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San Beda College of Law


TRANSPORTATION LAWS CONTRACT OF TRANSPORTATION/ CARRIAGE A contract whereby a person, natural or juridical, obligates to transport persons, goods, or both, from one place to another, by land, air or water, for a price or compensation. Classifications: 1. Common or Private 2. Goods or Passengers . !or a fee "for hire# or Gratuitous $. %and, &ater'maritime, or Air (. )omestic'inter*island'coastwise or +nternational'foreign +t is a relationship which is imbued with the public interest. COMMON CARRIER Persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public "Art. 1, 2, Civil Code#. Art. 1, 2 of the -ew Civil Code avoids any distinction between one whose principal business activity is the carrying of persons or goods or both and one who does such carrying only as an ancillary activity "sideline#. +t also avoids a distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. -either does the law distinguish between a carrier offering its services to the general public that is the general community or population and one who offers services or solicits business only from a narrow segment of the general population. A person or entity is a common carrier even if he did not secure a Certificate of Public Convenience ")e Gu.man vs. CA, 1/0 1C2A /12#. +t ma3es no distinction as to the means of transporting, as long as it is by land, water or air. +t does not provide that the transportation should be by motor vehicle. "!irst Philippine +ndustrial Corporation vs. CA# 4ne is a common carrier even if he has no fi5ed and publicly 3nown route, maintains no terminals, and issues no tic3ets "Asia %ighterage 1hipping, +nc. vs. CA#. C a!act"!istics: 1. 6nderta3es to carry for all people indifferently and thus is liable for refusal without sufficient reason "%astimoso vs. )oliente, 4ctober 27, 18/1#9 2. Cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the traffic in these goods9 . -o monopoly is favored ":atangas ;rans. vs. 4rlanes, (2 P<+% $((#9 $. Provides public convenience. PRI#ATE CARRIER 4ne which, without being engaged in the business of carrying as a public employment, underta3es to deliver goods or passengers for compensation. "<ome +nsurance Co. vs. American 1teamship Agency, 2 1C2A 2$# TESTS W$ET$ER CARRIER IS COMMON OR PRI#ATE: ;he 1C in !irst Philippine +ndustrial Corporation vs. CA "188(# reiterated the following tests= 1. +t must be engaged in the business of carrying goods for others as a public

COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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employment and must hold itself out as ready to engage in the transportation of goods generally as a business and not as a casual occupation9 2. +t must underta3e to carry goods of the 3ind to which its business in confined9 . +t must underta3e to carry by the method by which his business is conducted and over its established roads9 and $. ;he transportation must be for hire. +n -ational 1teel Corp. vs. CA "188,# the 1C held that the true test of a common carrier is the carriage of goods or passengers provided it has space for all who opt to avail themselves of its transportation for a fee. COMMON PRI#ATE CARRIER CARRIER 1. As to availability <olds himself Contracts with out for all particular people individuals or indiscriminately groups only 2. As to reDuired diligence >5traordinary 4rdinary diligence is diligence is reDuired reDuired . As to regulation 1ubject to -ot subject to 1tate 1tate regulation regulation $. 1tipulation limiting liability Parties may Parties may not agree on limit the limiting the carrier@s carrier@s liability liability, e5cept when provided it is provided by not contrary to law law, morals or good customs

(. >5empting circumstance Prove caso fortuito, e5traordinary Art. 11,$ -CC diligence and Art. 1, , -CC /.Presumption of negligence ;here is a -o presumption of presumption of fault or fault or negligence negligence ,.Governing law %aw on %aw on common obligations and carriers contracts GO#ERNING LAWS A% Do&"stic/int"!'islan(/coast)is" Applicable to %and, &ater, and Air transportation 1. Civil Code * primary 2. Code of Commerce "Arts. $8, ,8, (, *, $, (07, 07/*0$(# * suppletory *% Int"!national/fo!"i+n/o,"!s"as -Fo!"i+n co.nt!/ to P ili00in"s1 Applicable to &ater'maritime and Air transportation ;he law of the country of destination generally applies. 1. Civil Code * primary 2. Code of Commerce * suppletory . 4thers * suppletory a. &ater'maritime= Carriage of Goods by 1ea Act "C4G1A# b. Air= &arsaw Convention I% NEW CI#IL CODE -A!ts% 2345'23661 RE78IREMENT OF E9TRAORDINARY DILIGENCE 2endition of service with the greatest s3ill and utmost foresight. ")avao 1tevedore Co. v. !ernande.# Rationale:

COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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1. !rom the nature of the business and for reasons of public policy "Art. 1, # 2. 2elationship of trust . :usiness is impressed with a special public duty $. Possession of the goods (. Preciousness of human life A common carrier is not an absolute insurer of all ris3s of travel. CO#ERAGE 1. Bigilance over goods "Arts. 1, $*1,($#9 and 2. 1afety of passengers "Arts. 1,((*1,/ #. PASSENGER A person who has entered into a contract of carriage, e5press or implied, with the carrier. ;hey are entitled to e5traordinary diligence from the common carrier. ;he following are not considered passengers, and are entitled to ordinary diligence only= a. 4ne who has not yet boarded any part of a vehicle regardless of whether or not he has purchased a tic3et9 b. 4ne who remains on a carrier for an unreasonable length of time after he has been afforded every safe opportunity to alight9 c. 4ne who has boarded by fraud, stealth, or deceit9 d. 4ne who attempts to board a moving vehicle, although he has a tic3et, unless the attempt be with the 3nowledge and consent of the carrier9 e. 4ne who has boarded a wrong vehicle, has been properly informed of such fact, and on alighting, is injured by the carrier9 f. +nvited guests and accommodation passengers. "%ara vs. Balencia# g. 4ne who rides any part of the vehicle which is unsuitable or dangerous or which he 3nows is not designed or

intended for passengers. DEFENSES OF A COMMON CARRIER IN T$E CARRIAGE OF GOODS 1. CA14 !42;6+;4'!42C> AA?>62> R":.isit"s: a. Aust be the pro5imate and only cause of the loss b. >5ercise of due diligence to prevent or minimi.e the loss before, during or after the occurrence of the disaster "Art. 1, 8# c. Carrier has not negligently incurred in delay in transporting the goods "Art. 1,$7# !ire is not considered a natural disaster or calamity as it arises almost invariably from some act of man. ">astern 1hipping %ines +nc. vs. +AC# Aechanical defects are not force majeure if the same was discoverable by regular and adeDuate inspections. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p.$!"%$!!& 2. AC;1 4! P6:%+C >->AE R":.isit"s: a. Aust be the pro5imate and only cause of the loss b. >5ercise of due diligence to prevent or minimi.e the loss before, during or after the act causing the loss, deterioration or destruction of the goods "Art. 1, 8# . ->G%+G>-C> 4! ;<> 1<+PP>2 42 4&->2 a. 1ole and pro5imate cause= absolute defense b. Contributory= partial defense. "Art. 1,$1# $. C<A2AC;>2 4! ;<> G44)1 42 )>!>C;1 +- ;<> PACC+-G 42 +- ;<> C4-;A+->2 >ven if the damage should be caused by

COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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the inherent defect'character of the goods, the common carrier must e5ercise due diligence to forestall or lessen the loss. "Art. 1,$2# ;he carrier which, 3nowing the fact of improper pac3ing of the goods upon ordinary observation, still accepts the goods notwithstanding such condition, is not relieved of liability or loss or injury resulting therefrom. "1outhern %ines, +nc. v. CA, $ 1C2A 2(0# (. 42)>2 42 AC; 4! P6:%+C A6;<42+;E 1aid public authority must have the power to issue the order "Art. 1,$ #. ConseDuently, where the officer acts without legal process, the common carrier will be held liable. "Gan.on v. CA 1/1 1C2A /$/# )iligence in the selection and supervision of employees under Article 2107 of the Civil Code cannot be interposed as a defense by the common carrier because the liability of the carriers arises from the breach of the contract of carriage. ;he defense under said articles is applicable to negligence in Duasi* delicts under Art. 21,/. ")el Prado v. Aanila >lectric Co., (2 Phil 877# CARRIAGE OF GOODS 1. Common carrier 2. 1hipper . Consignee

LIA*ILITY OF A COMMON CARRIER FOR DEAT$ OR IN;8RIES TO PASSENGERS D8E TO ACTS OF ITS EMPLOYEES AND OT$ER PASSENGERS OR STRANGERS FOR ACTS FOR ACTS OF OF OT$ER ITS PASSENGER EMPLOYEES S OR STRANGERS 2eDuired diligence and defense >5traordinary 4rdinary diligence diligence -ature of liability ;ort9 however, -ot absolute9 ;he employee limited by Art. must be on 1,/ duty at the time of the act. "Aaranan v. Pere.# ;he carrier is liable when its personnel allowed a passenger to drive the vehicle causing it to collide with another vehicle resulting to the injuries suffered by the other passengers. "A22 vs. :allesteros, 1/ 1C2A /$1#

CARRIAGE OF PASSENGERS Pa!ti"s 1. Common carrier 2. Passenger

Ca.s" of lia<ilit/ )elay in delivery, loss, )eath or injury to the passengers destruction, or deterioration of the goods D.!ation of lia<ilit/ !rom the time the goods are ;he duty of a common carrier to unconditionally placed in the provide safety to its passengers possession of, and received by so obligates it not only during the
COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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the carrier for transportation until the same are delivered actually or constructively by the carrier to the consignee or to the person who has the right to receive them. "Art. 1, /# +t remains in full force and effect even when they are temporarily unloaded or stored in transit unless the shipper or owner has made use of the right of stoppage in transitu. "Art. 1, ,# +t continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination until the consignee has bee advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. "Art. 1, 0# )elivery of goods to the custom authorities is not delivery to the consignee. "%u )o v. :inamira, 171 Phil 127#

course of the trip, but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage. "%2;A v. -avidad, F277 G# All persons who remain on the premises within a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. "%a Aallorca v. CA, 1, 1C2A , 8 9 Abioti. 1hipping Corporation v. CA, 1,8 1C2A 8(# +t is the duty of common carriers of passengers to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to enter, and they are liable for injuries suffered from the sudden starting up or jer3ing of their conveyances while doing so. ;he duty which the carrier of passengers owes to its patrons e5tends to persons boarding the cars as well as to those alighting therefrom ")angwa ;rans Co., +nc. vs. CA 272 1C2A (,$#. P!"s.&0tion of n"+li+"nc" Art.1,(( Civil Code 2eason= ;he contract between the passenger and the carrier imposes on the latter the duty to transport the passenger safely9 hence the burden of e5plaining should fall on the carrier.

Art.1, ( Civil Code 2eason= As to when and how goods were damaged in transit is a matter peculiarly within the 3nowledge of the carrier and its employees. "Airasol v. )ollar, ( P<+% 12$#

COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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Aere proof of delivery of goods to a carrier in good order and the subseDuent arrival of the same goods at the place of destination in bad order ma3es for a prima facie case against the carrier. "Coastwise %ighterage Corp. v. CA, 2$( 1C2A ,8/# D"f"ns"s 1. 4rdinary circumstance= >5ercise of e5traordinary diligence "Art. 1, (# 2. 1pecial circumstances= a. !lood, storm, earthDua3e, lighting, or other natural disaster or calamity "plus force majeure# b. Act of the public enemy in war, whether international or civil c. Act or omission of the shipper or the owner of goods d. ;he character of the goods or defects in the pac3ing or in the containers e. 4rder or act of competent public authority "Art. 1, $# 1. >5ercise of e5traordinary diligence "Art. 1,(/# 2. Caso fortuito

COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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#ali( sti0.lations 1. 2eduction of degree of diligence to ordinary diligence, provided it be= a# +n writing, signed by the shipper or owner9 b# 1upported by a valuable consideration other than the service rendered by the carriers9 and c# 2easonable, just and not contrary to public policy. "Art. 1,$$# 2. !i5ed amount of liability= A contract fi5ing the sum to be recovered by the owner or shipper for the loss, destruction or deterioration of the goods, if it is reasonable and just under the circumstances and has been fairly and freely agreed upon. "Art. 1,(7# . %imited liability for delay= An agreement limiting the common carrier@s liability for delay on account of stri3es or riots "Art. 1,$0# $. 1tipulation limiting liability to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value. "Art. 1,$8# 1tipulation limiting liability when a passenger is carried gratuitously, but not for willful acts or gross negligence. "Art. 1,(0#

;he diligence reDuired in the carriage of the goods may be reduced by only one degree, from e5traordinary to ordinary diligence or diligence of a good father of a family. "Art. 1,$$, Art. 1,$(, no. $# #oi( sti0.lations 1. ;hat the goods are )ispensing with or lessening the transported at the ris3 of the e5traordinary responsibility of a
COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

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owner or shipper9 2. ;hat carrier will not be liable for any loss, destruction or deterioration of the goods9 . ;hat the carrier need not observe any diligence in the custody of the goods9 $. ;hat the carrier shall e5ercise a degree of diligence less than that of a good father of a family over the movable transported9 (. ;hat the carrier shall not be responsible for the acts or omissions of his or its employees9 /. ;hat the carrier@s liability for acts committed by thieves or robbers who do not act with grave or irresistible threat, violence or force is dispensed with or diminished9 ,. ;hat the carrier is not responsible for the loss, destruction or deterioration of the goods on account of the defective condition of the car, vehicle, ship or other eDuipment used in the contract of carriage. "Art. 1,$(#

common carrier for the safety of passengers imposed by law by stipulation, by posting of notices, by statements on tic3ets or otherwise. "Art. 1,(,#

COMMERCIAL LAW COMMITTEE C<A+2P>214-= Garny %uisa Alegre A11;. C<A+2P>214-=?ayson 4@1 2amos >)P= :eatri5 +. 2amos 16:?>C; <>A)1= Aarichelle )e Bera "-egotiable +nstruments %aw#9 ?ose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9 1hirley Aae ;abangcura, :on Bincent Agustin "Corporation %aw#9 Carl 1teven Co "1pecial %aws#9 ?ohn %emuel Gatdula ":an3ing %aws#9 2obespierre C6 "%aw on +ntellectual Property#

