Beruflich Dokumente
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Passenger – one who travels in a public conveyance Case: British Airways Inc. v. Honorable Court of Appeals
by virtue of contract, express or implied, with the - even if no tickets were issued, a verbal contract to
carrier as to the payment of fare or that which is carry is already a binding consensual contract. In said
accepted as an equivalent thereof. case, petitioner repeatedly failed to transport contract
workers bound for Jeddah. The costs of the tickets were
already paid to petitioners and confirmed bookings were
Time of Perfection:
canceled without prior notice, thus, petitioner was made
2 types of contracts of carriage of PASSENGERS: liable for its breach of obligation to transport the workers.
1. Contract to carry (agreement to carry the
passenger at some future date) – consensual contract Note: a bill of lading/ticket is a documentary proof of the
and perfected by mere consent agreements of both parties, but it is not necessary for the
perfection of the contract to carry.
* AIRCRAFT – perfected even without issuance of ticket
as long as there was already meeting of minds with Continuing Offer Rule:
respect to the subject matter and consideration. - Once a PUB (or Jeepney) stops, it is in effect
making a continuing offer to bus riders. Under this
If a passenger is carried gratuitously or under a reduced rule, it is the duty of the drivers to stop their
fare, he is is still considered as a passenger. However, a
conveyances for a reasonable length of time in order to
stipulation limiting the common carrier’s liability for
afford passengers an opportunity to board and enter,
negligence is valid.
and they are liable for injuries suffered by boarding
Case: Baliwag Transit Corp. v. CA passengers resulting from the sudden starting up of the
-Only the injured person can be considered as a real carrier.
party-in-interest who can instituted a suit. The parents of - the liability is already based on a contract.
the injured party cannot appeal, by themselves, the - it follows that the passengers is deemed to be
dismissal of a case, especially if a release is made by the accepting the offer if he is already attempting to board
party injured. the conveyances and the contract of carriage is
perfected from that point. (Case: Dangwa Traspo. Co.
There may be cases when the party who contacted for a v. CA)
contract of transportation is not the passenger. Such as:
1. An employer who hires the services of a bus to 2. CARRIAGE OF GOODS
ferry its employees to a particular destination. Parties: shipper & carrier
2. School which hire services of a bus to transport
students so that they can attend an event.. Shipper – the person who delivers the goods to the
carrier for transportation; pays the consideration or on
whose behalf payment is made
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carrier is established.
Consignee – person to whom the goods are to be
delivered. May be the shipper himself or a third person CARRIER:
who is not actually a party to the contract Common carriers (CC) (1732)
– persons, corporations, firms or associations
Perfection: engaged in the business of carrying or transporting
> contract to carry goods – consensual passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.
(NOT the means of transportation)
> contract of carriage - act of delivery of goods – one that holds itself out as ready to engage in
(goods are unconditionally placed in the possession the transportation of goods for hire as a public
and control of the carrier and upon their receipt by the employment and not as a casual occupation.
carrier for transportation)
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clientele (between the general public and a narrow goods for another
segment of the general population) - CC = observe extraordinary diligence; in case of
Still considered a CC even if he did not secure a loss, deterioration or destruction of goods of goods,
Certificate of Public Convenience CCs are presumed to be at fault or have acted
No distinction as to the means of transporting, as negligently
long as it is by land, water or air
The Civil Code does not provide that the - 2 types of Affreightment
transportation should be by motor vehicle i. Time charter: vessel is leased to the charterer for a
Still a CC even if he has no fixed and publicly fixed period of time
know route, maintains no terminals, and issues no ii. Voyage charter: ship is leased for a single voyage
tickets
Pipeline operators are CCs – even if oil or 2. Charter by demise/ Bareboat Charter
petroleum products are transported through - whole vessel is let to the charterer with a
pipelines and not through motor vehicles (Case: transfer to him of its entire command and possession
First Philippine Industrial Corp. vs. CA) and consequent control over its navigation including
the master and the crew who are his servants.
Case: Jose Mendoza v. Philippine Airlines Inc -charter includes both vessel and crew—CC
- The test of whether one is a common carrier by becomes private carrier (PC) insofar as that particular
air is whether he holds out that he will carry for hire, voyage is concerned
so - if it is already a PC- ordinary diligence in the
carriage of goods will suffice
long as he has room, goods of everyone bringing goods - PC = undertaking is a single transaction, not a
to him for carriage, not whether he is carrying as a part of the general business or occupation, although
public employment or whether he carries to a fixed
place. involving the carriage of goods for a fee; NO
presumption of negligence applies – whosoever alleges
Case: De Guzman v. CA damage to or deterioration of the goods carried
- private respondent was considered a common has the burden of proving that the cause was the
carrier although his principal business was a junk negligence of the carrier.
dealer. On his return trips to Pangasinan, (after selling
junk materials in Manila) respondent would load his Distinction between Common Carriers and Private
Carriers:
vehicles with cargo which various merchants wanted
COMMON CARRIER PRIVATE CARRIER
delivered in establishments in Pangasinan. For that Extraordinary diligence Ordinary diligence in the
service, respondent charged freight rates that were in the vigilance over the carriage of goods will suffice
commonly lower than regular commercial rates. Thus, goods they carry
even if the transportation of goods was merely In case of loss, No such presumption applies to
ancillary to the main business of buying and selling destruction, or private carriers, for whosoever
used bottles and scrap metals, the Supreme Court deterioration of goods, alleges damage to or
they are presumed to deterioration n of the goods
considered the respondent a common carrier.
have been at fault or to carried has the onus of proving
have acted negligently; that the cause was the negligence
CHARTER PARTY: A contract by which an entire burden of proving of the carrier
ship or some principal part thereof is let by the owner otherwise rests on them
to another person for a specified time or use. (Note: a Cannot stipulate that it is May validly enter into such
charter party is a written contract/instrument, not a exempt from liability for stipulation
person) the negligence of its
agents or employees
Q: What is the effect of charter party?
A: It may transform a common carrier into a private Factors to be considered whether a carrier is
carrier. However, it must be a bareboat or demise common/private:
charter where the charterer mans the vessel with his Law applicable
own people and becomes, in effect, the owner for the o Common →Civil Code
voyage or service stipulated o Private → Contract
Diligence required
2 types: o Common → extraordinary diligence
1. Contract of Affreightment o Private → diligence of a good father of a family
- involves the use of shipping space on vessels Burden of proof in relation to negligence
leased by the owner in part or as a whole, to carry
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2. Code of Commerce - in all matters not fixed on a definite individual – the registered owner.
regulated by NCC.
3. COGSA- supletory to NCC KABIT SYSTEM
-The “registered owner” rule is applicable to
people involved on a “kabit system”
C. Carriage from Philippine Ports to Foreign -arrangement whereby a person who has been
Ports granted a certificate of public convenience allows other
1. laws of the country to which the goods are persons who own motor vehicles to operate them under
being trasnported. (Art. 1753, CC) his license, sometimes for a fee or percentage of the
earnings --- contrary to public policy (thus VOID and
D. Overland Transportation INEXISTENT under Art. 1409 of the Civil Code)
1. CC- primary Law - parties to the “kabit system” cannot invoke the
2. Code of Commerce - suppletorily same as against each other either to enforce their
illegal agreement or to invoke the same to escape
E. Air Transportation liability. This is consistent with the time-honored
1. CC-primary law maxim “ex pacto illicito non oritur action” [No action
arises from an illicit bargain]. →pari delicto rule
2. Code of Commerce - having entered into an illegal contract, neither
3. For international carriage- Warsaw can seek relief from the courts and each must bear the
Convention with amendments consequences of his acts
Note: COGSA- primary law under RA 10668 (see Note: the policy against “kabit system” is also
page 970) applicable to aircrafts and vessels – basic rule that no
person can operate a common carrier without securing
NATURE OF BUSINESS a certificate of public convenience and necessity.
- Common Carriers exercise a sort of public office Hence, persons wo do not have such certificate cannot
- Consequently, common carriers are subject to cercumvent the law by using the certificate of another.
regulation by the State -the thrust of the law in enjoining the kabit system
is not so much as to penalize the parties but to identify
REGISTERED OWNER RULE/ REGISTRATION the person upon whom responsibility may be fixed in
LAWS case of an accident with the end view of protecting the
- Governed by the Land Transportation and riding public.
Traffic Code and administered by the Land
Transportation Office Case: Dizon vs. Octavio
- the primary factors considered in the granting of
a certificate of public convenience for the business of
public transportation is the financial capacity of the
- There is a Compulsory registration of motor
vehicles under Sec. 5 of RA 4136 or Land
Transportation and Traffic Code. holder of the license, so that liabilities arising from
- Registered owner rule- registered owner of a accidents may be duly compensated
vehicle is liable for any damage caused by the - Thus, for the safety of passengers and the public
negligent operation of the vehicle although the same who may have been wronged and deceived through the
was already sold or conveyed to another person at the
time of the accident. baneful kabit system, the registered owner of the
- The registered owner is liable to the injured vehicle is not allowed to prove that another person has
party subject to his right of recourse against the become the owner so that he may be thereby relived of
transferee or the buyer responsibility
- Applicable in case of lease
- Registered owner not liable if vehicle was taken BOUNDARY SYSTEM
form him without his knowledge and consent. -system where carriers impose an amount that
such drivers would need to remit/pay to the carrier
Q: what is the purpose of such law? everyday. This amount to be remitted/paid is called the
A: The main aim of motor vehicle registration is to “boundary”. The excess of the amount the drivers earn
identify the owner so that if any accident happens, or daily will be their compensation. It is also considered
that any damage or injury is caused by the vehicle on as a form of lease of the vehicle being used, mostly
the public highways, responsibility therefor can be common in taxi operators.
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-under this system, the carrier cannot escape accept a particular class of goods
liability by claiming that the driver is a lessee. To - EXP: it appears that for some sufficient reason the
tolerate such position would not only abet flagrant discrimination against the traffic in such goods is
violations of the Public Service Law but also place the reasonable and necessary: (DUO-CIELS-F/DUCO-FLIES)
riding public at the mercy of reckless and irresponsible 1. dangerous objects or substances including
drivers-reckless because the amount they earn depends dynamites and other explosives
upon the number of trips they make, hence, the speed 2. goods are unfit for transportation
at which they drive; and irresponsible because most if 3. acceptance would result in overloading
not all of them are in no position to pay for the 4. contrabands or illegal goods
damages they might cause. 5. goods injurious to health
6. goods will be exposed to untoward danger like
CHAPTER 2 flood, capture by enemies and the like
OBLIGATIONS OF THE PARTIES 7. goods like livestock will be exposed to
diseases
8. strike
Basic obligations of the common carrier:
9. failure to tender goods on time
1. To accept passengers and goods without
discrimination. Case: Fisher v. Yangco
2. To deliver/seasonable deliver the goods - factors in determining reasonable discrimination
3. To bring the passenger to the proper place or include: (SRN/SNR)
destination. i. suitability of the vessel for the transportation of
4. To deliver the goods to the proper person. such products;
5. To exercise extraordinary diligence in the ii. reasonable possibility of danger or disaster
resulting from their transportation in the form and
performance of its duties.
under the conditions in which they are offered for
carriage; and
I. Obligations of the carrier
iii. the general nature of the business done by the
carrier.
A. DUTY TO ACCEPT
- A common carrier granted a certificate of public
(1) Hazardous and Dangerous Substances
convenience is duty bound to accept passengers or
- Carrier not properly equipped to transport
cargo without any discrimination.
dangerous chemicals or explosives may validly refuse
- It is illegal for domestic ship operators to refuse to
to accept the same for transport.
accept or carry passengers or cargo without just cause.
- Those which are not authorized by the Maritime
(Section 16, RA 9295)
Industry Authority to carry such goods may also
validly refuse the same for transport.
Note: In air transportation, passengers with
- There must be a Special Permit to Carry from
confirmed tickets who were not allowed to board are
the MARINA. (accept only if the said cargoes are
provided with denied boarding compensation and
covered by the necessary clearance from appropriate
priority boarding rules.
government agencies)
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consignee in attendance. If declaration of shipper is 3. The carrier is liable for damages used by the
true, expenses occasioned by the examination and of delay; and
repacking the packages shall be for the account of the 4. The consignee may exercise his right to
carrier abandon under Art. 371 of the Code of Commerce.
-Even if the cause of the loss, destruction or
deterioration of the goods should be caused by the Article 1740 (NCC). If common carrier negligently
character of the goods, or the faulty nature of the delays in transporting the goods, a natural disaster
packing or of the containers, the common carrier must shall not free it from responsibility.
exercise due diligence to forestall or lessen the loss.
-a carrier is entitled to fair representation of the Article 1747 (NCC). If common carrier delays ,
nature and value of the goods to be carried, with the without just cause, in transporting the goods or
concomitant right to rely thereon, and further noting changes the stipulated or usual route, the contract
this juncture that a carrier has no obligation to inquire limiting its liability cannot be availed of in case of the
into the correctness or sufficiency of such information. loss, destruction, or deterioration of the goods.
The consequent duty to conduct inspection thereof
arises in the event that there should be reason to doubt Note: read page 67 of book for other provisions.
the veracity of such representations. (Case: Saludo, Jr.
v. CA) (1) Abandonment
- In case of delay through the fault of the carrier,
B. DUTY TO DELIVER THE GOODS the consignee may refuse to accept the goods or may
Time of Delivery leave the goods in the hands of the carrier. It must be
- Where a carrier has made an express contract, communicated to the carrier in writing.
the goods must be delivered within a specified time
- This right must be exercised between the time of
otherwise he is liable for any delay (indemnity for
delay and before the arrival of the goods at its
damages).
destination.
- In the absence of any agreement, goods must be
- The carrier must pay the full value of the goods
delivered at its destination within a reasonable time
as if they had been lost or mislaid.
(depending on the attending circumstances, nature of
the goods; expected date of arrival in the BOL may be
Note: If abandonment is not made, indemnification for
considered).
the losses and damages by reason of the delay cannot
- In the absence of a special contract, a carrier is
exceed the current price which the goods would have
NOT an insurer against delay in transportation of
on the day and at the place they are to be delivered.
goods.
The value of the goods which the carrier must pay in
-Reasonable time: expected date of arrival may be
case of loss or misplacement shall be that what is
considered in determining. In Mearsk v CA, 2 months
declared in the bill of lading.
was considered as unreasonable. However, it will also
depend on the nature of the goods. (If perishable, it
Consignee must not defer the payment of the expenses
should be delivered with haste or before it is damaged
and transportation charges of the goods otherwise
or becomes rotten.)
carrier may demand the judicial sale of the goods.
Consequences/Effects of Delay
Case: Magellan Mfg. Marketing Corp. vs. CA
- Excusable delays in carriage suspend, but do not
- Abandonment may also be made by virtue of
generally terminate, the contract of carriage; when the
stipulation or agreement between parties
cause is removed, the master must proceed with the
voyage and make delivery.
(2) Rights of Passengers in Case of Delay
- During the detention or delay, vessel continues - As to the rights and duties of the parties strictly
to be liable as a common carrier, not a warehouseman, arising out of delay, the Civil Code is silent. However,
and remains duty bound to exercise extraordinary the Code of Commerce provides for such a situation:
diligence.
ARTICLE 698. In case a voyage already begun
If delay is legally inexcusable, the following should be interrupted, the passengers shall be obliged
consequences results: to pay the fare in proportion to the distance covered,
1. the carrier is still liable even if natural without right to recover for losses and damages if the
disaster caused the damage; interruption is
2. The stipulation limiting the liability of the
carreir cannot be availed of or is inoperative; due to fortuitous event of force majeure, but with a
right to indemnity if the interruption should have been
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Note: the presumption is operative even if the parties prove that they observed extraordinary diligence.
cannot establish the cause of damage to the goods or
injury to the passenger. EFFECT OF ACQUITTAL.
-The acquittal of the employee of the common
The Civil Code provides: carrier in the criminal case is immaterial to the case for
Article 1735. In all cases other than those mentioned breach of contract.
in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
goods are lost, destroyed or deteriorated, common Article 31 of the NCC provides: “when the
carriers are presumed to have been at fault or to have civil action is based on an obligation not
acted negligently, unless they prove that they observed arising from the act or omission complained
extraordinary diligence as required in article 1733. of as a felony, such civil action may proceed
independently of the criminal proceedings and
Article 1756. In case of death of or injuries to regardless of the result of the latter.”
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they DURATION OF DUTY IN CARRIAGE OF
prove that they observed extraordinary diligence as GOODS. Due diligence should be exercised the
prescribed in articles 1733 and 1755. moment the goods are delivered to the carrier. [Refer
to Arts. 1736, 1737, and 1738 of the NCC]
Q: Why should common carriers exercise
extraordinary diligence? Q: When the goods are deemed delivered to
A: to protect the passengers from tragic mishaps that the carrier.
frequently occur in connection with modern A: The goods are deemed delivered to the
transportation. this high standard of care is carrier when the goods are ready for and have
imperatively demanded by the preciousness of human been placed in the exclusive possession,
life and by the consideration that every person must in custody and control of the carrier for the
every way be safeguarded against all injury (Report of purpose of their immediate transportation and
Code Commission). the carries has accepted them. When the
carrier has thus accepted such delivery, the
Note: this extraordinary liability lasts from the time the liability of the carrier commences eo instanti.
goods are placed in the possession of the carrier until [As to its termination, it was ruled that the
they are delivered to the consignee, or “to the person obligation of the carrier could also be
who has the right to receive them”, but these considered terminated despite the non-
provisions only when loss, destruction or deterioration surrender of the bill of lading.]
takes place while the goods are in the possession of the
carrier, and not after it has lost control of them. Temporary Unloading or Storage. Art. 1737
of the NCC provides that the common
Note: the statutory presumption may only be overcome carrier’s duty to observe extraordinary
by evidence that the carrier exercised extraordinary diligence over the goods remains in full force
diligence. and effect even when are temporarily
unloaded or stored in transit.
Note: there is no presumption of bad faith even if there
is a presumption of negligence. Bad faith should be Stoppage in Transitu.
established by clear and convincing evidence. The law By way of exception under Art. 1737,
always presumes good faith such that any person who extraordinary diligence need not be exercised
seeks to be awarded with damages due to the acts of over the goods that are unloaded temporarily
another has the burden of proving that the later acted in if the shipper or owner has made use of the
bad faith or with ill motive. (Case: Air France v right of stoppage in transitu.
Gillego)
. Q: What is Stoppage in Transitu?
Doctrine of Proximate Cause – is not applicable, there A: It is the right of an unpaid seller to resume
is a presumption of negligence. possession of the goods at any time while the goods
- if the goods are lost, destroyed or deteriorated, are in transit, and he will become entitled to the same
common carriers are presumed to have acted rights in regard to the goods as he would have had if he
negligently, unless they prove that they observed had never parted with the possession.
extraordinary diligence. In case of death of or injuries The right is available if:
to passengers, common carriers are presumed to have 1. The buyer of goods is or becomes
been at fault or to have acted negligently, unless they insolvent;
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subject to approval by MARINA and the same proper lane for the purpose of overtaking
cannot generally be changed without the another vehicle in an ordinary situation has the
authorization from said administrative agency duty to see to it that the road is clear and not
to proceed if he cannot do so in safety.
