San Beda College of Law: Contract of Transportation/ Carriage

San Beda College of Law 54
MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ CARRIAGE Steamship Agency, 23 SCRA 24)

A contract whereby a person, natural or juridical,
obligates to transport persons, goods, or both, from TESTS WHETHER CARRIER IS COMMON OR
one place to another, by land, air or water, for a PRIVATE:
price or compensation. The SC in First Philippine Industrial Corporation
Classifications: vs. CA (1995) reiterated the following tests:
1. Common or Private 1. It must be engaged in the business of
2. Goods or Passengers carrying goods for others as a public
3. For a fee (for hire) or Gratuitous employment and must hold itself out as
4. Land, Water/maritime, or Air ready to engage in the transportation of
5. Domestic/inter-island/coastwise or goods generally as a business and not as
International/foreign a casual occupation;
It is a relationship which is imbued with the 2. It must undertake to carry goods of the
public interest. kind to which its business in confined;
3. It must undertake to carry by the method
COMMON CARRIER by which his business is conducted and
Persons, corporations, firms or associations over its established roads; and
engaged in the business of carrying or transporting 4. The transportation must be for hire.
passengers or goods or both, by land, water, or air, In National Steel Corp. vs. CA (1997) the SC held
for compensation, offering their services to the that the true test of a common carrier is the
public (Art. 1732, Civil Code). carriage of goods or passengers provided it has
Art. 1732 of the New Civil Code avoids any space for all who opt to avail themselves of its
distinction between one whose principal business transportation for a fee.
activity is the carrying of persons or goods or both
and one who does such carrying only as an ancillary
activity (sideline). It also avoids a distinction COMMON CARRIER PRIVATE
between a person or enterprise offering CARRIER
transportation service on a regular or scheduled 1. As to availability
basis and one offering such service on an Holds himself out for all Contracts with particular
occasional, episodic or unscheduled basis. people indiscriminately individuals or groups
Neither does the law distinguish between a only
carrier offering its services to the general public that 2. As to required diligence
is the general community or population and one Extraordinary diligence is Ordinary diligence is
who offers services or solicits business only from a required required
narrow segment of the general population. 3. As to regulation
A person or entity is a common carrier even if Subject to State Not subject to State
he did not secure a Certificate of Public Convenience regulation regulation
(De Guzman vs. CA, 168 SCRA 612). 4. Stipulation limiting liability
It makes no distinction as to the means of
Parties may not agree on Parties may limit the
transporting, as long as it is by land, water or air. It
limiting the carriers carriers liability,
does not provide that the transportation should be
liability except when provided it is not
by motor vehicle. (First Philippine Industrial
provided by law contrary to law, morals
Corporation vs. CA)
or good customs
One is a common carrier even if he has no fixed
5. Exempting circumstance
and publicly known route, maintains no terminals,
Prove extraordinary caso fortuito, Art. 1174
and issues no tickets (Asia Lighterage Shipping, Inc.
diligence and Art. 1733, NCC
vs. CA).
NCC
Characteristics:
1. Undertakes to carry for all people indifferently 6.Presumption of negligence
and thus is liable for refusal without There is a presumption No presumption of fault
sufficient reason (Lastimoso vs. Doliente, of fault or negligence or negligence
October 20, 1961); 7.Governing law
2. Cannot lawfully decline to accept a particular Law on common carriers Law on obligations and
class of goods for carriage to the prejudice contracts
of the traffic in these goods;
3. No monopoly is favored (Batangas Trans.
vs. Orlanes, 52 PHIL 455); GOVERNING LAWS
4. Provides public convenience. A. Domestic/inter-island/coastwise
Applicable to Land, Water, and Air transportation
PRIVATE CARRIER 1. Civil Code - primary
One which, without being engaged in the 2. Code of Commerce (Arts. 349, 379, 573-
business of carrying as a public employment, 734, 580, 806-845) - suppletory
undertakes to deliver goods or passengers for
compensation. (Home Insurance Co. vs. American B. International/foreign/overseas (Foreign
country to Philippines)
COMMERCIAL LAW COMMITTEE

CHAIRPERSON: Garny Luisa Alegre ASST. CHAIRPERSON:Jayson OS Ramos EDP: Beatrix I. Ramos SUBJECT HEADS:
Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario (Transportation Laws);
Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John Lemuel Gatdula (Banking
Laws); Robespierre CU (Law on Intellectual Property)
Applicable to Water/maritime and Air Requisites:

transportation a. Must be the proximate and only cause of
The law of the country of destination generally the loss
applies. b. Exercise of due diligence to prevent or
1. Civil Code - primary minimize the loss before, during or after the
2. Code of Commerce - suppletory occurrence of the disaster (Art. 1739)
3. Others - suppletory c. Carrier has not negligently incurred in
a. Water/maritime: Carriage of Goods by delay in transporting the goods (Art. 1740)
Sea Act (COGSA) Fire is not considered a natural disaster or
b. Air: Warsaw Convention calamity as it arises almost invariably from some act
of man. (Eastern Shipping Lines Inc. vs. IAC)
I. NEW CIVIL CODE Mechanical defects are not force majeure if the
(Arts. 1732-1766) same was discoverable by regular and adequate
inspections. (Notes and Cases on the Law on
REQUIREMENT OF EXTRAORDINARY Transportation and Public Utilities, Aquino, T. &
DILIGENCE Hernando, R.P. 2004 ed. p.120-122)
Rendition of service with the greatest skill and
utmost foresight. (Davao Stevedore Co. v. 2. ACTS OF PUBLIC ENEMY
Fernandez) Requisites:
Rationale: a. Must be the proximate and only cause of
1. From the nature of the business and for the loss
reasons of public policy (Art. 1733) b. Exercise of due diligence to prevent or
2. Relationship of trust minimize the loss before, during or after the
3. Business is impressed with a special public act causing the loss, deterioration or
duty destruction of the goods (Art. 1739)
4. Possession of the goods
5. Preciousness of human life 3. NEGLIGENCE OF THE SHIPPER OR OWNER
A common carrier is not an absolute insurer of all a. Sole and proximate cause: absolute defense
risks of travel. b. Contributory: partial defense. (Art. 1741)
COVERAGE 4. CHARACTER OF THE GOODS OR DEFECTS IN

1. Vigilance over goods (Arts. 1734-1754); and THE PACKING OR IN THE CONTAINER
2. Safety of passengers (Arts. 1755-1763). Even if the damage should be caused by the
inherent defect/character of the goods, the common
PASSENGER carrier must exercise due diligence to forestall or
A person who has entered into a contract of lessen the loss. (Art. 1742)
carriage, express or implied, with the carrier. They The carrier which, knowing the fact of improper
are entitled to extraordinary diligence from the packing of the goods upon ordinary observation, still
common carrier. accepts the goods notwithstanding such condition, is
The following are not considered passengers, and not relieved of liability or loss or injury resulting
are entitled to ordinary diligence only: therefrom. (Southern Lines, Inc. v. CA, 4 SCRA 258)
a. One who has not yet boarded any part of
a vehicle regardless of whether or not he 5. ORDER OR ACT OF PUBLIC AUTHORITY
has purchased a ticket; Said public authority must have the power to
b. One who remains on a carrier for an issue the order (Art. 1743). Consequently, where
unreasonable length of time after he has the officer acts without legal process, the common
been afforded every safe opportunity to carrier will be held liable. (Ganzon v. CA 161 SCRA
alight; 646)
c. One who has boarded by fraud, stealth, or Diligence in the selection and supervision of
deceit; employees under Article 2180 of the Civil Code
d. One who attempts to board a moving cannot be interposed as a defense by the common
vehicle, although he has a ticket, unless carrier because the liability of the carriers arises
the attempt be with the knowledge and from the breach of the contract of carriage. The
consent of the carrier; defense under said articles is applicable to
e. One who has boarded a wrong vehicle, negligence in quasi-delicts under Art. 2176. (Del
has been properly informed of such fact, Prado v. Manila Electric Co., 52 Phil 900)
and on alighting, is injured by the carrier;
f. Invited guests and accommodation LIABILITY OF A COMMON CARRIER FOR
passengers. (Lara vs. Valencia) DEATH OR INJURIES TO PASSENGERS DUE TO
g. One who rides any part of the vehicle ACTS OF ITS EMPLOYEES AND OTHER
which is unsuitable or dangerous or which PASSENGERS OR STRANGERS
he knows is not designed or intended for
passengers. FOR ACTS OF OTHER
FOR ACTS OF ITS PASSENGERS OR
DEFENSES OF A COMMON CARRIER IN THE EMPLOYEES STRANGERS
CARRIAGE OF GOODS
1. CASO FORTUITO/FORCE MAJEURE Required diligence and defense

Extraordinary diligence Ordinary diligence Perez)

Nature of liability
Tort; however, Not absolute; limited The carrier is liable when its personnel allowed a
The employee must be by Art. 1763 passenger to drive the vehicle causing it to collide
on duty at the time of with another vehicle resulting to the injuries
the act. (Maranan v. suffered by the other passengers. (MRR vs.
Ballesteros, 16 SCRA 641)
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS
Parties
1. Common carrier 1. Common carrier
2. Shipper 2. Passenger
3. Consignee
Cause of liability
Delay in delivery, loss, destruction, or deterioration of Death or injury to the passengers
the goods
Duration of liability
From the time the goods are unconditionally placed in The duty of a common carrier to provide safety to its
the possession of, and received by the carrier for passengers so obligates it not only during the course
transportation until the same are delivered actually or of the trip, but for so long as the passengers are
constructively by the carrier to the consignee or to the within its premises and where they ought to be in
person who has the right to receive them. (Art. 1736) pursuance to the contract of carriage. (LRTA v.
It remains in full force and effect even when they Navidad, [2003])
are temporarily unloaded or stored in transit unless the All persons who remain on the premises within a
shipper or owner has made use of the right of reasonable time after leaving the conveyance are to
stoppage in transitu. (Art. 1737) be deemed passengers, and what is a reasonable time
It continues to be operative even during the time or a reasonable delay within this rule is to be
the goods are stored in a warehouse of the carrier at determined from all the circumstances, and includes a
the place of destination until the consignee has bee reasonable time to see after his baggage and prepare
advised of the arrival of the goods and has had for his departure. (La Mallorca v. CA, 17 SCRA 739 ;
reasonable opportunity thereafter to remove them or Abiotiz Shipping Corporation v. CA, 179 SCRA 95)
otherwise dispose of them. (Art. 1738) It is the duty of common carriers of passengers to
Delivery of goods to the custom authorities is not stop their conveyances a reasonable length of time in
delivery to the consignee. (Lu Do v. Binamira, 101 Phil order to afford passengers an opportunity to enter,
120) and they are liable for injuries suffered from the
sudden starting up or jerking of their conveyances
while doing so. The duty which the carrier of
passengers owes to its patrons extends to persons
boarding the cars as well as to those alighting
therefrom (Dangwa Trans Co., Inc. vs. CA 202 SCRA
574).
Presumption of negligence
Art.1735 Civil Code Art.1755 Civil Code