R8LES ON PASSENGERS@ *AGGAGE IN T$E IN T$E C8STODY OF C8STODY T$E OF T$E PASSENGERS COMMON -$AND' CARRIER CARRIED1 -C$ECAED' IN1 L"+al nat.!" of t " <a++a+" -ecessary Considered deposit as HgoodsI R":.i!"( (ili+"nc" </ t " co&&on ca!!i"! )iligence of a >5traordinary depositary diligence "ordinary diligence# A00lica<l" !.l"s Arts. 1880 and Arts. 1, * 2777*277 1,( CONC8RRING CA8SES OF ACTION ARISING FROM T$E NEGLIGENT ACT OF T$E COMMON CARRIER 1. Culpa contractual "breach of contract# 4nly the carrier is primarily liable and not the driver, because there is no privity between the driver and the passenger. :asis= Art.1,(8, -CC. -o defense of due diligence in the selection and supervision of employees. 2. Culpa aquiliana "Duasi*delict# ;he carrier and driver are solidarily liable as joint tortfeasors. :asis= Art. 2107, -CC. )efense of due diligence in the selection and supervision of employees is available. >5ception= maritime tort resulting in collision. "'ee notes on Collision# . Culpa cri(inal "criminal negligence# ;he driver is primarily liable. ;he carrier is subsidiarily liable only if the driver is convicted and declared insolvent. :asis= Art. 177, 2PC. +n case of injury to a passenger due to the negligence of the driver of the bus on which

he is riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. +t ma3es no difference that the liability of the bus driver and owner springs from contract while that of the owner and driver of the other vehicle arises from Duasi*delict. "!abre vs. CA# LIMITATIONS LIA*ILITY IN#ALID AS *EING CONTRARY TO P8*LIC POLICY 1. 4ne e5empting the carrier from any and all liability for loss or damage occasioned by its own negligence. 2. An unDualified limitation of liability to an agreed valuation. AS TO CARRIER@S

#ALID B ENFORCEA* LE 1. 4ne limiting the liability of the carrier to an agreed valuation, unless the shipper declares a higher value and pays a higher rate of freight "<.>. <eacoc3 Company vs. Aacondray J Company +nc.#

<owever, the carrier cannot limit its liability for injury to, or loss of, goods shipped where such injury or loss was caused by its own negligence. "1hewaram vs. PA%, 1, 1C2A /7/# SPECIAL R8LES ON LIA*ILITES OF AIRLINE CARRIERS 1. +n case of flight diversion due to bad weather or other circumstances beyond the pilot@s control, the relation between the carrier and the passenger continues until the latter has been landed at the port of destination and has left the carrier@s premises. ;he carrier should necessarily e5ercise e5traordinary diligence in

safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. "Philippine Airlines vs. CA, 22/ 1C2A $2 # 2. >ven where overboo3ing of passengers is allowed as a commercial practice, the airline company would still be guilty of bad faith and still be liable for damages if it did not properly inform passenger that it could breach the contract of carriage even if they were confirmed passengers. "Kalamea vs. CA, 220 1C2A 2 # . An open*dated tic3et constitutes a complete contract between the carrier and passenger. <ence, the airline company is liable if it refused to confirm a passenger@s flight reservation. "1ingson vs. CA, 202 1C2A 1$8# $. An airline company which issued a confirmed tic3et to a passenger covering successive trips on different airlines can be held liable for damages occasioned by Hbumping offI by one of the successive airlines. "%ufthansa German Airlines vs. CA, 2 0 1C2A 287# (. An airline tic3et providing that carriage by successive air carriers is to be regarded as a Hsingle operationI is to ma3e the issuing carrier liable for the tortuous conduct of the other carrier. A printed provision in the tic3et limiting liability only to its own conduct is not enough to rebut that liability. "C%A 2oyal )utch Airlines vs. CA, /( 1C2A 2 ,# II% CODE OF COMMERCE

. 2ight of abandonment $. -otice of damage (. Combined carrier agreement *ILL OF LADING ;he written ac3nowledgment of receipt of goods and agreement to transport them to a specific place to a person named or to his order. Rules: 1. +t is not indispensable for the creation of a contract of carriage. "Compania Aaritima vs. +nsurance Company of -orth America, 12 1C2A 21 # 2. Ambiguity is construed against the carrier, the contract being one of adhesion. . ;he consignee, although the instrument is oftentimes drawn up only by the consignor and carrier, becomes bound by all the stipulations contained therein by ma3ing a claim for loss on the basis of said bill of lading. "1ea*%and 1ervices +nc. vs. +AC# $. ;he right of a party to recover for loss of shipment consigned to him under a bill of lading drawn up only by and between the shipper and the carrier, springs from either a relation of agency between him and the shipper, or his status as stranger in whose favor some stipulation is made in said contract, and who becomes a party thereto when he demands fulfillment of that stipulation. "Art. 1 11 "2#, "Aendo.a vs. PA% +nc.# (. Acceptance of the bill of lading without dissent raises the presumption that all the terms therein where brought to the 3nowledge of the shipper and agreed to by him and, in the absence of fraud or mista3e9 he is estopped from thereafter denying that he assented to such terms. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p.!0$& Ain(s: 1. 1n board * issued when the goods have

-A!ts% 44>'43>1 A00lica<ilit/ 1. )omestic land and water'maritime transportation. (Pandect o) Co((ercial Law and *urisprudence, *ustice *ose +itu,, $--. ed.& 2. )omestic Air ;ransportation. (Co((ercial Law Re/iew, Cesar +illanue/a, !""# ed.& IMPORTANT CONCEPTS: 1. :ill of lading 2. 4bligations of the carrier


$. (. /.

been actually placed aboard the ship with very reasonable e5pectation that the shipment is as good as on its way. Recei/ed * one in which it is stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped. Ne,otiable * one in which it is stated that the goods referred to therein will be delivered to the bearer or to the order of any person named therein. Non%ne,otiable * 4ne in which it is stated that the goods referred to therein will be delivered to a specified person. Clean 2 4ne which does not indicate any defect in the goods. 3oul L 4ne which contains a notation thereon indicating that the goods covered by it are in bad condition.

as stipulated (. 1ymbol of the goods O*LIGATIONS OF T$E CARRIER A% D.t/ to acc"0t t " +oo(s 56N6RAL RUL6: A common carrier cannot ordinarily refuse to carry a particular class of goods. 67C6PT81N: !or some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. "!isher vs. Eangco 1teamship Co. 1 Phil 1#. +nstances when the carrier may validly refuse to accept the goods include the ff= 1.# Goods sought to be transported are dangerous objects, or substances including dynamite and other e5plosives 2.# Goods are unfit for transportation .# Acceptance would result in overloading $.# Contrabands or illegal goods (.# Goods are injurious to health /.# Goods will be e5posed to untoward danger li3e flood, capture by enemies and the li3e ,.# Goods li3e livestoc3 will be e5posed to disease 0.# 1tri3e 8.# !ailure to tender goods on time. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p.09& +n case of carriage by railway, the carrier is e5empted from liability if carriage is insisted upon by the shipper, provided its objections are stated in the bill of lading. <owever, when a common carrier accepts cargo for shipment for valuable consideration, it ta3es the ris3 of delivering it in good condition as when it was loaded. "PA% vs. CA# *% D.t/ to ("li,"! t " +oo(s -ot only to transport the goods safely but to the person indicated in the bill of lading. ;he goods should be delivered to the consignee or any other person to whom the bill of lading was validly transferred or negotiated.

