Transportation Law Reviewer SAN BEDA PDF

San Beda College of Law
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MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ even if he did not secure a Certificate of

CARRIAGE Public Convenience (De Guzman vs. CA,
A contract whereby a person, natural or 168 SCRA 612).
juridical, obligates to transport persons, It makes no distinction as to the means of
goods, or both, from one place to another, transporting, as long as it is by land, water or
by land, air or water, for a price or air. It does not provide that the
compensation. transportation should be by motor vehicle.
Classifications: (First Philippine Industrial Corporation vs.
1. Common or Private CA)
2. Goods or Passengers One is a common carrier even if he has
3. For a fee (for hire) or Gratuitous no fixed and publicly known route, maintains
4. Land, Water/maritime, or Air no terminals, and issues no tickets (Asia
5. Domestic/inter-island/coastwise or Lighterage Shipping, Inc. vs. CA).
International/foreign Characteristics:
It is a relationship which is imbued with 1. Undertakes to carry for all people
the public interest. indifferently and thus is liable for
refusal without sufficient reason
COMMON CARRIER (Lastimoso vs. Doliente, October 20,
Persons, corporations, firms or 1961);
associations engaged in the business of 2. Cannot lawfully decline to accept a
carrying or transporting passengers or particular class of goods for carriage to
goods or both, by land, water, or air, for the prejudice of the traffic in these
compensation, offering their services to the goods;
public (Art. 1732, Civil Code). 3. No monopoly is favored (Batangas
Art. 1732 of the New Civil Code avoids Trans. vs. Orlanes, 52 PHIL 455);
any distinction between one whose principal 4. Provides public convenience.
business activity is the carrying of persons
or goods or both and one who does such PRIVATE CARRIER
carrying only as an ancillary activity One which, without being engaged in the
(sideline). It also avoids a distinction business of carrying as a public
between a person or enterprise offering employment, undertakes to deliver goods or
transportation service on a regular or passengers for compensation. (Home
scheduled basis and one offering such Insurance Co. vs. American Steamship
service on an occasional, episodic or Agency, 23 SCRA 24)
unscheduled basis.
Neither does the law distinguish between TESTS WHETHER CARRIER IS
a carrier offering its services to the general COMMON OR PRIVATE:
public that is the general community or The SC in First Philippine Industrial
population and one who offers services or Corporation vs. CA (1995) reiterated the
solicits business only from a narrow following tests:
segment of the general population. 1. It must be engaged in the business of
A person or entity is a common carrier carrying goods for others as a public
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)
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employment and must hold itself out 5. Exempting circumstance
as ready to engage in the Prove caso fortuito,
transportation of goods generally as a extraordinary Art. 1174 NCC
business and not as a casual diligence and
occupation; Art. 1733, NCC
2. It must undertake to carry goods of 6.Presumption of negligence
the kind to which its business in There is a No
confined; presumption of presumption of
3. It must undertake to carry by the fault or fault or
method by which his business is negligence negligence
conducted and over its established 7.Governing law
roads; and Law on Law on
4. The transportation must be for hire. common obligations and
In National Steel Corp. vs. CA (1997) the carriers contracts
SC held that the true test of a common
carrier is the carriage of goods or GOVERNING LAWS
passengers provided it has space for all who A. Domestic/inter-island/coastwise
opt to avail themselves of its transportation Applicable to Land, Water, and Air
for a fee. transportation
1. Civil Code - primary
2. Code of Commerce (Arts. 349, 379,
COMMON PRIVATE 573-734, 580, 806-845) - suppletory
CARRIER CARRIER
1. As to availability B. International/foreign/overseas
Holds himself Contracts with (Foreign country to Philippines)
out for all particular Applicable to Water/maritime and Air
people individuals or transportation
indiscriminately groups only The law of the country of destination
2. As to required diligence generally applies.
Extraordinary Ordinary 1. Civil Code - primary
diligence is diligence is 2. Code of Commerce - suppletory
required required 3. Others - suppletory
3. As to regulation a. Water/maritime: Carriage of Goods
Subject to Not subject to by Sea Act (COGSA)
State State b. Air: Warsaw Convention
regulation regulation
4. Stipulation limiting liability I. NEW CIVIL CODE
Parties may Parties may (Arts. 1732-1766)
not agree on limit the
limiting the carriers REQUIREMENT OF EXTRAORDINARY
carriers liability liability, DILIGENCE
except when provided it is Rendition of service with the greatest skill
provided by not contrary to and utmost foresight. (Davao Stevedore Co.
law law, morals or v. Fernandez)
good customs Rationale:
Property)
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1. From the nature of the business and intended for passengers.
for reasons of public policy (Art. 1733)
2. Relationship of trust DEFENSES OF A COMMON CARRIER IN
3. Business is impressed with a special THE CARRIAGE OF GOODS
public duty 1. CASO FORTUITO/FORCE MAJEURE
4. Possession of the goods Requisites:
5. Preciousness of human life a. Must be the proximate and only cause
A common carrier is not an absolute of the loss
insurer of all risks of travel. b. Exercise of due diligence to prevent or
minimize the loss before, during or after
COVERAGE the occurrence of the disaster (Art. 1739)
1. Vigilance over goods (Arts. 1734-1754); c. Carrier has not negligently incurred in
and delay in transporting the goods (Art.
2. Safety of passengers (Arts. 1755-1763). 1740)
Fire is not considered a natural disaster
PASSENGER or calamity as it arises almost invariably
A person who has entered into a contract from some act of man. (Eastern Shipping
of carriage, express or implied, with the Lines Inc. vs. IAC)
carrier. They are entitled to extraordinary Mechanical defects are not force majeure
diligence from the common carrier. if the same was discoverable by regular and
The following are not considered adequate inspections. (Notes and Cases on
passengers, and are entitled to ordinary the Law on Transportation and Public
diligence only: Utilities, Aquino, T. & Hernando, R.P. 2004
a. One who has not yet boarded any part ed. p.120-122)
of a vehicle regardless of whether or
not he has purchased a ticket; 2. ACTS OF PUBLIC ENEMY
b. One who remains on a carrier for an Requisites:
unreasonable length of time after he a. Must be the proximate and only cause
has been afforded every safe of the loss
opportunity to alight; b. Exercise of due diligence to prevent or
c. One who has boarded by fraud, minimize the loss before, during or after
stealth, or deceit; the act causing the loss, deterioration or
d. One who attempts to board a moving destruction of the goods (Art. 1739)
vehicle, although he has a ticket,
unless the attempt be with the 3. NEGLIGENCE OF THE SHIPPER OR
knowledge and consent of the carrier; OWNER
e. One who has boarded a wrong a. Sole and proximate cause: absolute
vehicle, has been properly informed of defense
such fact, and on alighting, is injured b. Contributory: partial defense. (Art.
by the carrier; 1741)
f. Invited guests and accommodation
passengers. (Lara vs. Valencia) 4. CHARACTER OF THE GOODS OR
g. One who rides any part of the vehicle DEFECTS IN THE PACKING OR IN THE
which is unsuitable or dangerous or CONTAINER
which he knows is not designed or Even if the damage should be caused by
Property)
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the inherent defect/character of the goods, LIABILITY OF A COMMON CARRIER FOR
the common carrier must exercise due DEATH OR INJURIES TO PASSENGERS
diligence to forestall or lessen the loss. (Art. DUE TO ACTS OF ITS EMPLOYEES AND
1742) OTHER PASSENGERS OR STRANGERS
The carrier which, knowing the fact of
improper packing of the goods upon FOR ACTS
ordinary observation, still accepts the goods FOR ACTS OF OF OTHER
notwithstanding such condition, is not ITS PASSENGER
relieved of liability or loss or injury resulting EMPLOYEES S OR
therefrom. (Southern Lines, Inc. v. CA, 4 STRANGERS
SCRA 258) Required diligence and defense
Extraordinary Ordinary
5. ORDER OR ACT OF PUBLIC diligence diligence
AUTHORITY Nature of liability
Said public authority must have the power Tort; however, Not absolute;
to issue the order (Art. 1743). Consequently, The employee limited by Art.
where the officer acts without legal process, must be on 1763
the common carrier will be held liable. duty at the time
(Ganzon v. CA 161 SCRA 646) of the act.
Diligence in the selection and supervision (Maranan v.
of employees under Article 2180 of the Civil Perez)
Code cannot be interposed as a defense by
the common carrier because the liability of The carrier is liable when its personnel
the carriers arises from the breach of the allowed a passenger to drive the vehicle
contract of carriage. The defense under said causing it to collide with another vehicle
articles is applicable to negligence in quasi- resulting to the injuries suffered by the other
delicts under Art. 2176. (Del Prado v. Manila passengers. (MRR vs. Ballesteros, 16 SCRA
Electric Co., 52 Phil 900) 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, Death or injury to the passengers
destruction, or deterioration of the
goods
Duration of liability
From the time the goods are The duty of a common carrier to
unconditionally placed in the provide safety to its passengers
possession of, and received by so obligates it not only during the
Property)
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the carrier for transportation until course of the trip, but for so long
the same are delivered actually or as the passengers are within its
constructively by the carrier to the premises and where they ought
consignee or to the person who to be in pursuance to the contract
has the right to receive them. (Art. of carriage. (LRTA v. Navidad,
1736) [2003])
It remains in full force and effect All persons who remain on the
even when they are temporarily premises within a reasonable
unloaded or stored in transit time after leaving the
unless the shipper or owner has conveyance are to be deemed
made use of the right of stoppage passengers, and what is a
in transitu. (Art. 1737) reasonable time or a reasonable
It continues to be operative delay within this rule is to be
even during the time the goods determined from all the
are stored in a warehouse of the circumstances, and includes a
carrier at the place of destination reasonable time to see after his
until the consignee has bee baggage and prepare for his
advised of the arrival of the goods departure. (La Mallorca v. CA, 17
and has had reasonable SCRA 739 ; Abiotiz Shipping
opportunity thereafter to remove Corporation v. CA, 179 SCRA
them or otherwise dispose of 95)
them. (Art. 1738) It is the duty of common
Delivery of goods to the carriers of passengers to stop
custom authorities is not delivery their conveyances a reasonable
to the consignee. (Lu Do v. length of time in order to afford
Binamira, 101 Phil 120) passengers an opportunity to
enter, 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 Reason: The contract between
goods were damaged in transit is the passenger and the carrier
a matter peculiarly within the imposes on the latter the duty to
knowledge of the carrier and its transport the passenger safely;
employees. (Mirasol v. Dollar, 53 hence the burden of explaining
PHIL 124) should fall on the carrier.
Property)
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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: 1. Exercise of extraordinary

Exercise of extraordinary diligence (Art. 1756)
diligence (Art. 1735) 2. Caso fortuito
2. Special circumstances:
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)

