity
Energy
Tasked to promote, encourage and assist
Exception: When an order in favor of another
public service entities, particularly
cooperatives, to the end of achieving the type of public service entity (or of another
cooperative) will result in the furnishing and
objective of making electric service
extending of area coverage service (1) to a
available throughout the nation on an
greater number of households, (2) over a larger
area coverage basis as rapidly as
geographic area, and (3) on the basis of the
possible.
same or lower rates, charges and fees.
Franchising powers are delegated to the
agency. All franchising powers of
Department of Energy (RA 7638)
municipal, city and provincial
Exercises jurisdiction over the non-price
governments are hereby repealed
regulatory powers and functions of the
Has the power to conduct hearings
Energy Regulatory Board. (eg: funds,
regarding the issuance, alteration and
property, equipment and personnel).
cancellation of certificates and to review
Formulate policies for the planning and
existing franchises of cooperatives.
implementation of a comprehensive
program for the efficient supply and
Electric Cooperatives
economical use of energy
Cooperative non-stock, non-profit
Develop and update the existing
membership corporations.
Philippine energy program which shall
Organized for the purpose of and of
provide for an integrated and
promoting and encouraging the fullest
comprehensive exploration,
use of, service on an area coverage basis
development, utilization, distribution and
at the lowest cost consistent with sound
conservation of energy resources, with
economy and the prudent management.
preferential bias for environment Cooperatives shall be exempt from
friendly, indigenous, and low-cost
regulation by the Board of Powers and
sources of energy.
Waterworks.
Establish and administer programs for
The provisions of the Securities Act shall
the exploration, transportation,
not apply to any note, bond or other
marketing, distribution, utilization,
evidence of indebtedness issued by any
conservation, stockpiling and storage of
cooperative or to any mortgage, deed of
energy resources of all forms, whether
trust, indenture or other instrument
conventional or non-conventional.
executed to secure the same. The
The Secretary of the Department or his
provisions of said Act shall not apply to
representative shall have visitorial and
the issuance of membership certificates
Sources:
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examining authority over nongovernment entities with contracts for
the exploration, development, or
utilization of the natural resources for
energy purposes in order to determine
the share of the Government in the
revenue or product thereof.
Energy Regulatory Commission (ERC)
Replaced the abolished Energy
Regulatory Board
Has the power to determine, prescribe
and fix the rates being charged by the
National Power Corporation and Electric
Cooperatives.
Under the EPIRA (RA 9136), the ratefixing power of the ERC extends to those
entities engaged in power distribution,
transmission and supply. The prices
charged by a generation company for
supply of electricity shall not be subject
to regulation by the ERC except as
otherwise provided under said Act.
Power to issue Certificates of Public
Convenience for the operation of electric
power utilities and services, except
electric cooperatives (which remains
under the NEA).
Decisions regarding the fixing of rates
are appealable to the Public Service
Commission and ultimately to the
Supreme Court.
Any complaint against such rates or fees
shall be filed with the Public Service
Commission within thirty (30) days after
the effectivity of such rates or fees, but
the filing of such complaint or action
shall not stay the effectivity of said rates
or fees.
Electric Power Industry Reform Act (RA 9136)
Divided the electric power industry into 4
sectors:
Generation
Transmission
Distribution
Supply
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
Express declaration that power

generation shall NOT be considered as a
public utility operation.
Consequences:
For this purpose, any person or entity
engaged or which shall engage in
power generation and supply of
electricity shall not be required to
secure a local or national franchise.
Citizenship requirements do not
apply and foreign investors may own
beyond the 60% capitalization limit.
Even if a franchise is not necessary, the
power generating entities still needs to
secure from the ERC a certificate of
compliance as well as other health,
safety and environmental clearances
from the appropriate government
agencies.
The distribution sector is deemed by law
to be a regulated common carrier.
NOTE: The EPIRA only exempts the power
generating entities from securing a franchise.
Entities engaged in power distribution,
transmission and supply are different matters
altoghether. They still need to secure a
franchise or certificate from the ERC and shall
be regulated by the same agency.
XXIII. CERTIFICATE OF PUBLIC
CONVENIENCE
CPC vs. CPCN
Certificate of Public
Convenience
Certificate of Public
Convenience and Necessity
Any authorization to
operate a public service
issued by the
appropriate government
agency
Issued by the appropriate