,. 'pent L 4ne which covers goods that already have been delivered by the carrier without a surrender of a signed copy of the bill. 0. Throu,h L 4ne issued by the carrier who is obliged to use the facilities of other carriers as well as his own facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which bill of lading is honored by the second and other interested carriers who do not issue their own bills. 8. Custod4 L 4ne wherein the goods are already received by the carrier but the vessel indicated therein has not yet arrived in the port. 17. Port L 4ne which is issued by the carrier to whom the goods have been delivered, and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment. F.nctions: 1. :est evidence of the e5istence of the contract of carriage of cargo "Art. ( # 2. )ocument of title . 2eceipt of cargo $. Contract to transport and deliver goods

Ti&" of ("li,"!/ Sti0.lat"( in No sti0.lation Cont!act/*ill of La(in+ 1. Carrier is 1. &ithin a bound to fulfill reasonable the contract time. and is liable for 2. Carrier is any delay9 no bound to matter from forward them what cause it in the 1st may have shipment of arisen. the same or similar goods which he may ma3e to the point of delivery. "A2;. (0 Code of Commerce# Eff"cts of ("la/ a. Aerely suspends and generally does not terminate the contract of carriage b. Carrier remains duty bound to e5ercise e5traordinary diligence c. -atural disaster shall not free the carrier from responsibility "Art.1,$7# d. +f delay is without just cause, the contract limiting the common carrier@s liability cannot be availed of in case of loss or deterioration of the goods "Art.1,$,# RIG$T OF CONSIGNEE TO A*ANDON GOODS Instanc"s: 1. Partial non*delivery, where the goods are useless without the others "Art. / #9 2. Goods are rendered useless for sale or consumption for the purposes for which they are properly destined "Art. /(#9 and . +n case of delay through the fault of the carrier "Art. ,1#. NOTICE OF DAMAGE -ART% 4661 R":.isit"s fo! a00lica<ilit/: 1. )omestic'inter*island'coastwise transportation 2. %and'water'air transportation

. Carriage of goods $. Goods shipped are damaged R.l"s: a. Patent damage= shipper must file a claim against the carrier immediately upon delivery "it may be oral or written# b. %atent damage= shipper should file a claim against the carrier within 2$ hours from delivery. Not": ;hese rules does not apply to misdelivery of goods. "2oldan vs. %im Pon.o# Purpose o) notice: ;o inform the carrier that the shipment has been damaged, and it is charged with liability therefore, and to give it an opportunity to ma3e an investigation and fi5 responsibility while the matter is fresh. ;he filing of notice of claim is a condition precedent for recovery. 1horter period may be stipulated by the parties because it merely affects the shipper@s remedy and does not affect the liability of the carrier. "P<+%AAG>- vs. 1weetlines, +nc.# P!"sc!i0ti," P"!io( -ot provided by Article //. ;hus, in such absence, Civil Code rules on prescription apply. +f despite the notice of claim, the carrier refuses to pay, action must be filed in court. 1. -o bill of lading was issued= within 6 /"a!s 2. :ill of lading was issued= within 2? /"a!s% ARTICLE 466 COGSA S"c%4 -61 A00lica<ilit/ 1. )om 1. +nternational estic'inter* ' island'coastwis overseas'forei e gn "from transportation foreign 2. %and country to , water, air Phils.# transportation -ote= subject . Carri to the rule on age of goods Paramount Clause 2.

&ater'maritim e transportation . Carriage of goods Notic" of (a&a+" 1. 1. -ot a Condition condition precedent precedent 2. 2. *day period 2$*hour period for claiming for claiming latent damage latent damage P!"sc!i0ti," 0"!io( -one provided9 4ne year from Civil Code the date of applies. delivery "delivered but damaged goods#, or date when the vessel left port or from the date of delivery to the arrastre "non* delivery or loss#. COM*INED CARRIER AGREEMENT -ART% 4341 56N6RAL RUL6: +n case of a contract of transportation of several legs, each carrier is responsible for its particular leg in the contract. 67C6PT81N: A combined carrier agreement where a carrier ma3es itself liable assuming the obligations and acDuiring as well the rights and causes of action of those which preceded it.

/. Charter party ,. %oans on bottomry and respondentia 0. Accidents in maritime commerce MARITIME/ADMIRALTY LAW +t is the system of laws which particularly relates to the affairs and business of the sea, to ships, their crews and navigation, and to maritime conveyance of persons and property. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino & ernando, citin, 3rancisco, p.!:#& Aaritime laws apply only to maritime trade and sea voyages. (Pandect o) Co((ercial Law and *urisprudence, *ustice *ose +itu,, $--. ed.& Arrastre service is not maritime in character. +t refers to a contract for the unloading of goods from a vessel. "+C;1+ vs. Prudential Guarantee, 27 1C2A 2$$# C$ARACTERISTICS OF MARITIME TRANSACTION 1. Real * similar to transactions over real property with respect to effectivity against third persons which is done through registration. "2ubiso vs. 2ivera, , Phil. ,2#. ;he evidence of real nature is shown by= 1# the limitation of the liability of the agents to the actual value of the vessel and the freight money9 and 2# the right to retain the cargo and embargo and detention of the vessel "%u.on 1tevedoring Corp v. CA, 1(/ 1C2A 1/8#9 2. 4pothecar4 * the liability of the owner of the value of the vessel is limited to the vessel itself (;octrine o) Li(ited Liabilit4&. ;he real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which stands as the guaranty for their settlement. "Aboiti. 1hipping Corp. vs. General Accident !ire and %ife Assurance Corp. 21, 1C2A (8#. MERC$ANT #ESSEL

-A!ts% 534'=6>1 IMPORTANT CONCEPTS: 1. Aerchant vessel 2. Aaritime lien and Preference of Credit . )octrine of limited liability $. Causes of revocation of voyage (. Participants in maritime commerce