Reason: As to when and how goods were damaged in Reason: The contract between the passenger and the
transit is a matter peculiarly within the knowledge of carrier imposes on the latter the duty to transport the
the carrier and its employees. (Mirasol v. Dollar, 53 passenger safely; hence the burden of explaining
PHIL 124) should fall on the carrier.
Mere proof of delivery of goods to a carrier in good
order and the subsequent arrival of the same goods at
the place of destination in bad order makes for a prima
facie case against the carrier. (Coastwise Lighterage
Corp. v. CA, 245 SCRA 796)

Defenses
1. Ordinary circumstance: Exercise of 1. Exercise of extraordinary diligence (Art.

extraordinary diligence (Art. 1735) 1756)
2. Special circumstances: 2. Caso fortuito
a. Flood, storm, earthquake, lighting, or
other natural disaster or calamity (plus
force majeure)
b. Act of the public enemy in war,
whether international or civil
c. Act or omission of the shipper or the
owner of goods
d. The character of the goods or defects
in the packing or in the containers
e. Order or act of competent public
authority (Art. 1734)
Valid stipulations
1. Reduction of degree of diligence to ordinary Stipulation limiting liability when a passenger is

diligence, provided it be: carried gratuitously, but not for willful acts or gross
a) In writing, signed by the shipper or owner; negligence. (Art. 1758)
b) Supported by a valuable consideration other
than the service rendered by the carriers;
and
c) Reasonable, just and not contrary to public
policy. (Art. 1744)
2. Fixed amount of liability: A contract fixing the sum
to be recovered by the owner or shipper for the loss,
destruction or deterioration of the goods, if it is
reasonable and just under the circumstances and has
been fairly and freely agreed upon. (Art. 1750)
3. Limited liability for delay: An agreement limiting the
common carriers liability for delay on account of
strikes or riots (Art. 1748)
4. Stipulation limiting liability to the value of the goods
appearing in the bill of lading, unless the shipper or
owner declares a greater value. (Art. 1749)
The diligence required in the carriage of the goods

may be reduced by only one degree, from
extraordinary to ordinary diligence or diligence of a
good father of a family. (Art. 1744, Art. 1745, no. 4)
Void stipulations
1. That the goods are transported at the risk of the
owner or shipper; Dispensing with or lessening the extraordinary
2. That carrier will not be liable for any loss, responsibility of a common carrier for the safety of
destruction or deterioration of the goods; passengers imposed by law by stipulation, by posting
3. That the carrier need not observe any diligence of notices, by statements on tickets or otherwise. (Art.
in the custody of the goods; 1757)
4. That the carrier shall exercise a degree of
diligence less than that of a good father of a family
over the movable transported;
5. That the carrier shall not be responsible for the
acts or omissions of his or its employees;
6. That the carriers liability for acts committed by
thieves or robbers who do not act with grave or
irresistible threat, violence or force is dispensed with
or diminished;
7. That the carrier is not responsible for the loss,
destruction or deterioration of the goods on account
of the defective condition of the car, vehicle, ship or

other equipment used in the contract of carriage.

(Art. 1745)

RULES ON PASSENGERS BAGGAGE injury to, or loss of, goods shipped where such
IN THE CUSTODY OF IN THE CUSTODY injury or loss was caused by its own negligence.
THE PASSENGERS OF THE COMMON (Shewaram vs. PAL, 17 SCRA 606)
(HAND-CARRIED) CARRIER
(CHECKED-IN) SPECIAL RULES ON LIABILITES OF AIRLINE
Legal nature of the baggage CARRIERS
Necessary deposit Considered as goods 1. In case of flight diversion due to bad weather or
Required diligence by the common carrier other circumstances beyond the pilots control, the
Diligence of a depositary Extraordinary diligence relation between the carrier and the passenger
(ordinary diligence) continues until the latter has been landed at the
Applicable rules port of destination and has left the carriers
Arts. 1998 and 2000-2003 Arts. 1733-1753 premises. The carrier should necessarily exercise
extraordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers
CONCURRING CAUSES OF ACTION ARISING
until they have reached their final destination.
FROM THE NEGLIGENT ACT OF THE COMMON
(Philippine Airlines vs. CA, 226 SCRA 423)
CARRIER
2. Even where overbooking of passengers is allowed
1. Culpa contractual (breach of contract)
as a commercial practice, the airline company would
Only the carrier is primarily liable and not the
still be guilty of bad faith and still be liable for
driver, because there is no privity between the
damages if it did not properly inform passenger that
driver and the passenger.
it could breach the contract of carriage even if they
Basis: Art.1759, NCC.
were confirmed passengers. (Zalamea vs. CA, 228
No defense of due diligence in the selection and
SCRA 23)
supervision of employees.
3. An open-dated ticket constitutes a complete
contract between the carrier and passenger. Hence,
2. Culpa aquiliana (quasi-delict)
the airline company is liable if it refused to confirm a
The carrier and driver are solidarily liable as joint
passengers flight reservation. (Singson vs. CA, 282
tortfeasors.
SCRA 149)
Basis: Art. 2180, NCC.
4. An airline company which issued a confirmed
Defense of due diligence in the selection and
ticket to a passenger covering successive trips on
supervision of employees is available. Exception:
different airlines can be held liable for damages
maritime tort resulting in collision. (See notes on
occasioned by bumping off by one of the
Collision)
successive airlines. (Lufthansa German Airlines vs.
CA, 238 SCRA 290)
3. Culpa criminal (criminal negligence)
5. An airline ticket providing that carriage by
The driver is primarily liable. The carrier is
successive air carriers is to be regarded as a single
subsidiarily liable only if the driver is convicted and
operation is to make the issuing carrier liable for
declared insolvent.
the tortuous conduct of the other carrier. A printed
Basis: Art. 100, RPC.
provision in the ticket limiting liability only to its own
conduct is not enough to rebut that liability. (KLM
In case of injury to a passenger due to the
Royal Dutch Airlines vs. CA, 65 SCRA 237)
negligence of the driver of the bus on which he is
riding and of the driver of another vehicle, the
II. CODE OF COMMERCE
drivers as well as the owners of the two vehicles are
jointly and severally liable for damages. It makes
no difference that the liability of the bus driver and A. OVERLAND TRANSPORTATION
owner springs from contract while that of the owner (Arts. 349-379)
and driver of the other vehicle arises from quasi-
delict. (Fabre vs. CA) Applicability
1. Domestic land and water/maritime transportation.
LIMITATIONS AS TO CARRIERS LIABILITY (Pandect of Commercial Law and Jurisprudence,
INVALID AS BEING VALID & Justice Jose Vitug, 1997 ed.)
CONTRARY TO PUBLIC ENFORCEABLE 2. Domestic Air Transportation. (Commercial Law
POLICY Review, Cesar Villanueva, 2004 ed.)
1. One exempting the 1. One limiting the
carrier from any and all liability of the carrier to IMPORTANT CONCEPTS:
liability for loss or an agreed valuation, 1. Bill of lading
damage occasioned by its unless the shipper 2. Obligations of the carrier
own negligence. declares a higher value 3. Right of abandonment
2. An unqualified and pays a higher rate 4. Notice of damage
limitation of liability to an of freight 5. Combined carrier agreement
agreed valuation. (H.E. Heacock
Company vs. BILL OF LADING
Macondray & Company The written acknowledgment of receipt of goods
Inc.) and agreement to transport them to a specific place
to a person named or to his order.
Rules:
However, the carrier cannot limit its liability for
1. It is not indispensable for the creation of a

contract of carriage. (Compania Maritima vs. 9. Custody One wherein the goods are
Insurance Company of North America, 12 SCRA already received by the carrier but the vessel
213) indicated therein has not yet arrived in the
port.
2. Ambiguity is construed against the carrier, the 10. Port One which is issued by the carrier to
contract being one of adhesion. whom the goods have been delivered, and
the vessel indicated in the bill of lading by
3. The consignee, although the instrument is which the goods are to be shipped is already
oftentimes drawn up only by the consignor and in the port where the goods are held for
carrier, becomes bound by all the stipulations shipment.
contained therein by making a claim for loss on the Functions:
basis of said bill of lading. (Sea-Land Services Inc. 1. Best evidence of the existence of the
vs. IAC) contract of carriage of cargo (Art. 353)
2. Document of title
4. The right of a party to recover for loss of 3. Receipt of cargo
shipment consigned to him under a bill of lading 4. Contract to transport and deliver goods as
drawn up only by and between the shipper and the stipulated
carrier, springs from either a relation of agency 5. Symbol of the goods
between him and the shipper, or his status as
stranger in whose favor some stipulation is made in OBLIGATIONS OF THE CARRIER
said contract, and who becomes a party thereto A. Duty to accept the goods
when he demands fulfillment of that stipulation. GENERAL RULE: A common carrier cannot
(Art. 1311 (2), (Mendoza vs. PAL Inc.) ordinarily refuse to carry a particular class of goods.
EXCEPTION: For some sufficient reason the
5. Acceptance of the bill of lading without dissent discrimination against the traffic in such goods is
raises the presumption that all the terms therein reasonable and necessary. (Fisher vs. Yangco
where brought to the knowledge of the shipper and Steamship Co. 31 Phil 1).
agreed to by him and, in the absence of fraud or Instances when the carrier may validly refuse to
mistake; he is estopped from thereafter denying accept the goods include the ff:
that he assented to such terms. (Notes and Cases 1.) Goods sought to be transported are dangerous
on the Law on Transportation and Public Utilities, objects, or substances including dynamite and other
Aquino, T. & Hernando, R.P. 2004 ed. p.261) explosives
2.) Goods are unfit for transportation
Kinds: 3.) Acceptance would result in overloading
1. On board - issued when the goods have 4.) Contrabands or illegal goods
been actually placed aboard the ship with 5.) Goods are injurious to health
very reasonable expectation that the 6.) Goods will be exposed to untoward danger like
shipment is as good as on its way. flood, capture by enemies and the like
2. Received - one in which it is stated that the 7.) Goods like livestock will be exposed to disease
goods have been received for shipment with 8.) Strike
or without specifying the vessel by which the 9.) Failure to tender goods on time. (Notes and
goods are to be shipped. Cases on the Law on Transportation and Public
3. Negotiable - one in which it is stated that Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p.68)
the goods referred to therein will be In case of carriage by railway, the carrier is
delivered to the bearer or to the order of exempted from liability if carriage is insisted upon
any person named therein. by the shipper, provided its objections are stated in
4. Non-negotiable - One in which it is stated the bill of lading.
that the goods referred to therein will be However, when a common carrier accepts cargo
delivered to a specified person. for shipment for valuable consideration, it takes the
5. Clean One which does not indicate any risk of delivering it in good condition as when it was
defect in the goods. loaded. (PAL vs. CA)
6. Foul One which contains a notation
thereon indicating that the goods covered by B. Duty to deliver the goods
it are in bad condition. Not only to transport the goods safely but to the
person indicated in the bill of lading. The goods
7. Spent One which covers goods that should be delivered to the consignee or any other
already have been delivered by the carrier person to whom the bill of lading was validly
without a surrender of a signed copy of the transferred or negotiated.
bill.
8. Through One issued by the carrier who is Time of delivery
obliged to use the facilities of other carriers Stipulated in No stipulation
as well as his own facilities for the purpose Contract/Bill of
of transporting the goods from the city of Lading
the seller to the city of the buyer, which bill 1. Carrier is bound to 1. Within a reasonable
of lading is honored by the second and other fulfill the contract and is time.
interested carriers who do not issue their liable for any delay; no 2. Carrier is bound to
own bills. matter from what cause forward them in the 1st