2. Transshipment
- The act of taking cargo out of one ship and C. DILIGENCE IN THE SELECTION AND
loading it into another; to transfer goods from SUPERVISION
the vessel stipulated in the contract of In quasi-delict cases Under 2176 in relation to
affreightment to another vessel before the Article 2180 of the NCC, the employer can
place of destination named in the contract has invoke the defense of due diligence in the
been reached. selection and supervision of the employee in
- Transshipment of freight without legal excuse order to escape liability. Such a defense is not
is a violation of the contract and subjects the available if the case against the carrier is
carrier to liability if the freight is lost even by based on contract – culpa contractual.
a cause otherwise excepted. Art. 1759. Common carriers are liable for the
death of or injuries to passengers through the
Note: There is transshipment whether or not the same negligence or willful acts of the former’s
person, firm or entity owns the vessels (what matters employees, although such employees may
is the actual physical transfer of cargo from one have acted beyond the scope of their authority
vessel to another) or in violation of the orders of the common
carriers.
EXTRAORDINARY DILIGENCE IN This liability of the common carriers does not
CARRIAGE BY LAND cease upon proof that they exercised all the
diligence of a good father of a family in the
A. CONDITION OF VEHICLE selection and supervision of their employees.
- Common carriers that offer transportation by
land are similarly required to make sure that D. DUTY TO INSPECT
the vehicles that they are using are in good - There is no unbending duty to inspect each
order and condition. and every package or baggage that is being
brought inside the bus or jeepney. The carrier
Rule on Mechanical Defects – If the carriers will is duty bound to conduct such inspection
replace certain parts of the motor vehicle, they are depending on the circumstances.
duty bound to make sure that the parts that they are
purchasing are not defective. Hence, it is a long- Case: Nocum vs. Laguna Tayabas Bus Company
standing rule that a carrier cannot escape liability by - While it is true the passengers of appellant’s
claiming that the accident that resulted because of a bus should not be made to suffer for
defective break or tire is due to a fortuitous event. something over which they had no control,
This is true even if it can be established that the tire fairness
that was subject of a blow-out is brand new. The duty demands that in measuring a common
to exercise extraordinary diligence requires the carrier’s duty towards its passengers,
carrier to purchase and use vehicle parts that are not allowance must be given to the reliance
defective. that should be reposed on the sense of
responsibility of all the passengers in
B. TRAFFIC RULES regard to their common safety.
- The carrier fails to exercise extraordinary - It is to be presumed that a passenger will not
diligence if it will not comply with basic take with him anything dangerous to the
traffic rules. The Civil Code provides for a lives and limbs of his co-passengers not to
presumption of negligence in case the accident speak of his own.
occurs while the operator of the motor vehicle - Not to be lightly considered is the right to
is violating traffic rules. privacy to which each passenger is entitled
- In other words, inquiry may be verbally
In cases involving breach of contract of carriage, made as to the nature of a passenger’s
proof of violation of traffic rules confirms that the baggage when such is not outwardly
carrier failed to exercise extraordinary diligence. perceptible, but beyond this, constitutional
boundaries are already in danger of being
Case: Mallari Sr and Jr vs. CA transgressed
- The rule is settled that a driver abandoning his - SC held that carrier has succeeded in
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*Mechanical defects – damage or injury 2. Problem: A passenger told the driver that he
resulting from mechanical defects is not a has valuable items in his bag which was placed
damage or injury that was caused by fortuitous under his feet and he asked the driver (to which
event; carrier is liable to its passengers for he is seated near) to watch for the bag while he is
damages caused by mechanical defects of the asleep.
conveyance (breakage of a faulty drag-link
spring, fracture of the vehicle’s right steering (a) There have been incidents of throwing
knuckle, defective breaks) of stones at passing vehicles in the North
Express Way. While the bus was traversing
- One of the reason why carrier is made liable despite the super highway, a stone hurled from the
the presence of mechanical defect is the absence of overpass and hit the passenger resulting to
privity between the passenger and the manufacturer injuries. Can the passenger hold the bus
liable for damages?
Case: Juntilla v. Fontanar
- “Tire-blowouts” was not considered as fortuitous Answer: Yes. The incident was foreseeable due
event although it was alleged that the tires were the prior incidents of stone hurling. The bus
in good condition; no evidence was presented to should have exercised utmost diligence and
show that the evidence were due to adverse road employed adequate precautionary measures to
conditions – the carrier must prove all angles. secure safety of passengers since the incident
- The explosion could have been caused by too was foreseeable. .
much air pressure injected into the tires and the
fact that the jeepney was overloaded and HOWEVER, if the stone throwing was entirely
speeding at the time of the accident. unforeseeable and the carrier exercised the
utmost diligence, then, the bus can’t be held
OTHER INVALID DEFENSES liable. Nonetheless, the burden of proof is on the
1. Damage to cargo due to EXPLOSION of another carrier to prove such exercise of diligence. It is
cargo – not attributable to peril of the seas or up to the carrier to overthrow the presumption of
accidents of navigation. negligence. If the passenger decides to file a
2. Damage by WORMS and RATS resulting to case, all the passenger has to do is to prove that
damage to cargoes – can’t be cited as an excuse she was a passenger of the bus and that she
by the carrier. suffered injuries while on board the bus.
3. Damage by WATER through a port which had
been left open or insufficiently fastened on (b) Supposing that there were armed men
sailing. who staged a hold-up while the bus was
4. Carrier cannot escape liabilities to third persons if speeding along the highway. One of them
damage was caused by BARRATRY – where stole the passenger’s bag and wallet while
the master or crew of the ship committed pointing a gun him. Is the bus liable?
unlawful acts contrary to their duties – includes
theft and fraudulently running the ship ashore. Answer: No. Hand-carried luggages are
governed by necessary deposit. Besides, theft
Cases: with use of arms or through irresistible force is a
force majeure which exempts carriers from
1. Problem: A carrier bus on its way to its liability.
destination encountered an engine failure, thus, it 3. Hi-jacking cannot exculpate the carrier from
has to be repaired for 2 days. And while in the liability if it is shown that the employees of the
repair shop, a typhoon came resulting to the carrier were not overwhelmed by the hijackers
spoilage of cargoes. and that there was no showing of irresistible
force. Since, there were 4 employers while there
Answer: A typhoon although a natural disaster, is were only 2 hijackers and only one of them was
not a valid defense if it is shown that it was not armed with bladed weapon.
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Case: Franklin Gacal vs. PAL Art. 1742. Even if the loss, destruction, or
-It is therefore not enough that the event should deterioration of the goods should be caused by the
not have been foreseen or anticipated, as is commonly character of the goods, or the faulty nature of the
believed, but it must be one impossible to foresee or to packing or the containers, the common carrier must
avoid. exercise due diligence to forestall or lessen the loss.
-The mere difficulty to foresee the happening is
not the impossibility to foresee the same Thus, if the carrier accepted the goods knowing the
fact of improper packing or even if the carrier does
B. PUBLIC ENEMY not know but the defect was nonetheless apparent
-Presupposes a state of war and refers to the upon ordinary observation, it is not relived from
government of a foreign nation at war with the country liability for loss or injury to goods resulting therefrom.
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their employees.
Cases:
1. Problem: A carrier knowing that some of a Art. 1763. Carrier is responsible for injuries suffered
cargo of sacks of rice had big holes and others by a passenger on account of the willful acts or
had openings just loosely tied with strings negligence of other passengers or of strangers, if the
resulting to the spillage of rice during the trip. common carrier’s employees through the exercise of
Thus, there was shortage in the delivery of the the diligence of a good father of a family could have
cargoes. When sued due to the shortage, the prevented or stopped the act or omission.
carrier interposed a defense that it was not liable
since the shortage was due to the defective a. Employees
condition of the sacks. Decide. - Carrier is liable for the acts of its employees. It can’t
escape liability by claiming that it exercised due
Answer: Carrier must still exercise extraordinary diligence in supervision and selection of its employees
diligence if the fact of improper packing is (unlike in quasi-delicts).
known to the carrier or its servants, or apparent
upon ordinary observation. If the carrier accepted Reasons for the rule:
the cargo without protests or exception 1. Undertaking of the carrier requires that its
notwithstanding such condition, he is not relived passenger that full measure of protection
of liability for damage resulting therefrom. afforded by the exercise of high degree of care
Apply Article 1742. prescribed by law, inter alia from violence and
insults at the hands of strangers and other
D. ORDER OF PUBLIC AUTHORITY passengers, but above all, from the acts of the
carrier’s own servants.
Art. 1743. If through the order of public authority the
goods are seized or destroyed, the common carrier is 2. The liability of the carrier for the servant’s
not responsible, provided said public authority had violation of duty to performance of his contract
power to issue order. to safely transport the passenger, delegating
therewith the duty of protecting the passenger
Cases: with utmost care prescribed by law.
1. Carrier was not excused from liability since the
order of an acting mayor was not considered as a 3. As between the carrier and the passenger, the
valid order of a public authority. It is required former must bear the risk of wrongful acts or
that public authority who issued the order must negligence of the carrier’s employees against
be duly authorized to issue the order. passenger, since it, and not the passenger, has the
power to select and remove them.
2. Carriage of Goods by Sea Act – provides that
carrier shall not responsible for loss or damage Rationale: On the other hand, if the ship owner
resulting from “arrest or restraint of princes, derives profits from the results of the choice of the
rulers, or people, or seizure under legal process” captain and the crew, when the choice turns out
and from “quarantine restrictions”. successful, it is also just that he should suffer the
consequences of an unsuccessful appointment, by
II. DEFENSES IN CARRIAGE OF PASSENGERS application of the rule of natural law contained in the
partidas --- that he who enjoys the benefits derived
- Primary defense of carrier is exercise of from a thing must likewise suffer the losses that ensue
extraordinary diligence in transporting passengers. therefrom
Even if there is a fortuitous event, the carriers must Note: Willful acts of the employees include theft
also present proof of exercise of extraordinary
diligence. b. Other Passengers and Third Persons
Art. 1759. Common carriers are liable for the death of - With respect to acts of strangers and other passengers
or injuries to passengers through the negligence or resulting in injury to a passenger, the availability of
willful acts of the carrier’s employees, although such such defense is also subject to the exercise of a carrier
employees may have acted beyond the scope of their of due diligence to prevent or stop the act or omission.
authority or in violation of the orders of the common
carriers. - Negligence of the carrier need not be the sole cause
The liability does not cease even upon proof that they of the damage or injury to the passenger or the goods.
exercised diligence in the selection and supervision of The carrier would still be liable even if the contractual
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breach concurs with the negligent act or omission of his family, servants or visitors, or if the loss arises
another person. from the character of the things brought into the hotel.
(n)
Remember: the negligence of the other driver in a
collision is NOT a prejudicial question to an action Art. 2003. The hotel-keeper cannot free himself from
against the carrier’s company. responsibility by posting notices to the effect that he is
not liable for the articles brought by the guest. Any
Article 1759. Common carriers are liable for the stipulation between the hotel-keeper and the guest
death of or injuries to passenger through the whereby the responsibility of the former as set forth in
negligence or willful acts of the former’s employees, articles 1998 to 2001 is suppressed or diminished shall
although such employees may have acted beyond the be void. (n)
scope of their authority or in violation of the orders of
the common carriers. Cases:
1. Despite the fact that the carrier gave notice that it
PASSENGER’S BAGGAGES shall not be liable for baggage brought in by
- The term baggage has been defined to include passengers, the carrier is still liable for lost hand-
whatever articles a passenger usually takes with him carried luggage since it is governed by rules on
for his own personal use, comfort and convenience necessary deposits. Under Art. 20000, the
- Rules that are applicable to goods that are being responsibility of the depositary includes the loss
shipped are also applicable to baggage delivered to the of property of the guest caused by strangers but
custody of the carrier. Arts. 1733. 1734 and 1736 of not that which may proceed from force majeure.
Civil Code are applicable. Moreover, article 2001 considers theft as force
- However, if the luggage was hand-carried, Arts. majeure if it is done with use of arms or through
1998, 2000-2003 shall apply. irresistible force.
Distinction: W/N the baggage is in the personal 2. Even if the passenger did not declare his baggage
custody of the passenger. nor pay its charges contrary to the regulations of
if yes, hand carried baggage the bus company, the carrier is still liable in case
if no, checked-in baggage of loss of the baggage. Since, it has the duty to
exercise extraordinary diligence over the
Art. 1998. The deposit of effects made by the baggage that was turned over to the carrier or
travellers in hotels or inns shall also be regarded as placed in the baggage compartment of the bus.
necessary. The keepers of hotels or inns shall be The non-payment of the charges is immaterial as
responsible for them as depositaries, provided that long as the baggage was received by the carrier
notice was given to them, or to their employees, of the for transportation.
effects brought by the guests and that, on the part of
the latter, they take the precautions which said hotel-
keepers or their substitutes advised relative to the care ACTS OF THE SHIPPER OR THE PASSENGER
and vigilance of their effects. (1783) - if the act or omission of the shipper or owner of
the goods or the passenger is the proximate and only
Art. 2000. The responsibility referred to in the two cause of the damage, then the common carrier is not
preceding articles shall include the loss of, or injury to liable.
the personal property of the guests caused by the - Nevertheless, contributory negligence on the
servants or employees of the keepers of hotels or inns part of the shipper/ passenger would only mitigate the
as well as strangers; but not that which may proceed carrier’s liability; it is not a total excuse.
from any force majeure. The fact that travellers are - However, if the negligence of the shipper/
constrained to rely on the vigilance of the keeper of the passenger is the proximate and only cause of the loss,
hotels or inns shall be considered in determining the then, the carrier shall not be liable. The carrier may
degree of care required of him. (1784a) overcome the presumption of negligence and may be
able to prove that it exercised extraordinary diligence
Art. 2001. The act of a thief or robber, who has in handling the goods or in transporting the passenger.
entered the hotel is not deemed force majeure, unless it
is done with the use of arms or through an irresistible The carrier may be able to prove that the only cause of
force. (n) the loss of the goods is any of the following:
Art. 2002. The hotel-keeper is not liable for 1. Failure of the shipper to disclose the nature of
compensation if the loss is due to the acts of the guest, the goods;
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2. Improper marking or direction as to the Note: there is also no assumption of risk by the mere
destination; fact that the carrier posted notices against such liability
3. Improper loading when he assumes such
responsibility. Case:
Problem: Although, there is a sign in the bus that
The shipper must likewise see to it that the goods says: “do not talk to the driver while the bus is in
are properly packed; otherwise, liability of the carrier motion, otherwise, the company would not
may either be mitigated or barred depending on the assume responsibility for any accident:.
circumstances. Nonetheless, the passengers dared the driver to
race with another bus, as the bus speeds up in the
Art. 1741. If the shipper or owner merely contributed attempt to overtake the other bus, it failed to slow
to the loss, destruction or deterioration of the goods, down. As a result, the bus turns turtle causing the
the proximate cause thereof being the negligence of the death and injuries to passengers. Is the bus
common carrier, the latter shall be liable in damages, company liable?
which however, shall be equitably reduced.
Answer: Yes. The bus company is obligated to
Art. 1761. The passenger must observe the diligence exercise utmost diligence in carrying passengers.
of a good father of a family to avoid injury to himself. This liability cannot be eliminated or limited by
simply posting notices. The passenger cannot be
Art. 1762. The contributory negligence of the said to have assumed the risk of being injured
passenger does not bar recovery of damages for his when he urged the driver to accept the dare. At
death or injuries, if the proximate cause thereof is the most, the passengers can only be said to be guilty
negligence of the common carrier, but the amount of of contributory negligence which would mitigate
damages shall be equitably reduced. the liability of the driver, since the proximate
cause of the accident was the driver’s willful and
a. Last Clear Chance reckless act in running the race with the other
bus.
A negligent carrier is liable to a negligent
passenger in placing himself in peril, if the carrier was Case: Cesar Isaac vs. A.L. Ammen Transportation Co,
aware of the passenger’s peril, or should have been Inc.
aware of it in the reasonable exercise of due care, had - Where a carrier’s employee is confronted with a
in fact an opportunity later than that of the passenger to sudden emergency, the fact that he is obliged to act
avoid an accident. quickly and without a chance for deliberation must be
taken into account, and he is not led to the same degree
Last clear chance applies in a suit between the of care that he would otherwise be required to exercise
owners and drivers of colliding vehicles. It does not in the absence of such emergency but must exercise
arise where a passenger demands responsibility from only such care as any ordinary prudent person would
the carrier to enforce its contractual obligations. For it exercise under like circumstances and conditions, and
would be inequitable to exempt the negligent driver of the failure on his part to exercise the best judgment the
the carrier and its owner on the ground that the other case renders possible does no establish lack of care and
driver was likewise guilty of negligence. skill on his part which renders the company liable.
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- Since he opted to sit on the open platform - six (6) years if there is no written contract (bill of
between the coaches of the train, he should have held lading)
tightly and tenaciously on the upright metal bar found - ten (10) years if there is written contract
at the side of said platform to avoid falling off from the
speeding train This rule likewise applies to carriage of passengers
for domestic transportation.
Case: Monica Roldan vs. Lim Ponzo and Co. - Damages arising from delay or late delivery are not
- Article 366 of the Commercial Code is limited to the damage or loss contemplated under the COGSA.
cases of claims for damage to goods actually turned The goods are not actually lost or damaged. The
over by the carrier and received by the consignee. applicable period is ten (10) years.
*But the period prescribed in Art. 366 may be subject Case: Domingo Ang vs. American Steamship Agencies
to modification by agreement of the parties. What is to be resolved – in order to determine the
applicability of the prescriptive period of one year – is
*The validity of a contractual limitation of time for whether or not there was loss of the goods subject
filing the suit itself against a carrier shorter than the matter of the complaint.
statutory period thereof has generally been upheld as Loss contemplates merely a situation where no
such stipulation merely affects the shipper’s remedy delivery at all was made by the shipper of the goods
and does not affect the liability of the carrier. because the same had perished, gone out of commerce,
or disappeared in such a way that their existence is
b) Extinctive Prescription unknown or they cannot be recovered. (Note: It is not
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loss due to misdelivery or delivery to the wrong carrier, that he has received the described goods from
person.) the shipper, to be transported on the expressed terms,
to the described place of destination, and to be
* This rule applies in collision cases. The one (1) year delivered there to the designated consignee or parties.
period starts not from the date of the collision but - A bill of lading or a ticket is not necessary for
when the goods should have been delivered, had the the perfection of a contract of carriage.
cargoes been saved.
KINDS OF BILL OF LADING:
Case: Maritime Agencies and Services Inc. vs. CA
- When there is two destination of delivery, the 1. Negotiable or non-negotiable
one year period should commence when the last item 2. Clean bill of lading or foul bill of lading
was delivered to the consignee. ♦ Clean bill of lading – one that does not
contain any notation indicating any defect
*Insurance in the goods.
The insurer who is exercising its right of ♦ Foul bill of lading – one that contains
subrogation is also bound by the one (1) year such notation.
prescriptive period.
However, it does not apply to the claim against
3. On board bill or received for shipment bill
the insurer for the insurance proceeds. The claim ♦ On board bill of lading - one in which it
against the insurer is based on contract that expires is stated that the goods have been
in ten (10) years. received on board the vessel which is to
carry the goods.
C. Air Transportation - is issued when the goods have been
actually placed aboard the ship with
- The applicable rule on international air transportation every reasonable expectation that the
can be found in the Warsaw Convention shipment is as good as on its way.
♦ Received for shipment bill of lading –
Warsaw Convention: The complaint or claim with the one in which it is stated that the goods
carrier must be filed within 3 days from the receipt of have been received for shipment with or
the baggage and seven days in case of goods. In case without specifying the vessel by which the
of delay, 14 days after the baggage was placed at the goods are to be shipped.
disposal of the passenger. - is issued whenever conditions are not
normal and there is insufficiency of
a) Prescriptive Period shipping space.