Bessel engaged in maritime commerce, whether foreign or otherwise. (<ar Re/iew =aterials in Co((ercial Law, *or,e =ira/ite, !""! ed.& Constitutes property which may be acDuired and transferred by any of the means recogni.ed by law. ;hey shall continue to be considered as personal property. "Arts. (, , (0(# ;hey are susceptible to (ariti(e liens such as for the repair, eDuipping and provisioning of the vessel in the preparation of a voyage, as well as mortgage liabilities, in satisfaction of which a vessel may be validly arrested and sold. "1hip Aortgage )ecree of 18,0# MARITIME LIEN +t constitutes a present right of property in the ship, a jus in re, to be afterward enforced in admiralty by process in rem. "P-: vs. CA, , 1C2A 01# +f the maritime lien arose prior to the recording of a preferred mortgage, it shall have priority over the said mortgage lien. "P-: vs. CA, , 1C2A 01# ORDER OF PREFERENCE IN CASE OF SALE OF #ESSEL R%A% 62?6 P%D% 2552 Eff"cti,it/ (at" 18/8 18,0 A00lica<ilit/ 4verseas :oth domestic shipping only and overseas shipping Ain( of sal" ?udicial ?udicial and e5trajudicial O!("! of P!"f"!"nc" A preferred ;he preferred mortgage mortgage lien shall have shall have priority over all priority over all claims against claims against the vessel, the vessel, e5cept the e5cept the following following

preferences in the order stated= 1. ?udicial costs of the proceedings9 2. ;a5es due the Philippine Government9 . 1alaries and wages of the Captain and Crew of the vessel during its last voyage9 $. General average or salvage including contract salvage, bottomry loans, and indemnity due shippers for the value of goods transported but which were not delivered to the consignee9 (. Costs of repair and eDuipment of the vessel, and provisioning of food, supplies and fuel during its last voyage9 and /. Preferred mortgages registered prior in time.

preferences in the order stated= 1. >5penses and fees allowed and costs ta5ed by the court and ta5es due to the Government9 2. Crew@s wages9 . General average9 $. 1alvage, including contract salvage9 (. Aaritime liens arising prior in time to the recording of the preferred mortgage9 /. )amages arising out of tort9 and ,. Preferred mortgage registered prior in time.

>ffect of sale= All pre*e5isting claims in the vessel are terminated. ;hey will then be

satisfied from the proceeds of the sale subject to the order of preference. DOCTRINE OF LIMITED LIA*ILITY -$YPOT$ECARY R8LE1 Cases where applicable= 1. Art. (0, L civil liability for indemnities to third persons 2. Art. (87 L indemnities from negligent acts of the captain "not the shipowner or ship agent# . Art. 0 , L collision $. Art. /$ L liability for wages of the captain and the crew and for advances made by the ship agent if the vessel is lost by shipwrec3 or capture

+nstances= 1. +n case of civil liability from indemnities to third persons "Art. (0,#9 2. +n case of lea3age of at least M of the contents of a cargo containing liDuids "Art. /0,#9 and . +n case of constructive loss of the vessel "1ec. 1 0, +nsurance Code#. RIG$T OF A*ANDONMENT S$IPOWNER CONSIGNEE OR S$IP AGENT W at &a/ <" a<an(on"( Bessel Goods shipped Instanc"s 1. +n case of 1. Partial non* civil liability delivery, from where the indemnities to goods are third persons useless "Art. (0,#9 without the 2. 1ec. 1 0, others "Art. +nsurance / #9 Code9 2. Goods are . +n case of rendered lea3age of at useless for least M of the sale or contents of a consumption cargo for the containing purposes for liDuids "Art. which they are /0,# properly destined "Art. /(#9 and . +n case of delay through the fault of the carrier "Art. ,1#. Eff"cts 1. ;ransfer 1. ;ransfer of of ownership of ownership on the vessel from the goods the shipowner from the to the shippers shipper to the or insurer. carrier. 2. +n case 2. Carrier

56N6RAL RUL6: ;he liability of shipowner and ship agent is limited to the amount of interest in said vessel such that where vessel is entirely lost, the obligation is e5tinguished. "%u.on 1tevedoring v. >scano, 1(/ 1C2A 1/8# ;he interest e5tends to= 1# the vessel itself9 2# eDuipments9 # freightage9 and $# insurance proceeds. "Chua v. +AC, 1// 1C2A 10 # 67C6PT81N': 1. Claims under &or3men@s Compensation "Abueg vs. 1an )iego ,, Phil , 7#9 2. +njury or damage due to shipowner or to the concurring negligence of the shipowner and the captain9 . ;he vessel is insured "BasDue. vs. CA 1 0 1C2A (( #. $. >5penses for repair on vessel completed before loss9 (. +n case there is no total loss and the vessel is not abandoned9 /. Collision between two negligent vessels9
Abandonment of the vessel is necessary to limit the liability of the shipowner. ;he only instance were abandonment is dispensed with is when the vessel is entirely lost "%u.on 1tevedoring vs. CA 1(/ 1C2A 1/8#. RIG$T OF S$IPOWNER OR S$IP AGENT TO A*ANDON #ESSEL

of "2#, the insurer must pay the insured as if there was actual total loss of the vessel.

should pay the shipper the mar3et value of the goods at the point of destination.

CA8SES OF RE#OCATION OF #OYAGE 1. &ar or interdiction of commerce9 2. :loc3ade9 . Prohibition to receive cargo at destination9 $. >mbargo9 (. +nability of the vessel to navigate. "Art. /$7# T"!&s: 1. +nterdiction of commerce L A governmental prohibition of commercial intercourse intended to bring about an entire cessation for the time being of all trade whatever. 2. :loc3ade L A sort of circumvallation of a place by which all foreign connection and correspondence is, as far as human power can effect it, to be cut off. . >mbargo L A proclamation or order of a state, usually issued in time of war or threatened hostilities, prohibiting the departure of ships or goods from some or all the ports of such state until further order. PARTICIPANTS IN MARITIME COMMERCE A. 1hipowners and ship agents :. Captains and masters of the vessel C. 4fficers and crew of the vessel ). 1upercargoes >. Pilot A% S$IPOWNERS AND S$IP AGENTS S i0o)n"! -0!o0!i"ta!io1 Person who has possession, control and management of the vessel and the conseDuent right to direct her navigation and receive freight earned and paid, while his possession continues.

S i0 a+"nt -na,i"!o1 Person entrusted with provisioning and representing the vessel in the port in which it may be found9 also includes the shipowner. -ot a mere agent under civil law9 he is solidarily liable with the ship owner. Powers and functions= 1. Capacity to trade9 2. )ischarge duties of the captain, subject to Art./789 . Contract in the name of the owners with respect to repairs, details of eDuipment, armament, provisions of food and fuel, and freight of the vessel, and all that relate to the reDuirements of navigation9 $. 4rder a new voyage, ma3e a new charter or insure the vessel after obtaining authori.ation from the shipowner or if granted in certificate of appointment. Ci,il Lia<iliti"s of t " S i0o)n"! An( S i0 A+"nt 1. All contracts of the captain, whether authori.ed or not, to repair, eDuip and provision the vessel9 "Art. (0/# 2. %oss and damage to the goods loaded on the vessel without prejudice to their right to free themselves from liability by abandoning the vessel to the creditors. "Art. (0,# D.t/ of S i0 A+"nt to Disc a!+" t " Ca0tain an( M"&<"!s of t " C!") +f the seamen contract is not for a definite period or voyage, he may discharge them at his discretion. "Art. /7 # +f for a definite period, he may not discharge them until after the fulfillment of their contracts, e5cept on the following grounds= a. +nsubordination in serious matters9 b. 2obbery9 c. ;heft9 d. <abitual drun3enness9 e. )amage caused to the vessel or to its cargo through malice or manifest or proven negligence. "Art. /7(# *% CAPTAINS AND MASTERS ;hey are the chiefs or commanders of