it may have arisen. shipment of the same or Prescriptive Period

similar goods which he Not provided by Article 366. Thus, in such
may make to the point absence, Civil Code rules on prescription apply.
of delivery. (ART. 358 If despite the notice of claim, the carrier refuses
Code of Commerce) to pay, action must be filed in court.
1. No bill of lading was issued:
Effects of delay within 6 years
a. Merely suspends and generally 2. Bill of lading was issued: within
does not terminate the contract 10 years.
of carriage ARTICLE 366 COGSA Sec.3 (6)
b. Carrier remains duty bound to Applicability
exercise extraordinary diligence 1. Domestic 1. International/
c. Natural disaster shall not free /inter- overseas/foreign (from
the carrier from responsibility island/coa foreign country to
(Art.1740) stwise Phils.)
d. If delay is without just cause, transport Note: subject to the
the contract limiting the ation rule on Paramount
common carriers liability cannot 2. Land, Clause
be availed of in case of loss or water, air 2. Water/maritime
deterioration of the goods transport transportation
(Art.1747) ation 3. Carriage of goods
3. Carriage
RIGHT OF CONSIGNEE TO ABANDON GOODS of goods
Instances: Notice of damage
1. Partial non- 1. 1.
delivery, where the Not
goods are useless
without the others 2. 2.
(Art. 363); 3-
2. Goods are
rendered useless Prescriptive period
for sale or None provided; Civil One year from the date
consumption for Code applies. of delivery (delivered
the purposes for but damaged goods),
which they are or date when the vessel
properly destined left port or from the
(Art. 365); and date of delivery to the
3. In case of delay arrastre (non-delivery
through the fault of or loss).
the carrier (Art.
371).
COMBINED CARRIER AGREEMENT (ART. 373)
NOTICE OF DAMAGE (ART. 366) GENERAL RULE: In case of a contract of
Requisites for applicability: transportation of several legs, each carrier is
1. Domestic/inter-island/coastwise transportation responsible for its particular leg in the contract.
2. Land/water/air transportation EXCEPTION: A combined carrier agreement where
3. Carriage of goods a carrier makes itself liable assuming the obligations
4. Goods shipped are damaged and acquiring as well the rights and causes of action
Rules: of those which preceded it.
a. Patent damage: shipper must file a claim against
the carrier immediately upon delivery (it may be B. MARITIME COMMERCE
oral or written) (Arts. 573-869)
b. Latent damage: shipper should file a claim
against the carrier within 24 hours from delivery. IMPORTANT CONCEPTS:
Note: These rules does not apply to misdelivery of 1. Merchant vessel
goods. (Roldan vs. Lim Ponzo) 2. Maritime lien and Preference of Credit
Purpose of notice: To inform the carrier that the 3. Doctrine of limited liability
shipment has been damaged, and it is charged with 4. Causes of revocation of voyage
liability therefore, and to give it an opportunity to 5. Participants in maritime commerce
make an investigation and fix responsibility while 6. Charter party
the matter is fresh. 7. Loans on bottomry and respondentia
The filing of notice of claim is a condition 8. Accidents in maritime commerce
precedent for recovery.
Shorter period may be stipulated by the parties MARITIME/ADMIRALTY LAW
because it merely affects the shippers remedy and It is the system of laws which particularly relates
does not affect the liability of the carrier. to the affairs and business of the sea, to ships, their
(PHILAMGEN vs. Sweetlines, Inc.) crews and navigation, and to maritime conveyance

of persons and property. (Notes and Cases on the Applicability

Law on Transportation and Public Utilities, Aquino & Overseas shipping only Both domestic and
Hernando, citing Francisco, p.254) overseas shipping
Kind of sale
Maritime laws apply only to maritime trade and Judicial Judicial and
sea voyages. (Pandect of Commercial Law and extrajudicial
Jurisprudence, Justice Jose Vitug, 1997 ed.) Order of Preference
A preferred mortgage The preferred mortgage
Arrastre service is not maritime in character. It shall have priority over lien shall have priority
refers to a contract for the unloading of goods from all claims against the over all claims against
a vessel. (ICTSI vs. Prudential Guarantee, 320 SCRA vessel, except the the vessel, except the
244) following preferences in following preferences in
the order stated: the order stated:
CHARACTERISTICS OF MARITIME 1. Judicial costs of the 1. Expenses and fees
TRANSACTION proceedings; allowed and costs taxed
1. Real - similar to transactions over real property 2. Taxes due the by the court and taxes
with respect to effectivity against third persons Philippine Government; due to the Government;
which is done through registration. (Rubiso vs. 3. Salaries and wages 2. Crews wages;
Rivera, 37 Phil. 72). The evidence of real nature is of the Captain and 3. General average;
shown by: 1) the limitation of the liability of the Crew of the vessel 4. Salvage, including
agents to the actual value of the vessel and the during its last voyage; contract salvage;
freight money; and 2) the right to retain the cargo 4. General average or 5. Maritime liens arising
and embargo and detention of the vessel (Luzon salvage including prior in time to the
Stevedoring Corp v. CA, 156 SCRA 169); contract salvage, recording of the
2. Hypothecary - the liability of the owner of the bottomry loans, and preferred mortgage;
value of the vessel is limited to the vessel itself indemnity due shippers 6. Damages arising out
(Doctrine of Limited Liability). for the value of goods of tort; and
transported but which 7. Preferred mortgage
The real and hypothecary nature of maritime law were not delivered to registered prior in time.
simply means that the liability of the carrier in the consignee;
connection with losses related to maritime contracts 5. Costs of repair and
is confined to the vessel, which stands as the equipment of the
guaranty for their settlement. (Aboitiz Shipping vessel, and provisioning
Corp. vs. General Accident Fire and Life Assurance of food, supplies and
Corp. 217 SCRA 359). fuel during its last
voyage; and
MERCHANT VESSEL 6. Preferred mortgages
Vessel engaged in maritime commerce, whether registered prior in time.
foreign or otherwise. (Bar Review Materials in
Commercial Law, Jorge Miravite, 2002 ed.)
Constitutes property which may be acquired and Effect of sale: All pre-existing claims in the vessel
transferred by any of the means recognized by law. are terminated. They will then be satisfied from the
They shall continue to be considered as personal proceeds of the sale subject to the order of
property. (Arts. 573, 585) preference.
They are susceptible to maritime liens such as for
the repair, equipping and provisioning of the vessel DOCTRINE OF LIMITED LIABILITY
in the preparation of a voyage, as well as mortgage (HYPOTHECARY RULE)
liabilities, in satisfaction of which a vessel may be Cases where applicable:
validly arrested and sold. (Ship Mortgage Decree of 1. Art. 587 civil liability for indemnities to
1978) third persons
2. Art. 590 indemnities from negligent acts
MARITIME LIEN of the captain (not the shipowner or ship
It constitutes a present right of property in the agent)
ship, a jus in re, to be afterward enforced in 3. Art. 837 collision
admiralty by process in rem. (PNB vs. CA, 337 SCRA 4. Art. 643 liability for wages of the
381) captain and the crew and for advances
If the maritime lien arose prior to the recording made by the ship agent if the vessel is
of a preferred mortgage, it shall have priority over lost by shipwreck or capture
the said mortgage lien. (PNB vs. CA, 337 SCRA 381)
GENERAL RULE: The liability of shipowner and
ship agent is limited to the amount of interest in
ORDER OF PREFERENCE IN CASE OF SALE OF said vessel such that where vessel is entirely lost,
VESSEL the obligation is extinguished. (Luzon Stevedoring v.
Escano, 156 SCRA 169) The interest extends to: 1)
R.A. 6106 P.D. 1521 the vessel itself; 2) equipments; 3) freightage; and
Effectivity date 4) insurance proceeds. (Chua v. IAC, 166 SCRA 183)
1969 1978 EXCEPTIONS:

1. Claims under Workmens Compensation (Abueg the

vs. San Diego 77 Phil 730); goods at
2. Injury or damage due to shipowner or to the the point
concurring negligence of the shipowner and of
the captain; destinati
3. The vessel is insured (Vasquez vs. CA 138 on.
SCRA 553).
4. Expenses for repair on vessel completed before CAUSES OF REVOCATION OF VOYAGE
loss; 1. War or interdiction of commerce;
5. In case there is no total loss and the vessel is 2. Blockade;
not abandoned; 3. Prohibition to receive cargo at destination;
6. Collision between two negligent vessels; 4. Embargo;
5. Inability of the vessel to navigate. (Art. 640)
Abandonment of the vessel is necessary to limit
the liability of the shipowner. The only instance Terms:
were abandonment is dispensed with is when the 1. Interdiction of commerce A governmental
vessel is entirely lost (Luzon Stevedoring vs. CA 156 prohibition of commercial intercourse intended
SCRA 169). to bring about an entire cessation for the time
being of all trade whatever.
RIGHT OF SHIPOWNER OR SHIP AGENT TO 2. Blockade A sort of circumvallation of a place
ABANDON VESSEL by which all foreign connection and
Instances: correspondence is, as far as human power can
1. In case of civil liability from indemnities to effect it, to be cut off.
third persons (Art. 587); 3. Embargo A proclamation or order of a state,
2. In case of leakage of at least of the usually issued in time of war or threatened
contents of a cargo containing liquids (Art. hostilities, prohibiting the departure of ships or
687); and goods from some or all the ports of such state
3. In case of constructive loss of the vessel until further order.
(Sec. 138, Insurance Code).
PARTICIPANTS IN MARITIME COMMERCE
RIGHT OF ABANDONMENT A. Shipowners and ship agents
B. Captains and masters of the vessel
SHIPOWNER OR SHIP CONSIGNEE C. Officers and crew of the vessel
AGENT D. Supercargoes
What may be abandoned E. Pilot
Vessel Goods shipped
Instances A. SHIPOWNERS AND SHIP AGENTS
1. In case of civil liability 1. Partial non-delivery, Shipowner (proprietario)
from indemnities to third where the goods are Person who has possession, control and
persons (Art. 587); useless without the management of the vessel and the consequent right
2. Sec. 138, Insurance others (Art. 363); to direct her navigation and receive freight earned
Code; 2. Goods are rendered and paid, while his possession continues.
3. In case of leakage of useless for sale or
at least of the consumption for the Ship agent (naviero)
contents of a cargo purposes for which they Person entrusted with provisioning and
containing liquids (Art. are properly destined representing the vessel in the port in which it may
687) (Art. 365); and be found; also includes the shipowner.
3. In case of delay Not a mere agent under civil law; he is solidarily
through the fault of the liable with the ship owner.
carrier (Art. 371). Powers and functions:
Effects 1. Capacity to trade;
1. Transfer of 1. Transfer 2. Discharge duties of the captain, subject to
ownership of of Art.609;
the vessel ownershi 3. Contract in the name of the owners with
from the p on the respect to repairs, details of equipment,
shipowner to goods armament, provisions of food and fuel, and
the shippers or from the freight of the vessel, and all that relate to the
insurer. shipper requirements of navigation;
2. In case of (2), to the 4. Order a new voyage, make a new charter or
the insurer carrier. insure the vessel after obtaining authorization
must pay the 2. Carrier from the shipowner or if granted in certificate
insured as if should of appointment.
there was pay the
actual total shipper Civil Liabilities of the Shipowner And Ship
loss of the the Agent
vessel. market
value of