Property)
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Valid stipulations
1. Reduction of degree of Stipulation limiting liability when a

diligence to ordinary diligence, passenger is carried gratuitously,
provided it be: but not for willful acts or gross
a) In writing, signed by the negligence. (Art. 1758)
shipper or owner;
b) Supported by a valuable
consideration other than
the service rendered by the
carriers; and
c) Reasonable, just and not
contrary to public policy.
(Art. 1744)
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 Dispensing with or lessening the

transported at the risk of the extraordinary responsibility of a
Property)
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owner or shipper; common carrier for the safety of
2. That carrier will not be liable passengers imposed by law by
for any loss, destruction or stipulation, by posting of notices,
deterioration of the goods; by statements on tickets or
3. That the carrier need not otherwise. (Art. 1757)
observe any diligence in the
custody of the goods;
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)

Property)
RULES ON PASSENGERS BAGGAGE he is riding and of the driver of another
IN THE IN THE vehicle, the drivers as well as the owners of
CUSTODY OF CUSTODY the two vehicles are jointly and severally
THE OF THE liable for damages. It makes no difference
PASSENGERS COMMON that the liability of the bus driver and owner
(HAND- CARRIER springs from contract while that of the owner
CARRIED) (CHECKED- and driver of the other vehicle arises from
IN) quasi-delict. (Fabre vs. CA)
Legal nature of the baggage
Necessary Considered LIMITATIONS AS TO CARRIERS
deposit as goods LIABILITY
Required diligence by the INVALID AS VALID &
common carrier BEING ENFORCEAB
Diligence of a Extraordinary CONTRARY LE
depositary diligence TO PUBLIC
(ordinary POLICY
diligence) 1. One 1. One limiting
Applicable rules exempting the the liability of
Arts. 1998 and Arts. 1733- carrier from any the carrier to
2000-2003 1753 and all liability an agreed
for loss or valuation,
CONCURRING CAUSES OF ACTION damage unless the
ARISING FROM THE NEGLIGENT ACT OF occasioned by shipper
THE COMMON CARRIER its own declares a
1. Culpa contractual (breach of contract) negligence. higher value
Only the carrier is primarily liable and not 2. An and pays a
the driver, because there is no privity unqualified higher rate of
between the driver and the passenger. limitation of freight
Basis: Art.1759, NCC. liability to an (H.E. Heacock
agreed Company vs.
No defense of due diligence in the
valuation. Macondray &
selection and supervision of employees.
Company
Inc.)
2. Culpa aquiliana (quasi-delict)
The carrier and driver are solidarily liable However, the carrier cannot limit its liability
as joint tortfeasors. for injury to, or loss of, goods shipped where
Basis: Art. 2180, NCC. such injury or loss was caused by its own
Defense of due diligence in the selection negligence.
and supervision of employees is available. (Shewaram vs. PAL, 17 SCRA 606)
Exception: maritime tort resulting in collision.
(See notes on Collision) SPECIAL RULES ON LIABILITES OF
AIRLINE CARRIERS
3. Culpa criminal (criminal negligence) 1. In case of flight diversion due to bad
The driver is primarily liable. The carrier is weather or other circumstances beyond the
subsidiarily liable only if the driver is pilots control, the relation between the
convicted and declared insolvent. carrier and the passenger continues until the
Basis: Art. 100, RPC. latter has been landed at the port of
destination and has left the carriers
In case of injury to a passenger due to the premises. The carrier should necessarily
negligence of the driver of the bus on which exercise extraordinary diligence in
safeguarding the comfort, convenience and 3. Right of abandonment
safety of its stranded passengers until they 4. Notice of damage
have reached their final destination. 5. Combined carrier agreement
(Philippine Airlines vs. CA, 226 SCRA 423)
2. Even where overbooking of passengers is BILL OF LADING
allowed as a commercial practice, the airline The written acknowledgment of receipt of
company would still be guilty of bad faith and goods and agreement to transport them to a
still be liable for damages if it did not specific place to a person named or to his
properly inform passenger that it could order.
breach the contract of carriage even if they Rules:
were confirmed passengers. (Zalamea vs. 1. It is not indispensable for the creation of
CA, 228 SCRA 23) a contract of carriage. (Compania Maritima
3. An open-dated ticket constitutes a vs. Insurance Company of North America,
complete contract between the carrier and 12 SCRA 213)
passenger. Hence, the airline company is
liable if it refused to confirm a passengers 2. Ambiguity is construed against the carrier,
flight reservation. (Singson vs. CA, 282 the contract being one of adhesion.
SCRA 149)
4. An airline company which issued a 3. The consignee, although the instrument is
confirmed ticket to a passenger covering oftentimes drawn up only by the consignor
successive trips on different airlines can be and carrier, becomes bound by all the
held liable for damages occasioned by stipulations contained therein by making a
bumping off by one of the successive claim for loss on the basis of said bill of
airlines. (Lufthansa German Airlines vs. CA, lading. (Sea-Land Services Inc. vs. IAC)
238 SCRA 290)
5. An airline ticket providing that carriage by 4. The right of a party to recover for loss of
successive air carriers is to be regarded as a shipment consigned to him under a bill of
single operation is to make the issuing lading drawn up only by and between the
carrier liable for the tortuous conduct of the shipper and the carrier, springs from either a
other carrier. A printed provision in the ticket relation of agency between him and the
limiting liability only to its own conduct is not shipper, or his status as stranger in whose
enough to rebut that liability. (KLM Royal favor some stipulation is made in said
Dutch Airlines vs. CA, 65 SCRA 237) contract, and who becomes a party thereto
when he demands fulfillment of that
II. CODE OF COMMERCE stipulation. (Art. 1311 (2), (Mendoza vs. PAL
Inc.)
A. OVERLAND TRANSPORTATION
(Arts. 349-379) 5. Acceptance of the bill of lading without
dissent raises the presumption that all the
Applicability terms therein where brought to the
1. Domestic land and water/maritime knowledge of the shipper and agreed to by
transportation. (Pandect of Commercial Law him and, in the absence of fraud or mistake;
and Jurisprudence, Justice Jose Vitug, 1997 he is estopped from thereafter denying that
ed.) he assented to such terms. (Notes and
2. Domestic Air Transportation. (Commercial Cases on the Law on Transportation and
Law Review, Cesar Villanueva, 2004 ed.) Public Utilities, Aquino, T. & Hernando, R.P.
2004 ed. p.261)
IMPORTANT CONCEPTS:
1. Bill of lading Kinds:
2. Obligations of the carrier 1. On board - issued when the goods have
been actually placed aboard the ship as stipulated
with very reasonable expectation that 5. Symbol of the goods
the shipment is as good as on its way.
2. Received - one in which it is stated that OBLIGATIONS OF THE CARRIER
the goods have been received for A. Duty to accept the goods
shipment with or without specifying the GENERAL RULE: A common carrier
vessel by which the goods are to be cannot ordinarily refuse to carry a particular
shipped. class of goods.
3. Negotiable - one in which it is stated EXCEPTION: For some sufficient reason
that the goods referred to therein will be the discrimination against the traffic in such
delivered to the bearer or to the order of goods is reasonable and necessary. (Fisher
any person named therein. vs. Yangco Steamship Co. 31 Phil 1).
4. Non-negotiable - One in which it is Instances when the carrier may validly
stated that the goods referred to therein refuse to accept the goods include the ff:
will be delivered to a specified person. 1.) Goods sought to be transported are
5. Clean One which does not indicate dangerous objects, or substances including
any defect in the goods. dynamite and other explosives
6. Foul One which contains a notation 2.) Goods are unfit for transportation
thereon indicating that the goods 3.) Acceptance would result in overloading
covered by it are in bad condition. 4.) Contrabands or illegal goods
5.) Goods are injurious to health
7. Spent One which covers goods that 6.) Goods will be exposed to untoward
already have been delivered by the danger like flood, capture by enemies and
carrier without a surrender of a signed the like
copy of the bill. 7.) Goods like livestock will be exposed to
8. Through One issued by the carrier disease
who is obliged to use the facilities of 8.) Strike
other carriers as well as his own 9.) Failure to tender goods on time. (Notes
facilities for the purpose of transporting and Cases on the Law on Transportation
the goods from the city of the seller to and Public Utilities, Aquino, T. & Hernando,
the city of the buyer, which bill of lading R.P. 2004 ed. p.68)
is honored by the second and other In case of carriage by railway, the carrier
interested carriers who do not issue is exempted from liability if carriage is
their own bills. insisted upon by the shipper, provided its
9. Custody One wherein the goods are objections are stated in the bill of lading.
already received by the carrier but the However, when a common carrier
vessel indicated therein has not yet accepts cargo for shipment for valuable
arrived in the port. consideration, it takes the risk of delivering it
10. Port One which is issued by the in good condition as when it was loaded.
carrier to whom the goods have been (PAL vs. CA)
delivered, and the vessel indicated in
the bill of lading by which the goods are B. Duty to deliver the goods
to be shipped is already in the port
Not only to transport the goods safely but
where the goods are held for shipment.
to the person indicated in the bill of lading.
Functions: The goods should be delivered to the
1. Best evidence of the existence of the consignee or any other person to whom the
contract of carriage of cargo (Art. 353) bill of lading was validly transferred or
2. Document of title negotiated.
3. Receipt of cargo
4. Contract to transport and deliver goods
3. Carriage of goods
Time of delivery 4. Goods shipped are damaged
Stipulated in No stipulation Rules:
Contract/Bill a. Patent damage: shipper must file a claim
of Lading against the carrier immediately upon
1. Carrier is 1. Within a delivery (it may be oral or written)
bound to fulfill reasonable b. Latent damage: shipper should file a
the contract time. claim against the carrier within 24 hours
and is liable for 2. Carrier is from delivery.
any delay; no bound to Note: These rules does not apply to
matter from forward them misdelivery of goods. (Roldan vs. Lim
what cause it in the 1st Ponzo)
may have shipment of Purpose of notice: To inform the carrier
arisen. the same or that the shipment has been damaged, and it
similar goods is charged with liability therefore, and to give
which he may it an opportunity to make an investigation
make to the and fix responsibility while the matter is
point of fresh.
delivery. (ART. The filing of notice of claim is a condition
358 Code of precedent for recovery.
Commerce) Shorter period may be stipulated by the
parties because it merely affects the
Effects of delay shippers remedy and does not affect the
a. Merely suspends and generally does not liability of the carrier. (PHILAMGEN vs.
terminate the contract of carriage Sweetlines, Inc.)
b. Carrier remains duty bound to exercise Prescriptive Period
extraordinary diligence Not provided by Article 366. Thus, in such