ships. ;he terms have the same meaning, but are particularly used in accordance with the si.e of the vessel governed and the scope of transportation, i.e., large and overseas, and small and coastwise, respectively. -ature of position " *fold character#= 1. General agent of the shipowner9 2. ;echnical director of the vessel9 . 2epresentative of the government of the country under whose flag he navigates. Nualifications= 1. !ilipino citi.en9 2. %egal capacity to contract9 . Aust have passed the reDuired physical and mental e5aminations reDuired for licensing him as such. "Art. /78# +nherent powers= 1. Appoint crew in the absence of ship agent9 2. Command the crew and direct the vessel to its port of destination9 . +mpose correctional punishment on those who, while on board vessel, fail to comply with his orders or are wanting in discipline9 $. Aa3e contracts for the charter of vessel in the absence of ship agent. (. 1upply, eDuip, and provision the vessel9 and /. 4rder repair of vessel to enable it to continue its voyage. "Art. /17# 1ources of funds to comply with the inherent powers of the captain "in successive order#= 1. !rom the consignee of the vessel9 2. !rom the consignee of the cargo9 . :y drawing on the ship agent9 $. :y a loan on bottomry9 (. :y sale of part of the cargo. "Art. /11# )uties= 1. :ring on board the proper certificate and documents and a copy of the Code of Commerce9 2. Ceep a %og :oo3, Accounting :oo3 and !reight :oo39 . >5amine the ship before the voyage9

$. 1tay on board during the loading and unloading of the cargo9 (. :e on dec3 while leaving or entering the port9 /. Protest arrivals under stress and in case of shipwrec39 ,. !ollow instructions of and render an accounting to the ship agent9 0. %eave the vessel last in case of wrec39 8. <old in custody properties left by deceased passengers and crew members9 17. Comply with the reDuirements of customs, health, etc. at the port of arrival9 11. 4bserve rules to avoid collision9 12. )emand a pilot while entering or leaving a port. "Art. /12# A ship@s captain must be accorded a reasonable measure of discretionary authority to decide what the safety of the ship and of its crew and cargo specifically reDuires on a stipulated ocean voyage "+nter*4rient Aaritime >nterprises +nc. vs. CA#. -o liability for the following= 1. )amages caused to the vessel or to the cargo by force majeure9 2. 4bligations contracted for the repair, eDuipment, and provisioning of the vessel unless he has e5pressly bound himself personally or has signed a bill of e5change or promissory note in his name. "Art. /27# Soli(a!/ Lia<iliti"s of t " S i0 A+"nt/S i0o)n"! fo! Acts Don" </ t " Ca0tain to)a!(s Pass"n+"!s an( Ca!+o"s 1. )amages to vessel and to cargo due to lac3 of s3ill and negligence9 2. ;hefts and robberies of the crew9 . %osses and fines for violation of laws9 $. )amages due to mutinies9 (. )amages due to misuse of power9 /. !or deviations9 ,. !or arrivals under stress9

0. )amages due to non*observance of marine regulations. "Art. /10# C% OFFICERS AND CREW 1. 1ailing Aate'!irst Aate 2. 1econd Aate . >ngineers $. Crew -o liability under the following circumstances= 1. +f, before beginning voyage, captain attempts to change it, or a naval war with the power to which the vessel was destined occurs9 2. +f a disease brea3s out and be officially declared an epidemic in the port of destination9 . +f the vessel should change owner or captain. "Art. /$,# Sailin+ Mat"/Fi!st Mat" 1econd chief of the vessel who ta3es the place of the captain in case of absence, sic3ness, or death and shall assume all of his duties, powers and responsibilities. "Art. /2,# )uties= 1. Provide himself with maps and charts with astronomical tables necessary for the discharge of his duties9 2. Ceep the :innacle :oo39 . Change the course of the voyage on consultation with the captain and the officers of the boat, following the decision of the captain in case of disagreement9 $. 2esponsible for all the damages caused to the vessel and the cargo by reason of his negligence. "Arts. /20 * / 1# S"con( Mat" ;a3es command of the vessel in case of the inability or disDualification of the captain and the sailing mate, assuming in such case their powers and responsibilities. ;hird in command )uties= 1. Preserve the hull and rigging of the vessel9

2. . $. (.

Arrange well the cargo9 )iscipline the crew9 Assign wor3 to crew members9 +nventory the rigging and eDuipment of the vessel, if laid up. "Art. / 2#

En+in""!s 4fficers of the vessel but have no authority e5cept in matters referring to the motor apparatus. &hen two or more are hired, one of them shall be the chief engineer. )uties= 1. +n charge of the motor apparatus, spare parts, and other instruments pertaining to the engines9 2. Ceep the engines and boilers in good condition9 . -ot to change or repair the engine without authority of the captain9 $. +nform the captain of any damage to the motor apparatus9 (. Ceep an >ngine :oo39 /. 1upervise all personnel maintaining the engine. "Art. / 2# C!") ;he aggregate of seamen who man a ship, or the ship@s company. <ired by the ship agent, where he is present and in his absence, the captain hires them, preferring !ilipinos, and in their absence, he may ta3e in foreigners, but not e5ceeding 1'( of the crew. "Art. / $# Class"s of S"a&an@s Cont!acts 1. :y the voyage9 2. :y the month9 and . :y share of profits or freightage. ;.st Ca.s"s fo! t " Disc a!+" of S"a&an W il" Cont!act S.<sists 1. Perpetration of a crime9 2. 2epeated insubordination, want of discipline9 . 2epeated incapacity and negligence9 $. <abitual drun3enness9 (. Physical incapacity9 /. )esertion. "Art. / ,# R.l"s in cas" of D"at of a S"a&an

;he seaman@s heirs are entitled to payment as follows= 1. +f death is natural= a. compensation up to time of death if engaged on wage b. if by voyage * half of amount if death occurs on voyage out9 and full, if on voyage in c. if by shares * none, if before departure9 full, if after departure 2. if death is due to defense of vessel * full payment9 . if captured in defense of vessel * full payment9 $. if captured due to carelessness * wages up to the date of the capture. "Art. /$(# Co&0l"&"nt of t " #"ss"l All persons on board, from the captain to the cabin boy, necessary for the management, maneuvers, and service, thus including the crew, the sailing mates, engineers, sto3ers and other employees on board not having specific designations. )oes not include the passengers or the persons whom the vessel is transporting. D% S8PERCARGOES Persons who discharges administrative duties assigned to him by ship agent or shippers, 3eeping an account and record of transaction as reDuired in the accounting boo3 of the captain. "Art. /$8# E% PILOT A person duly Dualified, and licensed, to conduct a vessel into or out of ports, or in certain waters. ;he term generally connotes a person ta3en on board at a particular place for the purpose of conducting a ship through a river, road or channel, or from a port. Aaster pro hac /ice for the time being in the command and navigation of the ship. &hile in e5ercising his functions a pilot is in sole command of the ship and supersedes the master for the time being in the command and navigation of the ship, the master does not surrender his vessel to the pilot and the pilot is not the master. ;here