1. All contracts of the captain, whether authorized 1. Bring on board the proper certificate and
or not, to repair, equip and provision the documents and a copy of the Code of
vessel; (Art. 586) Commerce;
2. Loss and damage to the goods loaded on the 2. Keep a Log Book, Accounting Book and
vessel without prejudice to their right to free Freight Book;
themselves from liability by abandoning the 3. Examine the ship before the voyage;
vessel to the creditors. (Art. 587) 4. Stay on board during the loading and
unloading of the cargo;
Duty of Ship Agent to Discharge the Captain 5. Be on deck while leaving or entering the
and Members of the Crew port;
If the seamen contract is not for a definite period 6. Protest arrivals under stress and in case
or voyage, he may discharge them at his discretion. of shipwreck;
(Art. 603) 7. Follow instructions of and render an
If for a definite period, he may not discharge accounting to the ship agent;
them until after the fulfillment of their contracts, 8. Leave the vessel last in case of wreck;
except on the following grounds: 9. Hold in custody properties left by
a. Insubordination in serious matters; deceased passengers and crew members;
b. Robbery; 10. Comply with the requirements of customs,
c. Theft; health, etc. at the port of arrival;
d. Habitual drunkenness; 11. Observe rules to avoid collision;
e. Damage caused to the vessel or to its 12. Demand a pilot while entering or leaving a
cargo through malice or manifest or proven port. (Art. 612)
negligence. (Art. 605)
A ships captain must be accorded a reasonable
B. CAPTAINS AND MASTERS measure of discretionary authority to decide what
They are the chiefs or commanders of ships. the safety of the ship and of its crew and cargo
The terms have the same meaning, but are specifically requires on a stipulated ocean voyage
particularly used in accordance with the size of the (Inter-Orient Maritime Enterprises Inc. vs. CA).
vessel governed and the scope of transportation,
i.e., large and overseas, and small and coastwise, No liability for the following:
respectively. 1. Damages caused to the vessel or to the
Nature of position (3-fold character): cargo by force majeure;
1. General agent of the shipowner; 2. Obligations contracted for the repair,
2. Technical director of the vessel; equipment, and provisioning of the vessel
3. Representative of the government of the unless he has expressly bound himself
country under whose flag he navigates. personally or has signed a bill of exchange
Qualifications: or promissory note in his name. (Art. 620)
1. Filipino citizen;
2. Legal capacity to contract; Solidary Liabilities of the Ship
3. Must have passed the required physical Agent/Shipowner for Acts Done by the
and mental examinations required for Captain towards Passengers and Cargoes
licensing him as such. (Art. 609) 1. Damages to vessel and to cargo due to
Inherent powers: lack of skill and negligence;
1. Appoint crew in the absence of ship 2. Thefts and robberies of the crew;
agent; 3. Losses and fines for violation of laws;
2. Command the crew and direct the vessel 4. Damages due to mutinies;
to its port of destination; 5. Damages due to misuse of power;
3. Impose correctional punishment on those 6. For deviations;
who, while on board vessel, fail to comply 7. For arrivals under stress;
with his orders or are wanting in 8. Damages due to non-observance of
discipline; marine regulations. (Art. 618)
4. Make contracts for the charter of vessel in
the absence of ship agent. C. OFFICERS AND CREW
5. Supply, equip, and provision the vessel; 1. Sailing Mate/First Mate
and 2. Second Mate
6. Order repair of vessel to enable it to 3. Engineers
continue its voyage. (Art. 610) 4. Crew
Sources of funds to comply with the inherent No liability under the following circumstances:
powers of the captain (in successive order): 1. If, before beginning voyage, captain attempts
1. From the consignee of the vessel; to change it, or a naval war with the power to
2. From the consignee of the cargo; which the vessel was destined occurs;
3. By drawing on the ship agent; 2. If a disease breaks out and be officially
4. By a loan on bottomry; declared an epidemic in the port of destination;
5. By sale of part of the cargo. (Art. 611) 3. If the vessel should change owner or captain.
Duties: (Art. 647)
Sailing Mate/First Mate

Second chief of the vessel who takes the place of 1. Perpetration of a crime;
the captain in case of absence, sickness, or death 2. Repeated insubordination, want of discipline;
and shall assume all of his duties, powers and 3. Repeated incapacity and negligence;
responsibilities. (Art. 627) 4. Habitual drunkenness;
Duties: 5. Physical incapacity;
1. Provide himself with maps and charts with 6. Desertion. (Art. 637)
astronomical tables necessary for the
discharge of his duties; Rules in case of Death of a Seaman
2. Keep the Binnacle Book; The seamans heirs are entitled to payment as
3. Change the course of the voyage on follows:
consultation with the captain and the 1. If death is natural:
officers of the boat, following the decision a. compensation up to time of death if
of the captain in case of disagreement; engaged on wage
4. Responsible for all the damages caused to b. if by voyage - half of amount if death
the vessel and the cargo by reason of his occurs on voyage out; and full, if on
negligence. (Arts. 628 - 631) voyage in
c. if by shares - none, if before departure;
Second Mate full, if after departure
Takes command of the vessel in case of the 2. if death is due to defense of vessel - full
inability or disqualification of the captain and the payment;
sailing mate, assuming in such case their powers 3. if captured in defense of vessel - full payment;
and responsibilities. 4. if captured due to carelessness - wages up to
Third in command the date of the capture. (Art. 645)
Duties:
1. Preserve the hull and rigging of the Complement of the Vessel
vessel; All persons on board, from the captain to the
2. Arrange well the cargo; cabin boy, necessary for the management,
3. Discipline the crew; maneuvers, and service, thus including the crew,
4. Assign work to crew members; the sailing mates, engineers, stokers and other
5. Inventory the rigging and equipment of employees on board not having specific
the vessel, if laid up. (Art. 632) designations.
Does not include the passengers or the persons
Engineers whom the vessel is transporting.
Officers of the vessel but have no authority
except in matters referring to the motor apparatus. D. SUPERCARGOES
When two or more are hired, one of them shall be Persons who discharges administrative duties
the chief engineer. assigned to him by ship agent or shippers, keeping
Duties: an account and record of transaction as required in
1. In charge of the motor apparatus, spare the accounting book of the captain. (Art. 649)
parts, and other instruments pertaining to
the engines; E. PILOT
2. Keep the engines and boilers in good A person duly qualified, and licensed, to conduct
condition; a vessel into or out of ports, or in certain waters.
3. Not to change or repair the engine The term generally connotes a person taken on
without authority of the captain; board at a particular place for the purpose of
4. Inform the captain of any damage to the conducting a ship through a river, road or channel,
motor apparatus; or from a port.
5. Keep an Engine Book; Master pro hac vice for the time being in the
6. Supervise all personnel maintaining the command and navigation of the ship.
engine. (Art. 632) While in exercising his functions a pilot is in sole
command of the ship and supersedes the master for
Crew the time being in the command and navigation of
The aggregate of seamen who man a ship, or the the ship, the master does not surrender his vessel
ships company. to the pilot and the pilot is not the master. There
Hired by the ship agent, where he is present and are occasions when the master may and should
in his absence, the captain hires them, preferring interfere and even displace the pilot, as when the
Filipinos, and in their absence, he may take in pilot is obviously incompetent or intoxicated (Far
foreigners, but not exceeding 1/5 of the crew. (Art. Eastern Shipping Company vs. CA).
634) Compulsory Pilotage States possessing harbors
have enacted laws or promulgated rules requiring
Classes of Seamans Contracts vessels approaching their ports to take on board
1. By the voyage; pilots licensed under the local laws. (Notes and
2. By the month; and Cases on the Law on Transportation and Public
3. By share of profits or freightage. Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p.
518)
Just Causes for the Discharge of Seaman
While Contract Subsists Liablity of Pilot

GENERAL RULE: On compulsory pilotage grounds,

the Harbor Pilot is responsible for damage to a LEASE CHARTER PARTY
vessel or to life or property due to his negligence. If for a definite period, Charterer may rescind
EXCEPT: lessee cannot give up charter party by paying
1. Accident caused by force majeure or natural the lease by paying a half of the freightage
calamity provided the pilot exercised prudence and portion of the amount agreed upon.
extra diligence to prevent or minimize damages. agreed upon.
2. Countermand or overrule by the master of the If the leased property is The new owner is not
vessel in which case the registered owner of the sold to one who knows compelled to respect the
vessel is liable. (Sec.11, Art.III PPA Admin Order 03- of the existence of the charter party so long as
85) lease, the new owner he can load the vessel
must respect the lease. with his own cargo. (Art.
SPECIAL CONTRACTS OF MARITIME 689)
COMMERCE Civil law concept Commercial law concept
1. Charter party
2. Bill of lading
3. Contract of transportation of passengers
on sea voyages CHARTER PARTY BILL OF LADING
4. Loan on bottomry An entire or complete More like a private
5. Loan on respondentia contract. receipt which the
6. Marine insurance captain gives to accredit
goods received from
CHARTER PARTY persons
A contract by virtue of which the owner or agent Consensual contract Real contract
binds himself to transport merchandise or persons
for a fixed price.
BAREBOAT OR CONTRACT OF
A contract by which an entire ship, or some
DEMISE CHARTER AFFREIGHTMENT
principal part thereof is let/leased by the owner to
(TIME OR VOYAGE
another person for a specified time or use. (Planters
CHARTER)
Products, Inc. vs. CA, 226 SCRA 476)
Charterer becomes Owner remains liable as
Parties:
liable to others caused carrier and must answer
1. Ship owner or ship agent
by its negligence for any breach of duty
2. Charterer
Charterer regarded as Charterer is not
Classes:
owner pro hac vice for regarded as owner.
1. Bareboat or demise The charterer provides
the voyage
crew, food and fuel. The charterer is liable as if he
were the owner, except when the cause arises from Owner of vessel The vessel owner retains
relinquishes possession, possession, command
the unworthiness of the vessel. The shipowner
leases to the charterer the whole vessel, command and and navigation of the
navigation to charterer ship
transferring to the latter the entire command,
possession and consequent control over the vessels
navigation, including the master and the crew, who Common carrier is Common carrier is not
thereby become the charters servants. It converted to private converted to a private
transforms a common carrier into a private carrier. carrier. carrier.
The charterer becomes the owner of the
vessel pro hac vice, just for that one particular
purpose only. Because the charterer is treated
as owner pro hac vice, the charterer assumes PERSONS WHO MAY MAKE A CHARTER
the customary rights and liabilities of the 1. Owner or owners of the vessel, either in
shipowner to third persons and is held liable for whole or in majority part, who have legal
the expense of the voyage and the wages of control and possession of the vessel
the seamen. 2. Charterer may subcharter entire vessel to
2. Contract of Affreightment A contract whereby 3rd person only if not prohibited in original
the owner of the vessel leases part or all of its space charter. (Art.679)
to haul goods for others. 3. Ship agent if authorized by the owner/s or
The shipowner retains the possession, given such power in the certificate of
command and navigation of the ship, the appointment. (Art.598)
charterer merely having use of the space in the 4. Captain in the absence of the ship agent
vessel in return for his payment of the charter or consignee and only if he acts in
hired. accordance with the instructions of the
Kinds: agent or owner and protects the latters
a. Time charter vessel is chartered for a interests. (Art.609)
fixed period of time or duration of voyage.
b. Voyage or trip charter the vessel is REQUISITES OF A VALID CHARTER PARTY
leased for one or series of voyages usually 1. Consent of the contracting parties
for purposes of transporting goods for 2. Existing vessel which should be placed at
charterer. the disposition of the shipper