c. Natural disaster shall not free the carrier absence, Civil Code rules on prescription
from responsibility (Art.1740) apply.
d. If delay is without just cause, the contract If despite the notice of claim, the carrier
limiting the common carriers liability cannot refuses to pay, action must be filed in court.
be availed of in case of loss or deterioration 1. No bill of lading was issued:
of the goods (Art.1747) within 6 years
2. Bill of lading was issued: within
RIGHT OF CONSIGNEE TO ABANDON 10 years.
GOODS ARTICLE 366 COGSA
Instances: Sec.3 (6)
1. Partial non-delivery, where the goods are Applicability
useless without the others (Art. 363); 1. Dom 1. International
2. Goods are rendered useless for sale or estic/inter- /
consumption for the purposes for which they island/coastwis overseas/forei
are properly destined (Art. 365); and e gn (from
3. In case of delay through the fault of the transportation foreign
carrier (Art. 371). 2. Land country to
, water, air Phils.)
NOTICE OF DAMAGE (ART. 366) transportation Note: subject
Requisites for applicability: 3. Carri to the rule on
1. Domestic/inter-island/coastwise age of goods Paramount
transportation Clause
2. Land/water/air transportation 2.
Water/maritim 6. Charter party
e 7. Loans on bottomry and respondentia
transportation 8. Accidents in maritime commerce
3. Carriage of
goods MARITIME/ADMIRALTY LAW
Notice of damage It is the system of laws which particularly
1. 1. Not a relates to the affairs and business of the
Condition condition sea, to ships, their crews and navigation,
precedent precedent and to maritime conveyance of persons and
2. 2. 3-day period property. (Notes and Cases on the Law on
24-hour period for claiming Transportation and Public Utilities, Aquino &
for claiming latent damage Hernando, citing Francisco, p.254)
latent damage
Prescriptive period Maritime laws apply only to maritime
None provided; One year from trade and sea voyages. (Pandect of
Civil Code the date of Commercial Law and Jurisprudence, Justice
applies. delivery Jose Vitug, 1997 ed.)
(delivered but
damaged Arrastre service is not maritime in
goods), or character. It refers to a contract for the
date when the unloading of goods from a vessel. (ICTSI vs.
vessel left port Prudential Guarantee, 320 SCRA 244)
or from the
date of CHARACTERISTICS OF MARITIME
delivery to the TRANSACTION
arrastre (non- 1. Real - similar to transactions over real
delivery or property with respect to effectivity against
loss). third persons which is done through
registration. (Rubiso vs. Rivera, 37 Phil. 72).
COMBINED CARRIER AGREEMENT The evidence of real nature is shown by: 1)
(ART. 373) the limitation of the liability of the agents to
GENERAL RULE: In case of a contract of the actual value of the vessel and the freight
transportation of several legs, each carrier is money; and 2) the right to retain the cargo
responsible for its particular leg in the and embargo and detention of the vessel
contract. (Luzon Stevedoring Corp v. CA, 156 SCRA
EXCEPTION: A combined carrier 169);
agreement where a carrier makes itself 2. Hypothecary - the liability of the owner of
liable assuming the obligations and the value of the vessel is limited to the
acquiring as well the rights and causes of vessel itself (Doctrine of Limited Liability).
action of those which preceded it.
The real and hypothecary nature of
A. MARITIME COMMERCE maritime law simply means that the liability
(Arts. 573-869) of the carrier in connection with losses
related to maritime contracts is confined to
IMPORTANT CONCEPTS: the vessel, which stands as the guaranty for
1. Merchant vessel their settlement. (Aboitiz Shipping Corp. vs.
2. Maritime lien and Preference of Credit General Accident Fire and Life Assurance
3. Doctrine of limited liability Corp. 217 SCRA 359).
4. Causes of revocation of voyage
5. Participants in maritime commerce MERCHANT VESSEL
Vessel engaged in maritime commerce, preferences in preferences in
whether foreign or otherwise. (Bar Review the order the order
Materials in Commercial Law, Jorge stated: stated:
Miravite, 2002 ed.) 1. Judicial 1. Expenses
Constitutes property which may be costs of the and fees
acquired and transferred by any of the proceedings; allowed and
means recognized by law. They shall 2. Taxes due costs taxed by
continue to be considered as personal the Philippine the court and
property. (Arts. 573, 585) Government; taxes due to
They are susceptible to maritime liens 3. Salaries the
such as for the repair, equipping and and wages of Government;
provisioning of the vessel in the preparation the Captain 2. Crews
of a voyage, as well as mortgage liabilities, and Crew of wages;
in satisfaction of which a vessel may be the vessel 3. General
validly arrested and sold. (Ship Mortgage during its last average;
Decree of 1978) voyage; 4. Salvage,
4. General including
MARITIME LIEN average or contract
It constitutes a present right of property in salvage salvage;
the ship, a jus in re, to be afterward enforced including 5. Maritime
in admiralty by process in rem. (PNB vs. CA, contract liens arising
337 SCRA 381) salvage, prior in time to
If the maritime lien arose prior to the bottomry the recording
recording of a preferred mortgage, it shall loans, and of the
have priority over the said mortgage lien. indemnity due preferred
(PNB vs. CA, 337 SCRA 381) shippers for mortgage;
the value of 6. Damages
goods arising out of
ORDER OF PREFERENCE IN CASE OF transported tort; and
SALE OF VESSEL but which 7. Preferred
were not mortgage
R.A. 6106 P.D. 1521 delivered to registered
Effectivity date the consignee; prior in time.
1969 1978 5. Costs of
Applicability repair and
Overseas Both domestic equipment of
shipping only and overseas the vessel,
shipping and
Kind of sale provisioning of
Judicial Judicial and food, supplies
extrajudicial and fuel
Order of Preference during its last
A preferred The preferred voyage; and
mortgage mortgage lien 6. Preferred
shall have shall have mortgages
priority over all priority over all registered
claims against claims against prior in time.
the vessel, the vessel,
except the except the Effect of sale: All pre-existing claims in
following following the vessel are terminated. They will then be
satisfied from the proceeds of the sale Instances:
subject to the order of preference. 1. In case of civil liability from
indemnities to third persons (Art. 587);
DOCTRINE OF LIMITED LIABILITY 2. In case of leakage of at least of the
(HYPOTHECARY RULE) contents of a cargo containing liquids (Art.
Cases where applicable: 687); and
1. Art. 587 civil liability for indemnities 3. In case of constructive loss of the
to third persons vessel (Sec. 138, Insurance Code).
2. Art. 590 indemnities from negligent
acts of the captain (not the shipowner RIGHT OF ABANDONMENT
or ship agent)
3. Art. 837 collision SHIPOWNER CONSIGNEE
4. Art. 643 liability for wages of the OR SHIP
captain and the crew and for AGENT
advances made by the ship agent if What may be abandoned
the vessel is lost by shipwreck or Vessel Goods
capture shipped
Instances
GENERAL RULE: The liability of 1. In case of 1. Partial non-
shipowner and ship agent is limited to the civil liability delivery,
amount of interest in said vessel such that from where the
where vessel is entirely lost, the obligation is indemnities to goods are
extinguished. (Luzon Stevedoring v. Escano, third persons useless
156 SCRA 169) The interest extends to: 1) (Art. 587); without the
the vessel itself; 2) equipments; 3) 2. Sec. 138, others (Art.
freightage; and 4) insurance proceeds. Insurance 363);
(Chua v. IAC, 166 SCRA 183) Code; 2. Goods are
EXCEPTIONS: 3. In case of rendered
1. Claims under Workmens Compensation leakage of at useless for
(Abueg vs. San Diego 77 Phil 730); least of the sale or
2. Injury or damage due to shipowner or to contents of a consumption
the concurring negligence of the cargo for the
shipowner and the captain; containing purposes for
3. The vessel is insured (Vasquez vs. CA liquids (Art. which they are
138 SCRA 553). 687) properly
4. Expenses for repair on vessel completed destined (Art.
before loss; 365); and
5. In case there is no total loss and the 3. In case of
vessel is not abandoned; delay through
6. Collision between two negligent vessels; the fault of the
carrier (Art.
Abandonment of the vessel is necessary 371).
to limit the liability of the shipowner. The Effects
only instance were abandonment is 1. Transfer 1. Transfer of
dispensed with is when the vessel is entirely of ownership of ownership on
lost (Luzon Stevedoring vs. CA 156 SCRA the vessel from the goods
169). the shipowner from the
to the shippers shipper to the
RIGHT OF SHIPOWNER OR SHIP AGENT or insurer. carrier.
TO ABANDON VESSEL 2. In case 2. Carrier
of (2), the should pay the Ship agent (naviero)
insurer must shipper the Person entrusted with provisioning and
pay the insured market value representing the vessel in the port in which it
as if there was of the goods may be found; also includes the shipowner.
actual total at the point of Not a mere agent under civil law; he is
loss of the destination. solidarily liable with the ship owner.
vessel. Powers and functions:
1. Capacity to trade;
CAUSES OF REVOCATION OF VOYAGE 2. Discharge duties of the captain, subject
1. War or interdiction of commerce; to Art.609;
2. Blockade; 3. Contract in the name of the owners with
3. Prohibition to receive cargo at respect to repairs, details of equipment,
destination; armament, provisions of food and fuel,
4. Embargo; and freight of the vessel, and all that
5. Inability of the vessel to navigate. (Art. relate to the requirements of navigation;
640) 4. Order a new voyage, make a new charter
or insure the vessel after obtaining
Terms: authorization from the shipowner or if
1. Interdiction of commerce A granted in certificate of appointment.
governmental prohibition of commercial
intercourse intended to bring about an Civil Liabilities of the Shipowner And
entire cessation for the time being of all Ship Agent
trade whatever. 1. All contracts of the captain, whether
2. Blockade A sort of circumvallation of a authorized or not, to repair, equip and
place by which all foreign connection and provision the vessel; (Art. 586)
correspondence is, as far as human 2. Loss and damage to the goods loaded on
power can effect it, to be cut off. the vessel without prejudice to their right
3. Embargo A proclamation or order of a to free themselves from liability by
state, usually issued in time of war or abandoning the vessel to the creditors.
threatened hostilities, prohibiting the (Art. 587)
departure of ships or goods from some or
all the ports of such state until further Duty of Ship Agent to Discharge the
order. Captain and Members of the Crew
If the seamen contract is not for a definite
PARTICIPANTS IN MARITIME period or voyage, he may discharge them at
COMMERCE his discretion. (Art. 603)
A. Shipowners and ship agents If for a definite period, he may not
B. Captains and masters of the vessel discharge them until after the fulfillment of
C. Officers and crew of the vessel their contracts, except on the following
D. Supercargoes grounds:
E. Pilot a. Insubordination in serious matters;
b. Robbery;
A. SHIPOWNERS AND SHIP AGENTS c. Theft;
Shipowner (proprietario) d. Habitual drunkenness;
Person who has possession, control and e. Damage caused to the vessel or to its
management of the vessel and the cargo through malice or manifest or
consequent right to direct her navigation and proven negligence. (Art. 605)
receive freight earned and paid, while his
possession continues. B. CAPTAINS AND MASTERS
They are the chiefs or commanders of
ships. 4. Stay on board during the loading and