2 years from the date of arrival at the 4. Spent bill of lading
destination or from the date the aircraft ought to - If the goods were already delivered but the
have arrived or from the date on which the bill of lading was not returned.
transportation stopped. 5. Through bill of lading
- One issued by a carrier who is obliged to use
Limiting Stipulations the facilities of other carriers as well as his
- The carrier can also, in proper cases, invoke partial own facilities for the purpose of transporting
defense in the form of a limiting stipulation. the goods from the city of the seller to the city
of the buyer, which bill of lading is honored
Requisites: by the second and other interested carriers
1. It is reasonable and just under the who do not issue their own lading.
circumstances 6. Custody bill of lading
2. It is fairly and freely agreed upon . 7. Port bill of lading
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applies suppletorily to the Civil Code if the goods are document has the effect of manual delivery so as to
to be shipped from a foreign port to the Philippines. constitute the transferee the owner of the goods.
-Under COGSA, the liability of the carrier is
US$500 per package in the absence of a shipper’s
declaration of a higher value in the bill of lading.
- If the goods are shipped in cartons, each carton
is considered a package even if they are stored in
container vans.
- When what would ordinarily be considered
packages are shipped in a container supplied by the CHAPTER 6
carrier and the number of such units is disclosed in the ACTIONS AND DAMAGES IN CASE OF
shipping documents, each of those units and not the BREACH
container constitutes the package referred to in
COGSA. CAUSES OF ACTION OF A PASSENGER AND
SHIPPER:
Q: When the limiting stipulation cannot be a) against common carrier – based on
invoked? culpa contractual or culpa aquiliana
A: Under the following circumstances: b) on the part of the driver – based on
1. When the agreement limiting the common either culpa delictual or culpa aquiliana
carrier’s liability is annulled by the shipper or
owner if the common carrier refused to carry DISTINCTION BETWEEN CULPA
the goods unless the former agreed to such CONTRACTUAL AND CULPA AQUILIANA
stipulation; and
2. If the carrier delays in the transportation of the
POINT OF CULPA CULPA
goods; and DISTINCTIO CONTRACTU AQUILIAN
3. If the carrier changes the stipulated o usual N AL A
route. Source of Contract Quasi-Delict
Obligation
BILL OF LADING AS A RECEIPT Liability of No liability there Solidarily
-A bill of lading is a prima facie evidence of the Employee being no privity liable with
receipt of the goods by the carrier. of contract the employer
Availability of Due diligence in Due
SAID WEIGHT CLAUSE Defense the selection and diligence in
- It means nobody knows the actual weight of the supervision of the selection
cargo; the weight written on the bill and on the the employee is and
manifest is based only on the declaration of the not a defense. supervision
shipper. of the
-This is material when the presumption of employee is
negligence is invoked because before the presumption a defense
can operate, the shipper must prove the alleged loss. under Art.
2180.
NEGOTIABILITY In what Liable as a Liable as an
capacity liable contracting party. employer.
-The presence of words of negotiability makes the
document of title negotiable. CONCURRENT CAUSES OF ACTION
-If the document of title contains the
required words of negotiability to make the ♠ There is one action but several causes of action - The
instrument negotiable under Article 1507 of same act that breaches the contract may also be tort
the NCC, the document remains to be
negotiable even if the words “not negotiable” ♠ The cause of action of a passenger or shipper against
or non-negotiable are placed thereon. the common carrier can be culpa contractual or culpa
♦ Bearer document - negotiated by delivery aquiliana while the basis of liability on the part of the
♦Order document - negotiated by indorsement of driver is either culpa delictual or culpa aquiliana. The
the specified person so named driver of the carrier is not liable based on contract
because there is NO PRIVITY of contract between him
Note: Effects of negotiation: Negotiation of the and the passenger or shipper.
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DAMAGES RECOVERED UNDER ART. 2205 2) Attorney’s fees - refer to Art. 2208 of the Civil
(CIVIL CODE) Code - attorney’s fees may be awarded in an action for
1) For loss or impairment of earning capacity breach of contract of carriage under par. 1,2,4,5,10 and
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♠ 12% - for final judgment - Factors to consider that could affect the
amount to be recovered:
Note: No interest, however, shall be adjudged on 1. The extent of humiliation may also
unliquidated claims for damages except when or until determine the amount of moral
the demand can be established with reasonable damages that can be awarded.
certainty, the interest shall begin to run form the time
2. The extent of pain and suffering
the claim is made judicially or extrajudicially.
likewise determines the award.
2. Moral Damages - Includes physical suffering, 3. Official, political, social and financial
standing of the offended party and the
mental anguish, fright, serious anxiety, besmirched
business and financial position of the
reputation, wounded feelings, moral shock, social
offender affect the amount of
humiliation and similar injury.
damages.
- Though incapable of pecuniary
computation, moral damages may be
4. The age of the claimant.
recovered if they were the proximate
result of the defendant’s wrongful act or 3. Nominal Damages
omission. - Refer to Art. 2221-2223 (Civil
- Moral damages are not awarded to punish Code)
the defendant but to compensate the - It is adjudicated in order that the
victim. right of plaintiff may be vindicated or
- May be recovered when there is death or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
there is malice or bad faith. (in
by him.
transportation of passengers)
- The assessment of nominal damages
- Refer to Art. 2219 and 2220 (enumerates is left to the discretion of the court according
cases when moral damages may be to the circumstances of the case.
awarded) - The award of nominal damages is
- Generally, no moral damages may be also justified in the absence of competent
awarded where the breach of contract is proof of the specific amounts of actual
not malicious. damages suffered.
- Moral damages may be awarded if the - Cannot co-exist with actual
contractual negligence is considered gross damages.
negligence. - There is no loss in nominal
- Subject to three conditions in damages, unlike in actual and temperate
transportation law: damages, loss is present which is proven and
♦ Death not proven but rather ascertained by the court,
♦ Malice or bad faith (must be done respectively.
in the performance of the contract of
carriage) Case: Japan Airlines vs. CA
♦ Physical Injuries - The award of moral damages was justified because
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JAL failed to make necessary arrangement to the provisions under Art. 2232-2235 of
transport the plaintiffs on the first available the Civil Code.
connecting flight to Manila.
- Only Nominal damages were awarded in the absence Case: Air France vs. Rafael Carrascoso and CA - The
of proof of actual damages inference of bad faith is there; it may be drawn from
the facts and circumstances set forth therein. The
4. Temperate or Moderate Damages contract was averred to establish the relation between
- More than nominal but less than the parties.
compensatory damages. - Deficiency in the complaint in stating that there was
- Art. 2224 provides: bad faith, if any, was cured by the evidence.
- may be recovered when the court
finds that some pecuniary loss has been
suffered but its amount cannot, from the Case: Philippine Airlines Inc. vs. CA
nature of the case, be provided with certainty. - Moral damages are recoverable in a breach of
- cannot co-exist with actual damages. contract of carriage where the air carrier thought its
- definite proof of pecuniary loss agents acted fraudulently or in bad faith.
cannot be offered, although the court is - The contract of air carriage generates a relation
convinced that there has been such loss. attended with a public duty. Neglect or malfeasance of
the carrier’s employees naturally could give ground
5. Liquidated Damages for an action for damages.
- Those agreed by the parties to a contract,
to be paid in case of breach thereof.
- Ordinarily, the court cannot change the PART II: AVIATION LAW
amount of liquidated damages agreed
upon by the parties. However, Art. 2227 CHAPTER 7
of the Civil Code provides that liquidated THE AIRCRAFT AND CIVIL AVIATION
damages, whether intended as an
indemnity or a penalty, shall be equitably Applicable Laws:
reduced if they were iniquitous or 1. The New Civil Code provisions on Common
unconscionable. Carriers
2. RA 9497 – Civil Aviation Authority Act of 2008
6. Exemplary or Corrective Damages 3. Civil Aviation Regulations (issued by CAAP)
- Requisites for the award of exemplary 4. Treaties and Conventions (Warsaw Convention)
damages:
1. They may be imposed by way of CIVIL AVIATION
example in addition to compensatory
damages, and only after the claimant’s Aeronautics or aviation
right to them has been established. -science and art of flight
2. They cannot be recovered as a
matter of right, their determination Civil Aviation
depending upon the amount of -refers to the operation of any civil aircraft for the
compensatory damages that may be purpose of general aviation operations, aerial work or
awarded to the claimant. commercial air transport operations
3. The act must be accompanied by
bad faith or done in wanton, fraudulent, Aircraft
oppressive or malevolent manner. -any machine that can derive support in the
atmosphere from the reactions of the air other than the
Note: If gross negligence warrants the award of reactions of the air against the earth’s surface
exemplary damages, with more reason is its imposition -shall refer to civil aircraft only, not State or
justified when the act performed is deliberate, public aircraft when used om Civil Aviation Act of
malicious and tainted with bad faith. The rationale 2008
behind exemplary or corrective damage is to provide
an example or correction from public good. REGISTRATION OF AIRCRAFT
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accordance with the requirements of the Civil Aviation any portion thereof shall be registered with the CAAP.
Authority Act of 2008
SEC. 49. Conveyance to be Recorded. - No
Art. 17, Chap III, of the Chicago Convention conveyance made or executed, which affects the title
-“aircraft have the nationality of the State in to, or interest in, any aircraft of Philippine registry, or
which they are registered” any portion thereof shall be valid in respect to such
aircraft or portion thereof against any person other than
Note: An aircraft cannot be registered in more than one the person by whom the conveyance is made or
State, but registration may be changed from one State executed, his heirs, assignees, executors,
to another administrators, devisees, or successors in interest, and
any person having actual notice thereof, until such
Registration is made in accordance with Civil Aviation conveyance is recorded in the Authority. Every such
Authority Act of 2008 (see pages 335-337, Aquino) conveyance so recorded shall be valid as against all
persons. Any instrument, recording of which is
Sec. 45. Application for Aircraft Registration – required by the provisions of this Act, shall take effect
Applications for certificate of registration shall be from the date of its record in the books of the
made in writing, signed and sworn to by the owner or Authority, and not from the date of its execution.
lessee of any aircraft or aircrafts engine eligible for
registration. The application shall also state: a) the date SEC. 50. Form of Conveyance. - No conveyance may
and place of filing; b) the specification, construction be recorded under the provisions of this Act unless it
and technical description of the aircraft or aircraft complies with the requirements for the registration of
engine; and c) such other information as may be documents similar to the land registration process. The
required by the Authority in such manner and form as conveyance to be recorded shall also state: (a) the
the Authority may prescribe by regulation. interest in the aircraft of the person by whom such
conveyance is made or executed or, in the case of a
State of Registry contract of conditional sale, the interest of the vendor;
-State on whose register the aircraft is entered and (b) the interest transferred by the conveyance.
Requirements for an aircraft to be eligible for SEC. 51. Establishment of System of Recording. -
registration: The Authority shall establish a national system for
1. Aircraft is owned by or leased to citizen or recording documents that affect the title to or any
citizens of the Phil or corporations or associations interest in any aircraft registered in accordance with
organized under the laws of the Phil at least 60% of this Act and in any aircraft engine, propeller, appliance
whose capital is owned by Filipino citizens; and or spare parts intended for use on any such aircraft.
2. Aircraft is not registered under the laws of any
country SEC. 52. Method of Recording. - The Authority shall
record conveyances delivered to it in the order of their
Exceptionally, foreign-owned or registered receipt, in files kept for that purpose, indexed to show:
aircraft may be registered if utilized by members of (a) The identifying description of the aircraft;
aero clubs organized for recreation, sport, or the (b) The names of the parties to the conveyance;
development of flying skills as prerequisite to any (c) The date of the instrument and the date and time it
aeronautical activities of such clubs w/in Phil airspace is recorded;
(d) The interest in the aircraft transferred by the
No aircraft can be operated in the Philippines conveyance;
unless it displays nationality and registration marks. (e) If such conveyance is made as security for
Permanent marking of aircraft nationality and indebtedness, the amount and date of maturity of such
registration shall be painted on the aircraft or affixed indebtedness; and
by other means ensuring a similar degree of (f) All particular estates, mortgages, liens, leases,
permanence orders and other encumbrances and all decrees,
instruments, attachments or entries affecting aircraft
Certificate of registration is conclusive evidence and other matters properly determined under this Act.
of ownership, except in a proceeding where such
ownership is, or may be, at issue. The validity of the registration of voluntary
dealings concerning aircrafts with the CAAP is
Recording of Conveyances subject to the ff rules:
-All conveyances made or executed, which affects 1. Registration is valid only with respect to the
title to, or interest in, any aircraft of Phil registry, or parties and their heirs, assignees, executors,
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administrators, devisees, or successors in interest, and operator, which undertakes, whether directly or
any person having actual notice thereof. indirectly or by lease or any other arrangement, to
2. Registration is valid as against all persons and engage in commercial air transport operations within
instrument, recording of which is required shall take borders or airspace of the Philippines, whether on a
effect from date of its record in the books of Authority, scheduled or chartered basis.
and not from the date of its execution.
4. Airman
AIR TRANSPORTATION -refers to any individual who engages, as the
person in command or as pilot, mechanic, aeronautical
Air commerce or commercial air transport engineer, flight radio operator or member of the crew,
operation in the navigation of aircraft while under way and any
-Scheduled or unscheduled air transport services individual who is directly in charge of inspection,
for pay or hire, the navigation of aircraft in furtherance maintenance, overhauling, or repair of aircraft, aircraft
of a business, the navigation of aircraft from one place engine, propellers, or appliances and individual who
to another for operation in the conduct of a business, or serves in the capacity of aircraft dispatcher or air
an aircraft operation involving the transport of traffic control operator.
passengers, cargo or mail for remuneration or hire.
CAB regulates persons and entities that are
Domestic air commerce involved in the economic aspects of air
-Air commerce within the limits of Phil territory. transportations and entities such as:
1. General Sales Agent
Domestic air transport -means a person, who, pursuant to an authority
-Air transportation within the limits of the Phil. from an airline, by itself or through an agent, sells or
territory. offers for sale any air transportation, or negotiates for,
or holds himself by solicitation, advertisement or
Foreign air transport otherwise as one who sells, provides, furnishes,
-Air transportation between the Phil and any place contracts or arranges for, such air transportation.
outside it or wholly outside the Phil 2. Cargo Sales Agent
-means any person who does not directly operate
International commercial air transport an aircraft for the purpose of engaging in air
-Carriage by aircraft of persons or property for transportation or air commerce and who, as principal
remuneration or hire or the carriage of mail between or agent, sells, or offers for sale any air transportation
any two or more countries. of cargo, or negotiates for, or holds himself out by 1
solicitation, advertisement or otherwise as one who
PERSONS INVOLVED IN AIR provides, sells, furnishes, contracts, or arranges for,
TRANSPORTATION. such air transportation of cargo.
-Persons and entities involved in air transportation 3. Air Freight Forwarders
that are regulated by CAAP principally include the air -means any indirect air carrier which, in the
carrier or operator. ordinary and usual course of its undertaking, assembles
and consolidates or provides for assembling and
Air operators may either be a Philippine Air Carrier or consolidating such property or performs or provides
Foreign Air Carrier. for the performance of break-bulking and distributing
operations with respect to consolidated shipments, and
1. Air carrier or operator is responsible for the transportation of property from
-refers to a person who undertakes, whether the point of receipt to point of destination and utilizes
directly or indirectly, or by a lease or any other for the whole or any part of such transportation the
arrangements, to engage in air transportation services services of a direct air carrier.
or air commerce. The term may likewise refer to either 4. Off-line Carrier
a "Philippine air carrier" or a "foreign air carrier" as -means, for purposes of this Regulation, any
indicated by the context. foreign air carrier not certificated by the Board, but
who maintains office or who has designated or
2. Philippine air carrier appointed agents or employees in the Philippines, who
-means an air carrier who is a citizen of the sells or offers for sale any air transportation in behalf
Philippines. of said foreign air carrier and/or others, or negotiate
for, or holds itself out by solicitation, advertisement, or
3. Foreign air carrier or foreign air operator otherwise sells, provides, furnishes, contracts, or
-means any operator, not being a Philippine air arranges for such transportation.
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operation any point in the territory of the recipient state Note: Failed to exercise extraordinary diligence if the
plane did not take the designated route and the tragic
Eight Freedom of the Air/Eight Freedom Right – crash could have been avoided had it taken said
the right or privilege of transporting cabotage traffic designated route.
between to point in the territory of the granting state on
a service which originates or terminates in the home Airworthiness
country of the foreign carrier or outside the territory of -Important requirement in transportation by air.
the granting state -Fit to transport goods and passengers.
-Able to withstand the rigors of the flight.
Ninth Freedom of the Air/Ninth Freedom Right – -Means that an aircraft, its engines, propellers,
the right or privilege of transporting cabotage traffic of and other components and accessories, are of proper
the granting state on a service performed entirely design and construction, and are safe for air navigation
within the territory of the granting state purposes, such design and construction being
consistent with accepted engineering practice and in
Note: only the first five “freedoms” have been accordance with aerodynamic laws and aircraft
officially recognized by international treaty. science.
-Under Civil Aviation Regulation, the registered
CANCELLATION OF COMMERCIAL owner or operator of an aircraft is responsible for
AGREEMENT maintaining aircraft in an airworthy condition.
The CAB has ample power under its organizing charter
to compel an airline to terminate whatever commercial Rules prescribed by CAAP:
agreements the carrier may have. 1. Certification of aircraft and aeronautical
The CAB have been granted the general supervision components;
and regulation of, and jurisdiction and control over, air 2. Issuance of Certificate of Airworthiness and other
carriers as well as their property, property rights, certifications for aeronautical products;
equipment, facilities and franchise 3. Continued airworthiness of aircraft and
aeronautical components;
Types of Cabotage:
1. Consecutive Cabotage
4. Rebuilding and modifications of aircraft and
-right or privilege, in respect of scheduled aeronautical components;
international air services, of transporting cabotage 5. Maintenance and preventive maintenance of
traffic between two points in the territory of the aircraft and aeronautical components;
granting State on a service which originates or 6. Aircraft inspection requirements;
terminates in the home country of the foreign carrier or 7. Air operator aircraft maintenance and
(in connection with the so-called Seventh Freedom of inspection requirements.
the Air) outside the territory of the granting
Tariff System; Tariff
2. State Stand Alone Cabotage - a rule or condition of air travel that regulates and
-the right or privilege of transporting cabotage binds the airline and passengers.
traffic of the granting State on a service performed - binding although they are in the nature of
entirely within the territory of the granting State contracts of adhesion.
Note: The Philippines has not granted the right of Care of Baggage
cabotage in this jurisdiction. Air carriers are liable in the ff cases:
1. Baggage of their passengers were either
Chapter 8 damaged or its contents were lost or stolen;
OBLIGATIONS OF CARRIER IN AIR 2. Baggage were transported or diverted to
TRANSPORTATION another place;
3. In case of off-loading baggage;
Extraordinary Diligence in Air Transportation 4. When there was delay in the delivery of the
Due diligence in air transportation includes the
baggage;
obligation to make sure that the aircraft is airworthy,
that the vessel has a competent captain and crew, and 5. If the baggage is lost altogether.
that the captain and his crew exercised extraordinary
diligence in operating the aircraft. Duty to Passenger
-Airline companies has the duty not only to
cursorily instruct but to strictly require their personnel
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accommodated only by an exit row seat. 3. transportation from the airport to the hotel;
4. free communication;
What the Court considers as bad faith is the 5. first aid medicine.
willful and deliberate overbooking on the part of the Rights of Passengers in case of Delay
airline carrier. Economic Regulation No. 7, as (A) Delay for more than 2 hrs:
amended was designed to cover only honest mistakes 1. refreshments or meals;
on the part of carriers and excludes deliberate and 2. free communication;
willful acts of non-accommodation 3. first aid medicine
(B) Flights deferred until the next day:
Economic Regulation No. 7 shall apply to every 1. refreshments or meals;
Philippine and foreign carrier with respect to the 2. hotel accommodation;
following: 3. free communication
(a) flights or portion of flights within the territory 4. reimbursement of the value of any fare
of the Phils;
(b) flights or portion of flights from the territory Bill of Rights for Air Passengers
of the Phils operated by a domestic or foreign carrier; -DTOC-DTI Joint Administrative Order No. 1
(c) denied boarding for reasons other than no- states in its perambulatory clause that an “air carrier
show or cancellation of booking voluntarily made by ticket constitutes a contract of carriage between an air
passengers; carrier and a passenger, whereby the air carrier, for
(d) delayed flights; and consideration, obligates itself to transport a passenger
(e) cancelled flights by air safely, efficiently, and conveniently along a
stipulated route at a given date and time, subject to
Honest Mistakes certain conditions and restrictions.” Such a contract of
-The Economic Regulation is designed to cover carriage creates an assymetrical relationship between
only honest mistakes on the part of carriers and an air carrier and a passenger.
excludes deliberate and willful acts of non-
accommodation Economic Regulation No. 9 provides for the Bill of
Rights of passengers and specifying certain
Overbooking obligations of the air carrier.