3. Freight 5. To leave
4. Compliance with Art. 652 of the Code of the port
Commerce if the
charterer
does not
bring the
cargo
Clauses Which May Be Included In a Charter within
Party the lay
days and
Jason clause Clause paramount or extra lay
paramount clause days
A stipulation in a charter A clause in a charter allowed;
party that in case of a party providing that the 6. To place
maritime accident for COGSA shall apply, even in a
which the shipowner is though the vessel in
not responsible by law, transportation is a
contract or otherwise, domestic, subject to the condition
the cargo shippers, extent that any term of to
consignees or owners the bill of lading is navigate;
shall contribute with the repugnant to the COGSA 7. to bring
shipowner in general or applicable law, then cargo to
average. (Pandect of to the extent thereof the nearest
Commercial Law and provision of the bill of neutral
Jurisprudence, Justice lading is void. (Pandect port in
Jose Vitug, 1997 ed.) of Commercial Law and case of
Jurisprudence, Justice war or
Jose Vitug, 1997 ed.) blockade.
(Arts.
669-678)
Rescission of a Charter Party

At At Fortuitous
Rights and Obligations of Parties charterers shipowners causes
request request (Art. 690)
SHIPOWNER OR CHARTERER (Art 688) (Art. 689)
SHIP AGENT
1. If the 1. To pay the agreed 1. By 1. If the extra 1. War or
vessel is charter price; abandoning lay days interdiction of
chartered 2. To pay freightage the charter and terminate commerce;
wholly, on unboarded cargo; paying half of without the 2. Blockade;
not to 3. To pay losses to the freightage; cargo being 3. Prohibition
accept others for loading 2. Error in placed to receive
cargo uncontracted cargo and tonnage or alongside the cargo;
from illicit cargo; flag; vessel; 4. Embargo;
others; 4. To wait if the 3. Failure to 2. Sale by the and
2. To vessel needs repair; place the owner of the 5. Inability of
observe 5. To pay expenses vessel at the vessel before the vessel to
represent for deviation. (Arts. charterers loading by the navigate.
ed 679-687) disposal; charterer;
capacity; 4. Return of
3. To the vessel due
unload to pirates,
cargo enemies or bad
clandesti weather;
nely 5. Arrival at a
placed port for
4. To repairs.
substitut
e Terms:
another 1. Primage - bonus to be paid to the captain after
vessel if the successful voyage.
load is 2. Demurrage the sum fixed in the charter party
less than as a remuneration to the owner of the ship for
3/5 of the detention of his vessel beyond the number
capacity;

of days allowed by the charter party for loading of destination.

or unloading or for sailing.
3. Deadfreight the amount paid by or
recoverable from a charterer of a ship for the Forms:
portion of the ships capacity the latter 1. Public instrument
contracted for but failed to occupy. 2. Policy signed by the contracting parties and
4. Lay Days - days allowed to charter parties for the broker taking part therein
loading and unloading the cargo. 3. Private instrument (Art. 720)
5. Extra Lay Days days which follow after the Contents:
lay days have elapsed. 1. Kind, name and registry of the vessel;
2. Name, surname and domicile of the captain;
USUAL FORMS OF CONSUMMATING 3. Names, surnames and domiciles of the
CONTRACTS borrower and the lender;
1. C.I.F. cost, insurance and freight; 4. Amount of the loan and the premium
2. F.O.B. - free on board; stipulated;
3. F.A.S. - free alongside ship; and 5. Time for repayment;
4. C. & F. - cost and freight. 6. Goods pledged to secure repayment;
7. Voyage during which the risk is run (Art.721)
TRANSSHIPMENT OF GOODS
The act of taking cargo out of one ship and
loading it in another, or the transfer of goods from
the vessel stipulated in the contract of affreightment BOTTOMRY/ ORDINARY LOAN
to another vessel before the place of destination RESPONDENTIA (MUTUUM)
named in the contract has been reached, or the Not subject to Usury Subject to Usury Law
transfer for further transportation from one ship or Law
conveyance to another.
It is not dependent on the ownership of the Liability of the Not subject to any
transporting ships or in the change of carriers, but borrower is contingent contingency (absolute
rather on the fact of actual physical transfer of on the safe arrival of liability)
cargo from one vessel to another. the vessel or cargo at
If done without legal excuse, however competent destination
and safe the vessel into which the transfer is made,
is a violation of contract and infringement of right of The last lender is a The first lender is a
shipper and subjects carrier to liability if freight is preferred creditor preferred creditor
lost event by cause otherwise excepted. (Magellan
Manufacturing vs. CA, 201 SCRA 102)
WHEN LOAN ON BOTTOMRY OR
LOAN ON BOTTOMRY AND RESPONDENTIA RESPONDENTIA REGARDED AS SIMPLE LOAN
A real, unilateral, aleatory contract, by virtue of 1. Lender loaned an amount larger than the
which one person lends to another a certain amount value of the object due to fraudulent
of money or goods on things exposed to maritime means employed by the borrower.
risks, which amount, with its earnings, is to be (ART.726)
returned if the things are safely transported, and 2. Full amount of the loan is not used for the
which is lost if the latter are lost. cargo or given on the goods if all of them
could not have been loaded, the balance
will be considered a simple loan.
LOAN ON LOAN ON (ART.727)
BOTTOMRY RESPONDENTIA 3. If the effects on which the money is taken
Definition is not subjected to any risk. (ART.729)
Loan made by Loan taken on security
shipowner or ship of the cargo laden on a Note: Under existing laws, the parties to a loan,
agent guaranteed by vessel, and repayable whether ordinary or maritime, may agree on any
vessel itself and upon safe arrival of rate of interest. (CB Circular 905)
repayable upon arrival cargo at destination.
of vessel at (Art. 719)
destination. (Art. 719) MARINE INSURANCE LOAN ON
BOTTOMRY OR
RESPONDENTIA
Who may contract Indemnity is paid after the Indemnity is paid in
Shipowner or ship Only the owner of the loss has occurred advance by way of
agent. Outside of the cargo. a loan
residence of the In case of loss of the vessel In case of loss of
owners - the captain. due to a risk insured the vessel due to a
Common elements: against, the obligation of marine peril, the
1. Exposure of security to marine peril; the insurer becomes obligation of the
2. Obligation of the debtor conditioned only absolute borrower to pay is
upon safe arrival of the security at the point extinguished

Consensual contract Real contract property, and not the voyage, which constitutes the
true foundation of general average. (A. Magsaysay,
Hypothecary Nature of Bottomry/ Inc. vs. Agan, G.R.No. L-6393, Jan. 31, 1955)
Respondentia
GENERAL RULE: The obligation of the borrower to
pay the loan is extinguished if the goods given as PARTICULAR OR GROSS OR GENERAL
security are absolutely lost by reason of an accident SIMPLE
of the sea, during the voyage designated, and if it is Definition
proven that the goods were on board. Damages or expenses Damages or expenses
EXCEPTIONS: caused to the vessel or deliberately caused in
1. Loss due to inherent defect; cargo that did not inure order to save the
2. Loss due to the barratry on the part of the to the common benefit, vessel, its cargo or both
captain; and borne by respective from real and known
3. Loss due to the fault or malice of the borrower; owners. (Art. 809) risk. (Art. 811)
4. The vessel was engaged in contraband; and Requisites
5. The cargo loaded on the vessel be different in 1. common danger;
from that agreed upon. 2. deliberate
sacrifice;
Concurrence of Marine Insurance and Loan on 3. success;
Bottomry/Respondentia 4. proper formalities
1. The insurable interest of the owner of a and legal steps.
ship hypothecated by bottomry is only the Liability
excess of the value over the amount The owner of the goods All the persons having
secured by bottomry. (Sec. 101, which gave rise to the an interest in the vessel
Insurance Code) expense or suffered the and the cargo therein
2. The value of what may be saved in case damage shall bear this at the time of the
of shipwreck shall be divided between the average. (Art. 810) occurrence of the
lender and the insurer in proportion to the average shall contribute
interest of each one. (Art. 735) to satisfy this average.
(Art. 812)
Note: If a vessel is hypothecated by bottomry only The insurers
the excess is insurable, since a loan on bottomry (Art.859) and lenders
partakes of the nature likewise of an insurance on bottomry and
coverage to the extent of the loan accommodation. respondentia shall
The same rule would apply to the hypothecation of likewise contribute.
the cargo by respondentia. (Pandect of Commercial (Art.732).
Law and Jurisprudence, Justice Jose Vitug, 1997 Number of interests involved
ed.) Only one interest Several interests
involved involved
ACCIDENTS IN MARITIME COMMERCE
Share in the damage or expense
1. Averages
100% share In proportion to the
2. Arrival Under Stress
value of the owners
3. Collision
property saved
4. Shipwreck
Right to recover
AVERAGE No reimbursement There may be
An extraordinary or accidental expense incurred reimbursement
during the voyage in order to preserve the cargo, Kinds (not exclusive)
vessel or both, and all damages or deterioration Art. 809 Art. 811
suffered by the vessel from departure to the port of Procedure for recovery
destination, and to the cargo from the port of 1. Assembly and
loading to the port of consignment. (Art. 806) deliberation
The person whose property has been saved must 2. Resolution of the
contribute to reimburse the damage caused or captain
expense incurred if the situation constitutes general 3. Entry of the
average. resolution in the
Classes: logbook
1. Particular or Simple Average 4. Detailed minutes
2. Gross or General Average 5. Delivery of the
Where both vessel and cargo are saved, it is minutes to the
general average; where only the vessel or only the maritime judicial
cargo is saved, it is particular average. authority of the
Expenses incurred to refloat a vessel, which first port, within
accidentally ran aground, in order to continue its 24 hours from
voyage, do not constitute general average. Not only arrival,
is there absence of a marine peril, common safety 6. Ratification by
factor, and deliberateness. It is the safety of the captain under