The terms have the same meaning, but unloading of the cargo;
are particularly used in accordance with the 5. Be on deck while leaving or entering
size of the vessel governed and the scope of the port;
transportation, i.e., large and overseas, and 6. Protest arrivals under stress and in
small and coastwise, respectively. case of shipwreck;
Nature of position (3-fold character): 7. Follow instructions of and render an
1. General agent of the shipowner; accounting to the ship agent;
2. Technical director of the vessel; 8. Leave the vessel last in case of wreck;
3. Representative of the government of 9. Hold in custody properties left by
the country under whose flag he deceased passengers and crew
navigates. members;
Qualifications: 10. Comply with the requirements
1. Filipino citizen; of customs, health, etc. at the port of
2. Legal capacity to contract; arrival;
3. Must have passed the required 11. Observe rules to avoid collision;
physical and mental examinations 12. Demand a pilot while entering
required for licensing him as such. or leaving a port. (Art. 612)
(Art. 609)
Inherent powers: A ships captain must be accorded a
1. Appoint crew in the absence of ship reasonable measure of discretionary
agent; authority to decide what the safety of the
2. Command the crew and direct the ship and of its crew and cargo specifically
vessel to its port of destination; requires on a stipulated ocean voyage
3. Impose correctional punishment on (Inter-Orient Maritime Enterprises Inc. vs.
those who, while on board vessel, fail CA).
to comply with his orders or are
wanting in discipline; No liability for the following:
4. Make contracts for the charter of 1. Damages caused to the vessel or to
vessel in the absence of ship agent. the cargo by force majeure;
5. Supply, equip, and provision the 2. Obligations contracted for the repair,
vessel; and equipment, and provisioning of the
6. Order repair of vessel to enable it to vessel unless he has expressly bound
continue its voyage. (Art. 610) himself personally or has signed a bill
Sources of funds to comply with the of exchange or promissory note in his
inherent powers of the captain (in name. (Art. 620)
successive order):
1. From the consignee of the vessel; Solidary Liabilities of the Ship
2. From the consignee of the cargo; Agent/Shipowner for Acts Done by the
3. By drawing on the ship agent; Captain towards Passengers and
4. By a loan on bottomry; Cargoes
5. By sale of part of the cargo. (Art. 611) 1. Damages to vessel and to cargo due
Duties: to lack of skill and negligence;
1. Bring on board the proper certificate 2. Thefts and robberies of the crew;
and documents and a copy of the 3. Losses and fines for violation of laws;
Code of Commerce; 4. Damages due to mutinies;
2. Keep a Log Book, Accounting Book 5. Damages due to misuse of power;
and Freight Book; 6. For deviations;
3. Examine the ship before the voyage; 7. For arrivals under stress;
8. Damages due to non-observance of 2. Arrange well the cargo;
marine regulations. (Art. 618) 3. Discipline the crew;
4. Assign work to crew members;
C. OFFICERS AND CREW 5. Inventory the rigging and equipment of
1. Sailing Mate/First Mate the vessel, if laid up. (Art. 632)
2. Second Mate
3. Engineers Engineers
4. Crew Officers of the vessel but have no authority
No liability under the following except in matters referring to the motor
circumstances: apparatus. When two or more are hired, one
1. If, before beginning voyage, captain of them shall be the chief engineer.
attempts to change it, or a naval war with Duties:
the power to which the vessel was 1. In charge of the motor apparatus,
destined occurs; spare parts, and other instruments
2. If a disease breaks out and be officially pertaining to the engines;
declared an epidemic in the port of 2. Keep the engines and boilers in good
destination; condition;
3. If the vessel should change owner or 3. Not to change or repair the engine
captain. (Art. 647) without authority of the captain;
4. Inform the captain of any damage to
Sailing Mate/First Mate the motor apparatus;
Second chief of the vessel who takes the 5. Keep an Engine Book;
place of the captain in case of absence, 6. Supervise all personnel maintaining
sickness, or death and shall assume all of the engine. (Art. 632)
his duties, powers and responsibilities. (Art.
627) Crew
Duties: The aggregate of seamen who man a
1. Provide himself with maps and charts ship, or the ships company.
with astronomical tables necessary for Hired by the ship agent, where he is
the discharge of his duties; present and in his absence, the captain
2. Keep the Binnacle Book; hires them, preferring Filipinos, and in their
3. Change the course of the voyage on absence, he may take in foreigners, but not
consultation with the captain and the exceeding 1/5 of the crew. (Art. 634)
officers of the boat, following the
decision of the captain in case of Classes of Seamans Contracts
disagreement; 1. By the voyage;
4. Responsible for all the damages 2. By the month; and
caused to the vessel and the cargo by 3. By share of profits or freightage.
reason of his negligence. (Arts. 628 -
631) Just Causes for the Discharge of Seaman
While Contract Subsists
Second Mate 1. Perpetration of a crime;
Takes command of the vessel in case of 2. Repeated insubordination, want of
the inability or disqualification of the captain discipline;
and the sailing mate, assuming in such case 3. Repeated incapacity and negligence;
their powers and responsibilities. 4. Habitual drunkenness;
Third in command 5. Physical incapacity;
Duties: 6. Desertion. (Art. 637)
1. Preserve the hull and rigging of the
vessel; Rules in case of Death of a Seaman
The seamans heirs are entitled to are occasions when the master may and
payment as follows: should interfere and even displace the pilot,
1. If death is natural: as when the pilot is obviously incompetent or
a. compensation up to time of death if intoxicated (Far Eastern Shipping Company
engaged on wage vs. CA).
b. if by voyage - half of amount if death Compulsory Pilotage States possessing
occurs on voyage out; and full, if on harbors have enacted laws or promulgated
voyage in rules requiring vessels approaching their
c. if by shares - none, if before ports to take on board pilots licensed under
departure; full, if after departure the local laws. (Notes and Cases on the Law
2. if death is due to defense of vessel - full on Transportation and Public Utilities,
payment; Aquino, T. & Hernando, R.P. 2004 ed. p.
3. if captured in defense of vessel - full 518)
payment;
4. if captured due to carelessness - wages Liablity of Pilot
up to the date of the capture. (Art. 645) GENERAL RULE: On compulsory pilotage
grounds, the Harbor Pilot is responsible for
Complement of the Vessel damage to a vessel or to life or property due
All persons on board, from the captain to to his negligence.
the cabin boy, necessary for the EXCEPT:
management, maneuvers, and service, thus 1. Accident caused by force majeure or
including the crew, the sailing mates, natural calamity provided the pilot exercised
engineers, stokers and other employees on prudence and extra diligence to prevent or
board not having specific designations. minimize damages.
Does not include the passengers or the 2. Countermand or overrule by the master
persons whom the vessel is transporting. of the vessel in which case the registered
owner of the vessel is liable. (Sec.11, Art.III
D. SUPERCARGOES PPA Admin Order 03-85)
Persons who discharges administrative
duties assigned to him by ship agent or SPECIAL CONTRACTS OF MARITIME
shippers, keeping an account and record of COMMERCE
transaction as required in the accounting 1. Charter party
book of the captain. (Art. 649) 2. Bill of lading
3. Contract of transportation of
E. PILOT passengers on sea voyages
A person duly qualified, and licensed, to 4. Loan on bottomry
conduct a vessel into or out of ports, or in 5. Loan on respondentia
certain waters. 6. Marine insurance
The term generally connotes a person
taken on board at a particular place for the CHARTER PARTY
purpose of conducting a ship through a river, A contract by virtue of which the owner or
road or channel, or from a port. agent binds himself to transport
Master pro hac vice for the time being in merchandise or persons for a fixed price.
the command and navigation of the ship. A contract by which an entire ship, or
While in exercising his functions a pilot is some principal part thereof is let/leased by
in sole command of the ship and the owner to another person for a specified
supersedes the master for the time being in time or use. (Planters Products, Inc. vs. CA,
the command and navigation of the ship, the 226 SCRA 476)
master does not surrender his vessel to the Parties:
pilot and the pilot is not the master. There 1. Ship owner or ship agent
2. Charterer If the leased The new
Classes: property is owner is not
1. Bareboat or demise The charterer sold to one compelled to
provides crew, food and fuel. The charterer who knows of respect the
is liable as if he were the owner, except the existence charter party
when the cause arises from the of the lease, so long as he
unworthiness of the vessel. The shipowner the new owner can load the
leases to the charterer the whole vessel, must respect vessel with his
transferring to the latter the entire command, the lease. own cargo.
possession and consequent control over the (Art. 689)
vessels navigation, including the master Civil law Commercial
and the crew, who thereby become the concept law concept
charters servants. It transforms a common
carrier into a private carrier.
The charterer becomes the owner of
the vessel pro hac vice, just for that one CHARTER BILL OF
particular purpose only. Because the PARTY LADING
charterer is treated as owner pro hac An entire or More like a
vice, the charterer assumes the complete private receipt
customary rights and liabilities of the contract. which the
shipowner to third persons and is held captain gives
liable for the expense of the voyage and to accredit
the wages of the seamen. goods
2. Contract of Affreightment A contract received from
whereby the owner of the vessel leases part persons
or all of its space to haul goods for others. Consensual Real contract
The shipowner retains the possession, contract
command and navigation of the ship, the
charterer merely having use of the space BAREBOAT CONTRACT
in the vessel in return for his payment of OR DEMISE OF
the charter hired. CHARTER AFFREIGHTM
Kinds: ENT (TIME OR
a. Time charter vessel is chartered for VOYAGE
a fixed period of time or duration of CHARTER)
voyage. Charterer Owner remains
b. Voyage or trip charter the vessel is becomes liable liable as carrier
leased for one or series of voyages to others and must
usually for purposes of transporting caused by its answer for any
goods for charterer. negligence breach of duty
Charterer Charterer is
LEASE CHARTER regarded as not regarded
PARTY owner pro hac as owner.
If for a definite Charterer may vice for the
period, lessee rescind charter voyage
cannot give up party by paying Owner of The vessel
the lease by half of the vessel owner retains
paying a freightage relinquishes possession,
portion of the agreed upon. possession, command and
amount agreed command and navigation of
upon. navigation to the ship
charterer A stipulation in A clause in a
a charter party charter party
that in case of providing that
a maritime the COGSA
Common Common accident for shall apply,
carrier is carrier is not which the even though
converted to converted to a shipowner is the
private carrier. private carrier. not transportation
responsible by is domestic,
law, contract subject to the
PERSONS WHO MAY MAKE A CHARTER or otherwise, extent that any