-there can be oversold flight, provided the
overbooking does not exceed 10% of the seating Right to be provided with accurate information
capacity of the aircraft. Otherwise, it would amount before purchase
into bad faith which would entitle the passenger to an (a) Right to full, fair, and clear disclosure of the
award of moral damages, among others. service offered and all the terms and conditions of the
Contract of Carriage.
Priority Rules (b) Right to clear and non-misleading
-The ff. priorities shall be observed by every advertisements of, and important reminders regarding
carrier for the purpose of determining which passenger fares.
holding confirmed reserved space shall be denied (c) Right against misleading and fraudulent sales
boarding on an oversold flight: promotion practices.
(a) Thru Passengers over Originating passengers - first
priority; Right to receive the full value of the service
(b) Connecting Confirmed Passengers - 2nd priority; purchased
(c) Originating Confirmed Passengers - 3rd priority; (e) Right to transportation and baggage
(d) Passengers with Conditional Reservation Tickets - conveyance.
4th priority; (f) Right to be processed for check-in.
(e) Chance Passengers - accommodated on a first (g) Right to sufficient processing time.
come, first served basis. (h) Right to board aircraft for the purpose of
flight.
Rights of Passengers in case of Cancellation
Right to compensation
In case of cancellation for causes attributable (i) Right to compensation and amenities in case of
to the carrier, the passenger shall have the ff. cancellation of flight.
rights: (j) Right to compensation and amenities in case of
(A) The air carrier shall provide the ff: flight delay.
1. refreshments or meals; (k) Right to compensation for delayed, lost, and
2. hotel accommodation; damaged baggage.
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(l) Right to compensation in case of death or discriminated) is not a valid reason to refuse
bodily injury of a passenger inspection.
(m) Right to immediate payment of
compensation. The carrier is deemed to have not exercised
extraordinary diligence if it did not exercise its duty to
Check-in period- is the time when the air carrier’s inspect as mandated by RA 6235. Unlike buses or
check-in counters are open for accepting and jeepneys, passengers and goods in aircrafts are subject
processing passengers checking in for their flight, to rigorous inspection
which starts at least 2 hours before the ETD in
international airports and in other airports designated 9 classes of dangerous goods:
by the DOTC. In other airports, the check-in period 1) Explosives
shall start at least 1 hour before the ETD. 2) Gases
Inspection of Aircrafts and Cargo
3) Flammable liquids
Aircraft companies (those considered public 4) Flammable solids
utilities / for hire) are authorized to open and 5) Oxidizing substances and organic peroxides
investigate suspicious packages and cargoes in 6) Toxic and infectious substances
the presence of the owner or shipper, or his 7) Radioactive
authorized representatives if present; 8) Corrosive substances
If the owner, shipper or his representative 9) Miscellaneous Dangerous substances and
refuses to have it opened and inspected, the
articles
airline is authorized to refuse its loading.
Every ticket issued to a passenger shall Applicable Law: RA 6235
contain among others: "Holder hereof and his -It shall be unlawful to compel a change in the
hand-carried luggage(s) are subject to search course or destination of an aircraft of Philippine
for, and seizure of, prohibited materials or registry, or to seize or usurp [CSU] the control while it
substances. Holder refusing to be searched is in flight. It shall likewise be unlawful to [CSU] an
shall not be allowed to board the aircraft”. aircraft of foreign registry to land in Philippine
territory while in the Phil.
Case: Northwest Airlines v Laya:
-thorough inspection of the briefcase of the Q: When is an aircraft considered in flight?
plaintiff was deemed justified. Protection of passengers A: From the moment all its external doors are closed
must take precedence over convenience. Nevertheless, following embarkation until any of such doors is
the implementation of security measures must be opened for disembarkation.
attended by the basic courtesies.
Q: What are other acts that are prohibited?
The Director General is authorized to Prevent A: 1. to assassinate the pilot, member of the crew or
where: passenger of the aircraft;
(1) The aircraft may not be airworthy; or 2. to explode or attempted to explode any bomb or
(2) The airman may not be qualified or physically or explosive to destroy the aircraft; or
mentally capable for the flight; or 3. Whenever the crime is accompanied by murder,
(3) The operation would cause imminent danger to homicide, serious physical injuries or rape.
persons or property on the ground. 4. It shall be unlawful to ship, load or carry in any
passenger aircraft operating as a public utility within
The carrier has the duty (not right) to inspect cargoes the Philippines, and explosive, flammable, corrosive or
and baggage. poisonous substance or material.
The carrier has the duty to inquire as to the (1) "Explosive"
general nature of the articles; (2) "Flammable"
And is entitled to fair representation of its (3)"Corrosive" is any substance or material, either
nature and value. liquid, solid or gaseous, which through chemical
However, when the CC has reasonable ground reaction wears away, impairs or consumes any object.
to suspect that such are dangerous or illegal in (4) "Poisonous" is any substance or materials,
character that would justify the exhaustive which through chemical reactions kills, injuries or
inspection or refusal to carry the same. impairs a living organism or person.
Inconvenience to the passenger due to
inspection (when he is not singled-out nor CHAPTER 9
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THE WARSAW CONVENTION have been the result of an event which took place
during the carriage by air.
The Warsaw Convention has the force and effect of the
law in the Philippines, as the Philippines is a signatory Q: What is international transportation?
and applies to all international transportation of A: It is…
persons, baggage, good in an aircraft. (1) The place of departure and place of
destination are within the territories of two
Q: Is the WARSAW Convention constitutional? contracting countries regardless of WON there
A: There is a presumption of constitutionality as it is was a break in the transportation;
adopted by the legislative and executive department (2) The place of departure and place of
which are presumed to have studied it carefully. destination are within the territories of single
contracting countries regardless of WON there
Q: What is covered by the WARSAW Convention? was a stoppage.
A: It applies to international air carriage.
Note: Transportation to be performed by several
successive air carriers shall be deemed to be one
Q: When not applicable: undivided transportation, if it has been regarded by the
A: when: practice as a single operation, whether it has been
1) If there is willful misconduct on the part of the agreed upon under the form of a single contract or a
carrier’s employees. The Convention does not series of contracts, and it shall not lose its international
regulate, much less exempt, carrier from character merely because one contract or a series of
liability for damages for violating the rights of contracts is to be performed entirely within a territory
its passengers under the contract of carriage. subject to the sovereignty, mandate, or authority of the
(PAL v CA, 257 SCRA 33) same high contracting party.
2) When it contradicts public policy
3) If the requirements under the Convention are Note: Warsaw prevails over the Civil Code, Rules of
not complied with Court and all laws in the Philippines since an
International law prevails over general law.
Q: What are the liability of the carrier under the
WARSAW Convention? Q: What is the period covered by international
A: transportation?
A: During the period which or goods are in the charge
for damage in case of death or wounding of a
of the carrier in the airport, or on board the aircrafts or
passenger, if the accident which caused the
in case of landing outside airport. It does not cover
damage so sustained took place on board the
landing through land, sea or river outside the airport.
aircraft or in the course of any of the
operations of embarking or disembarking;
If a damage to the goods was sustained during the
transportation it is presumed to be resulted or took
for damage sustained in in case of destruction, place during the transportation by air.
loss or damage to any registered luggage or
any goods, if its cause took place during the Q: When International Carrier Liable?
carriage by air; A: when:
(1) On board the aircraft;
for damage occasioned by delay in the (2) in the course of embarking;
carriage by air of passengers, luggage or
goods; g (3) or in disembarking;
(4) or when there was delay.
Q: What is carriage by air?
A: It comprises the period during which the luggage or LIMIT OF LIABILITY
goods are in charge of the carrier, whether in an Under the WARSAW Convention liability for
aerodrome or on board an aircraft, or, in the case of a injuries to passengers, shall be limited to
landing outside an aerodrome, in any place whatsoever. 250,000 francs, unless agreed otherwise;
for damages with respect to registered
But does not extend to any carriage by land, by baggage or cargoes, it shall be limited to 250
sea or by river performed outside an aerodrome. francs per kg;
Unless such a carriage is for the purpose of loading,
delivery or transshipment, any damage is presumed, to
As to objects that the passenger takes charge
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himself, it shall be limited to 5,000 francs. -Nevertheless, if the carrier accepts baggage
without a baggage check having been delivered, or
if the baggage check does not contain particulars
Montreal agreement and CAB rules on limit of set out, the carrier shall not be entitled to avail
liabilities: himself of those provisions of the Convention
1965, for bodily injuries a limit of 75,000 which exclude or limit his liability.
dollars independent of negligence if carriers;
Which was raised by IATA or International Air (5) Waiver
transport Assoc. -When the carrier fails to timely raise
objections during the trial when question and
Tariff Limitations answers regarding the actual claims and damages
An air carrier is not liable for the loss of the sustained by the passenger were asked.
baggage in an amount in excess of the limits specified
in the tariffs filed in the proper authorities. (6) Estoppel
-When the carrier is estopped by its or its
DEFENSES AGAINST LIMIT OF LIABILITY employees act.
(1) Willful misconduct;
(2) Gross negligence; Tort liability
-The Convention does not provide for an
(3) Absence of baggage check; exclusive enumeration of instances when the carrier is
(4) If there was a waiver on the part of the carrier; liable. Hence, a complaint for quasi-delict can still be
(5) If the carrier is estopped from invoking the filed even if the filing period is beyond the prescriptive
provision on limit of liability period provided under the Convention so long as it is
within the prescriptive period of the four years under
(1) Willful Misconduct the Civil Code.
When the damages resulted from the act or -The Convention’s provisions do not regulate or
omission of the carrier. Its servants or agents, done exclude liability for other breaches of contract by the
with the intent to cause damage or recklessly and with carrier or misconduct of its officers and employees, or
knowledge that it would probably result to damage. for some particular or exceptional type of damage.
Neither may the Convention be invoked to justify the
Elements: disregard of some extraordinary sort of damage
a. intentional act or omission resulting to a passenger and preclude recovering
b. awareness of probable consequence therefor beyond the limits set by said Convention.
c. causal relationship bet act or omission to injury Nevertheless, it is settled that allegations of
tortious conduct committed against an airline
passenger during the course of the international
(2) Gross Negligence
carriage do not bring the case outside the ambit of the
It speaks of wanton negligence and lack of
Warsaw Convention.
care on part of the carrier.
The Court distinguished between:
(3) Absence of Ticket Damage to passenger’s Humiliation he suffered at
-Carrier must deliver the ticket to passenger baggage; delay despite the hands of airline’s
confirmed reservation ticket employees.; unjust
which contains the stipulations limiting liabilities. discrimination, undue or
-However, mere defective compliance (in unreasonable preference or
contrast to total absence out ticket) does not disadvantage
eliminate the liability limitation. covered by Warsaw covered by Civil Code,
Convention, prescription: 2 prescription: 4 years.
(4) Absence of baggage check years.
(United Airlines v. Uy; Mahaney v Air France)
-The absence of baggage check will deprive
the carrier of its right to invoke the limited liability
provisions of the Warsaw Convention. “For the Also, Warsaw convention would cover cases of
transportation of baggage, other than small personal heated exchange which included insults and profanity,
objects of which the passenger takes charge confrontation between passenger and flight attendant
himself, the carrier must delivered a baggage who acted with international misconduct during a
check. The absence, irregularity or loss of the flight.
baggage checks shall not affect the existence or the
validity of the contract of transportation. Venue of Action
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Under the Art 28(1) Convention, the plaintiff Ticket, Baggage Check and Air Way Bill (pages 415-
must bring the action for damages before the Court: 419, Aquino)
1. where carrier is domiciled;
2. where the carrier has his principal place of Effect of Non-Compliance.
business; -Non-compliance with the mandatory provisions
3. where the carrier has an establishment by on formality may result in the non-application of the
which the contract has been made; or limit of liability.
4. place of destination. Ex. The absence of baggage check is a defense against
the limit of liability.
Note: However, SC held this to be a jurisdiction and
not a venue provision. (see page 406, Aquino)
CHAPTER 10
Notice of Claim: A Condition Precedent MARITIME LAW
Complaint must be filed within the following period:
Maritime Law – is the system of laws which
1. 3 days from receipt of the baggage; or
particularly relates to the affairs and business
2. 7 days from receipt of goods; or of the sea, to ships, their crews and navigation
3. 14 days, in case of delay, counted from the and to marine conveyance of persons and
time the baggage was placed at the disposal of the property
passenger.
Governing Laws:
Note: the fundamental reasons for such stipulation are 1. New Civil Code – primary law on maritime
(1) to inform the carrier that the cargo has been commerce
damaged, and that it is being charged with liability 2. Book III Code of Commerce – applied suppletorily
therefore; and (2) to give it an opportunity to examine 3. Special Laws
the nature and extent of injury. a. Salvage Law (Act No. 2616)
b. Carriage of Goods by Sea Act (CA No. 65)
Note: Exception to requirement of notice of claim is c. Ship Mortgage Decree of 1978 (PD 1521)
when there is fraud on the part of the carrier or if the
delay can be attributed to the acts or omission of the REAL AND HYPOTHECARY NATURE OF
carrier. MARITIME LAW
2 year prescription is reckoned from: Case: Philippine Shipping Company, et al. vs.
1. Date of arrival at the destination Francisco Garcia Vergara
2. Date aircraft ought to have arrived -That which distinguishes the maritime from the
civil law and even from the mercantile law in general
3. Date which the carriage stopped is the real and hypothecary nature of the former.
Note: the 2-year prescriptive period does not apply if Evidence of this “real “ nature of maritime
the cause of action is based on quasi-delict. law:
The limitation of the liability of the agents
Successive Carriers
to the actual value of the vessel and the
-transportation to be performed by several
freight money
successive carriers shall be deemed, for the purposes of
this convention, to be one undivided transportation. The right to retain the cargo and the
-if regarded as single operation, whether agreed embargo and detention of the vessel even
under a single or series of contracts, and it shall not cases where the ordinary civil law would
lose its international character merely because one or not allow more than a personal action
series of contracts are to be performed entirely within against the debtor or person liable
the sovereignty or mandate of same high contracting
state. Note: This repeals the civil law to such extent
that, in certain cases where the mortgaged
Note: the fact that a successive carrier is considered as property is lost no personal action lies against
an agent does not excuse the agent from liability who the owner or agent of the vessel
shall be liable for his own negligent acts or omission in
the performance of his duties. Two reasons why it is impossible to do away
with these privileges:
(See book for provisions on formality: Passenger The risk to which the thing is exposed
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The real nature of maritime law, salvage, so far as they go, on the remainder of the
exclusively real, according to which the vessel as well on the amount of the freightage of the
liability of the parties is limited to a thing cargo saved; but sailors who are engaged on shares
to which is at mercy of the waves shall not have any right whatsoever on the salvage of
the hull, but only the portion of the freightage saved. If
Case: Aboitiz Shipping Corporation vs. General they should have worded to recover the remainder of
Accident Fire and Life Assurance Corporation, Ltd. the shipwrecked vessel they shall be given from the
-The real and hypothecary nature of amount of the salvage an award in proportion of the
maritime law simply means that the liability of efforts made and to the risks encountered in order to
the carrier in connection with losses related to accomplish the salvage
maritime contracts is confined to the vessel,
which is hypothecated for such obligations or Art. 837: civil liability incurred by the ship owner:
which stands as the guaranty for their liability limited to value of the vessel + appurtenances
settlement + freightage earned during voyage
-Purpose: It was designed to offset such
adverse conditions and to encourage people Art. 590: The co-owners of the vessel shall be civilly
and entities to venture into maritime liable in the proportion of their contribution to the
commerce despite the risks and prohibitive common fund for the results of the acts of the captain,
cost of shipbuilding referred in Article 587. Each co-owner may exempt
himself from this liability by the abandonment, before
Thus, the liability of the vessel owner and a notary, of that part of the vessel belonging to him.
agent arising from the operation of such vessel COVERAGE OF LIMITED LIABILITY
were confined to the (1) vessel itself, Article 837 - applies the principle of limited liability in
(2) its equipment, cases of collision.
(3) freight, and Articles 587 and 590 - embody the universal principle
(4) insurance if any, of limited liability in all cases.
which limitation served to induce
capitalists into effectively wagering their Note: Based on the Aboitiz case, these articles cover
resources against the consideration of the large only: 1) liability to third persons, 2) acts of the captain,
profits attainable in trade and 3) collisions
Real – similar to transactions over real property where Limited liability rule – means that the liability of a
to effect against third persons, registration is necessary shipowner for damages in case of loss is limited to the
Hypothecary – the liability of the owner of the value value of his vessel.
of the vessel is limited to the vessel itself No vessel, no liability.
The civil liability for collision is merely co-
STATUTORY PROVISIONS existent with the interest in the vessel; if there
Article 837, 587, 590 and 643 of the Code of was total loss, liability is also extinguished.
Commerce – provides for limited liability of If the vessel is co-owned, the limited liability
shipowner. to third persons shall be satisfied by the co-
owners (Art. 590 CC)
Art. 587 (liability to third persons).
The ship agent shall also be civilly liable for the Case: Monarch Insurance Co., Inc. vs. Court of
indemnities in favor of third persons which may arise Appeals
from the conduct of the captain in the care of the -The ship owner’s or agent’s liability is
goods which he loaded on the vessel; but he may merely co-extensive with his interest in the
exempt himself therefrom by abandoning the vessel vessel such that a total loss thereof results in
with all her equipment and the freight it may have its extinction.
earned during the voyage. -Total destruction of the vessel
extinguishes maritime liens because there are
Art. 643: vessel and cargo lost by reason of capture or no longer any res to which it can attach. . This
wreck: all rights shall be extinguished, both as regards doctrine is based on the real and hypothecary
the crew to demand any wages whatsoever, and as nature of maritime law.
regards the ship agent to recover the advances made
If a portion of the vessel or of the cargo, or both, GR: If the ship is totally lost, liability is
should be saved, the crew engaged on wages, extinguished. If the ship or part thereof still exists,
including the captain, shall retain their rights on the he can escape liability by abandoning the vessel, its
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appurtenances and its freight. extinguish the liability of the carrier’s insurer.
-Despite the loss of the vessel, therefore,
Note: Since the Civil Code contains no provision its insurance answers for the damages that a
regulating liability of shipowners or agents in the event shipowner or agent, may be held liable for by
of total loss or destruction of the vessel, Article 587 of reason of the death of its passengers.
the Code of Commerce governs. -However, the limited liability rule
applies to the paying insurer when it exercises
Q: Who is entitled to limited liability? its right of subrogation against the shipowner.