oath. (Arts. 813- convenient port instead of the port of destination, if

814) during the voyage the vessel cannot continue the
trip to the port of destination.
GOODS NOT COVERED BY GENERAL AVERAGE
EVEN IF SACRIFICED When lawful When Who bears
1. Goods carried on deck. (ART.855) unlawful expenses:
2. Goods not recorded in the books or
records of the vessel. (ART.855 (2)) The inability to 1. Lack of The shipowner
3. Fuel for the vessel if there is more than continue provisions or ship agent is
sufficient fuel for the voyage. (Rule IX, voyage is due due to liable in case of
York-Antwerp Rule) to lack of negligence unlawful arrival
provisions, to carry under stress.
Jettison well-founded according But they shall
Act of throwing cargo overboard in order to fear of seizure, to usage not be liable
lighten the vessel. privateers, and for the
Order of goods to be cast overboard: pirates, or customs; damages
1. Those which are on the deck, preferring accidents of 2. Risk of caused by
the heaviest one with the least utility and the sea enemy not reason of a
value; disabling it to well lawful arrival.
2. Those which are below the upper deck, navigate. (Art. known or (Art. 821)
beginning with the one with greatest 819) manifest
weight and smallest value. (Art. 815) 3. Defect of
vessel due
Jettisoned goods are not res nullius nor deemed to
abandoned within the meaning of civil law so as to improper
be the object of occupation by salvage. (Pandect of repair; and
Commercial Law and Jurisprudence, Justice Jose 4. Malice,
Vitug, 1997 ed.) negligence
In order that the jettisoned goods may be , lack of
included in the gross or general average, the foresight
existence of the cargo on board should be proven or skill of
by means of the bill of lading. (Art. 816) captain.
(Art. 820)
York-Antwerp (Y-A) Rules on Determining
Liability for Averages With Regard To Deck It is the duty of the captain to continue the
Cargo voyage without delay after the cause of the arrival
1. Deck cargo is allowed only in under stress has ceased failing in such duty renders
domestic/coastwise/inter-island him liable. However, in case the cause has been risk
shipping, and is prohibited in of enemies, there must first be an assembly before
international/overseas/foreign shipping. departure. (Art. 825)
2. If deck cargo is loaded with the consent Steps:
of the shipper on overseas trade, it must 1. Captain should determine during the
always contribute to general average, voyage if there is well founded fear of
but should the same be jettisoned, it seizure, privateers and other valid
would not be entitled to reimbursement grounds;
because there is violation of the Y-A 2. Captain shall assemble the officers and
Rules. summon the persons interested in the
3. If deck cargo is loaded with the consent cargo who may attend the meeting but
of the shipper on coastwise shipping, it without a right to vote;
must always contribute to general 3. The officers shall determine and agree if
average and if jettisoned would be there is well-founded reason after
entitled to reimbursement. examining the circumstances. The
Reason: In domestic shipping, voyages are captain shall have the deciding vote;
usually short and the seas are generally not rough. 4. The agreement shall be drafted and the
In overseas shipping, the vessel is exposed for proper minutes shall be signed and
many days to perils of the sea. entered in the log book;
5. Objections and protests shall likewise be
DOMESTIC INTERNATIONAL entered in the minutes.
Deck cargo is allowed Deck cargo is not
allowed COLLISION
With shippers consent Impact of two vessels both of which are moving.
General average Particular average
Without shippers consent Allision
Captain is liable Captain is liable Impact between a moving vessel and a stationary
one.
ARRIVAL UNDER STRESS (ARRIBADA)
The arrival of a vessel at the nearest and most Nautical Rules to Determine Negligence

1. When two vessels are about to enter a port, (Urrutia and Co. v. Baco River Plantation Co., 26
the farther one must allow the nearer to enter PHIL 632)
first; if they collide, the fault is presumed to be
imputable to the one who arrived later, unless Cases Covered By Collision and Allision
it can be proved that there was no fault on its 1. One vessel at fault
part. Vessel at fault is liable for damage caused to
2. When two vessels meet, the smaller should innocent vessel as well as damages suffered by the
give the right of way to the larger one. owners of cargo of both vessels. (Art. 826)
3. A vessel leaving port should leave the way 2. Both vessels at fault
clear for another which may be entering the Each vessel must bear its own loss, but the
same port. shippers of both vessels may go against the
4. The vessel which leaves later is presumed to shipowners who will be solidarily liable. (Art. 827)
have collided against one which has left earlier. 3. Vessel at fault not known
5. There is a presumption against the vessel Each vessel must bear its own loss, but the
which sets sail in the night. shippers of both vessels may go against the
6. There is a presumption against the vessel with shipowners who will be solidarily liable. (Art. 828)
spread sails which collides with another which Doctrine of Inscrutable Fault In case of
is at anchor and cannot move, even when the collision where it cannot be determined which
crew of the latter has received word to lift between the two vessels was at fault, both
anchor, when there was not sufficient time to vessels bear their respective damage, but both
do so or there was fear of a greater damage or should be solidarily liable for damage to the
other legitimate reason. cargo of both vessels.
7. There is a presumption against an improperly 4. Third vessel at fault
moored vessel. The third vessel will be liable for losses and
8. There is a presumption against a vessel which damages. (Art. 831)
has no buoys to indicate the location of its 5. Fortuitous event/force majeure
anchors to prevent damage to vessels which No liability. Each bears its own loss. (Art. 830)
may approach it.
9. Vessels must have proper look-outs or The doctrine of res ipsa loquitur applies in case a
persons trained as such and who have no other moving vessel strikes a stationary object, such as a
duty aside therefrom. (Smith Bell v. CA) bridge post, dock, or navigational aid. (Far Eastern
Shipping v. CA, Luzon Stevedoring vs. CA)
Nautical Rules as to Sailing Vessel and
Steamship Even if the cause of action against the common
1. Where a steamship and a sailing vessel are carrier is based on quasi-delict, the defense of due
approaching each other from opposite diligence in the selection and supervision of
directions, or on intersecting lines, the employees is unavailing in case of a maritime tort
steamship from the moment the sailing vessel resulting in collision. It is not a civil tort governed by
is seen, shall watch with the highest diligence the Civil Code but a maritime one governed by Arts.
her course and movements so as to be able to 826-839 of the Code of Commerce. (Manila
adopt such timely means of precaution as will Steamship vs. Insa Abdulhaman)
necessarily prevent the two boats from coming
in contact. Doctrine of Last Clear Chance and Rule on
2. The sailing vessel is required to keep her Contributory Negligence cannot be applied in
course unless the circumstances require collision cases because of Art.827 of the Code of
otherwise. Commerce. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
Zones of Time in the Collision of Vessels Hernando, R.P. 2004 ed.)
1. First zone all time up to the moment when risk
of collision begins. MARITIME PROTEST
No rule is as yet applicable for none is necessary. Condition precedent or prerequisite to recovery of
2. Second zone time between moment when risk damages arising from collisions and other maritime
of collision begins and moment it becomes a accidents.
practical certainty. It is a written statement made under oath by the
It is in this period where conduct of the vessels is captain of a vessel after the occurrence of an
primordial. It is in this zone that vessels must strictly accident or disaster in which the vessel or cargo is
observe nautical rules, unless a departure therefrom lost or damaged, with respect to the circumstances
becomes necessary to avoid imminent danger. attending such occurrence, for the purpose of
3. Third zone time when collision is certain and recovering losses and damages.
time of impact. Excuses for not filing protest: 1) where the
An error in this zone would no longer be legally interested person is not on board the vessel; and 2)
consequential. on collision time, need not be protested. (Art. 836)
Error in Extremis - sudden movement made by a Cases applicable:
faultless vessel during the third zone of collision 1. Collision (Art. 835);
with another vessel which is at fault during the 2nd 2. Arrival under stress (Art. 612(8));
zone. Even if such sudden movement is wrong, no 3. Shipwrecks (Arts. 612(15), 843);
responsibility will fall on said faultless vessel. 4. Where the vessel has gone through a

hurricane or when the captain believes and delivers it to the carrier for transportation. The
that the cargo has suffered damages or carrier does not participate in the counting of the
averages (Art. 624). merchandise for loading into the container, the
Who makes: Captain actual loading, and the sealing of the container. (US
When made: within 24 hours from the time the Lines v. Comm. Of Customs, ICTSI v. Prudential
collision took place. Guarantee)
Before whom made: competent authority at the The matter of quantity, description and
point of collision or at the first port of arrival, if in conditions of the cargo inside the container is the
the Philippines and to the Philippine consul, if the sole responsibility of the shipper, unless there is
collision took place abroad. (Art. 835) stipulation to the contrary. (US Lines vs. Comm. Of
Customs, Reyma Brokerage v. Phil. Home
SHIPWRECK Assurance)
It is the loss of the vessel at sea as a
consequence of its grounding, or running against an Note: In order to attribute to the carrier any
object in sea or on the coast. It occurs when the damage to the shipment that may be found,
vessel sustains injuries due to a marine peril inspection of the goods should be done at pier-side.
rendering her incapable of navigation. (Bankers vs. CA)
If the wreck was due to malice, negligence or
lack of skill of the captain, the owner of the vessel III. CARRIAGE OF GOODS BY SEA ACT/COGSA
may demand indemnity from said captain. (Art. 841) (C.A. No. 65)
The rules on collision or allision, as may be
pertinent, can equally apply to shipwrecks. APPLICABILITY
The transportation must be:
SPECIAL CONCEPTS 1. Water/maritime transportation;
ARRASTRE SERVICE 2. for the carriage of goods; and
A contract for the unloading of goods from a 3. overseas/international/foreign (from
vessel. foreign port to Philippine port).
Applicability: Overseas trade only. (Commercial It can be applied in domestic sea transportation if
Law Review, C. Villanueva, 2004 ed.) agreed upon by the parties. (Clause paramount or
Significance: When a person brings in cargo paramount clause)
from abroad, he cannot unload and deliver the
cargo by himself. The unloading must be done by IMPORTANT FEATURES:
the arrastre operator, which will then deliver the 1. Amount of carriers liability
cargo to the importer. (Commercial Law Review, C. 2. Notice of damage
Villanueva, 2004 ed.) 3. Prescriptive period
Nature of business: It is a public utility,
discharging functions which are heavily invested AMOUNT OF CARRIERS LIABILITY
with public interest. Under the Sec. 4(5), the liability limit is set at
Liability: $500 per package or customary freight unit unless
1. Similar to a warehouseman (Lua Kian v. Manila the nature and value of such goods is declared by
Railroad) the shipper. This is deemed incorporated in the bill
2. Similar to a common carrier (Northern Motors of lading even if not mentioned in it. (Eastern
v. Prince Line) Shipping vs. IAC, 150 SCRA 463)
3. Solidary liability with the common carrier Note that Art. 1749, NCC applies to
domestic/inter-island/coastwise trade.
Note: In order that the arrastre operator may be
held liable, the consignee must prove that the NOTICE OF DAMAGE (SEC. 3(6))
damage was due to the negligence and while the Rules:
goods are in the custody of the arrastre operator. a. Patent damage: shipper should file a claim with
(Hartford Fire Insurance v. E. Razon, Inc.) the carrier immediately upon delivery
b. Latent damage: shipper should file a claim with
STEVEDORING SERVICE the carrier within three days from delivery.
The carriage of goods from the warehouse or
pier to the holds of the vessel. (Chief of Staff vs. Note: The filing of a notice of claim is not a
CIR) condition precedent.
As understood in the port business, the term
consists of the handling of cargo from the hold of PRESCRIPTIVE PERIOD
the ship to the dock, in case of pier-side unloading; Action for loss or damage to the cargo should be
or to a barge, in case of unloading at sea. (Anglo-Fil brought within one year after:
Trading Corp. vs. Lazaro) a. Delivery of the goods (delivered but
The loading on the ship of outgoing cargo is also damaged goods); or
part of stevedoring work. (Ibid.) b. The date when the goods should have
been delivered (non-delivery). (Sec. 3[6])
CONTAINERIZATION/ SAID-TO-CONTAIN/
SHIPPERS LOAD AND COUNT SYSTEM Loss or Damage as applied to the COGSA
System whereby the shipper loads his cargoes in contemplates a situation where no delivery at all
a specially designed container, seals the container was made by the shipper of the goods because the