1. Owner or owners of the vessel, either the cargo term of the bill
in whole or in majority part, who have shippers, of lading is
legal control and possession of the consignees or repugnant to
vessel owners shall the COGSA or
2. Charterer may subcharter entire contribute with applicable law,
vessel to 3rd person only if not the shipowner then to the
prohibited in original charter. (Art.679) in general extent thereof
3. Ship agent if authorized by the average. the provision of
owner/s or given such power in the (Pandect of the bill of
certificate of appointment. (Art.598) Commercial lading is void.
4. Captain in the absence of the ship Law and (Pandect of
agent or consignee and only if he acts Jurisprudence, Commercial
in accordance with the instructions of Justice Jose Law and
the agent or owner and protects the Vitug, 1997 Jurisprudence,
latters interests. (Art.609) ed.) Justice Jose
Vitug, 1997
REQUISITES OF A VALID CHARTER ed.)
PARTY
1. Consent of the contracting parties Rights and Obligations of Parties
2. Existing vessel which should be
placed at the disposition of the shipper SHIPOWNER CHARTERER
3. Freight OR SHIP
4. Compliance with Art. 652 of the Code AGENT
of Commerce 1. If the vessel 1. To pay the
is chartered agreed charter
wholly, not to price;
accept cargo 2. To pay
from others; freightage on
Clauses Which May Be Included In a 2. To observe unboarded
Charter Party represented cargo;
capacity; 3. To pay
Jason clause Clause 3. To unload losses to
paramount or cargo others for
paramount clandestinely loading
clause placed uncontracted
4. To cargo and
substitute illicit cargo;
another vessel 4. To wait if
if load is less the vessel
than 3/5 of needs repair; s ; navigate.
capacity; 5. To pay disposal;
5. To leave expenses for 4. Return
the port if the deviation. of the
charterer does (Arts. 679- vessel
not bring the 687) due to
cargo within pirates,
the lay days enemies
and extra lay or bad
days allowed; weather;
6. To place in 5. Arrival
a vessel in a at a port
condition to for
navigate; repairs.
7. to bring
cargo to Terms:
nearest neutral 1. Primage - bonus to be paid to the captain
port in case of after the successful voyage.
war or 2. Demurrage the sum fixed in the charter
blockade. party as a remuneration to the owner of
(Arts. 669-678) the ship for the detention of his vessel
beyond the number of days allowed by
the charter party for loading or unloading
Rescission of a Charter Party or for sailing.
At At Fortuito 3. Deadfreight the amount paid by or
chartere shipown us recoverable from a charterer of a ship for
rs ers causes the portion of the ships capacity the latter
request request (Art. contracted for but failed to occupy.
(Art 688) (Art. 690) 4. Lay Days - days allowed to charter
689) parties for loading and unloading the
1. By 1. If the 1. War or cargo.
abandoni extra lay interdicti 5. Extra Lay Days days which follow after
ng the days on of the lay days have elapsed.
charter terminate commerc
and without e; USUAL FORMS OF CONSUMMATING
paying the cargo 2. CONTRACTS
half of being Blockade 1. C.I.F. cost, insurance and freight;
the placed ; 2. F.O.B. - free on board;
freightag alongsid 3. 3. F.A.S. - free alongside ship; and
e; e the Prohibitio 4. C. & F. - cost and freight.
2. Error vessel; n to
in 2. Sale receive TRANSSHIPMENT OF GOODS
tonnage by the cargo; The act of taking cargo out of one ship and
or flag; owner of 4. loading it in another, or the transfer of goods
3. Failure the Embargo from the vessel stipulated in the contract of
to place vessel ; and affreightment to another vessel before the
the before 5. place of destination named in the contract
vessel at loading Inability has been reached, or the transfer for further
the by the of the transportation from one ship or conveyance
charterer charterer vessel to to another.
It is not dependent on the ownership of 2. Obligation of the debtor
the transporting ships or in the change of conditioned only upon safe
carriers, but rather on the fact of actual arrival of the security at the
physical transfer of cargo from one vessel to point of destination.
another. Forms:
If done without legal excuse, however 1. Public instrument
competent and safe the vessel into which 2. Policy signed by the
the transfer is made, is a violation of contract contracting parties and the
and infringement of right of shipper and broker taking part therein
subjects carrier to liability if freight is lost 3. Private instrument (Art.
event by cause otherwise excepted. 720)
(Magellan Manufacturing vs. CA, 201 SCRA Contents:
102) 1. Kind, name and registry of
the vessel;
LOAN ON BOTTOMRY AND 2. Name, surname and
RESPONDENTIA domicile of the captain;
A real, unilateral, aleatory contract, by 3. Names, surnames and
virtue of which one person lends to another domiciles of the borrower
a certain amount of money or goods on and the lender;
things exposed to maritime risks, which 4. Amount of the loan and the
amount, with its earnings, is to be returned if premium stipulated;
the things are safely transported, and which 5. Time for repayment;
is lost if the latter are lost. 6. Goods pledged to secure
repayment;
7. Voyage during which the
LOAN ON LOAN ON risk is run (Art.721)
BOTTOMRY RESPONDEN
TIA
Definition BOTTOMRY/ ORDINARY
Loan made by Loan taken on RESPONDEN LOAN
shipowner or security of the TIA (MUTUUM)
ship agent cargo laden Not subject to Subject to
guaranteed by on a vessel, Usury Law Usury Law
vessel itself and repayable
and repayable upon safe Liability of the Not subject to
upon arrival of arrival of borrower is any
vessel at cargo at contingent on contingency
destination. destination. the safe (absolute
(Art. 719) (Art. 719) arrival of the liability)
vessel or
Who may contract cargo at
Shipowner or Only the destination
ship agent. owner of the The last The first
Outside of the cargo. lender is a lender is a
residence of preferred preferred
the owners - creditor creditor
the captain.
Common elements:
1. Exposure of security to
marine peril;
WHEN LOAN ON BOTTOMRY OR the goods given as security are absolutely
RESPONDENTIA REGARDED AS SIMPLE lost by reason of an accident of the sea,
LOAN during the voyage designated, and if it is
1. Lender loaned an amount larger than proven that the goods were on board.
the value of the object due to EXCEPTIONS:
fraudulent means employed by the 1. Loss due to inherent defect;
borrower. (ART.726) 2. Loss due to the barratry on the part of the
2. Full amount of the loan is not used for captain;
the cargo or given on the goods if all 3. Loss due to the fault or malice of the
of them could not have been loaded, borrower;
the balance will be considered a 4. The vessel was engaged in contraband;
simple loan. (ART.727) and
3. If the effects on which the money is 5. The cargo loaded on the vessel be
taken is not subjected to any risk. different in from that agreed upon.
(ART.729)
Concurrence of Marine Insurance and
Note: Under existing laws, the parties to a Loan on Bottomry/Respondentia
loan, whether ordinary or maritime, may 1. The insurable interest of the owner of
agree on any rate of interest. (CB Circular a ship hypothecated by bottomry is
905) only the excess of the value over the
amount secured by bottomry. (Sec.
101, Insurance Code)
MARINE LOAN ON 2. The value of what may be saved in
INSURANCE BOTTOMR case of shipwreck shall be divided
Y OR between the lender and the insurer in
RESPOND proportion to the interest of each one.
ENTIA (Art. 735)
Indemnity is paid Indemnity is
after the loss paid in Note: If a vessel is hypothecated by
has occurred advance by bottomry only the excess is insurable, since
way of a a loan on bottomry partakes of the nature
loan likewise of an insurance coverage to the
In case of loss of In case of extent of the loan accommodation. The
the vessel due to loss of the same rule would apply to the hypothecation
a risk insured vessel due of the cargo by respondentia. (Pandect of
against, the to a marine Commercial Law and Jurisprudence, Justice
obligation of the peril, the Jose Vitug, 1997 ed.)
insurer becomes obligation of
absolute the ACCIDENTS IN MARITIME COMMERCE
borrower to 1. Averages
pay is 2. Arrival Under Stress
extinguishe 3. Collision
d 4. Shipwreck
Consensual Real
contract contract AVERAGE
An extraordinary or accidental expense
Hypothecary Nature of Bottomry/ incurred during the voyage in order to
Respondentia preserve the cargo, vessel or both, and all
GENERAL RULE: The obligation of the damages or deterioration suffered by the
borrower to pay the loan is extinguished if vessel from departure to the port of
destination, and to the cargo from the port of steps.
loading to the port of consignment. (Art. Liability
806) The owner of All the
The person whose property has been the goods persons
saved must contribute to reimburse the which gave having an
damage caused or expense incurred if the rise to the interest in the
situation constitutes general average. expense or vessel and the
Classes: suffered the cargo therein
1. Particular or Simple Average damage shall at the time of
2. Gross or General Average bear this the
Where both vessel and cargo are saved, average. (Art. occurrence of
it is general average; where only the vessel 810) the average
or only the cargo is saved, it is particular shall
average. contribute to
Expenses incurred to refloat a vessel, satisfy this
which accidentally ran aground, in order to average. (Art.
continue its voyage, do not constitute 812)
general average. Not only is there absence The
of a marine peril, common safety factor, and insurers
deliberateness. It is the safety of the (Art.859) and
property, and not the voyage, which lenders on
constitutes the true foundation of general bottomry and
average. (A. Magsaysay, Inc. vs. Agan, respondentia
G.R.No. L-6393, Jan. 31, 1955) shall likewise
contribute.
(Art.732).
PARTICULAR GROSS OR Number of interests involved
OR SIMPLE GENERAL Only one Several
Definition interest interests
Damages or Damages or involved involved
expenses expenses Share in the damage or
caused to the deliberately expense
vessel or cargo caused in 100% share In proportion
that did not order to save to the value of
inure to the the vessel, its the owners
common cargo or both property
benefit, and from real and saved
borne by known risk. Right to recover
respective (Art. 811) No There may be
owners. (Art. reimbursement reimbursemen
809) t
Requisites Kinds (not exclusive)
1. common Art. 809 Art. 811
danger; Procedure for recovery
2. deliberate 1. Assembly
sacrifice; and
3. success; deliberation
4. proper 2. Resolution
formalities of the captain
and legal 3. Entry of the
resolution in 816)
the logbook
4. Detailed York-Antwerp (Y-A) Rules on Determining
minutes Liability for Averages With Regard To
5. Delivery of Deck Cargo
the minutes to 1. Deck cargo is allowed only in
the maritime domestic/coastwise/inter-island shipping,
judicial and is prohibited in
authority of international/overseas/foreign shipping.
the first port, 2. If deck cargo is loaded with the consent
within 24 of the shipper on overseas trade, it must
hours from always contribute to general average, but
arrival, should the same be jettisoned, it would not
6. Ratification be entitled to reimbursement because there
by captain is violation of the Y-A Rules.
under oath. 3. If deck cargo is loaded with the consent
(Arts. 813- of the shipper on coastwise shipping, it must
814) always contribute to general average and if
jettisoned would be entitled to
GOODS NOT COVERED BY GENERAL reimbursement.
AVERAGE EVEN IF SACRIFICED Reason: In domestic shipping, voyages
1. Goods carried on deck. (ART.855) are usually short and the seas are generally