government agency to a
public service to which any
political subdivision has
granted a franchise
An authorization issued
by the proper
government agency for
the operation of public
services for which no
franchise, either
An authorization issued by
the proper government
agency for the operation of
public services for which a
franchise is required by
law
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municipal or legislative
is required by law
Issuance, Suspension and Revocation

Requisites for Issuance of CPC
1. Filipino citizenship
2. Financial ability
3. Public necessity
4. Profit motive
The Public Service Commission may issue a
provisional permit pending final determination
of an application for a certificate of public
convenience when the following requisites are
present:
1. The case cannot be decided at once
2. The Commission issues the provisional
permit to meet an urgent public need
3. For TPU (Transportation Public Utility)
services, that the case is not for new
public service, but a mere adjustment of
an existing service.
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
served by the new operator

Where the old operator failed to
make an offer to meet the increase in
traffic.
B. Prior Applicant Rule

Where there are various applicants for a
public utility over the same territory, all
conditions being equal, priority in the
filing of the application for a CPC
becomes an important factor in granting
or refusing a certificate.
C. Third Operator Rule
Where two operators are more than what
the public needs, there is no reason to
permit a third operator to engage in
competition with them.
If later on, circumstances would change
requiring the operation of new units or
extending existing facilities, the third
operator would be subject to the prior
applicant rule and also as to who may
best serve the public interest.
A. Prior Operator Rule

The Commission will not issue a CPC to a D. Protection of Investment Rule
One of the primary purposes of the
second operator if there is a first
Public Service Act is to protect and
operator who is rendering sufficient and
conserve the investments made by the
satisfactory service.
public service operators.
Purpose of the rule is to:
It is the duty of the Commission to

Protect the investment of the prior
protect the investment of an operator
operator
who is in good standing and not those
Avoid ruinous competition
whose investment has deteriorated
Before permitting a new operator to
through their own fault.
invade the territory of another existing
This rule is not applicable when:

operator with a CPC, thereby entering
The application of the rule will result
into competition with it, the prior
in a monopoly of the public service.
operator must be given an opportunity to
When the operator failed to render
extend its service to meet the public
satisfactory service and has violated
demand.
the terms and conditions of the
Main basis for granting new permits
certificate as well as the rules and
public interest or public necessity
regulations of the Commission.
Non-applicability of rule:
Where certificate granted is a maiden
Suspension and Revocation
franchise (there is no prior existing
1. When the facts and circumstances on the
line or service in said route or area)
strength of which the certificate was
Where public interest would be better
Sources:
Page 56 of 57
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3-D
L.T.J.F.
issued have been misrepresented or
materially altered.
2. The holder has violated or willfully
refused to comply with any order, rule or
regulation of the Commission.
3. The common carrier repeatedly fails to
comply with its duty to observe
extraordinary diligence.
Necessity of Notice and Hearing
In the following cases, the powers of the Public
Service Commission may be exercised only
upon prior notice and hearing:
1. Issuance of CPC or CPCN
2. Fixing of rates, tolls and charges
3. Setting up of just and reasonable
standards and classifications
4. Issuance of orders requiring public
services to establish and maintain
extensions of facilities
5. Suspension, revocation or modification of
certificates of public convenience.
Notice and hearing may be dispensed with in
the following cases:
1. When the Commission investigates any
matter concerning public services
2. Require any public service to furnish
safe, adequate and proper service
3. Appraise and value the property of any
public service
4. Grant any public service special permits
to make extra or special trips
5. Require any public service to properly
keep books, records and accounts, and
to make a report on its finances
6. Require the public service to comply with
laws and ordinances
2nd
TRANSPORTATION LAW
[ATTY. TESORO]
accident.
The registered owner is liable to the
injured party, subject to his right of
recourse against the transferee.
The registered owner is solidarily liable
with the driver or operator for the
injuries incurred by third persons.
The rule applies even if the registered
owner leased the vehicle to another who
is the actual operator. In order to be free
from liability, the lessor-owner should
register the lease contract with the LTO.
NOTE: Prior approval from the Regulatory
Agency is required if the public utility is
planning to increase the rates of its services.
But if the intent of the public utility is to give
discounts on the rates, prior approval from the
Agency may be dispensed with. Discount rates
are reduction in rates, thus the Agency's prior
approval of the discount is not necessary.
(NAPOCOR v. PEPOA, 486 SCRA 577, 2006)
Kabit System
An unlawful arrangement where the
grantee of a CPC allows another person
who owns motor vehicles to operate
under such license for a fee.
The registered owner or grantee of the
CPC shall still be liable to the public.
Although not penalized outright as a
criminal offense, the kabit system is
recognized as being contrary to public
policy and, therefore, a void contract.
But even if the kabit system is void as a
contract, the registered owner may still
be indemnified for the amount he is
required to pay as damages for injuries
caused to third persons.
Registered Owner Rule