same had perished, gone out of commerce, or the parties as a single operation, whether it has
disappeared in such a way that their existence is been agreed upon under the form of a single
unknown or they cannot be recovered. Thus, it is contract or of a series of contracts, and it shall not
inapplicable in case of misdelivery or conversion. lose its international character merely because one
(Ang vs. American Steamship Agencies Inc.) and contract or a series of contracts is to be performed
damage arising from delay or late delivery (Mitsui entirely within a territory subject to the sovereignty,
O.S.K. Lines Ltd. vs. CA). In such instance the, Civil suzerainty, mandate, or authority of the same High
Code rules on prescription shall apply. Contracting Party. (Art. 1 Sec.3)
The one-year prescriptive period is suspended WHEN INAPPLICABLE

by: 1. When public policy is contradicted;
1. The express agreement of the parties 2. If the requirements under the Convention
(Universal Shipping Lines, Inc. vs. IAC, are not complied with.
188 SCRA 170)
2. The filing of an action in court until it is IMPORTANT CONCEPTS:
dismissed. (Stevens & Co. vs. 1. Transportation documents
Nordeutscher Lloyd, 6 SCRA 180) a. Passenger ticket
b. Baggage check
The one-year period shall run from delivery of the c. Air way bill
last package and is not suspended by extrajudicial 2. Liability of the carrier for damages
demand. (Dole Phils.,Inc. vs. Maritime Co.,148 SCRA a. Death or injury to passengers
118) b. Loss or damage to baggage or goods
c. Delay
The one-year period shall run from delivery to the 3. Successive carrier agreement
arrastre operator and not to the consignee. (Union 4. Jurisdiction
Carbide Phils, Inc. vs. Manila Railroad Co.,SCRA 5. Combined transportation agreement
359)
PASSENGER BAGGAGE AIR WAYBILL
The insurer exercising its right of subrogation is TICKET CHECK
bound by the one-year prescriptive period. Passenger Checked-in Goods to be
However, it does not apply to the claim against the baggage shipped
insurer for the insurance proceeds. (Fil. Merchants
Ins. Co. vs. Alejandro; Mayer Steel Pipe Corp. vs. LIABILITY OF CARRIER FOR DAMAGES
CA) 1. Death or injury of a passenger if the accident
causing it took place on board the aircraft or in the
IV. WARSAW CONVENTION OF 1929 (WC) course of its operations of embarking or
disembarking; (Art. 17)
PURPOSE: To protect the emerging air 2. Destruction, loss or damage to any baggage or
transportation industry and to secure the uniformity goods, if it took place during the transportation by
of recovery by the passengers. air; (Art. 18) and
APPLICABILITY Transportation by air The period during which
The transportation must be: the baggage or goods are in the charge of the
1. International transportation; carrier, whether in an airport or on board an
2. Air transportation; and aircraft, or, in case of a landing outside an airport,
3. Carriage of passengers, baggage or in any place whatsoever.
goods. It includes any transportation by land or water
The WC shall also apply to fortuitous outside an airport if such takes place in the
transportation by aircraft performed by an air performance of a contract for transportation by air,
transportation enterprise. for the purpose of loading, delivery, or
transshipment.
International transportation - any transportation 3. Delay in the transportation of passengers,
in which the place of departure and the place of baggage or goods. (Art. 19)
destination are situated either:
1. Within the territories of two High Note: The Hague Protocol amended the WC by
Contracting Parties regardless of whether or removing the provision that if the airline took all
not there be a break in the transportation or necessary steps to avoid the damage, it could
transshipment, or exculpate itself completely (Art. 20(1)). (Alitalia vs.
2. Within the territory of a single High IAC, 192 SCRA 9)
Contracting Party, if there is an agreed
stopping place within a territory subject to the LIMIT OF LIABILITY (Art. 22, as amended by
sovereignty, mandate or authority of another Guatemala Protocol, 1971; Alitalia vs. IAC)
power, even though that power is not a party 1. Passengers
to the Convention. (round trip, Am. Jur.) GENERAL RULE: $100,000 per passenger
EXCEPTION: Agreement to a higher limit
Transportation to be performed by several
successive air carriers shall be deemed to be one
undivided transportation, if it has been regarded by

2. Checked-in baggage In United Airlines vs. Uy the two-year prescriptive

GENERAL RULE: $20 per kilogram period was not applied where the airline employed
EXCEPTION: In case of special declaration of delaying tactics.
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the RULE IN CASE OF VARIOUS SUCCESSIVE
declared sum unless it proves the sum is greater CARRIERS
than actual value. 1. Carriage of passengers
3. Hand-carried baggage GENERAL RULE: Action is filed only against the
$1000/passenger carrier in which the accident or delay occurred.
4. Goods to be shipped EXCEPTION: Agreement or contract whereby the
GENERAL RULE: $20 per kilogram first carrier assumed liability for the whole journey.
EXCEPTION: In case of special declaration of 2. Carriage of baggage or goods
value and payment of a supplementary sum by a. Passenger or consignor can file an action
consignor, carrier is liable to not more than the against the first carrier and the carrier in
declared sum unless it proves the sum is greater which the damage occurred
than actual value. b. Passenger or consignee can file an action
against the last carrier and the carrier in
An agreement relieving the carrier from liability or which the damage occurred.
fixing a lower limit is null and void. (Art. 23) These carriers are jointly and severally
Carrier is not entitled to the foregoing limit if the liable. (Art. 30)
damage is caused by willful misconduct or default
on its part. (Art. 25) A contract of international carriage by air,
although performed by different carriers under a
Thus, the WC does not operate as an exclusive series of airline tickets constitutes a single
enumeration of the instances of an absolute limit of operation. Members of the International Air
the extent of liability. It does not preclude the Transportation Association (IATA) are under a
application of the Civil Code and other pertinent general pool partnership agreement wherein they
local laws. It does not regulate or exclude liability act as agent of each other in the issuance of tickets
for other breaches of contract by the carrier, or to contracted passengers to boost ticket sales
misconduct of its employees, or for some particular worldwide and at the same time provide passengers
or exceptional type of damage. (Alitalia vs. CA) easy access to airlines which are otherwise
inaccessible in some parts of the world. (American
In PanAm v. IAC, the WC was applied as regards Airlines vs. CA)
the limitation on the carriers liability, there being a
simple loss of baggage without any improper Under a general pool partnership agreement, the
conduct on the part of the officials or employees of ticket-issuing airline is the principal in a contract of
the airline or other special injury sustained by the carriage while the endorsee-airline is the agent.
passenger. The obligation of the former remained and did not
cease even when the breach occurred not on its
In KLM Royal v. Tuller, the WC has invariably own flight but on that of another airline which had
been held inapplicable, or as not restrictive of the undertaken to carry the passengers to one of their
carriers liability, where there was satisfactory destinations. (China Airlines vs. Chiok)
evidence of malice or bad faith attributable to its
officers and employees. (Alitalia vs. IAC) JURISDICTION
At the option of the plaintiff, the action for
damages may be filed in the:
a. Court of domicile of the carrier;
ACTION FOR DAMAGES b. Court of its principal place of business;
1. Notice of claim c. Court where it has a place of business
A written complaint must me made within: through which the contract has been
a. 3 days from receipt of baggage made; or
b. 7 days from receipt of goods d. Court of the place of destination. (Art.
c. In case of delay, 14 days from receipt of 28(1))
baggage/goods NOTE: It is the passengers ultimate destination
The complaint is a condition precedent. Without not an agreed stopping place that determines the
the complaint, the action is barred except in case of country where suit is to be filed.
fraud on the part of the carrier. (Art. 26) The forum of action provided in Art. 28(1) is a
matter of jurisdiction rather than of venue. (Santos
2. Prescriptive period III vs. Northwest; 2A C.J.S.)
Action must be filed within 2 years from:
a. date of arrival at the destination V. SALVAGE LAW (Act No. 2616)
b. date of expected arrival
c. date on which the transportation stopped. SALVAGE
(Art. 29) Two concepts:
1. Services one person renders to the owner of a
ship or goods, by his own labor, preserving the
goods or the ship which the owner or those

entrusted with the care of them have either Requires success, Success is not required
abandoned in distress at sea, or are unable to otherwise no payment
protect or secure.
2. Compensation allowed to persons by whose Must be done with the Only the consent of the
voluntary assistance a ship at sea or her cargo or consent of the tugboat owner is
both have been saved in whole or in part from captain/crewmen needed
impending sea peril, or such property recovered
Vessel must be Vessel need not be
from actual peril or loss, as in cases of shipwreck,
involved in an accident involved in an accident
derelict or recapture.
Requisites:
1. Valid object of salvage; Fees distributed Fees belong to the
2. Object must have been exposed to marine among crewmen tugboat owner
peril (not perils of the ship);
3. Services rendered voluntarily (neither an RULES ON SALVAGE REWARD
existing duty nor out of a pre-existing 1. The reward is fixed by the RTC judge in the
contract); absence of agreement or where the latter is
4. Services are successful, total or partial. excessive. (Sec. 9)
Subjects of Salvage: 2. The reward should constitute a sufficient
1. Ship itself; compensation for the outlay and effort of the
2. Jetsam goods which are cast into the sea, and salvors and should be liberal enough to offer
there sink and remain under water; an inducement to others to render services in
3. Floatsam or Flotsam goods which float upon the similar emergencies in the future.
sea when cast overboard; 3. If sold (no claim being made within 3 months
4. Ligan or Lagan goods cast into the sea tied to a from publication), the proceeds, after
buoy, so that they may be found again by the deducting expenses and the salvage claim,
owners (p.173, Judge Diaz). shall go to the owner; if the latter does not
Persons who have no right to a reward for claim it within 3 years, 50% of the said
salvage: proceeds shall go to the salvors, who shall
1. Crew of the vessel saved; divide it equitably, and the other half to the
2. Person who commenced Salvage in spite of government. (Secs. 11-12)
opposition of the Captain or his representative; 4. If a vessel is the salvor, the reward shall be
3. In accordance with Sec. 3 of the Salvage Law, distributed as follows:
a person who fails to deliver a salvaged vessel or a. 50% to the shipowner;
cargo to the Collector of Customs. b. 25% to the captain; and
Derelict a ship or her cargo which is