2. Goods not recorded in the books or not rough. In overseas shipping, the vessel
records of the vessel. (ART.855 (2)) is exposed for many days to perils of the
3. Fuel for the vessel if there is more sea.
than sufficient fuel for the voyage.
(Rule IX, York-Antwerp Rule) DOMESTIC INTERNATIO
NAL
Jettison Deck cargo is Deck cargo is
Act of throwing cargo overboard in order to allowed not allowed
lighten the vessel. With shippers consent
Order of goods to be cast overboard: General Particular
1. Those which are on the deck, average average
preferring the heaviest one with the Without shippers consent
least utility and value; Captain is Captain is
2. Those which are below the upper liable liable
deck, beginning with the one with
greatest weight and smallest value. ARRIVAL UNDER STRESS (ARRIBADA)
(Art. 815) The arrival of a vessel at the nearest and
most convenient port instead of the port of
Jettisoned goods are not res nullius nor destination, if during the voyage the vessel
deemed abandoned within the meaning of cannot continue the trip to the port of
civil law so as to be the object of occupation destination.
by salvage. (Pandect of Commercial Law
and Jurisprudence, Justice Jose Vitug, 1997 When When Who
ed.) lawful unlawful bears
In order that the jettisoned goods may be expense
included in the gross or general average, the s:
existence of the cargo on board should be
proven by means of the bill of lading. (Art.
The 1. Lack The 4. The agreement shall be drafted and
inability of shipowne the proper minutes shall be signed
to provision r or ship and entered in the log book;
continue s due to agent is 5. Objections and protests shall likewise
voyage negligenc liable in be entered in the minutes.
is due to e to carry case of
lack of according unlawful COLLISION
provision to usage arrival Impact of two vessels both of which are
s, well- and under moving.
founded customs; stress.
fear of 2. Risk of But they Allision
seizure, enemy shall not Impact between a moving vessel and a
privateer not well be liable stationary one.
s, known or for the
pirates, manifest damages Nautical Rules to Determine Negligence
or 3. Defect caused 1. When two vessels are about to enter a
accident of vessel by port, the farther one must allow the
s of the due to reason of nearer to enter first; if they collide, the
sea improper a lawful fault is presumed to be imputable to the
disabling repair; arrival. one who arrived later, unless it can be
it to and (Art. 821) proved that there was no fault on its part.
navigate. 4. Malice 2. When two vessels meet, the smaller
(Art. , should give the right of way to the larger
819) negligenc one.
e, lack of 3. A vessel leaving port should leave the
foresight way clear for another which may be
or skill of entering the same port.
captain. 4. The vessel which leaves later is
(Art. 820) presumed to have collided against one
which has left earlier.
It is the duty of the captain to continue the 5. There is a presumption against the
voyage without delay after the cause of the vessel which sets sail in the night.
arrival under stress has ceased failing in 6. There is a presumption against the
such duty renders him liable. However, in vessel with spread sails which collides
case the cause has been risk of enemies, with another which is at anchor and
there must first be an assembly before cannot move, even when the crew of the
departure. (Art. 825) latter has received word to lift anchor,
Steps: when there was not sufficient time to do
1. Captain should determine during the so or there was fear of a greater damage
voyage if there is well founded fear of or other legitimate reason.
seizure, privateers and other valid 7. There is a presumption against an
grounds; improperly moored vessel.
2. Captain shall assemble the officers 8. There is a presumption against a vessel
and summon the persons interested in which has no buoys to indicate the
the cargo who may attend the meeting location of its anchors to prevent damage
but without a right to vote; to vessels which may approach it.
3. The officers shall determine and agree 9. Vessels must have proper look-outs or
if there is well-founded reason after persons trained as such and who have
examining the circumstances. The no other duty aside therefrom. (Smith Bell
captain shall have the deciding vote; v. CA)
Each vessel must bear its own loss, but
Nautical Rules as to Sailing Vessel and the shippers of both vessels may go against
Steamship the shipowners who will be solidarily liable.
1. Where a steamship and a sailing vessel (Art. 827)
are approaching each other from 3. Vessel at fault not known
opposite directions, or on intersecting Each vessel must bear its own loss, but
lines, the steamship from the moment the the shippers of both vessels may go against
sailing vessel is seen, shall watch with the shipowners who will be solidarily liable.
the highest diligence her course and (Art. 828)
movements so as to be able to adopt Doctrine of Inscrutable Fault In case
such timely means of precaution as will of collision where it cannot be determined
necessarily prevent the two boats from which between the two vessels was at
coming in contact. fault, both vessels bear their respective
2. The sailing vessel is required to keep her damage, but both should be solidarily
course unless the circumstances require liable for damage to the cargo of both
otherwise. vessels.
4. Third vessel at fault
Zones of Time in the Collision of Vessels The third vessel will be liable for losses
1. First zone all time up to the moment and damages. (Art. 831)
when risk of collision begins. 5. Fortuitous event/force majeure
No rule is as yet applicable for none is No liability. Each bears its own loss. (Art.
necessary. 830)
2. Second zone time between moment
when risk of collision begins and moment it The doctrine of res ipsa loquitur applies in
becomes a practical certainty. case a moving vessel strikes a stationary
It is in this period where conduct of the object, such as a bridge post, dock, or
vessels is primordial. It is in this zone that navigational aid. (Far Eastern Shipping v.
vessels must strictly observe nautical rules, CA, Luzon Stevedoring vs. CA)
unless a departure therefrom becomes
necessary to avoid imminent danger. Even if the cause of action against the
3. Third zone time when collision is common carrier is based on quasi-delict, the
certain and time of impact. defense of due diligence in the selection and
An error in this zone would no longer be supervision of employees is unavailing in
legally consequential. case of a maritime tort resulting in collision.
Error in Extremis - sudden movement It is not a civil tort governed by the Civil
made by a faultless vessel during the third Code but a maritime one governed by Arts.
zone of collision with another vessel which is 826-839 of the Code of Commerce. (Manila
at fault during the 2nd zone. Even if such Steamship vs. Insa Abdulhaman)
sudden movement is wrong, no
responsibility will fall on said faultless vessel. Doctrine of Last Clear Chance and Rule
(Urrutia and Co. v. Baco River Plantation on Contributory Negligence cannot be
Co., 26 PHIL 632) applied in collision cases because of Art.827
of the Code of Commerce. (Notes and
Cases Covered By Collision and Allision Cases on the Law on Transportation and
1. One vessel at fault Public Utilities, Aquino, T. & Hernando, R.P.
Vessel at fault is liable for damage caused 2004 ed.)
to innocent vessel as well as damages
suffered by the owners of cargo of both MARITIME PROTEST
vessels. (Art. 826) Condition precedent or prerequisite to
2. Both vessels at fault recovery of damages arising from collisions
and other maritime accidents. (Commercial Law Review, C. Villanueva,
It is a written statement made under oath 2004 ed.)
by the captain of a vessel after the Significance: When a person brings in
occurrence of an accident or disaster in cargo from abroad, he cannot unload and
which the vessel or cargo is lost or deliver the cargo by himself. The unloading
damaged, with respect to the circumstances must be done by the arrastre operator,
attending such occurrence, for the purpose which will then deliver the cargo to the
of recovering losses and damages. importer. (Commercial Law Review, C.
Excuses for not filing protest: 1) where Villanueva, 2004 ed.)
the interested person is not on board the Nature of business: It is a public utility,
vessel; and 2) on collision time, need not be discharging functions which are heavily
protested. (Art. 836) invested with public interest.
Cases applicable: Liability:
1. Collision (Art. 835); 1. Similar to a warehouseman (Lua Kian v.
2. Arrival under stress (Art. 612(8)); Manila Railroad)
3. Shipwrecks (Arts. 612(15), 843); 2. Similar to a common carrier (Northern
4. Where the vessel has gone through a Motors v. Prince Line)
hurricane or when the captain 3. Solidary liability with the common carrier
believes that the cargo has suffered
damages or averages (Art. 624). Note: In order that the arrastre operator may
Who makes: Captain be held liable, the consignee must prove
When made: within 24 hours from the time that the damage was due to the negligence
the collision took place. and while the goods are in the custody of the
Before whom made: competent authority arrastre operator. (Hartford Fire Insurance v.
at the point of collision or at the first port of E. Razon, Inc.)
arrival, if in the Philippines and to the
Philippine consul, if the collision took place STEVEDORING SERVICE
abroad. (Art. 835) The carriage of goods from the warehouse
or pier to the holds of the vessel. (Chief of
SHIPWRECK Staff vs. CIR)
It is the loss of the vessel at sea as a As understood in the port business, the
consequence of its grounding, or running term consists of the handling of cargo from
against an object in sea or on the coast. It the hold of the ship to the dock, in case of
occurs when the vessel sustains injuries due pier-side unloading; or to a barge, in case of
to a marine peril rendering her incapable of unloading at sea. (Anglo-Fil Trading Corp.
navigation. vs. Lazaro)
If the wreck was due to malice, The loading on the ship of outgoing cargo
negligence or lack of skill of the captain, the is also part of stevedoring work. (Ibid.)
owner of the vessel may demand indemnity
from said captain. (Art. 841) CONTAINERIZATION/ SAID-TO-
The rules on collision or allision, as may CONTAIN/ SHIPPERS LOAD AND
be pertinent, can equally apply to COUNT SYSTEM
shipwrecks. System whereby the shipper loads his
cargoes in a specially designed container,
SPECIAL CONCEPTS seals the container and delivers it to the
ARRASTRE SERVICE carrier for transportation. The carrier does
A contract for the unloading of goods from not participate in the counting of the
a vessel. merchandise for loading into the container,
Applicability: Overseas trade only. the actual loading, and the sealing of the
container. (US Lines v. Comm. Of Customs,
ICTSI v. Prudential Guarantee)
The matter of quantity, description and Note: The filing of a notice of claim is not a
conditions of the cargo inside the container condition precedent.
is the sole responsibility of the shipper,
unless there is stipulation to the contrary. PRESCRIPTIVE PERIOD
(US Lines vs. Comm. Of Customs, Reyma Action for loss or damage to the cargo
Brokerage v. Phil. Home Assurance) should be brought within one year after:
a. Delivery of the goods (delivered but
Note: In order to attribute to the carrier any damaged goods); or
damage to the shipment that may be found, b. The date when the goods should have
inspection of the goods should be done at been delivered (non-delivery). (Sec.
pier-side. (Bankers vs. CA) 3[6])
III. CARRIAGE OF GOODS BY SEA Loss or Damage as applied to the