A: It is the shipowner who is entitled to the benefit of The cause of action of the shipper, hence, the
limited liability. The shipowner is the very person for insurer is subject to the defenses available to
whom the Limited Liability Rule has been conceived the shipowner as if it were the shipper who
to protect. directly sued the same insurer.
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extinguished. 1. real and hypothecary --- the supreme court did not
-Only shipowner and ship agent can explain the literal meaning of it.
make an abandonment real: refers to the risk in maritime that’s why
there are privileges for the shipowner. Risks
PROCEDURE FOR ENFORCEMENT are certain to happen
hypothecary: remember guaranty and
Case: Aboitiz Shipping Corporation vs. General collateral which is the vessel. For the
Accident Fire and Life Assurance Corporation, Ltd. particular voyage, the guaranty is the vessel
-Rights of a vessel owner or agent under wherein if the vessel is lost, the shipowner no
the limited liability rule are akin to those of longer has the liability
the rights of shareholders to limited liability 2. limited liabililty rule --- no literal explanation
under our corporation laws. limited: it means that the liability is limited to
-Rights of the parties to claim against an the value of the vessel
agent or owner of vessel may be compared to liability: assumption that the shipowner is
those of creditors against an insolvent liable for the losses. There are no valid
corporation whose assets are not enough to defenses that shipowner can invoke to escape
satisfy the totality of claims as against it. liability. Same concept with 1479. Difference
-Creditors must limit their recovery to is that there is a fixed amount and there is
what is left in the name of the corporation qualification
-In the sinking of a vessel, the claimants
under the limited liability – no fixed amount
or creditors are limited in their recovery to the
but amount is confined on the vessel
remaining value of accessible assets. In the
case of lost vessel, these assets are the
Q: is this a right to limit the liability?
insurance proceeds and pending freightage for
A: admittedly it is a right that only shipowner can
the particular voyage.
exercise
PROTESTS
Q; how to exercise?
-Protest is the written statement by the
A: by way of pleading. But do not follow the way it
master of a vessel or any authorized officer,
was filed in Yangco. Here it was after judgment that
attested by proper officer or a notary, to the
the shipowner sought to abandon the ship to abandon
effect that damages has been suffered by the
liability
ship.
But right now, it is a matter of procedure. To limit
Required under the following cases:
liability by abandoning the vessel; IF it is a matter of
1. When the vessel makes an arrival under stress
procedure, you check the rules of civil procedure
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or
Q: so when does shipowner inform the
the captain believe that the cargo has suffered damages
court the right to limit liability?
or averages
A: in a pleading and normally in an answer. IT will be
4. Maritime collisions
raised as a defense. If shipownver cannot allege, then
that defense is deemed waiver. Therefore you cannot
Q: when is it not required?
seek abandonment after judgment was been rendered.
A: 1. when it does not fall under the four cases
mentioned above
The more critical issue is on the
2. when what is not involve is not a vessel
EXCEPTIONS in the LL Rule:
1. Workmen’s compensation (Abueg case: the repairs
ADMIRALTY JURISDICTION (RTC)
constitute maritime lien)
Section 19 (3) of BP 129 as amended by RA
7691 2. Insurance coverage
In all actions in admiralty and maritime - if the vessel is lost in the course of voyage and it
jurisdiction where the demand or claim exceeds 300, is insured, is it automatic that the limited liability rule
000 or in Metro manila, where such demand or claim does not apply?
exceeds 400,000. A: No. the basis of supreme court (Vasquez vs. CA ---
if less: MTC court mentioned very little about insurance: if the
vessel is insured, the insurance proceeds shall answer
the credit).
3 concepts:
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-If the plaintiff was injured or heirs will file action in monarch, this was not applied--- all the negligence
from insurance company, and since shipowner cannot was related to the absence of exercising extraordinary
avail of limited liability, this is not advisable to the diligence)
plaintiff because it has no privity of contract with the
insurance company Note: that in the subsequent cases,
Consolidated of Aboitiz case: there were
Q: when does insurance argument come in? findings of facts of the negligence of Aboitiz.
A: only when the shipowner will bring the insurance The point is when it comes to LLR, the Code
company to the case filed by the plaintiff—by way of of Commerce apply. You cannot invoke
third party complaint. Once insurance company is presumption of negligence. In order to refute,
impleaded then this can be used: that the owner cannot petitioner should prove negligence.
avail of limited liability.
-But no shipowner will ever implead the REMEMBER: PROVE THE FACTS OF
insurance. Because they will be the one who will claim NEGLIGENCE. Not presumption.
the insurance without telling the plaintiffs. In the case,
there is no proof that the vessel is insured. Even if we Case: Loadstar
know outside court, it is insured because in the court, - the shipowner is aware of the typhoon
there is no proof that the vessel is insured. Court will - insufficient manning – negligent
not identify evidence not properly identified and - Captain playing mahjong – there was
recorded in court. negligence. But SC said that it was negligent because
the shipowner did not prove that it was the first.
Q: is it really an exception in its strict Supposedly facts are established in court proceedings
sense? and not on presumption.
A: Not really (CAPANAS). What is the implication if no vessel, no liability
you properly invoke the LLRule – the plaintiff cannot they all mean one and the same such that the
avail beyond the value of the vessel. liability of the shipowner for the losses is
confined to the value of the vessel and the
If not apply – plaintiff will recover more than the value freight, if any
of vessel subject to rules on claiming of damages.
MARITIME PROTEST (4 INSTANCES) –
But question, if vessel if covered with insurance, does REQUIRED (LOOK AT CODE OF COMMERCE and
this mean that plaintiff can recover to the amount above notes)
applied? No, they can only recover until the coverage
of the insurance proceeds. INSTANCES WHEN IT DOES NOT APPLY:
1. NOT based CODE OF COMMERCE AND BASED
3. Negligence ON QUASI-DELICT THEN NOT MARITIME
- common carrier is presumed negligent if PROTEST
common carrier. However, this does not apply when 2. when what was is involve is not a vessel
there is an invocation on limited liability. (in all cases
except MONARCH vs. CA) --- the rest of the case, the Case: Lopez vs. Duruel
court has found negligence based on the facts -the motor boat is not a vessel under maritime
presented. You cannot invoke presumption of law, it is only engaged in bay traffic. A vessel in
negligence so that limited liability rule will not apply. maritime law, should be engaged in transporting goods,
persons, or both from one port to another
Monarch Case-- SC: since there is a presumption of
negligence then LLR will not apply. But SC also said Note: Since a vessel is a personal property, it can be
that if LLR is invoked, the initial burden to invoke mortgaged. Same concept with mortgage but different
negligence shifts to the shipowner. They should prove rule- PD 1521:
that there is no privity or knowledge on the negligence
of the ship captain. Q: what about process of extra judicial foreclosure
of vessel?
Q: what is the relationship of Civil Code A: chattel mortgage law should govern
and LLR?
A: There is none. Under 1766 in all matters not Q: what to remember under PD 1521?
provided by Civil Code, Code of Commerce or Special A: Section 4
law will apply. There is no rule in Civil Code in limited registration, non waiver
liability rule thus Code of Commerce will apply. (but Section17: priority of claims…
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If mortgagor does not pay: Note: When the mercantile code speaks of
1. judicial foreclosure – file actual case and implead vessels, they refer solely and exclusively to
the vessel as party defendant (served to captain or mercantile ships, as they do not include
authorized person); you can ask the court order to warships, and furthermore, they almost always
arrest the vessel. refer to craft which are not accessory to
2. extrajudicial another as in the case of launches, lifeboats
- the problem if vessel is not in possession of the and etc.
mortgagee, it is with the mortgagor, you cannot sell the -Further, they refer exclusively to those
property not in your possession. which are engaged in the transportation of
passengers and freight from one port to
In PD 1521—the order of arrest can be asked another or from one place to another
- They refer to merchant vessels and in
Grounds to discharge NO WAY can they or should they be
1. irregularly issued (mortgagee na ilad. Wala pa diay understood as referring to pleasure craft,
due obligation yachts, pontoons, health service and harbor
2. posting of a bond to discharge..the bond to be posted police vessels, etc.
is double the value of the claim. -Ships ought to be understood in the
sense of vessel serving the purpose of
maritime navigation or seagoing vessel, and
CHAPTER 11 not in the sense of vessel devoted to the
VESSELS navigation of rivers
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-Other vessel of minor nature not interests. Ship owners and seamen shall be subject to
engaged in maritime commerce, such as river what the laws and regulations of the public
boats and those carrying passengers from ship administration on navigation, customs, health, safety
to shore, must be governed, as to their liability of vessels, and other similar matters.
to passenger, by the provision of the civil code
or other appropriate special provisions of law. Gross tonnage means the measure of the
overall size of the ship.
Case: Augusto Lopez vs. Juan Duruelo, et. al Net tonnage means the measure of the useful
-The code of commerce are not capacity of a ship.
applicable to small craft which are only
subject to administrative (customs) regulations VESSEL AS PERSONAL PROPERTY
in the matter of port service and in the fishing -Vessels are considered personal property under
industry Art. 416 of the New Civil Code. The Code of
-Only vessels engaged in what is Commerce likewise expressly acknowledges the
ordinarily known as maritime commerce are special nature of a vessel as personal property in
within the provisions of law conferring limited Article 585 which provides:
liability on the owner in case of maritime Article 585. For all purposes of law not modified or
disaster restricted by the provisions of this Code, vessels shall
-It is therefore clear that a passenger on a continue to be considered as personal property.
boat like the Jison, in the case before use, is
not required to make protest as a condition Case: Philippine Refining Company vs. Jargue
precedent to his right of action for the injury -Vessels are personal property although
suffered by him in the collision described in occasionally referred to as a peculiar kind of
the complaint – article 835 of the Code of personal property
Commerce does not apply -They are subject to mortgage agreeably
to the provisions of the Chattel Mortgage Law
KINDS OF VESSELS: -The only difference between a chattel
1) A passenger ship is a ship which carries more mortgage of a vessel and a chattel mortgage of
than twelve passengers. other personality is that it is not now
2) A cargo ship is any ship which is not a necessary for a chattel mortgage of a vessel to
passenger ship. be noted in the registry of the register of
3) A tanker is a cargo ship constructed or adapted deeds, but it is essential that a record of
for the carriage in bulk of liquid cargoes of an documents affecting the title to a vessel be
inflammable nature. entered in the record of the Collector of
4) A fishing vessel is a vessel used for catching Customs at the port of entry.
fish, whales, seals, walrus or other living
resources of the sea. Case: Rubiso and Calixto vs. Rivera
-Ships or vessels, whether moved by
5) A nuclear ship is a ship provided with a steam or by sail, partake, to a certain extent, of
nuclear power plant. the nature and conditions of real property, on
6) “New ship” means a ship the keel of which is account of their value and importance in the
laid or which is at a similar stage of world of commerce
construction on or after the date of coming -Transfer of vessels should be in writing
into force of the SOLAS 1974. and must be recorded in the appropriate
7) “Existing ship” means a ship which is not a registry
new ship.
ACQUISITION
CONSTRUCTION, EQUIPMENT AND -Vessel may be acquired or transferred by
MANNING any means recognized by laws. Thus, vessel
The Construction, equipment and manning of may be sold, donated and may even be
vessel are subject to the rules issued by the Maritime acquired through prescription.
Industry Authority (MARINA) and consistent with
Article 574 of the Code of Commerce: Note: Under the present laws, vessels that are
under the jurisdiction of MARINA can be
Article 574. Builders of vessels may employ the transferred only with notice to said
materials and follow, with respect to their construction administrative agency.
and rigging, the systems most suitable to their
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A. Prescription (Code of Commerce) earns from the time it receives its last cargo shall
Acquisition of vessels through pertain entirely to the purchaser, and the payment of
prescription. the crew and other persons who make up its
complement for the same voyage shall be for his
Article 573. Merchant vessels constitute account.
property which may be acquired and
transferred by any of the means recognized by If the sale is made after the vessel has arrived at
law. The acquisition of a vessel must appear the port of its destination, the freightage shall pertain
in a written instrument, which shall not to the vendor, and the payment of the crew and other
produce any effect with respect to third individuals who make up its complement shall be for
persons if not inscribed in the registry of his account, unless the contrary is stipulated in either
vessels. case.
The ownership of a vessel shall likewise be
acquired by possession in good faith, continued for Article 578. If the vessel being on a voyage or
three years, with a just title duly recorded. in a foreign port, its owner or owners should
In the absence of any of these requisites, voluntarily alienate it, either to Filipinos or to
continuous possession for ten years shall be necessary foreigners domiciled in the capital or in a port
in order to acquire ownership. of another country, the bill of sale shall be
A captain may not acquire by prescription the executed before the consul of the Republic of
vessel of which he is in command. the Philippines at the port where it terminates
its voyage and said instrument shall produce
The provision contemplates two types of no effect with respect to third persons if it is
acquisitive prescription: 1) ordinary and 2) not inscribed in the registry of the consulate.
extraordinary prescription The consul shall immediately forward a true
copy of the instrument of purchase and sale of
The following requisites must be present for the vessel to the registry of vessels of the port
a person to acquire ownership through where said vessel is inscribed and registered.
ordinary prescription:
1) The person who claims ownership In every case the alienation of the vessel must be
must be in continuous possession; made to appear with a statement of whether the vendor
2) Possession must be for a period of receives its price in whole or in part, or whether he
three years, and preserves in whole or in part any claim on said vessel.
3)Possession must be in good faith. In case the sale is made to a Filipino, this fact shall be
stated in the certificate of navigation.
Note: If the possessor is in bad faith, the
acquisitive prescription is extraordinary and When a vessel, being on a voyage, shall be
the prescriptive period is 10 years. rendered useless for navigation, the captain shall
apply to the competent judge on court of the port of
B. Sale (Code of Commerce) arrival, should it be in the Philippines; and should it
The sale must be registered with the be in a foreign country, to the consul of the Republic of
MARINA to affect third persons. the Philippines, should there be one, or, where there is
none, to the judge or court or to the local authority;
Article 576. In the sale of a vessel it shall and the consul, or the judge or court, shall order an
always be understood as included the rigging, examination of the vessel to be made.
masts, stores and engine of a streamer If the consignee or the insurer should reside at
appurtenant thereto, which at the time belongs said port, or should have representatives there, they
to the vendor. must be cited in order that they may take part in the
proceedings on behalf of whoever may be concerned.
The arms, munitions of war, provisions and
fuel shall not be considered as included in the Article 579. After the damage to the vessel
sale. and the impossibility of her being repaired, in
The vendor shall be under the obligation to deliver to order to continue the voyage had been shown,
the purchaser a certified copy of the record sheet of its sale at public auction shall be ordered,
the vessel in the registry up to the date of the sale. subject to the following rules:
Article 577. If the alienation of the vessel should be 1) The hull of the vessel, its rigging, engines, stores,
made while it is on a voyage, the freightage which it and other articles shall be appraised, after making
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The mortgage may provide separate discharge of each such as tort. The ship agent, even though he is not the
vessel by the payment of a portion of mortgage owner, is liable in every way to the creditor for losses
indebtedness. The amount of such portion of such
and damages without prejudice to his right against the
payment shall be endorsed upon the documents of the
vessel. owner, the vessel and its equipment and freight. But
In such mortgage does not provide for the his liability, however is subject to the LIMITED
separate discharge of a vessel, the mortgage may LIABILITY RULE. The ship agent can enter into
nonetheless be a preferred mortgage. contracts to provision the ship.
ARREST AND FORECLOSURE The shipowner and the ship agent are liable in certain
Upon default of the obligor, the preferred ship
mortgaged may be foreclosed in a suit in admiralty. cases even if the captain has exceeded his authority if
Upon filing of a petition for foreclosure, the Court may the proceeds of an obligation redounded to the benefit
order the arrest of the vessel upon ex parte application of the vessel.
duly supported by an affidavit of a person who knows
the facts and upon filing of a bond. Liability for extra-contractual obligations
Foreclosure is only an alternative remedy. The -The shipowner and the ship agent can make the
mortgagee may likewise avail of the alternative
captain liable for his negligence. This obligation is one
remedy of specific performance in a suit in personam
in admiralty. based on the contract of carriage. If the cause of action
is quasi-delict, there is vicarous liability on the part of
the shipowner.
CHAPTER 13
THE AIRCRAFT AND CIVIL AVIATION
CAPTAINS v. MASTERS OF VESSELS
In sum, the following are persons who take part in For purposes of Maritime Commerce:
Maritime Commerce: The words “captain” and “master” have the same
• SHIPOWNERS and SHIP AGENTS; meaning; both being chiefs or commanders of ships.
Thus, the terms “captain” and “master” are used
• CAPTAINS and MASTERS OF VESSELS;
synonymously in the Code of Commerce.
• OFFICERS and CREW OF VESSELS
MARINA regulations:
SHIPOWNER v. SHIP AGENT MASTER – the person having command of the ship.
The same term is being used both for domestic trade
SHIPOWNER – the person who is primarily liable for and international trade.
damages sustained in the operation of vessel.
BOAT CAPTAIN – a person authorized by the
Code of Commerce – places the primary responsibility MARINA to act as officer and/or in command of a
on the owner of the vessel. boat/ship or has the qualification/license to act as such.
(Uses the term naviero which has been construed to
include shipowner, ship agent and even the charterer Powers and Functions —The captain of a vessel is a
who is considered as owner pro hac vice.) confidential and managerial employee.
Note: The captain is primarily the representative of the 3 Distinct Roles a captain commonly performs:
owner. The naviero must be understood to be the (Inter-Orient Maritime case)
person undertaking the voyage. 1. He is a GENERAL AGENT OF THE
SHIPOWNER;
SHIP AGENT (Code of Commerce) – the person 2. He is a COMMANDER and TECHNICAL
entrusted with provisioning of the vessel, or who DIRECTOR of the vessel (most important role for
represents her in the port in which she happens to be. this has something to do with the operation and
There is also the intention under the Code of preservation of the vessel during its voyage and the
Commerce to make the ship agent solidarily liable with protection of the passengers, if any, and crew and
the owner. The solidary liability applies both for cargo);
breach of contract and extra-contractual obligations
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The master shall retain overall command of the vessel also not liable for negligently assuring the competence
even on pilotage grounds whereby he can countermand of their members because as PROFESSIONAL
or overrule the order or command of the Harbor Pilot ASSOCIATIONS, they made no guarantee of the
on board. professional conduct of their members to the general
public.
a. Master and Pilot. (See Far Eastern Shipping
case on page 525 of the Aquino book for the SC CODE OF COMMERCE PROVISIONS ON
discussion on the duties of a pilot in relation to the CAPTAINS (See page 530 of the Aquino book)
master)
The Pilot supersedes the master for the time OFFICERS AND CREW OF VESSELS
being in the command and navigation of the ship, and COMPLEMENT OF A VESSEL. (Art. 648, Code of
his orders must be obeyed in all matters connected Commerce) —all the persons on board from the
with her navigation. He becomes the master pro hac captain to the cabin boy, necessary for the
vice. management, maneuvers, and service, and therefore, it
includes the CREW, the SAILING MATES,
b. Shipowner and Pilot. ENGINEERS, STOKERS, and OTHER EMPLOYEES
GENERAL RULE: the pilot is PERSONALLY ON BOARD not having specific designations; but it
LIABLE for damages caused by his own negligence or SHALL NOT INCLUDE the passengers or the persons
default to the OWNERS of the vessel, and to THIRD whom the vessel is transporting.
PARTIES for damages sustained in a collision. Such
negligence of the pilot in the performance of duty REGULATION OF MERCHANT MARINE
constitutes a MARITIME TORT. PROFESSION.