are occasions when the master may and should interfere and even displace the pilot, as when the pilot is obviously incompetent or into5icated "!ar >astern 1hipping Company vs. CA#. Compulsory Pilotage L 1tates possessing harbors have enacted laws or promulgated rules reDuiring vessels approaching their ports to ta3e on board pilots licensed under the local laws. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p. :$9& Lia<lit/ of Pilot 56N6RAL RUL6= 4n compulsory pilotage grounds, the <arbor Pilot is responsible for damage to a vessel or to life or property due to his negligence. 67C6PT: 1. Accident caused by force majeure or natural calamity provided the pilot e5ercised prudence and e5tra diligence to prevent or minimi.e damages. 2. Countermand or overrule by the master of the vessel in which case the registered owner of the vessel is liable. "1ec.11, Art.+++ PPA Admin 4rder 7 *0(# SPECIAL CONTRACTS OF MARITIME COMMERCE 1. Charter party 2. :ill of lading . Contract of transportation of passengers on sea voyages $. %oan on bottomry (. %oan on respondentia /. Aarine insurance C$ARTER PARTY A contract by virtue of which the owner or agent binds himself to transport merchandise or persons for a fi5ed price. A contract by which an entire ship, or some principal part thereof is let'leased by the owner to another person for a specified time or use. "Planters Products, +nc. vs. CA, 22/ 1C2A $,/# Pa!ti"s: 1. 1hip owner or ship agent

2. Charterer Class"s: 1. :areboat or demise L ;he charterer provides crew, food and fuel. ;he charterer is liable as if he were the owner, e5cept when the cause arises from the unworthiness of the vessel. ;he shipowner leases to the charterer the whole vessel, transferring to the latter the entire command, possession and conseDuent control over the vessel@s navigation, including the master and the crew, who thereby become the charter@s servants. +t transforms a common carrier into a private carrier. ;he charterer becomes the owner of the vessel pro hac vice, just for that one particular purpose only. :ecause the charterer is treated as owner pro hac /ice, the charterer assumes the customary rights and liabilities of the shipowner to third persons and is held liable for the e5pense of the voyage and the wages of the seamen. 2. Contract of Affreightment C A contract whereby the owner of the vessel leases part or all of its space to haul goods for others. ;he shipowner retains the possession, command and navigation of the ship, the charterer merely having use of the space in the vessel in return for his payment of the charter hired. Cinds= a. ;ime charter L vessel is chartered for a fi5ed period of time or duration of voyage. b. Boyage or trip charter L the vessel is leased for one or series of voyages usually for purposes of transporting goods for charterer. LEASE +f for a definite period, lessee cannot give up the lease by paying a portion of the amount agreed upon. C$ARTER PARTY Charterer may rescind charter party by paying half of the freightage agreed upon.

+f the leased property is sold to one who 3nows of the e5istence of the lease, the new owner must respect the lease. Civil concept

;he new owner is not compelled to respect the charter party so long as he can load the vessel with his own cargo. "Art. /08# law Commercial law concept

C$ARTER *ILL OF PARTY LADING An entire or Aore li3e a complete private receipt contract. which the captain gives to accredit goods received from persons Consensual 2eal contract contract *ARE*OAT OR DEMISE C$ARTER CONTRACT OF AFFREIG$TM ENT -TIME OR #OYAGE C$ARTER1 4wner remains liable as carrier and must answer for any breach of duty Charterer is not regarded as owner. ;he vessel owner retains possession, command and navigation of the ship

Charterer becomes liable to others caused by its negligence Charterer regarded as owner pro hac vice for the voyage 4wner of vessel relinDuishes possession, command and navigation to


Common carrier is converted to private carrier.

Common carrier is not converted to a private carrier.

PERSONS W$O MAY MAAE A C$ARTER 1. 4wner or owners of the vessel, either in whole or in majority part, who have legal control and possession of the vessel 2. Charterer may subcharter entire vessel to rd person only if not prohibited in original charter. "Art./,8# . 1hip agent if authori.ed by the owner's or given such power in the certificate of appointment. "Art.(80# $. Captain in the absence of the ship agent or consignee and only if he acts in accordance with the instructions of the agent or owner and protects the latter@s interests. "Art./78# RE78ISITES OF A #ALID C$ARTER PARTY 1. Consent of the contracting parties 2. >5isting vessel which should be placed at the disposition of the shipper . !reight $. Compliance with Art. /(2 of the Code of Commerce

A stipulation in a charter party that in case of a maritime accident for which the shipowner is not responsible by law, contract or otherwise, the cargo shippers, consignees or owners shall contribute with the shipowner in general average. "Pandect of Commercial %aw and ?urisprudence, ?ustice ?ose Bitug, 188, ed.#

A clause in a charter party providing that the C4G1A shall apply, even though the transportation is domestic, subject to the e5tent that any term of the bill of lading is repugnant to the C4G1A or applicable law, then to the e5tent thereof the provision of the bill of lading is void. "Pandect of Commercial %aw and ?urisprudence, ?ustice ?ose Bitug, 188, ed.#

Ri+ ts an( O<li+ations of Pa!ti"s S$IPOWNER OR S$IP AGENT 1. +f the vessel is chartered wholly, not to accept cargo from others9 2. ;o observe represented capacity9 . ;o unload cargo clandestinely placed $. ;o substitute another vessel if load is less C$ARTERER 1. ;o pay the agreed charter price9 2. ;o pay freightage on unboarded cargo9 . ;o pay losses to others for loading uncontracted cargo and illicit cargo9 $. ;o wait if the vessel

Cla.s"s W ic C a!t"! Pa!t/

Ma/ *" Incl.("( In a Cla.s" 0a!a&o.nt o! 0a!a&o.nt cla.s"

;ason cla.s"

than '( of capacity9 (. ;o leave the port if the charterer does not bring the cargo within the lay days and e5tra lay days allowed9 /. ;o place in a vessel in a condition to navigate9 ,. to bring cargo to nearest neutral port in case of war or bloc3ade. "Arts. //8*/,0#

needs repair9 (. ;o pay e5penses for deviation. "Arts. /,8* /0,#

@s 9 disposal9 $. 2eturn of the vessel due to pirates, enemies or bad weather9 (. Arrival at a port for repairs.