The person who is the registered owner
of a vehicle or conveyance is liable for
any damage caused by the negligent
operation of the vehicle although the
same was already sold or transferred to
another person at the time of the
Sources:
Page 57 of 57

Transpo Law Reviewer 3D Tesoro

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ATENEO LAW SCHOOL

TRANSPORTATION AND PUBLIC UTILITIES

Exercise extraordinary diligence in the

Common carriers are:

Cannot be exempt from

Duties and Obligations

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Real (delivery is required)

Tesoro Sez (His Personal Opinion):

NOTE: Atty. Tesoro does not make any

Nueca v MRR Mere purchase of a ticket does

ATENEO LAW SCHOOL

transportation fare. Patronizing the business of

exclusion of human agency from the cause of

Tamayo v Pascua The act of allowing and

Benito v PANAM A stipulation in the ticket

Dangwa Co v CA A public utility bus, once it

Vda de Abelo v PAL In an action based on a

ATENEO LAW SCHOOL

transportation (domestic sea)

Applies to all international

Quisumbing, Sr. v CA Robbery on board or the

In case of death or injuries of the

Carrier's responsibility over the safety of

But the passenger also has the duty to

overland or river transport of

Code of Commerce: Suppletory law governing

Vigilance Over Cargo

ATENEO LAW SCHOOL

carrier from responsibility.

PAL v CA (188 SCRA 461) The carriers

Diversions and Delays

Sulpicio Lines v CA The carrier is liable for the

ATENEO LAW SCHOOL

out for them. They are under the obligation to

Brinas v People It was negligence on the

PNR v CA If the carrier failed to observe

ATENEO LAW SCHOOL

Bayasen v CA Skidding means the partial or

not there be a break in the transportation or

ATENEO LAW SCHOOL

greater than actual value.

Limitation is Not Applicable

Action for Damages

ATENEO LAW SCHOOL

of tickets to contracted passengers to boost

ATENEO LAW SCHOOL

As a contract of adhesion, any

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Kinds of Bills of Lading

ATENEO LAW SCHOOL

s.t.c. - Said to Contain

knowledge of the actual condition of the goods

Keng Hua Paper v CA A bill of lading delivered

Liabilities and Obligations of Carrier

PC Ailmal Co v Macondray Bill of lading is

General Rule: Damages suffered by the goods

Robles v Santos The bill of lading is not

US Lines v Commissioner of Customs Where

ATENEO LAW SCHOOL

Claims by Consignee (Arts. 366-367)

ATENEO LAW SCHOOL

Phil-Am Gen v Sweet Lines Art. 366 applies to

Eastern Shipping Lines v IAC Fire may not be