-In cases of COLLISION: the COLLIDING The practice of marine profession is now governed by
VESSEL is prima facie responsible, hence, the burden special laws and pertinent rules issued by the:
of proof is upon the party claiming benefit of the - MARINA;
exemption from liability. Thus, it must be shown - BOARD OF MARINE DECK OFFICERS;
affirmatively that the pilot was at fault, and that there - BOARD OF MARINE ENGINEER OFFICERS
was no fault on the part of the officers or crew, which
might have been conducive to the damage. The fact MINIMUM SAFE MANNING.
that the law compelled the master to take the pilot does -It is not enough that the officers manning the
not exonerate the vessel from liability. The injured merchant vessel have all the qualifications imposed by
party shall seek redress from the vessel. The owners of the Philippine Merchant Marine Officers Act and other
the vessel are responsible to the injured party for the special laws or regulations. It is also required that there
acts of the pilot, and they must be left to recover the is sufficient number of officers and crew that are
amount as well as they can against him. serving in the vessel. (Quality and Quantity)
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CODE OF COMMERCE PROVISIONS on Sailing the passengers to disembark in tacloban. This time, this
Mates, Second Mate and Marine Engineer, Crew, and is the act of captain. The SC concluded that the
Supercargoes (See pages 548-560 of the Aquino book). damages sustained by passengers bound for catbalogan
are to shouldered by the shiponwer
Parties. —those provided above plus seamen, other rd
Indemnities in Favor of 3 person: OTTA devt case
members of the complement including the stokers sited in walter smith case
(incharge of boilers) and supercargo (agent of the
shippers who has authority to sell goods while on
- In OTTA the owner of the pier was at the same time
voyage)
the owner of the goods. SC, because there was a
relationship of owner of vessel and goods, then there is
4 maritime contracts:
presumption of negligence new civil code
1. charter parties
prevails
2. Botomry
3. Repondentia
Case: Walter smith case
4. Marine insurance (incorporated in the subject
- There was no relationship. Owner of port and
insurance)
owner of goods are different. What was applied by
court was the law on torts. No presumption of
ON PERSONS
negligence. There should be proof of negligence. The
Shipowner
owner of vessel proved that he exercised ordinary
- He has the privilege to invoke limited liability rule.
diligence (required in ports). What was presented was
- What if with a charter party with charterer, who can
the competence of shipcaptain. The shipowner proved
invoke the LLR?
ordinary diligence in choosing the ship captain.
No jurisprudence. Personal opinion of sir:
distinguish on the type of charter party. If
Contracts entered into by shipcaptain or master
affreightment, shipowner retains possession, command
-Inter orient case: one role is they are the general
and navigation of the vessel. If bareboat it is vested
agent of the shipowener. But if the obligation
upon the charterer.
contracted by the captain does not enure to the benefit
of the vessel, then the shipowner has no liability. There
- Jurisprudence: except for registration, the
is no conflict bec. 586 obligations contracted by the
charterer is the temporary owner of the vessel. With shipper while 1759 death or injury of passenger as
this, the charterer can invoke LLR (this part no juris). result of contract of carriage.
-The case in point with the contracts entered into
Note: There is not distinction of liability of shipowner was the case Wing Kee. There were supplies delivered.
and ship agent. They are civilly liable. Shipagent was said to be liable. SC said at the time you
There is a situation in maritime law that shipowner and were still an agent you were liable but at the time
agent they are held liable for the act or omission of a agency was terminated you are no longer liable.
third person which is the ship captain or master. -If both SO and SA are sued, being solidarily liable,
the SA has right of recourse over SO.
ACTS of CAPTAIN
Case: Yucon case Shipcaptain or master
- money was entrusted to the captain and the money - The difference is with regard to the tonnage of the
was lost. SC concluded that shipowner was liable for vessel (higher: captain; lower: master; major patron
the lost because the captain failed to put up measures and minor patron)
while in custody of the money. It may not technically
to an act but may refer to admission but would fall - The question on the shipcaptain or master is the
under the term acts exercise of discretion
Case: Sweetlines case - Inter orient case: captain tayong did not want to
-bound for catbalogan but the captain chose to allow proceed with the voyage from Singapore to Africa bec.
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Of lack of oxygen and acetylene. But because of order (labor code) abroad (POEA).. there is a standard
of management he proceeded. He was then ordered to contract (poea prepared and drafted it and every
repatriated and then another captain took his place. He seaman shall comply with this —this is to protect
filed for illegal dismissal. The issue was the discretion filipino seaman working abroad) that will be signed by
exercised by the captain. WON he has the discretion every seaman stipulating the security of tenure,
not to proceed bec. of lack of supply. SC said you repatriation, benefits, etc.
should emphasize reasonable discretion —it is the
captain’s duty . - Difference for abroad: bigger income but
contractual (after contract go home).. DOMEstic, you
- Inter Orient: triple roles of the captain —general can be a regular employee in accordance with the labor
agent, commander and technical manager, code
representative of country
- JumpShip scenario: it is a valid ground to
Shipcaptain and harbor pilot terminate a seaman
- Harbor pilot: distinguish if voluntary or compulsory Note: Shipcaptain should conduct preliminary
investigation for crimes conducted on board.
- Case cited by SC on proper relationship of captain
rd
and pilot. In far eastern shipping case 521 3 par — CHAPTER 14
there are occasion when the master may and should CHARTER PARTIES
interfere and even displace the pilot when
he is obviously incapacitate and intoxicated. Charter Parties
—a contract whereby the entire ship, or some of
- In this case, there is relevance on when the the principal part, is let by the owner to a merchant or
other person for a specified time or use for the
captain should interfere. If it is voluntary (pilot
conveyance of goods, consideration of payment of
engaged by shipowner) —damages caused by pilot,
freight.
shipowner is liable. If compulsory, shipowner can
-It is a form of “mercantile lease”. It is a contract,
escape liability
hence, parties are free to stipulate upon such terms and
conditions that would suit their purposes subject to the
- If compulsory distinguish whether there was
caveat that these should not be contrary to law or
circumstances that would require the shipcaptain to
public policy.
interfere with the ship pilot. If there are circumstances
but captain did not interfere then shipowner is liable. If
Parties:
there are circumstances and captain interfere but still
1. Charterer/Charter Party —merchant or a person
there is damage, the shipowner will not be liable.
who desires to lease ship or vessel owned by another
by transport of his or her goods for commercial
- Cebu Port Authority —covered by compulsory
purposes or persons from one port to another
pilotage 2. Shipowner (SO)
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2. Contract of Affreightment – charterer hires the said captain or master acts in accordance with the
vessel only, either for a determinate period of time or instructions of the agent or owner and protects the
for a single or consecutive voyage, with the SO latter’s interests.
providing for the provision of the ship, wages of the
master and crew, and expenses for maintenance of the REQUISITES OF A VALID CHARTER PARTY:
vessel 1. consent of the contracting parties;
a. Time Charter – vessel is leased to a charterer for 2. an existing vessel which should be placed at the
a fixed period of time disposition of the shipper;
3. the freight;
b. Voyage Charter – vessel is leased for a single or 4. compliance with requirements of Art. 652 of
particular voyage Code of commerce.
Effect of Charter on character of Carrier. (Aticle 652 of the Code of Commerce provides that the
-Generally, the character of the common carrier as charter party shall contain, among others, the name,
such is not affected by the charter party if the same is a surname, and domicile of the charterer, and if he states
contract of affreightment. that he is acting by commission, that of the person for
whose account he makes the contract.)
Persons who may make charter.
-The owner or owners of the vessel, either in Cases:
whole or majority part, who have legal control and Caltex v. Sulpicio Lines
possession of the vessel, may valdly enter into charter Facts-There was a voyage charter; collision between
parties with the charterer. MT Vector (tanker) and Doña Paz (owned by
Sulpicio); breach of contract filed by the passengers’s
Charterer. heirs against Sulpicio; 3d party complaint against
The charterer, by himself, may subcharter the entire registered owner of the tanker including Caltex ( that
vessel to a third person but only in the event that there they were negligent and in bad faith by not seeing to it
is no prohibition in the original charter regarding any that the tanker was seaworthy)
subcharter. The subcharter is an independent contract
by itself involving only the charterer and the Issue: WON charterer shall be liable under Maritime
subcharterer and therefore does not give rise to any Law?
contractual relation between the general owner and the
subcharterer. Ruling: Liability cannot be attached to Caltex; the
charter did not affect the business of Sulpicio as a
Part owners. —Part owners of the vessel are not common carrier; rights and responsibilities of
precluded from chartering the same for their own ownership still rested on the owner
commercial purposes.
Planters Product v CA
Ship Agent. —In the Code of Commerce, the ship Facts: time charter; Planters purchased fertilizers from
agent is not allowed to make contracts for a new the US; voyage to the Philippines; upon arrival,
charter unless he is properly or duly authorized by the shortage in the cargo was discovered; filed actions
owner, or by virtue of an authority given by a against carrier for damages (breach of Contract); RTC
resolution of the majority of the co-owners. He may, ruled in favor of the Planters; Ca reversed & absolved
however, may such charter if the same has been carrier as it was converted from common carrier to
extended to him in his certificate of appointment. private;
Captain or Master. —It is one of the inherent powers Ruling: It cannot become a private carrier; bareboat
of the captain or master of the vessel to enter into charter can become a private carrier but in contract of
valid and binding charter parties, but only in the event affreightment remains as common carrier (action based
of absence of the ship agent or consignee, and only if on contract of carriage; presumption of negligence);
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Ruling: reiterated Planters ruling; but was not able to Demurrage —a sum of money due by express
rebut presumption of negligence; did not exercise EO contract for detention of the vessel in loading, beyond
diligence ( hired unlicensed patron) time allowed for that purpose in that charter party; sum
of which is usually fixed by the parties in the charter
Home Insurance v. American Steamship party; liability for this exists only when expressly
-case mostly used by the common carrier as defense; stipulated
Home Insurance is subrogee; paid SMC of loss cargo
shipped thru American Steamship; no reference as to Deadfreight —where the charterer failed to occupy
what contract but there was a mention that it was in the leased portion of the vessel, he may thereby be
affreightment liable by the shipowner for the deadfreight that
occurred
Ruling: Common Carrier undertaking to carry special
cargo (chartered to special person only) become a
private carrier and stipulation exempting owner from STIPULATION IN CHARTER PARTIES
liability for loss due to the negligence of its agents is GR: parties are free to stipulate subject to Art 1744 to
valid; 1754 0f NCC
Shipowner can appoint senior officers for the vessel Art. 1744. A stipulation between the common carrier
even if bareboat contract. But technically it is an and the shipper or owner limiting the liability of the
affreightment. Most conflicts will occur if these former for the loss, destruction, or deterioration of the
various principles will have to be mixed. goods to a degree less than extraordinary diligence
shall be valid, provided it be:
The whereabouts of the vessel is important to know the (1) In writing, signed by the shipper or owner;
time for loading and unloading. (2) Supported by a valuable consideration other than
the service rendered by the common carrier; and
Policy – marina (3) Reasonable, just and not contrary to public policy.
Implementing or enforcement —Coastguard
Art. 1745. Any of the following or similar stipulations
FRIEGHT OR FREIGHTAGE shall be considered unreasonable, unjust and contrary
-price of carriage to public policy:
-shall accrue according to what is stipulated in (1) That the goods are transported at the risk of the
the contract owner or shipper;
-should there be no stipulation or if it is (2) That the common carrier will not be liable for any
ambiguous , rules shall be loss, destruction, or deterioration of the goods;
a. freight shall begin to run from the day (3) That the common carrier need not observe any
of loading on the vessel; diligence in the custody of the goods;
b. in charters with fixed period, the freight (4) That the common carrier shall exercise a degree of
shall begin to run upon that very day; diligence less than that of a good father of a family, or
of a man of ordinary prudence in the vigilance over
c. If freight is charged according o weight, the movables transported;
payment shall be made according to gross (5) That the common carrier shall not be responsible
weight, including the weight of the containers. for the acts or omission of his or its employees;
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(6) That the common carrier's liability for acts Art. 1753. The law of the country to which the goods
committed by thieves, or of robbers who do not act are to be transported shall govern the liability of the
with grave or irresistible threat, violence or force, is common carrier for their loss, destruction or
dispensed with or diminished; deterioration.
(7) That the common carrier is not responsible for the
loss, destruction, or deterioration of goods on account Art. 1754. The provisions of Articles 1733 to 1753
of the defective condition of the car, vehicle, ship, shall apply to the passenger's baggage which is not in
airplane or other equipment used in the contract of his personal custody or in that of his employee. As to
carriage. other baggage, the rules in Articles 1998 and 2000 to
2003 concerning the responsibility of hotel-keepers
Art. 1746. An agreement limiting the common shall be applicable.
carrier's liability may be annulled by the shipper or
owner if the common carrier refused to carry the ART. 653. if the cargo should be received without the
goods unless the former agreed to such stipulation. charter party having been signed, the contract shall be
understood as executed In accordance with what
Art. 1747. If the common carrier, without just cause, appears in the bill of lading, the sole evidence of title
delays the transportation of the goods or changes the with regard to the cargo for determining the rights and
stipulated or usual route, the contract limiting the obligations of the ship agent, captain and charterer.
common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods. CHAPTER 15
LOANS ON BOTTOMRY AND RESPONDENTIA
Art. 1748. An agreement limiting the common
carrier's liability for delay on account of strikes or May be executed by means of:
riots is valid. 1. public instrument
2. policy signed by the contracting parties and the
broker taking part therein
Art. 1749. A stipulation that the common carrier's 3. private instrument (Art. 720)
liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner GR: The captain cannot contract loans on
declares a greater value, is binding. respondentia secured by the cargo, and should he
do so, the contract shall be void. Neither can he
Art. 1750. A contract fixing the sum that may be borrow money or Bottomry for his own
transactions.
recovered. by the owner or shipper for the loss,
EXCEPTIONS:
destruction, or deterioration of the goods is valid, if it 1. On the portion of the vessel he owns, provided no
is reasonable and just under the circumstances, and money has been previously borrowed on the whole
has been fairly and freely agreed upon. vessel, nor exists any other kind of lien or obligation
chargeable against her.
Art. 1751. The fact that the common carrier has no 2. When he is permitted to do so, he must
necessarily state what interest he has in the vessel.
competitor along the line or route, or a part thereof, to
CONTENTS OF THE LOAN CONTRACT:
which the contract refers shall be taken into 1. kind, name and registry of the vessel;
consideration on the question of whether or not a 2. name, surname and domicile of the captain;
stipulation limiting the common carrier's liability is 3. names, surnames and domiciles of the borrower and
reasonable, just and in consonance with public policy. the lender;
4. amount of the loan and the premium stipulated;
Art. 1752. Even when there is an agreement limiting 5. time for repayment;
6. goods pledged to secure repayment;
the liability of the common carrier in the vigilance
7. voyage during which the risk is run (Art.721)
over the goods, the common carrier is disputably
presumed to have been negligent in case of their loss, WHO MAY CONTRACT:
destruction or deterioration. 1. Bottomry – by the ship owner or ship agent; outside
of the residence of the owners, the captain.
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2. Respondentia – only the owner of the cargo the loan of Bottomry or respondentia and maritime
insurance, the value of what may be saved in case of
DISTINCTIONS: ORDINARY LOAN shipwreck shall be divided between the lender and the
BOTTOMRY/ insurer, in proportion to the legitimate interest of each
RESPONDENTIA one, taking in consideration, for this purpose only, the
1. Not subject to Usury Law 1. Subject to Usury Law principal with respect to the
2. Liability of the borrower 2. Not subject to any Maritime contracts include charter parties… and loans
is contingent on the safe contingency on bottomry and respondentia are considered maritime
arrival of the vessel or cargo contracts
at destination Q: why do we have to study this topic? Are these
3. The last lender is a 3. The first lender is a relevant?
preferred creditor preferred creditor
A: they are hardly used at present. However, we have
4. Must have a collateral 4. May or may not have
to study this just in case this will be asked in the bar.
collateral
5. Collateral is the vessel or 5. Maybe property, real or
Especially in the unique terms used in this topic..
cargo subject to maritime personal General provisions in contracts will govern
risk Basic provision you should not forget:
6. Must be in writing 6. Need not be in writing 1. there should be a marine risk
but interest shall not be due 2. the condition that the vessel or the goods has
unless expressly stipulated perished then the right of the lender to collect
in writing everything as well as stipulated interest is extinguished
7. To be binding on third 7. Need not be registered (not sure if there are other more.. basin ala ko kaapas)
person must be recorded in
the registry of vessels of BOTTOMRY
port of registry of the vessel - It may refer to the vessel
8. Loss of collateral 8. Does not extinguished if - The bottom or the hull or the kill of the vessel can be
extinguishes the same there is a loss of the pledged in this case
collateral (if any) - The whole vessel can be a subject of a security or
collateral
1. Effects of loans be lost due to accident of the sea - PD. 1521: (is this different) --- loan is the principal,
during the time, and on the occasion of the voyage mortgage is the accessory.
which has been designated in the contract and proven - The contract of bottomry is principal, the mortgage
that the cargo was on board under pd 1521 is merely a security
- lender losses the right to institute the action which - In pd 1521 under section 4 it is a requirement that the
would pertain to him whole of the vessel must be mortgaged (no
Except: when the loss was jurisprudence on this matter whether a part of the
1. caused by inherent defect of the thing vessel can be mortgaged)
2. through fault or malice of the borrower - In bottomry the whole or the part of the vessel can be
3. through barratry on the part of the captain the subject
4. caused by damages suffered by the vessel as a - IF the part of the vessel can be pledged, is it
consequence of being engaged in a contraband necessary that there should be goods? No. no need for
5. loaded the goods on a vessel different from that goods.
designated in the contract unless the change was
caused by force majeure RESPONDENTIA
- The vessel should have goods. The goods must be
2. The lenders on bottomry or respondentia shall suffer laden in the vessel
in proportion to their respective interest, the general - Is it necessary that the boat is on voyage? The vessel
average which may take place in the things upon which must be in the actual course of voyage because this is
the loans were made. the objective of the law. Because if the vessel is
3. In case of shipwreck, the amount for payment of the docked in the port the owner can simply obtain loans.
loan shall be deduced to the proceeds of the effects And besides there is no risk when the vessel is docked
which have been saved but only after deducting the (but no jurisprudence)
costs of the salvage.
4. If the loan should be on the vessel or any of her Distinction of this two types of loan vs. SIMPLE
parts, the freight earned during the voyage for which LOAN (for purposes of the bar) --- 5 differences
the loan was contracted shall also be liable for its 1. with respect to form --- can you validly execute a
payment, as far as it may reach. bottomry or respondentia verbally? You cannot. Bec
5. If the same vessel or cargo should be the object of under the code of commerce no judicial action can
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arise when the contract is not reduced in writing. But - Damage or expenses deliberately caused
this is not the case in simple loan. But in simple loan in order to save the vessel, its cargo or
you take note the statute of frauds… if not in writing B both from real and known risk
and R, you can dismiss case due to failure to state - All the persons having an interest in the
cause of action. vessel and the cargo therein at the time of
Q: why hardly used at present? the occurrence of the average shall
A: because of sophistication. Captains can just call up contribute to satisfy this average.
any agent the shipowner to deliver anything for the use
of the vessel to deliver. … This contract was Requisites of General Average:
recognized in medieval times.