ACT/COGSA (C.A. No. 65) COGSA contemplates a situation where no
delivery at all was made by the shipper of
APPLICABILITY the goods because the same had perished,
The transportation must be: gone out of commerce, or disappeared in
1. Water/maritime transportation; such a way that their existence is unknown
2. for the carriage of goods; and or they cannot be recovered. Thus, it is
3. overseas/international/foreign (from inapplicable in case of misdelivery or
foreign port to Philippine port). conversion. (Ang vs. American Steamship
It can be applied in domestic sea Agencies Inc.) and damage arising from
transportation if agreed upon by the parties. delay or late delivery (Mitsui O.S.K. Lines
(Clause paramount or paramount clause) Ltd. vs. CA). In such instance the, Civil Code
rules on prescription shall apply.
IMPORTANT FEATURES:
1. Amount of carriers liability The one-year prescriptive period is
2. Notice of damage suspended by:
3. Prescriptive period 1. The express agreement of the parties
(Universal Shipping Lines, Inc. vs.
AMOUNT OF CARRIERS LIABILITY IAC, 188 SCRA 170)
Under the Sec. 4(5), the liability limit is set 2. The filing of an action in court until it is
at $500 per package or customary freight dismissed. (Stevens & Co. vs.
unit unless the nature and value of such Nordeutscher Lloyd, 6 SCRA 180)
goods is declared by the shipper. This is
deemed incorporated in the bill of lading The one-year period shall run from
even if not mentioned in it. (Eastern delivery of the last package and is not
Shipping vs. IAC, 150 SCRA 463) suspended by extrajudicial demand. (Dole
Note that Art. 1749, NCC applies to Phils.,Inc. vs. Maritime Co.,148 SCRA 118)
domestic/inter-island/coastwise trade.
The one-year period shall run from
NOTICE OF DAMAGE (SEC. 3(6)) delivery to the arrastre operator and not to
Rules: the consignee. (Union Carbide Phils, Inc.
a. Patent damage: shipper should file a vs. Manila Railroad Co.,SCRA 359)
claim with the carrier immediately upon
delivery The insurer exercising its right of
b. Latent damage: shipper should file a subrogation is bound by the one-year
claim with the carrier within three days prescriptive period. However, it does not
from delivery. apply to the claim against the insurer for the
insurance proceeds. (Fil. Merchants Ins. WHEN INAPPLICABLE
Co. vs. Alejandro; Mayer Steel Pipe Corp. 1. When public policy is contradicted;
vs. CA) 2. If the requirements under the
Convention are not complied with.
IV. WARSAW CONVENTION OF 1929
(WC) IMPORTANT CONCEPTS:
1. Transportation documents
PURPOSE: To protect the emerging air a. Passenger ticket
transportation industry and to secure the b. Baggage check
uniformity of recovery by the passengers. c. Air way bill
APPLICABILITY 2. Liability of the carrier for damages
The transportation must be: a. Death or injury to passengers
1. International transportation; b. Loss or damage to baggage or goods
2. Air transportation; and c. Delay
3. Carriage of passengers, baggage or 3. Successive carrier agreement
goods. 4. Jurisdiction
The WC shall also apply to fortuitous 5. Combined transportation agreement
transportation by aircraft performed by an air
transportation enterprise. PASSEN BAGGA AIR
GER GE WAYBIL
International transportation - any TICKET CHECK L
transportation in which the place of Passeng Checked Goods to
departure and the place of destination are er -in be
situated either: baggage shipped
1. Within the territories of two High
Contracting Parties regardless of whether LIABILITY OF CARRIER FOR DAMAGES
or not there be a break in the 1. Death or injury of a passenger if the
transportation or transshipment, or accident causing it took place on board the
2. Within the territory of a single High aircraft or in the course of its operations of
Contracting Party, if there is an agreed embarking or disembarking; (Art. 17)
stopping place within a territory subject to 2. Destruction, loss or damage to any
the sovereignty, mandate or authority of baggage or goods, if it took place during the
another power, even though that power is transportation by air; (Art. 18) and
not a party to the Convention. (round Transportation by air The period during
trip, Am. Jur.) which the baggage or goods are in the
charge of the carrier, whether in an airport or
Transportation to be performed by several on board an aircraft, or, in case of a landing
successive air carriers shall be deemed to outside an airport, in any place whatsoever.
be one undivided transportation, if it has It includes any transportation by land or
been regarded by the parties as a single water outside an airport if such takes place
operation, whether it has been agreed upon in the performance of a contract for
under the form of a single contract or of a transportation by air, for the purpose of
series of contracts, and it shall not lose its loading, delivery, or transshipment.
international character merely because one 3. Delay in the transportation of passengers,
contract or a series of contracts is to be baggage or goods. (Art. 19)
performed entirely within a territory subject
to the sovereignty, suzerainty, mandate, or Note: The Hague Protocol amended the WC
authority of the same High Contracting by removing the provision that if the airline
Party. (Art. 1 Sec.3) took all necessary steps to avoid the
damage, it could exculpate itself completely
(Art. 20(1)). (Alitalia vs. IAC, 192 SCRA 9) In PanAm v. IAC, the WC was applied as
regards the limitation on the carriers liability,
LIMIT OF LIABILITY (Art. 22, as amended there being a simple loss of baggage without
by Guatemala Protocol, 1971; Alitalia vs. any improper conduct on the part of the
IAC) officials or employees of the airline or other
1. Passengers special injury sustained by the passenger.
GENERAL RULE: $100,000 per
passenger In KLM Royal v. Tuller, the WC has
EXCEPTION: Agreement to a higher limit invariably been held inapplicable, or as not
restrictive of the carriers liability, where
there was satisfactory evidence of malice or
bad faith attributable to its officers and
2. Checked-in baggage employees. (Alitalia vs. IAC)
GENERAL RULE: $20 per kilogram
EXCEPTION: In case of special
declaration of value and payment of a
supplementary sum by consignor, carrier is ACTION FOR DAMAGES
liable to not more than the declared sum 1. Notice of claim
unless it proves the sum is greater than A written complaint must me made within:
actual value. a. 3 days from receipt of baggage
3. Hand-carried baggage b. 7 days from receipt of goods
$1000/passenger c. In case of delay, 14 days from receipt
4. Goods to be shipped of baggage/goods
GENERAL RULE: $20 per kilogram The complaint is a condition precedent.
EXCEPTION: In case of special Without the complaint, the action is barred
declaration of value and payment of a except in case of fraud on the part of the
supplementary sum by consignor, carrier is carrier. (Art. 26)
liable to not more than the declared sum
unless it proves the sum is greater than 2. Prescriptive period
actual value. Action must be filed within 2 years from:
a. date of arrival at the destination
An agreement relieving the carrier from b. date of expected arrival
liability or fixing a lower limit is null and void. c. date on which the transportation
(Art. 23) stopped. (Art. 29)
Carrier is not entitled to the foregoing limit
if the damage is caused by willful In United Airlines vs. Uy the two-year
misconduct or default on its part. (Art. 25) prescriptive period was not applied where
the airline employed delaying tactics.
Thus, the WC does not operate as an
exclusive enumeration of the instances of an RULE IN CASE OF VARIOUS
absolute limit of the extent of liability. It does SUCCESSIVE CARRIERS
not preclude the application of the Civil 1. Carriage of passengers
Code and other pertinent local laws. It does GENERAL RULE: Action is filed only
not regulate or exclude liability for other against the carrier in which the accident or
breaches of contract by the carrier, or delay occurred.
misconduct of its employees, or for some EXCEPTION: Agreement or contract
particular or exceptional type of damage. whereby the first carrier assumed liability for
(Alitalia vs. CA) the whole journey.
2. Carriage of baggage or goods
a. Passenger or consignor can file an venue. (Santos III vs. Northwest; 2A C.J.S.)
action against the first carrier and the
carrier in which the damage occurred V. SALVAGE LAW (Act No. 2616)
b. Passenger or consignee can file an
action against the last carrier and the SALVAGE
carrier in which the damage occurred. Two concepts:
These carriers are jointly and severally 1. Services one person renders to the
liable. (Art. 30) owner of a ship or goods, by his own labor,
preserving the goods or the ship which the
A contract of international carriage by air, owner or those entrusted with the care of
although performed by different carriers them have either abandoned in distress at
under a series of airline tickets constitutes a sea, or are unable to protect or secure.
single operation. Members of the 2. Compensation allowed to persons by
International Air Transportation Association whose voluntary assistance a ship at sea or
(IATA) are under a general pool partnership her cargo or both have been saved in whole
agreement wherein they act as agent of or in part from impending sea peril, or such
each other in the issuance of tickets to property recovered from actual peril or loss,
contracted passengers to boost ticket sales as in cases of shipwreck, derelict or
worldwide and at the same time provide recapture.
passengers easy access to airlines which Requisites:
are otherwise inaccessible in some parts of 1. Valid object of salvage;
the world. (American Airlines vs. CA) 2. Object must have been exposed to
marine peril (not perils of the ship);
Under a general pool partnership 3. Services rendered voluntarily (neither
agreement, the ticket-issuing airline is the an existing duty nor out of a pre-
principal in a contract of carriage while the existing contract);
endorsee-airline is the agent. The obligation 4. Services are successful, total or
of the former remained and did not cease partial.
even when the breach occurred not on its Subjects of Salvage:
own flight but on that of another airline which 1. Ship itself;
had undertaken to carry the passengers to 2. Jetsam goods which are cast into the
one of their destinations. (China Airlines vs. sea, and there sink and remain under water;
Chiok) 3. Floatsam or Flotsam goods which float
upon the sea when cast overboard;
JURISDICTION 4. Ligan or Lagan goods cast into the sea
At the option of the plaintiff, the action for tied to a buoy, so that they may be found
damages may be filed in the: again by the owners (p.173, Judge Diaz).
a. Court of domicile of the carrier; Persons who have no right to a reward
b. Court of its principal place of business; for salvage:
c. Court where it has a place of business 1. Crew of the vessel saved;
through which the contract has been 2. Person who commenced Salvage in spite
made; or of opposition of the Captain or his
d. Court of the place of destination. (Art. representative;
28(1)) 3. In accordance with Sec. 3 of the
NOTE: It is the passengers ultimate Salvage Law, a person who fails to deliver a
destination not an agreed stopping place salvaged vessel or cargo to the Collector of
that determines the country where suit is to Customs.
be filed.
The forum of action provided in Art. 28(1) Derelict a ship or her cargo which is
is a matter of jurisdiction rather than of abandoned and deserted at sea by those
who are in charge of it, without any hope of among owner
recovering it, or without any intention of crewmen
returning to it.
RULES ON SALVAGE REWARD
The intention of those in charge must be 1. The reward is fixed by the RTC judge in
ascertained. If those in charge left with the the absence of agreement or where the
intention of returning, or of procuring latter is excessive. (Sec. 9)
assistance, the property is not derelict, but if 2. The reward should constitute a sufficient
they quitted the property with the intention of compensation for the outlay and effort of
finally leaving it, it is derelict and a change of the salvors and should be liberal enough
their intention and an attempt to return will to offer an inducement to others to render
not change its nature (Erlanger & Galinger services in similar emergencies in the
vs. Swedish East Asiatic Co. Ltd.). future.
3. If sold (no claim being made within 3
If it is clear that the intention to return is months from publication), the proceeds,
slight, the salvage which was done after deducting expenses and the
thereafter is considered valid. (Notes and salvage claim, shall go to the owner; if
Cases on the Law on Transportation and the latter does not claim it within 3 years,
Public Utilities, Aquino, T. & Hernando, R.P. 50% of the said proceeds shall go to the
2004 ed. p. 616) salvors, who shall divide it equitably, and
the other half to the government. (Secs.
CONTRACT OF TOWAGE 11-12)
A contract whereby one vessel, usually 4. If a vessel is the salvor, the reward shall
motorized, pulls another, whether loaded or be distributed as follows:
not with merchandise, from one place to a. 50% to the shipowner;
another, for a compensation. It is a contract b. 25% to the captain; and
for services rather than a contract of
carriage.
c. 25% to the officers and crew in
proportion to their salaries. (Sec. 13)
SALVAGE TOWAGE
Governed by Governed by Taking passengers from a sinking ship,
special law Civil Code on without rendering any service in rescuing the
(Act No. contract of vessel, is not a salvage service, being a duty
2616) lease of humanity and not for reward.
Requires Success is
VI. PUBLIC SERVICE ACT
success, not required
(C.A. No. 146)
otherwise no
payment
PURPOSES:
Must be done Only the
1. To secure adequate, sustained
with the consent of the
service for the public at the least
consent of the tugboat owner
possible cost;
captain/crew is needed
2. To protect the public against
men
unreasonable charges and poor,
Vessel must Vessel need
inefficient service;
be involved in not be
3. To protect and secure investments in
an accident involved in an
public services;
accident
4. To prevent ruinous competition.
Fees Fees belong
distributed to the tugboat
AUTHORITY TO OPERATE PUBLIC
SERVICES CERTIFICAT CERTIFICAT
GENERAL RULE: No public service shall E OF E OF PUBLIC
operate without having been issued a PUBLIC CONVENIEN
certificate of public convenience or a CONVENIEN CE AND
certificate of public convenience and CE (CPC) NECESSITY
necessity. (CPCN)
EXCEPTIONS: An An
1. Warehouses; authorization authorization
2. Animal drawn vehicles and bancas issued by the issued by the
moved by oar or sail; appropriate appropriate
3. Airships, except for the fixing of government government
maximum rates for fare and freight; agency for agency for the
4. Radio companies, except for rates the operation operation of
fixing; of public public service
5. Public services owned or operated by services for for which a
the government, except as to rates which no prior franchise
fixing; franchise, is required by
6. Ice plants; and either law; e.g.
7. Public markets. municipal or telephone and
legislative, is other
PUBLIC SERVICE required by services.
A person who owns, operates, manages law, e.g.,
or controls in the Philippines for hire or common
compensation, with general or limited carriers.
clientele, whether permanent, occasional or
accidental, and done for general business A CPC or a CPCN constitutes neither a
purposes, any common carrier or public franchise nor a contract, confers no property
utility, ice plants, power and water supplies, right, and is a mere license or a privilege.
communication and similar public services. The holder of said certificate does not
(Sec. 13b, CA 146) acquire a property right in the route covered
A casual or incidental service devoid of thereby. Nor does it confer upon the holder
public character and interest is not brought any proprietary right or interest or franchise
within the category. The question depends in the public highways. Revocation of this
on such factors as the extent of services, certificate deprives him of no vested right.
whether such person or company has held New and additional burdens, alteration of
himself or itself out as ready to serve the the certificate, or even revocation or
public or a portion of the public generally. annulment thereof is reserved to the State.
(Luzon Stevedoring vs. PSC) (Luque vs. Villegas, 30 SCRA 408)
NOTE: The Public Service Commission It is a property and has a considerable