abandoned and deserted at sea by those who are in c. 25% to the officers and crew in
charge of it, without any hope of recovering it, or proportion to their salaries. (Sec. 13)
without any intention of returning to it.
Taking passengers from a sinking ship, without
The intention of those in charge must be rendering any service in rescuing the vessel, is not a
ascertained. If those in charge left with the intention salvage service, being a duty of humanity and not
of returning, or of procuring assistance, the property for reward.
is not derelict, but if they quitted the property with
the intention of finally leaving it, it is derelict and a VI. PUBLIC SERVICE ACT
change of their intention and an attempt to return (C.A. No. 146)
will not change its nature (Erlanger & Galinger vs.
Swedish East Asiatic Co. Ltd.). PURPOSES:
1. To secure adequate, sustained service for
If it is clear that the intention to return is slight, the public at the least possible cost;
the salvage which was done thereafter is considered 2. To protect the public against
valid. (Notes and Cases on the Law on unreasonable charges and poor,
Transportation and Public Utilities, Aquino, T. & inefficient service;
Hernando, R.P. 2004 ed. p. 616) 3. To protect and secure investments in
public services;
CONTRACT OF TOWAGE 4. To prevent ruinous competition.
A contract whereby one vessel, usually
motorized, pulls another, whether loaded or not AUTHORITY TO OPERATE PUBLIC SERVICES
with merchandise, from one place to another, for a GENERAL RULE: No public service shall operate
compensation. It is a contract for services rather without having been issued a certificate of public
than a contract of carriage. convenience or a certificate of public convenience
and necessity.
EXCEPTIONS:
SALVAGE TOWAGE 1. Warehouses;
Governed by special Governed by Civil Code 2. Animal drawn vehicles and bancas moved
law (Act No. 2616) on contract of lease by oar or sail;
3. Airships, except for the fixing of maximum

rates for fare and freight; 207 SCRA 343, Raymundo vs. Luneta Motor Co.)
4. Radio companies, except for rates fixing;
5. Public services owned or operated by the REQUREMENTS FOR GRANTING CPC OR CPCN
government, except as to rates fixing; 1. Applicant must be a citizen of the Philippines or
6. Ice plants; and a corporation or entity 60% of the capital of
7. Public markets. which is owned by such citizens;
2. Applicant must prove public necessity;
PUBLIC SERVICE 3. Applicant must prove that the operation of the
A person who owns, operates, manages or public service proposed and the authorization
controls in the Philippines for hire or compensation, to do business will promote the public interest
with general or limited clientele, whether on a proper and suitable manner;
permanent, occasional or accidental, and done for 4. Applicant must have sufficient financial
general business purposes, any common carrier or capability to undertake the proposed services
public utility, ice plants, power and water supplies, and meeting the responsibilities incident to its
communication and similar public services. (Sec. operation.
13b, CA 146)
A casual or incidental service devoid of public
character and interest is not brought within the POWERS POWERS
category. The question depends on such factors as REQUIRING PRIOR EXERCISABLE
the extent of services, whether such person or NOTICE AND WITHOUT PRIOR
company has held himself or itself out as ready to HEARING NOTICE AND
serve the public or a portion of the public generally. HEARING
(Luzon Stevedoring vs. PSC)
1. Issuance of CPC 1. Investigation any
NOTE: The Public Service Commission created or CPCN; matter concerning
under the Public Service Law has already been 2. Fixing of rates, public service;
abolished under P.D. No. 1 and other issuances. It tolls, and 2. Requiring
has been replaced by the following government charges; operators to
agencies: LTO; LTFRB; ATO; BOE; NTC; NEA; ERB; 3. Setting up of furnish safe,
NWRC; CAB; and MIA. standards and adequate, and
classifications; proper service;
4. Establishment of 3. Requiring public
CERTIFICATE OF CERTIFICATE OF rules to secure services to pay
PUBLIC PUBLIC accuracy of all expenses of
CONVENIENCE CONVENIENCE AND meters and all investigation;
(CPC) NECESSITY (CPCN) measuring 4. Valuation of
appliances; properties of
5. Issuance of public utilities;
An authorization An authorization orders requiring 5. Examination and
issued by the issued by the establishment or test of measuring
appropriate appropriate maintenance of appliances;
government agency for government agency for extension of 6. Grant of special
the operation of public the operation of public facilities; permits to make
services for which no service for which a 6. Revocation, or extra or special
franchise, either prior franchise is modification of trips in territories
municipal or required by law; e.g. CPC or CPCN; specified in the
legislative, is required telephone and other 7. Suspension of CPC certificate;
by law, e.g., common services. or CPCN, except when 7. Uniform
carriers. it is necessary to accounting system
avoid serious and and furnishing of
irreparable damage or annual reports;
inconvenience to the 8. Compelling
A CPC or a CPCN constitutes neither a franchise public or private compliance with
nor a contract, confers no property right, and is a interest, in which the laws and
mere license or a privilege. The holder of said case, a suspension regulations.
certificate does not acquire a property right in the not more than 30
route covered thereby. Nor does it confer upon the days may be ordered,
holder any proprietary right or interest or franchise prior to the hearing.
in the public highways. Revocation of this certificate (Soriano v. Medina,
deprives him of no vested right. New and additional 164 SCRA 36)
burdens, alteration of the certificate, or even
revocation or annulment thereof is reserved to the UNLAWFUL ACTS OF PUBLIC UTILITY
State. (Luque vs. Villegas, 30 SCRA 408) COMPANIES
1. Engagement in public service business without
It is a property and has a considerable value first securing the proper certificate;
and can be the subject of sale or attachment.
(Cogeo-Cubao Operators and Drivers Assn. vs. CA,

2. Providing or maintaining unsafe, improper or A rate is just and reasonable if it conforms to the
inadequate service as determined by the following requirements:
proper authority; 1. One which yields to the carrier a fair
3. Committing any act of unreasonable and unjust return upon the value of the property
preferential treatment to any particular person, employed in performing the service; and
corporation or entity as determined by the 2. One which is fair to the public for the
proper authority; service rendered.
4. Refusing or neglecting to carry public mail
upon request. (Secs. 18 and 19) REGISTERED OWNER RULE
The registered owner of a certificate of public
ACTS REQUIRING PRIOR APPROVAL convenience is liable to the public for the injuries or
1. Establish and maintain individual or joint rates; damages suffered by third persons caused by the
2. Establish and operate new units; operation of said vehicle, even though the same had
3. Issue free tickets; been transferred to a third person.
4. Issue any stock or stock certificates The registered owner is not allowed to escape
representing an increase of capital; responsibility by proving that a third person is the
5. Capitalize any franchise in excess of the actual and real owner Reason: It would be easy for
amount actually paid to the Government; him, by collusion with others or otherwise, to
6. Sell, alienate, mortgage or lease property, transfer the responsibility to an indefinite person, or
certificates or franchise. to one who possesses no property with which to
respond financially for the damage or injury done.
Under Sec. 20(g) of C.A. No. 146, the sale, etc. (Erezo, et al. vs. Jepte 102 Phil 103).
may be negotiated and completed before the
approval by the proper authority. Its approval is not KABIT SYSTEM
a condition precedent to the validity of the contract. A system whereby a person who has been
The approval is necessary only to protect public granted a certificate of public convenience allows
interest. other persons who own motor vehicles to operate
under such license, for a fee or percentage of such
PRIOR OPERATOR/OLD OPERATOR RULE earnings. It is void and inexistent under Art. 1409,
The rule allowing an existing franchised operator Civil Code.
to invoke a preferential right within the authorized Effects:
territory as long as he renders satisfactory and 1. The transfer, sale, lease or assignment of the
economical service. privilege granted is valid between the
The policy is not to issue a certificate to a second contracting parties but not upon the public or
operator to cover the same field and in competition third persons. (Gelisan vs. Alday, 154 SCRA
with a first operator who is rendering sufficient, 388)
adequate and satisfactory service. The prior
operator must first be given an opportunity to
improve its service, if inadequate or deficient.
Purpose: To prevent ruinous and wasteful
competition in order that the interests of the public
would be conserved and preserved.
It subordinates the prior applicant rule which

gives the first applicant priority only if things and
circumstances are equal.
Where the operator either fails or neglects to

make the improvement or effect the increase in
services, especially when given the opportunity, new
operators should be given the chance to give the
services needed by the public.
PRIOR APPLICANT RULE

Presupposes a situation when two interested
persons apply for a certificate to operate a public
utility in the same community over which no person
has as yet granted any certificate. If it turns out,
after the hearing, that the circumstances between
the two applicants are more or less equal, then the
applicant who applied ahead of the other, will be
granted the certificate.
2. The registered owner is primarily liable for all
RATE-FIXING POWER the consequences flowing from the operations
The rate to be fixed must be just, founded upon of the carrier.
conditions which are fair and reasonable to both the The public has the right to assume that the
owner and the public. registered owner is the actual or lawful owner

thereof. It would be very difficult and often

impossible, as a practical matter, for the public
to enforce their rights of action that they may
have for injuries inflicted by the vehicle if they
should be required to prove who the actual
owner is. (Benedicto vs. IAC, 187 SCRA 547)
3. The thrust of the law in enjoining the kabit
system is to identify the person upon whom
responsibility may be fixed with the end in view
of protecting the riding public (Lim vs. CA 373
SCRA 394).
4. The registered owner cannot recover from the
actual owner and the latter cannot obtain
transfer of the vehicle to himself, both being in
pari delicto. (Teja Marketing vs. IAC)
5. For the better protection of the public, both the
registered owner and the actual owner are
jointly and severally liable with the driver.
(Zamboanga Transportation Co. vs. CA)


San Beda College of Law: Contract of Transportation/ Carriage

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

San Beda College of Law: Contract of Transportation/ Carriage

Hochgeladen von

Copyright:

Verfügbare Formate

San Beda College of Law 54

MEMORY AID IN COMMERCIAL LAW

CONTRACT OF TRANSPORTATION/ CARRIAGE Steamship Agency, 23 SCRA 24)

COMMERCIAL LAW COMMITTEE

Applicable to Water/maritime and Air Requisites:

COVERAGE 4. CHARACTER OF THE GOODS OR DEFECTS IN

COMMERCIAL LAW COMMITTEE

Extraordinary diligence Ordinary diligence Perez)

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Art.1735 Civil Code Art.1755 Civil Code

COMMERCIAL LAW COMMITTEE

1. Ordinary circumstance: Exercise of 1. Exercise of extraordinary diligence (Art.

1. Reduction of degree of diligence to ordinary Stipulation limiting liability when a passenger is

The diligence required in the carriage of the goods

COMMERCIAL LAW COMMITTEE

other equipment used in the contract of carriage.

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

it may have arisen. shipment of the same or Prescriptive Period

COMMERCIAL LAW COMMITTEE

of persons and property. (Notes and Cases on the Applicability

COMMERCIAL LAW COMMITTEE

1. Claims under Workmens Compensation (Abueg the

COMMERCIAL LAW COMMITTEE

Sailing Mate/First Mate

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

GENERAL RULE: On compulsory pilotage grounds,

COMMERCIAL LAW COMMITTEE

Rescission of a Charter Party

COMMERCIAL LAW COMMITTEE

of days allowed by the charter party for loading of destination.

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

oath. (Arts. 813- convenient port instead of the port of destination, if

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

The one-year prescriptive period is suspended WHEN INAPPLICABLE

COMMERCIAL LAW COMMITTEE

2. Checked-in baggage In United Airlines vs. Uy the two-year prescriptive

COMMERCIAL LAW COMMITTEE

Derelict a ship or her cargo which is

COMMERCIAL LAW COMMITTEE

COMMERCIAL LAW COMMITTEE

It subordinates the prior applicant rule which

Where the operator either fails or neglects to

PRIOR APPLICANT RULE

COMMERCIAL LAW COMMITTEE

thereof. It would be very difficult and often

COMMERCIAL LAW COMMITTEE

Das könnte Ihnen auch gefallen