1. common danger;
2. that for the common safety part of
CHAPTER 16 the vessel or of the cargo or both is
AVERAGES sacrificed deliberately;
3. that from the expenses or damages
Article 806 of the Code of Commerce provides that caused follows the successful saving
the following shall be considered averages: of the vessel and cargo; and
1. An extra-ordinary or accidental expense 4. that the expenses or damages
incurred during the voyage in order to should have been incurred or inflicted
preserve the vessel, cargo, or both; after taking proper legal steps and
2. Any damages or deterioration which the authority.
vessel may suffer from the time it puts to sea
from the port of departure until it casts anchor Common danger
in the port of destination, and those suffered -means both the ship and the cargo, after
by the merchandise from the time they are has been loaded, are subject to the same
loaded in the port of shipment until they are danger, whether during the voyage, or in the
unloaded in the port of their consignment. port of loading or unloading, that the danger
arises from the accidents of the sea,
CLASSES OF AVERAGES: disposition of authority, or faults of men,
A. Simple or Particular Average provided that circumstances producing the
- Damage or expenses caused to the vessel peril should be ascertained and imminent or
or to her cargo that did not inure to the may rationally be said to be certain and
common benefit and profit of all persons imminent.
interested in the vessel and her cargo. -When the measure of precaution adopted
- The owner of the goods that suffered the solely and exclusively for the preservation of
damage bears the loss the vessel from the danger of seizure or
capture and not for the common safety is not
- res perit domino applies
considered as common danger.
- if the vessel or goods are hypothecated by
loan on bottomry and respondentia, the Deliberate Sacrifice
lender shall bear the loss in proportion to -voluntary sacrifice of a part for the
his interest benefit of the whole in order to justify
theaverage contribution.
RULES ON AVERAGES:
1. Averages is defined as damage deliberately Voluntary Jettison
caused or an expense deliberately incurred due to a -the casting away of some portion of the
marine peril and which has resulted in saving both associated interests for the purpose of
vessel and cargo or only the vessel or cargo. avoiding the common peril from the whole to
2. Where both vessel and cargo are saved, it is a particular portion of those interests
general average; where only the vessel or only the -the goods on board refer to in jettison
cargo is saved, it is particular average. should be proven by means of bill of lading
3. The person whose property has been saved must and with regards to those belonging to vessel
contribute to reimburse the damage caused or by means of inventory prepared before the
expense incurred if the situation constitutes general departure
average.
2 cases where there can also be general averages
B. General or Gross Average even if the sacrifice was not made during the
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Relevance of averages (take note these ex. Cases covered by collision and allision:
Connected to expenses under 806) under 806 --- 1. One vessel at fault – such vessel is liable for
averages are: damage caused to innocent vessel as well as
o Extraordinary expenses – ex. If machine does damages suffered by the owners of cargo of both
not work, you have to ask help of a tugboat… vessels.
the expenses on the use of tugboat is a 2. Both vessels at fault – each vessel must bear
question of averages. This is extraordinary its own loss, but the shippers of both vessels
because it is not foreseen. --- assuming the may go against the ship owners who will be
engine of the vessel was defective, can that be solidarily liable.
considered an average? YES. (question now if 3. Vessel at fault not known – same as rule as
it is particular or general) (2). (Doctrine of Inscrutable Fault)
o Damages or deterioration suffered 4. Third vessel at fault – same rule as (1).
- refer to the physical feature or attribute of 5. Fortuitous event – no liability. Each bears its
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absence of the ship captain, ship owner - On the other hand, the owner does
or a representative of either of them, not denounce his right to the
they being unknown, shall convey and property. There is no presumption of
deliver the vessel or merchandise ASAP an intention to abandon such
to the collector of customs if the port has property rights.
a collector and otherwise to the
provincial treasurer or municipal Maritime Lien
mayor.) - A salvor, in maritime law, has an
interest in the property; called a lien,
Derelict but it never goes, in the absence of a
-a ship or cargo which is abandoned contract expressly made, upon the
and deserted at sea by those who were in idea of debt due from the owner to
charge of it, without any hope of the salvor but upon the principle that
recovering it (sine spe recuperandi) or the service creates a property in the
without any intention of returning to it thing saved.
(sine animo revertendi)
CHAPTER 20
JETSAM, FLOTSAM, LIGAN: CARRIAGE OF GOODS BY SEA ACT
Jetsam – goods that were thrown
off a ship which was in danger Carriage of goods by sea act
Flotsam – goods that floated off -was originally passed by the Congress of the United
the ship while ship was in danger or States on April 16, 1936 as Public Act No. 521
when it sank -the law was later adopted by the Philippine
Ligan – goods left as sea on the Commonwealth on October 22, 1936 through
wreck or tied to a buoy so that they can Commonwealth Act No. 65
be recovered later
The new civil code is the primary law on goods
that are being transported from a foreign port to
Basis of entitlement to salvage reward the Philippines
(Circumstances to consider): -COGSA remains to be a suppletory law
a.i.a) The labor expended by the salvors -but goods that are transported internationally, it is
in rendering the salvage service the law of the country to which the goods are to be
a.i.b) The promptitude, skill and energy transported which shall govern the liability of the
displayed in rendering the service and common carrier for their loss, destruction or
saving the property deterioration.
a.i.c) The value of the property
Parties
employed by the salvors in rendering the -carrier and the shipper
service, and danger to which such -the carrier is not limited to the shipowner. Carrier
property was exposed includes the charterer.
a.i.d) The risk incurred by the salvors in
rescuing the property from the Duties of the carrier
impending peril -Civil Code requires international carriers to
a.i.e) The value of the property salved exercise extraordinary diligence
a.i.f) The degree of danger which the -two overriding obligations: 1.) the obligation to use
due care with respect to the cargo. 2.) the obligation
property was rescued to provide a seaworthy vessel at the beginning of the
voyage
Rights and obligations of salvors and owners:
- Salvor is entitled to compensation Contracts of carriage of goods covered by
for services rendered. He has, under COGSA are evidenced by Bills of Lading
the Salvage Law, a lien upon the -after the goods are loaded, the bill of lading is to be
property salvaged. issued by the carrier, master or agent of the carrier to
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public services: Provided, however, That a person in telephone service for “general business
engaged in agriculture, not otherwise a public purposes”, its rates are much lower than other
service, who owns a motor vehicle and uses it telephone companies, and although 20% to 30% of
personally and/or enters into a special contract their telephone subscribers are private subscribers,
whereby said motor vehicle is offered for hire or services rendered to them are merely incidental. In
compensation to a third party or third parties fact, BOT is not even authorized to use their income
engaged in agriculture, not itself or themselves a and their expenses are met through annual
public service, for operation by the latter for a appropriations made by the Congress.
limited time and for specific purpose directly
connected with the cultivation of his or their [Note: Water districts fall under the term ”public
farm, the transportation, processing, and utility” because its primary function is to construct,
marketing of agricultural products of such third maintain and operate water reservoirs and
party or third parties shall not be considered as waterworks for the purpose of supplying water to
operating a public service for the purpose of this the inhabitants, as well as consolidate and centralize
Act. all water supplies and drainage systems in the
Philippines.]
Elements for a person the be considered a public
service: NOT A PUBLIC UTILITY BY LAW
1. The person must own, operate, manage or Laws may expressly acknowledge that a
control in the Philippines public services which particular activity is not a public utility.
may include distribution of goods or rendering Ex. Power generators such as independent
of services to the public. power producers are not considered public
2. The ownership, operation, management or utility.
control must be for hire or compensation The re-classification of a business that is
3. The ownership, operation, management or originally regarded as public utility into an
control must be done for general business entity that is not a public utility through a
purposes. concession agreement or any contract with a
governmental instrumentality is not binding
Characteristics of public service: on the Courts and may be declared
1. The business may be permanent, unconstitutional. Besides, the mere fact that
occasional or accidental. service is rendered only under contract does
2. The business may be with general or not prevent a company from being
considered a public utility. The mere fact
limited clientele.
that the concessionaire operates under a
contract does not remove it from the
Carriers; considered public service if:
concept of public utility if it is inherently so.
1. They transport freight or passenger or It is up to the Court to decide based on the
both; evidence if the concessioner is inherently
2. Their service is with or without fixed such a public utility.
route; In an obiter in Luzon Stevedoring Co., Inc v
3. May be freight or carrier service of any Public Service Commision, the legislature
class, express service, steamboat or steamship may not declare a company or enterprise to
line, pontines, ferries, and water craft. be a public utility when it is not inherently
such.
Public service under Public Service Act requires
that the entity must me engaged in the activity CONSTITUTIONAL LIMITATIONS
for a general business purpose. Based on Article XII sec. 1, 6, 11, 17, 18, 19, and 22
-Business as the means by which a party habitually of the 1987 Phil. Constitution provisions, the
or regularly earns a livelihood of some gain; where limitations imposed by the Constitution on public
profit is the purpose, or livelihood is the motive. utilities include the following:
1) No franchise, certificate, or any other form
Thus, the Supreme Court ruled that although the of authorization for the operation of a public
Bureau of Telecommunications operated a telephone utility shall be granted except to citizens of
system, it is neither a “public service” nor engaged the Philippines or to corporations or
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associations organized under the laws of the 3) LTO (registration of drivers and motor
Philippines at least 60% per centum of vehicles)
whose capital is owned by such citizens; 4) MARINA (water transportation)
2) No franchise, certificate, or authorization 5) Philippine Coast Guard (concerned with
shall be exclusive in character; safety in water transportation)
3) No franchise, certificate, or authorization 6) National Telecommunications Commission
shall be for a longer period than fifty years; (communication utilities and services, radio
4) A franchise or right shall be granted only communications systems, wire or wireless
under the condition that it shall be subject to telephone and telegraph systems, radio and
amendment, alteration, or repeal by the television broadcasting systems and other
Congress when the common good so similar public utilities)
requires; 7) Energy Regulatory Commission
5) The State shall encourage equity 8) National Water Resources Council
participation in public utilities by the 9) Civil Aeronautics Board
general public;
10) Civil Aviation Authority of the Philippines
6) The participation of the foreign investors in
the governing body of any public utility 11) Philippine Ports Authority
enterprise shall be limited to their 12) Local Water Utilities Administration
proportionate share in its capital; 13) Toll Regulatory Board
7) All the executive and managing officers of
such corporation or association must be BASES OF REGULATION OF PUBLIC
citizens of the Philippines; UTILITIES
8) In times of national emergency, when the The police power of the State justifies the
public interest so requires, the State may, regulation of public utilities. In other words,
during the emergency and under reasonable regulation of public utilities is founded upon the
terms prescribed by it, temporarily take over police powers of the State and statutes prescribing
or direct the operation of any privately rules for the control and regulation of public utilities
owned public utility or business affected are considered valid exercise thereof.
with public interest.
OWNERSHIP OF PUBLIC UTILITIES
9) The State may, in the interest of national
Ownership of public utilities is subject to
welfare or defense, upon payment of just
regulation by the State. Concerned government
compensation, transfer to public ownership
agencies may impose certain requirements to
utilities and other private enterprises to be
persons or entities who wish to operate as public
operated by the Government;
utilities. This may include capitalization requirement
10) The State shall regulate or prohibit and other similar impositions.
monopolies when the public so requires;
11) Combinations in restraint of trade or unfair TIME WHEN OWNERSHIP MUST
competition are not allowed. COMMERCE
In Tatad vs. Garcia, Jr., even the mere
Constitutionality of the Public Service Act was formalization of a public utility corporation does not
upheld in Pangasinan Transportation Company v ipso facto characterize the corporation as one
Public Service Commission. operating public utility. The moment for determining
the requisite Filipino nationality is when the entitiy
REGULATORY AGENCIES applies for a franchise, certificate, or any other form
The powers of the Public Service Commission of authorization for that purpose.
(PSC) are now distributed among the different
government agencies: VOTING CONTROL TEST AND BENEFECIAL
1) Department of Transportation and OWNERHIP TEST applied to determine
Communications (It is the agency that issues whether the corporation is a ‘Philippine
certificates of public convenience for National”(Gamboa vs Teves)
operation of national railroad carriers) In other words, full beneficial ownership of the
2) LTFRB (land transportation) stocks, coupled with voting rights is essential.
Ownership of at least 60% of the shares with voting
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rights must pertain to Filipinos. If the requirement affected with public interest.
will not be imposed, the corporation will not be
“effectively controlled” by Filipinos in accordance MONOPOLIES AND UNFAIR COMPETITION
with the mandate of Sec. 11 of Art. XII of the The Constitution provides that State shall
Constitution. regulate or prohibit monopolies when the public
interest so requires. In addition, combinations in
OWNERSHIP OF FACILITIES restraint of trade or unfair competition are not
In Tatad v. Garcia, Jr., the limit imposed by the allowed under the Constitution.
Constitution on foreign equity applies only to the
operations of a public utility and not to the REGULATION OF RATES:
ownership of the facilities. - includes the regulation of the rates that they
are charging the public. This is in line with the
A corporation is not subject to the 60% Filipino policy of the State to protect the public against
equity requirement under Sec. 11 of the Article XII arbitrary and excessive rates while maintaining the
if it will just own the equipment or properties that efficiency and quality of services rendered.
will be used by another entity which shall operate as
public utility. Public Interest vs. Return of Investment
-The power to regulate rates does not give the
DEFINITE TERM State the right to prescribe rates that are so low as to
The term of the franchise to be given to public deprive the public utility of a reasonable return on
utilities is fifty (50) years at any given time. investment.
However, the appropriate government body may Thus, the rates prescribed by the State must be:
extend the franchise. one that yields a fair return on the public utility
upon the value of the property performing the
NON-EXCLUSIVITY service (return of investment);
The franchise cannot be exclusive. By doing so, one that is reasonable to the public for the
it is repugnant to the Constitution. services rendered (public interest)
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cost of handling and transporting. merely the notice of hearing issued by the ERC, in a
newspaper of general circulation in the locality
Reasonable and Just Standard in Fixing Rates. where the applicant operates; and
-The rate must be reasonable and just – the only 2. The need for the ERC to consider the
standard which the legislature is required to comments or pleadings of the customers and LGU
prescribe for the guidance of the administrative concerned.
authority. What is a just and reasonable rate is a Collection
question of fact calling for the exercise of discretion, -the public utility is obligated to collect only rates
good sense, and a fair, enlightened and independent agreed upon. Overcharging is prohibited.
judgment.
Provisional Rate Increase under EPIRA:
Operating Expenses. With respect to the application for provisional
-This is included in the determination of a just rate adjustments of electric distributors, among the
and reasonable rate. Why? To allow the public important requirements are:
utility to recoup the reasonable amount of expenses 1. Publication of the application itself, not
it has incurred in connection with the services it merely the notice of hearing issued by the ERC, in a
provides. [Note: Income tax is not included.] newspaper of general circulation in the locality
where the applicant operates; and
Fixing Rates for Electric Companies. 2. The need for the ERC to consider the
In an electric company, three major factors comments or pleadings of the customers and LGU
must be considered by the regulating agency in concerned.
determining just and reasonable rates: COLLECTION
1. Rate of return; After the proper regulatory body approves the
2. Rate base; rate of the public utility, the latter is obligated to
3. The return itself or the computed revenue to collect ONLY the rates agreed upon.
be earned by the public utility based on the PUV operators shall post a copy of the fare
rate of return and rate base. matrix in its office, terminal, waiting stations and
interior of the vehicle.
[Note: ERC has original and exclusive jurisdiction
under Rule 4(u) of the EPIRA over all cases AUTHORITY TO OPERATE AS PUBLIC
contesting rates, fees, fines, and penalties imposed UTILITY
by the ERC in the exercise of its power.] The power to authorize the operation of a
public utility is admittedly a
Methods in rate determination. prerogative of the legislature. A
1. Add-on method – adding the established franchise is a legislative grant or a
minimum fare (0.75) to the fare per succeeding through its instrumentalities
kilometre multiplied by the distance travelled in (administrative agencies) when such
excess of 4 km and 5 km respectively. power to authorize operation is
2. Straight Computation Method – the process by delegated.
which the actual distance travelled is multiplied
by the authorized fare per succeeding kilometre Franchise vs. Certificate of Public Convenience
of 0.25 centavos. (CPC):
Provisional Increase.
-An administrative agency may be empowered Franchise CPC
by law to approve provisionally, when demanded by Granted Grant or privilege Form of regulation
urgent public need, rates of public utilities without a by: from a sovereign through the
hearing. But provisional rates are by their nature power (generally, administrative
temporary and subject to adjustment in conformity from the congress) agencies.
There is a trend now
with the definitive rates approved after final hearing.
that the power to
Provisional Rate Increase under EPIRA: grant franchise is
With respect to the application for provisional delegated to
rate adjustments of electric distributors, among the administrative
important requirements are: agencies.
1. Publication of the application itself, not
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CPC does not confer upon the holder any should be an effective PA before a TP is issued.
proprietary right or interest or franchise in the route
covered thereby. Instances when CPC is not required (WAbARG)
Section 14. The following are exempted from the
Q: Which agency who has the power to specify provisions of the preceding section
and define the terms and conditions upon which a. Warehouses
the public utility shall be operated? b. Vehicles drawn by animals and bancas
A: PSC. It shall also make reasonable rules and
regulations for the operation and compensation of moved by oar or sail, and tugboats and
public utilities. lighters
c. Airships within the Philippines except as
Provisional Authority (PA) regards the fixing of the maximum rates on
-refers to an authority given to an entity qualified to freight and passengers
operate a public utility for a limited period during
the pendency of its application for, or before the d. Radio companies except with respect to the
issuance of its CPC. fixing of rates
-certain public utilities may be allowed to operate e. Public services owned or operated by any
pending the issuance of a CPC by acquiring a instrumentality of the National Government
Provisional Authority. or by any government-owned or controlled
-necessarily, a public utility that is granted a PA is
corporation, except with respect to the
already allowed to operate.
-However, the lifetime of a PA is limited and may be fixing of rates.
revoked by the agency at any time in according with
law and subject to final action on the main
application for a CPC. Transfer of Certificate
-the final outcome of the application rests within the -the applicable statute may deny or grant to the
exclusive prerogative of the concerned operator the right to transfer a franchise
administrative agency. -the PSC has the power and authority to approve a
Ex. One that is being issued by the MARINA in sale or transfer of a CPC if:
domestic shipping 1. there are just and reasonable grounds for making
the transfer
Issuance of PA by MARINA may be warranted 2. the sale or transfer is not detrimental to the public
under any of the following instances: interest
(As stated in Dagdag Jr. v The Public Service
a. operation in unserved or underserved route
Commission)
b. operation of ships complying with -since a franchise is personal in nature, any transfer
international standards or lease thereof should be notified to the PSC so that
c. operations of ships under EO 909 and its the latter may take proper safeguards
IRR and other similar laws/rules and -the law requires that before approval is granted,
there should be a public hearing with notice to all
regulations interested parties in order that the commission may
d. other analogous circumstance as may be determine if there are good and reasonable ground
determined by the MARINA justifying the transfer or lease of the property, or if
the sale or lease is detrimental to public interest.
-if the approval has not been obtained, the transfer
PA v Temporary Permit (TP) or lease is valid and binding between the parties
-a temporary permit is a document containing the although not effective against the public and the
call sign, authorized power, frequency/channel, class PSC. The approval is only necessary to protect the
station, hours of operation, points of communication public interest.
and equipment particulars granted to an authorized
public utility Q. What if transfer of the franchise was not
-a TP is more specific than a PA because a TP approved by the regulating agency?
contains details and specifications A: The registered owner rule applies. Thus, the
-the operational validity of a TP flows from only registered owner is liable for obligations to third
from a previously updated PA. This means, there parties and vehicles registered under his name.