created under the Public Service Law has value and can be the subject of sale or
already been abolished under P.D. No. 1 attachment. (Cogeo-Cubao Operators and
and other issuances. It has been replaced Drivers Assn. vs. CA, 207 SCRA 343,
by the following government agencies: LTO; Raymundo vs. Luneta Motor Co.)
LTFRB; ATO; BOE; NTC; NEA; ERB;
NWRC; CAB; and MIA. REQUREMENTS FOR GRANTING CPC
OR CPCN
1. Applicant must be a citizen of the
Philippines or a corporation or entity 60%
of the capital of which is owned by such n, or special trips in
citizens; modification territories
2. Applicant must prove public necessity; of CPC or specified in
3. Applicant must prove that the operation CPCN; the certificate;
of the public service proposed and the 7. 7. Uniform
authorization to do business will promote Suspension accounting
the public interest on a proper and of CPC or system and
suitable manner; CPCN, furnishing of
4. Applicant must have sufficient financial except when annual
capability to undertake the proposed it is reports;
services and meeting the responsibilities necessary to 8. Compelling
incident to its operation. avoid serious compliance
and with the laws
irreparable and
POWERS POWERS damage or regulations.
REQUIRING EXERCISABL inconvenienc
PRIOR E WITHOUT e to the
NOTICE PRIOR public or
AND NOTICE AND private
HEARING HEARING interest, in
which case, a
suspension
1. Issuance 1. Investigatio not more
of CPC or n any matter than 30 days
CPCN; concerning may be
2. Fixing of public service; ordered, prior
rates, tolls, 2. Requiring to the
and charges; operators to hearing.
3. Setting up furnish safe, (Soriano v.
of standards adequate, and Medina, 164
and proper SCRA 36)
classification service;
s; 3. Requiring UNLAWFUL ACTS OF PUBLIC UTILITY
4. Establish public COMPANIES
ment of rules services to 1. Engagement in public service business
to secure pay expenses without first securing the proper
accuracy of of certificate;
all meters investigation; 2. Providing or maintaining unsafe,
and all 4. Valuation improper or inadequate service as
measuring of properties determined by the proper authority;
appliances; of public 3. Committing any act of unreasonable and
5. Issuance utilities; unjust preferential treatment to any
of orders 5. Examinatio particular person, corporation or entity as
requiring n and test of determined by the proper authority;
establishmen measuring 4. Refusing or neglecting to carry public
t or appliances; mail upon request. (Secs. 18 and 19)
maintenance 6. Grant of
of extension special ACTS REQUIRING PRIOR APPROVAL
of facilities; permits to 1. Establish and maintain individual or joint
6. Revocatio make extra or rates;
2. Establish and operate new units; the hearing, that the circumstances between
3. Issue free tickets; the two applicants are more or less equal,
4. Issue any stock or stock certificates then the applicant who applied ahead of the
representing an increase of capital; other, will be granted the certificate.
5. Capitalize any franchise in excess of the
amount actually paid to the Government; RATE-FIXING POWER
6. Sell, alienate, mortgage or lease The rate to be fixed must be just, founded
property, certificates or franchise. upon conditions which are fair and
reasonable to both the owner and the public.
Under Sec. 20(g) of C.A. No. 146, the A rate is just and reasonable if it conforms
sale, etc. may be negotiated and completed to the following requirements:
before the approval by the proper authority. 1. One which yields to the carrier a fair
Its approval is not a condition precedent to return upon the value of the property
the validity of the contract. The approval is employed in performing the service;
necessary only to protect public interest. and
2. One which is fair to the public for the
PRIOR OPERATOR/OLD OPERATOR service rendered.
RULE
The rule allowing an existing franchised REGISTERED OWNER RULE
operator to invoke a preferential right within The registered owner of a certificate of
the authorized territory as long as he public convenience is liable to the public for
renders satisfactory and economical service. the injuries or damages suffered by third
The policy is not to issue a certificate to a persons caused by the operation of said
second operator to cover the same field and vehicle, even though the same had been
in competition with a first operator who is transferred to a third person.
rendering sufficient, adequate and The registered owner is not allowed to
satisfactory service. The prior operator must escape responsibility by proving that a third
first be given an opportunity to improve its person is the actual and real owner Reason:
service, if inadequate or deficient. It would be easy for him, by collusion with
Purpose: To prevent ruinous and wasteful others or otherwise, to transfer the
competition in order that the interests of the responsibility to an indefinite person, or to
public would be conserved and preserved. one who possesses no property with which
to respond financially for the damage or
It subordinates the prior applicant rule injury done. (Erezo, et al. vs. Jepte 102 Phil
which gives the first applicant priority only if 103).
things and circumstances are equal.
KABIT SYSTEM
Where the operator either fails or neglects A system whereby a person who has been
to make the improvement or effect the granted a certificate of public convenience
increase in services, especially when given allows other persons who own motor
the opportunity, new operators should be vehicles to operate under such license, for a
given the chance to give the services fee or percentage of such earnings. It is void
needed by the public. and inexistent under Art. 1409, Civil Code.
Effects:
PRIOR APPLICANT RULE 1. The transfer, sale, lease or assignment of
Presupposes a situation when two the privilege granted is valid between the
interested persons apply for a certificate to contracting parties but not upon the
operate a public utility in the same public or third persons. (Gelisan vs.
community over which no person has as yet Alday, 154 SCRA 388)
granted any certificate. If it turns out, after
owner are jointly and severally liable with
the driver. (Zamboanga Transportation
Co. vs. CA)
2. The registered owner is primarily liable

for all the consequences flowing from the
operations of the carrier.
The public has the right to assume that
the registered owner is the actual or
lawful owner thereof. It would be very
difficult and often impossible, as a
practical matter, for the public to enforce
their rights of action that they may have
for injuries inflicted by the vehicle if they
should be required 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

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CONTRACT OF TRANSPORTATION/ even if he did not secure a Certificate of

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Art.1735 Civil Code Art.1755 Civil Code

1. Ordinary circumstance: 1. Exercise of extraordinary

COMMERCIAL LAW COMMITTEE

1. Reduction of degree of Stipulation limiting liability when a

The diligence required in the

1. That the goods are Dispensing with or lessening the

COMMERCIAL LAW COMMITTEE

III. CARRIAGE OF GOODS BY SEA Loss or Damage as applied to the

NOTE: The Public Service Commission It is a property and has a considerable

2. The registered owner is primarily liable

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