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The one in whose name the vehicle is registered However, in Flash Taxicab v. Cruz, the Court
remains to be the owner and the transferee merely ruled that the absence of notice or hearing required
holds the vehicles for the registered owner. by the Public Service Act before the suspension,
revocation, or cancellation of any certificate of
The transfer of the franchise is prohibited if the public convenience, is a defect that can be cured by
transfer is for an illegal purpose the hearing held on the motion to reconsider filed by
-the CPC may even be cancelled if the transfer is the operator.
pursuant to the illegal practice called trafficking
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the Commission, of the revocation and consumer or user by the public service
cancellation of any acquired rights. concerned.
(b) To require any public service to pay the (e) To permit any street railway or traction
actual expenses incurred by the Commission company to change its existing gauge to
in any investigation if it shall be found in standard steam railroad gauge, upon such
the same that any rate, tool, charge, terms and conditions as the Commission
schedule, regulation, practice, act or service shall prescribe.
thereof is in violation of any provision of
this Act or any certificate, order, rule, (f) To grant to any public service special
regulation or requirement issued or permits to make extra or special trips within
established by the Commission. The the territory covered by its certificates of
Commission may also assess against any public convenience, and to make special
public service costs not to exceed twenty- excursion trips outside of its own territory if
five pesos with reference to such the public interest or special circumstances
investigation. required it: Provided, however, that in case a
public service cannot render such extra
(c) From time to time appraise and value the service on its own line or in its own
property of any public service, whenever in territory, a special permit for such extra
the judgment of the Commission it shall be service may be granted to any other public
necessary so to do, for the purpose of service.
carrying out any of the provisions of this
Act, and in making such valuation the (g) To require any public service to keep its
Commission may have access to and use books, records, and accounts so as to afford
any books, documents, or records in the an intelligent understanding of the conduct
possession of any department, bureau, of its business and to that end to require
office, or board of the government of the every such public service of the same class
Philippines or any political subdivision to adopt a uniform system of accounting.
thereof. Such system conform to any system
approved and confirmed by the Auditor
(d) To provide, on motion by or at the request General.
of any consumer or user of a public service,
for the examination and test of any (h) To require any public service to furnish
appliance used for the measuring of any annual reports of finances and operations.
product or service of a public service, and Such reports shall set forth in detail the
for that purpose, by its agents, experts, or capital stock issued, the amounts of said
examiners to enter upon any premises where capital stock paid up and the form of
said appliances may be, and other premises payment thereof; the dividends paid, the
of the public service, for the purpose of surplus, if any and the number of
setting up and using on said premises any stockholders, the consolidated and pending
apparatus necessary therefor. and to fix the obligations and the interest paid thereon; the
fees to be paid by any consumer or user who cost and value of the property of the
may apply to the Commission for such operator; concessions or franchises and
examination or test to be made, and if the equipment; the number of employees and
appliance be found defective or incorrect to salaries paid to each class; the accidents to
the disadvantage of the consumer or user to passengers, employees, and other person,
require the fees paid to be refunded to the and the causes thereof; the annual
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expenditures on improvements; the manner (j) To require any public service to comply
of their investment and nature of such with the laws of the Philippines and with
improvements; the receipts and profits in any provincial resolution or municipal
each of the branches of the business and of ordinance relating thereto and to conform to
whatever source; the operating and other the duties imposed upon it thereby or by the
expenses; the balance of profits and losses; provisions of its own character, whether
and a complete statement of the annual obtained under any general or special law of
financial operations of the operator, the Philippines.
including an annual balance sheet. Such
reports shall also contain any information (k) To investigate any or all accidents that may
which the Commission may require occur on the property of any public service
concerning freight and passenger rates, or or directly or indirectly arising from or
agreements, compromises or contracts connected with its maintenance or operation
affecting the same. Said reports shall cover in the Philippines; to require any public
a period of twelve months, ending on service to give the Commission immediate
December thirty-first of each year, and shall and effective notice of all any such
be sworn to by the officer or functionary of accidents, and to make such order or
the public service authorized therefor. The recommendation with respect thereto as the
Commission shall also have power to public interest may warrant or require.
require from time to time special reports
containing such information as above (l) To require every public service s herein
provided for or on other matters as the
defined to file within complete schedules of
Commission may deem necessary or
every classification employed and of every
advisable.
individual or joint rate, toll fare or charge
made, charged or exacted by it for any
(i) To require every public service to file with product supplied or service rendered within
the Commission a statement in writing, the Philippines and, in the case of public
verified by the oaths of the owner or the carriers, to file with it a statement showing
president and the secretary thereof, if a the itineraries or routes served as specified
corporation, setting forth the name, title of in such requirement.
office or portion, and post-office address,
and the authority, power and duties of every ALTERNATIVE PENALTY
officer, member of the board of directors,
trustees executive committee, The alternative penalty is a fine under Sec. 21 of the
superintendent, chief or head of construction PSA.
and operation thereof, in such form as to
POWER TO CANCEL LEGISLATIVE
disclose the source and origin of each FRANCHISE
administrative act, rule, decision, order or
other action of the operator of such public The NTC has no power to cancel certificates of
service; and, within ten days after any public convenience that it issued to the holders of
change is made in the title of, or authority, duly issued legislative franchises in the broadcast
powers or duties appertaining to any such industry.
office or position, or the person holding the
TRANSFER OF SHARES OF STOCKS
same, filed with the Commission a like
statement, verified in like manner, setting The Public Service Commission is the government
forth such change. agency vested with the authority to approve the
transfer of more than 40% of the subscribed capital
stock of a telecommunications company to a single
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Distinguished from criminal cases The doctrine of primary jurisdiction calls for
application when there is such competence to act on
Sec. 21 contemplates administrative sanction unlike the part of an administrative body. Otherwise, it is
Sec. 23-28 of Public Service Act which are penal in more appropriate to seek judicial remedy as to enable
nature, the latter speaks of fines imposed in the the administrative agency to act on the matter.
discretion of the court. The 60-day prescriptive
period of section 23-28 does not apply to sec. 21. Persons covered by regulation
General Rule: PSC had jurisdiction only over persons
engaged in public utilities, or over a public utility that
CHAPTER 22 holds a certificate of public convenience, and not over
persons who are not engaged in public utilities.
POWERS OF ADMINISTRATIVE AGENCIES
Exception: Those who may violate any valid regulation
RULE-MAKING AND QUASI-JUDICIAL it may promulgate under the law.
FUNCTIONS
Prosecuting and Investigating functions
➢ Quasi-legislative or rule-making power is the PSC has the power:
power to make rules and regulations which results *to investigate, upon its own initiative or upon
complaint in writing, any matter concerning any public
in delegated legislation that is within the confines
service as regards matters under its jurisdiction
of granting statute ad the doctrine of non- *to require any public service to furnish safe,
delegability and separability of powers. adequate, and proper service as the public interest may
require and warrant
➢ Quasi-Judicial or administrative adjudicatory power *to enforce compliance with any standard, rule,
is the power to hear and determine question of fact regulation, order or other requirement of this Act or of
the Commission. (Sec 17, CA no 146)
to which the legislative policy is to apply and to
decide in accordance with the standards laid down SC has held that the power of the Commission to
by the law itself in enforcing and administering the cancel and revoke a certificate of public convenience
same law. and necessity may be exercised by it even without a
formal charge filed by any interested party, with the
In carrying out their quasi-judicial functions, only limitation that the holder of the certificate should
the administrative officers or bodies are be given his day in court.
required to investigate facts or ascertain the
existence of facts, hold hearings, weigh Philippine Coast Guard- RA 9993
evidence, and draw conclusions from them as - It is described in the law as an armed and
basis for their official action and exercise of uniformed service attached to the Department
discretion in a judicial nature. of Transportation and Communication.
- In times of war, PCG is attached to the
Multiple functions Department of National Defense
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attached to the Department shall be authorized to member or by bodies or associations recognized by the
undertake specialized telecommunications, ports, airports Philippine government as the proper arbiter of such
and railways projects and facilities as directed by the charges or rates;
President of the Philippines or as provided by law;
q. Establish and prescribe the rules, regulations,
f. Establish, operate and maintain a nationwide postal procedures and standards for the accreditation of driving
system that shall include mail processing, delivery schools;
services, and money order services and promote the art of
philately; r. Administer and operate the Civil Aviation Training
g. Issue certificates of public convenience for the Center (CATC) and the National Telecommunications
operation of public land and rail transportation utilities Training Institute (NTTI); and
and services;
s. Perform such other powers and functions as may be
h. Accredit foreign aircraft manufacturers and/or prescribed by law, or as may be necessary, incidental, or
international organizations for aircraft certification in proper to its mandate or as may be assigned from time to
accordance with established procedures and standards; time by the President of the Republic of the Philippines .
o. Establish and prescribe the corresponding rules and f. To issue subpoena and subpoena duces tecum and
regulations for the enforcement of laws governing land summon witnesses to appear in any proceedings of the
transportation, air transportation and postal services, Board, to administer oaths and affirmations;
including the penalties for violations thereof, and for the g. To conduct investigations and hearings of complaints
deputation of appropriate law enforcement agencies in for violation of the public service laws on land
pursuance thereof; transportation and of the Board's rules and regulations,
p. Determine, fix and/or prescribe charges and/or rates orders, decisions and/or rulings and to impose fines
pertinent to the operation of public air and land and/or penalties for such violations;
transportation utility facilities and services, except such
h. To review motu proprio the decisions/actions of the
rates and/or charges as may be prescribed by the Civil
Regional Franchising and Regulatory Office herein
Aeronautics Board under its charter, and, in cases where
created;
charges or rates are established by international bodies or
associations of which the Philippines is a participating
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schedules and other materials required to be filled by (b) Ensure that the Authority performs its functions in
air carriers a proper, efficient and effective manner;
9. Assure protection of the public by requiring (c) Decide the objectives, strategies and policies of the
the performance of safe and adequate air service, Authority in accordance with the provisions of this
eliminating rate discrimination, unfair competition and Act;
deceptive practices in air transportation
(d) Determine the organizational structure of the
10. Suggest corrective measures to improve Authority in accordance with the provisions of this
safety in air commerce Act, establish a human resources management system
11. Review, reverse, modify or affirm on appeal based on merit and fitness, and adopt a rational
the administrative decision or order of the Assistant compensation and benefits scheme;
Secretary for Air Transportation on matters pertaining
to: (e) Exercise appellate powers on any decisions,
findings and rulings of the Director General, to
a.i. Grounding of Airmen and Aircraft issue subpoena ad testificandum or subpoena duces
a.ii. Revocation of any certificate or denial tecum requiring the attendance and testimony of
by the Assistant Secretary in connection witnesses in any matter or inquiry pending before the
with the violation of any provision of Board and require the production of books, papers,
RA 776 contracts, agreements and all other documents
a.iii. Imposition of civil penalty or fine by submitted for purposes of this section to be under oath
the Assistant Secretary in connection and verified by the person in custody thereof as to the
with the violation of any provision of truth and correctness of data appearing in such books,
RA 776 papers, tariffs, contracts, agreements and all other
12. Determine (even on its own initiative) documents;
whether to impose, remit, mitigate, increase or (f) Exercise appellate powers to order the taking of
compromise the civil penalties imposed by the depositions in any proceeding, or investigation,
Assistant Secretary for Air Transportation. pending before the Board at any stage of such
proceeding or investigation;
------------------------------------------------------------------
----- (g) Use available services, equipment, personnel and
facilities of other agencies of the Philippine
CIVIL AVIATION AUTHORITY OF THE Government, on a reimbursable basis when appropriate
PHILIPPINES (CAAP) and, on a similar basis, to co-operate with those
>Declared Policy: agencies in the establishment and use of services,
equipment and facilities of the Authority;
a. To establish and prescribe rules and
regulations for inspection and registration of all aircraft (h) Use the property of the Authority in such a manner
owned and operated in the Philippines and all air as may appear to the Authority to be requisite,
facilities advantageous or convenient with a view to making the
b. To establish and prescribe the corresponding best use of any of the property of the Authority in
the corresponding rules and regulations for the relation to its functions under this Act;
enforcement of laws governing air transportation (i) Invest such of the Authority's funds that are not
c. To determine, fix, and/or prescribe charges immediately required for operating expenses, or other
and/or rates pertinent to the operation of public air immediate obligations in any business venture the
utility facilities and services Board may deem appropriate, or in such secured note,
d. To administer and operate the Civil Aviation government securities, and other negotiable
Training Center instruments that satisfy the guidelines prescribed by
the Board. Funds of the Authority shall be deposited in
e. To operate and maintain national airports, air such commercial and universal banks as the Board
navigation and other similar facilities in compliance to may determine, subject to the requirements of existing
ICAO laws. The Board shall designate the officials authorized
f. To perform such other powers and functions to deposit in or withdraw funds from such depository
as may be prescribed by law banks;
(j) Promulgate rules and regulations as may be
Powers of the CAAP Board
necessary in the interest of safety in air commerce
(a) Provide comprehensive policy guidance for the pertaining to the issuance of the airman's certificate
promotion and development of the Philippine aviation including the licensing of operating and mechanical
industry, as provided for in this Act; personnel, type certificate for aircraft, aircraft engines,
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propellers and appliances, airworthiness certificates, (s) In coordination with the appropriate government
air carrier operating certificates, air agency certificates, agency tasked to provide airport security, shall:
navigation facility and aerodrome certificates; air (1) Prescribe reasonable regulation requiring that
traffic routes; radio and aeronautical all passengers and all property intended to be carried in
telecommunications and air navigation aids; aircraft the aircraft cabin in commercial air transport be
accident inquiries; aerodromes, both public and screened by weapon-detecting procedure or facilities
private-owned; construction of obstructions to employed or operated by employees or agents of the
aerodromes; height of buildings; antennae and other air operator or foreign air operator prior to boarding
edifices; registration of aircrafts; search and rescue; the aircraft for such transportation;
facilitation of air transports; operations of aircrafts,
both for domestic and international, including (2) Prescribe such other reasonable rules and
scheduled and non-scheduled; meteorology in relation regulations requiring such parties, methods and
to civil aviation; rules of the air; air traffic services; procedures as the Director General may find necessary
rules for prevention of collision of aircrafts, to protect persons and property aboard aircraft
identification of aircraft; rules for safe altitudes of operating in commercial air transport against acts of
flight; and such other rules and regulations, standards, criminal violence and aircraft piracy; and
governing other practices, methods and/or procedures (3) To the extent practicable, require uniform
as the Director General may find necessary and procedures for the inspection, detention, and search of
appropriate to provide adequately for safety regularity persons and property in domestic commercial air
and efficiency in air commerce and air navigation; transport and international commercial air transport to
(k) Impose and fix reasonable charges and fees for the assure their safety and to assure that they will receive
use of government aerodromes or air navigation courteous and efficient treatment by air operators and
facilities; for services rendered by the Authority in the their agents and employees.
rating of any aerodrome or air navigation facilities, ------------------------------------------------------------------
civil aviation schools and instructors, aircraft repair ----
stations, and aircraft radio and aeronautical
telecommunications stations; MARITIME INDUSTRY AUTHORITY
(MARINA)
(l) Fix the reasonable charges to be imposed in the use >Powers (Sec. 12, EO 125/125-A):
of privately-owned air navigation facilities and
aerodromes; 1. Develop and formulate plans, policies, programs
projects, standards, specifications and guidelines
(m) Adopt a system for the registration of aircraft as geared toward the promotion and development of
hereinafter provided; the maritime industry, the growth and effective
(n) Determine and fix, landing fees, parking space fees, regulation of shipping enterprises and for the
royalties on sales or deliveries, direct or indirect, to national security objectives of the country;
any aircraft for its use of aviation gasoline, oil and 2. Establish, prescribe and regulate routes, zones
lubricants, spare parts, accessories and supplies, tools, and/or areas of operation of particular operators of
other royalties, fees or rentals for the use of any of the public water services;
property under its management and control; (Basically
determine and fix fees) 3. Issue Certificates of Public Convenience for the
operation of domestic and overseas water carriers;
(o) Approve the annual and supplementary budget plan
and utilization of retained revenue; 4. Register vessels as well as issue certificates,
licenses or document necessary or incident thereto;
(p) Exercise the corporate powers granted to the
Authority; 5. Undertake the safety regulatory functions
pertaining to vessel construction and operation
(q) Upon its own initiative or the recommendation of including the determination or manning levels and
the Director General or an application of a private issuance of certificates of competency to seamen;
person, grant exemption from the requirements of
observing rules or regulations issued in accordance 6. Enforce laws, prescribe and enforce rules and
with this Act: Provided, That said grant of exemption regulations, including penalties for violations
is not prejudicial to flight safety; thereof, governing water transportation and the
Philippine merchant marine, and deputize the
(r) Formulate rules and regulations concerning Philippine Coast Guard (PCG) and other law
compliance of the carrier and the public for the safe enforcement agencies to effectively discharge
transport of goods and materials by air pursuant to these functions;
international standards or Annexes to the Chicago
Convention; and
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7. Undertake the issuance of license to qualified facilities or services as are necessary in the
seamen and harbor, bay and river pilots; ports vested in, or belonging to the
8. Determine, fix and/or prescribe charges and/or Authority.
rates pertinent to the operation of public water
transport utilities, facilities and services except in National Telecommunications Commission- EO 546
cases where charges or rates are established by - Government agency with regulatory and
international bodies or associations of which the quasi-judicial functions
Philippines is a participating member or by bodies - NTC is the sole body that exercises
or associations recognized by the Philippine supervision, adjudication and control over
Government as the proper arbiter of such charges all telecommunications service throughout
or rates; the country.
9. Accredit marine surveyors and maritime - It also adopts and promulgates such
enterprises engaged in shipbuilding, ship repair, guidelines, rules and regulations relative to
ship breaking, domestic and overseas shipping, the establishment, operation and
ship management and agency; maintenance of various telecommunications
10. Issue and register the continuous discharge book facilities and services nationwide.
of Filipino seamen; - NTC remains under the administrative
11. Establish and prescribe rules and regulations, supervision of the DTC as an attached
standards and procedures for the efficient and agency.
effective discharge of the above functions; and - NTC’s decisions are appealable only and
12. Perform such other functions as may now or directly to the SC.
hereafter be provided by law. Definition: Telecommunications
- Any process which enables a
>The powers of MARINA with respect to domestic
shipping are enumerated in Section 10 of RA 9295. telecommunications entity to relay and
receive voice, data, electronic messages,
Philippine Coast Guard- RA 9993 written or printed matter, fixed or moving
- It is described in the law as an armed and pictures, words, music or visible or audible
uniformed service attached to the signals or any control signals of any design
Department of Transportation and and for any purpose by wire, radio or other
Communication. electromagnetic, spectral, optical or
- In times of war, PCG is attached to the technological means.
Department of National Defense Broadcasting
- However, the DTC issued an order to - An undertaking the object of which is to
delineate the functions of the MARINA and transmit over-the-air commercial radio or
PCG. television messages for reception of a broad
“ in the exigency of the service, and in order audience in a geographic area.
to further promote the safety of life and Franchise
property at sea, MARINA shall be the - A privilege conferred upon a
policy-making agency on maritime safety telecommunications entity by congress,
and PCG” authorizing that entity to engage in a certain
type of telecommunications service.
Philippine Ports Authority- PD 857
- The law recognized the need to integrate - The broadcast industry such as the operators
and coordinate port planning, development, of television network and radio stations, is
control and operations at the national level, also being regulated by the NTC.
and at the same time promote the growth of
regional port bodies responsive to the needs Batangas CATV v. CA
of their individual localities. - NTC’s regulatory power over the
- Attached to the Department of Public Works broadcasting and cable television industry
Transportation and Communications extends to matters which are peculiarly
- PPA has been tasked, the corporate duties to within its competence.
supervise, control, regulate, construct, 1. determination of rates
maintain, operate, and provide such 2. issuance of certificates of authority
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