R"scission of a C a!t"! Pa!t/ At At Fo!t.ito c a!t"!" s i0o)n .s !@s "!@s ca.s"s !":."st !":."st -A!t% -A!t 6==1 -A!t% 6>?1 6=>1 1. :y 1. +f the 1. &ar or abandoni e5tra lay interdicti ng the days on of charter terminate commerc and without e9 paying the cargo 2. half of being :loc3ade the placed 9 freightag alongsid . e9 e the Prohibitio 2. >rror vessel9 n to in 2. 1ale receive tonnage by the cargo9 or flag9 owner of $. . !ailure the >mbargo to place vessel 9 and the before (. vessel at loading +nability the by the of the charterer charterer vessel to

T"!&s: 1. Primage * bonus to be paid to the captain after the successful voyage. 2. )emurrage L the sum fi5ed in the charter party as a remuneration to the owner of the ship for the detention of his vessel beyond the number of days allowed by the charter party for loading or unloading or for sailing. . )eadfreight L the amount paid by or recoverable from a charterer of a ship for the portion of the ship@s capacity the latter contracted for but failed to occupy. $. %ay )ays * days allowed to charter parties for loading and unloading the cargo. (. >5tra %ay )ays C days which follow after the lay days have elapsed. 8S8AL FORMS OF CONS8MMATING CONTRACTS 1. C.+.!. L cost, insurance and freight9 2. !.4.:. * free on board9 . !.A.1. * free alongside ship9 and $. C. J !. * cost and freight. TRANSS$IPMENT OF GOODS ;he act of ta3ing cargo out of one ship and loading it in another, or the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached, or the transfer for further transportation from one ship or conveyance to another.

+t is not dependent on the ownership of the transporting ships or in the change of carriers, but rather on the fact of actual physical transfer of cargo from one vessel to another. +f done without legal e5cuse, however competent and safe the vessel into which the transfer is made, is a violation of contract and infringement of right of shipper and subjects carrier to liability if freight is lost event by cause otherwise e5cepted. "Aagellan Aanufacturing vs. CA, 271 1C2A 172# LOAN ON *OTTOMRY AND RESPONDENTIA A real, unilateral, aleatory contract, by virtue of which one person lends to another a certain amount of money or goods on things e5posed to maritime ris3s, which amount, with its earnings, is to be returned if the things are safely transported, and which is lost if the latter are lost. LOAN ON RESPONDEN TIA )efinition %oan made by %oan ta3en on shipowner or security of the ship agent cargo laden guaranteed by on a vessel, vessel itself and repayable and repayable upon safe upon arrival of arrival of vessel at cargo at destination. destination. "Art. ,18# "Art. ,18# &ho may contract 1hipowner or 4nly the ship agent. owner of the 4utside of the cargo. residence of the owners * the captain. Common elements= 1. >5posure of security to marine peril9 LOAN ON *OTTOMRY


1. 2.

1. 2. . $. (. /. ,.

4bligation of the debtor conditioned only upon safe arrival of the security at the point of destination. !orms= Public instrument Policy signed by the contracting parties and the bro3er ta3ing part therein Private instrument "Art. ,27# Contents= Cind, name and registry of the vessel9 -ame, surname and domicile of the captain9 -ames, surnames and domiciles of the borrower and the lender9 Amount of the loan and the premium stipulated9 ;ime for repayment9 Goods pledged to secure repayment9 Boyage during which the ris3 is run "Art.,21#



-ot subject to 1ubject to 6sury %aw 6sury %aw %iability of the borrower is contingent on the safe arrival of the vessel or cargo at destination ;he last lender is a preferred creditor -ot subject to any contingency "absolute liability#

;he first lender is a preferred creditor

W$EN LOAN ON *OTTOMRY OR RESPONDENTIA REGARDED AS SIMPLE LOAN 1. %ender loaned an amount larger than the value of the object due to fraudulent means employed by the borrower. "A2;.,2/# 2. !ull amount of the loan is not used for the cargo or given on the goods if all of them could not have been loaded, the balance will be considered a simple loan. "A2;.,2,# . +f the effects on which the money is ta3en is not subjected to any ris3. "A2;.,28# Not"= 6nder e5isting laws, the parties to a loan, whether ordinary or maritime, may agree on any rate of interest. "C: Circular 87(# MARINE INS8RANCE LOAN ON *OTTOMR Y OR RESPOND ENTIA +ndemnity is paid in advance by way of a loan +n case of loss of the vessel due to a marine peril, the obligation of the borrower to pay is e5tinguishe d 2eal contract

the goods given as security are absolutely lost by reason of an accident of the sea, during the voyage designated, and if it is proven that the goods were on board. 67C6PT81N': 1. %oss due to inherent defect9 2. %oss due to the barratry on the part of the captain9 . %oss due to the fault or malice of the borrower9 $. ;he vessel was engaged in contraband9 and (. ;he cargo loaded on the vessel be different in from that agreed upon. Conc.!!"nc" of Ma!in" Ins.!anc" an( Loan on *otto&!//R"s0on("ntia 1. ;he insurable interest of the owner of a ship hypothecated by bottomry is only the e5cess of the value over the amount secured by bottomry. "1ec. 171, +nsurance Code# 2. ;he value of what may be saved in case of shipwrec3 shall be divided between the lender and the insurer in proportion to the interest of each one. "Art. , (# -ote= +f a vessel is hypothecated by bottomry only the e5cess is insurable, since a loan on bottomry parta3es of the nature li3ewise of an insurance coverage to the e5tent of the loan accommodation. ;he same rule would apply to the hypothecation of the cargo by respondentia. (Pandect o) Co((ercial Law and *urisprudence, *ustice *ose +itu,, $--. ed.& ACCIDENTS IN MARITIME COMMERCE 1. Averages 2. Arrival 6nder 1tress . Collision $. 1hipwrec3 A#ERAGE An e5traordinary or accidental e5pense incurred during the voyage in order to preserve the cargo, vessel or both, and all damages or deterioration suffered by the vessel from departure to the port of

+ndemnity is paid after the loss has occurred +n case of loss of the vessel due to a ris3 insured against, the obligation of the insurer becomes absolute

Consensual contract

$/0ot "ca!/ Nat.!" of *otto&!// R"s0on("ntia 56N6RAL RUL6: ;he obligation of the borrower to pay the loan is e5tinguished if

destination, and to the cargo from the port of loading to the port of consignment. "Art. 07/# ;he person whose property has been saved must contribute to reimburse the damage caused or e5pense incurred if the situation constitutes general average. Classes= 1. Particular or 1imple Average 2. Gross or General Average &here both vessel and cargo are saved, it is general average9 where only the vessel or only the cargo is saved, it is particular average. >5penses incurred to refloat a vessel, which accidentally ran aground, in order to continue its voyage, do not constitute general average. -ot only is there absence of a marine peril, common safety factor, and deliberateness. +t is the safety of the property, and not the voyage, which constitutes the true foundation of general average. "A. Aagsaysay, +nc. vs. Agan, G.2.-o. %*/ 8 , ?an. 1, 18((# PARTIC8LAR GROSS OR OR SIMPLE GENERAL D"finition )amages or )amages or e5penses e5penses caused to the deliberately vessel or cargo caused in that did not order to save inure to the the vessel, its common cargo or both benefit, and from real and borne by 3nown ris3. respective "Art. 011# owners. "Art. 078# R":.isit"s 1. common danger9 2. deliberate sacrifice9 . success9 $. proper formalities and legal

steps. Lia<ilit/ ;he owner of All the the goods persons which gave having an rise to the interest in the e5pense or vessel and the suffered the cargo therein damage shall at the time of bear this the average. "Art. occurrence of 017# the average shall contribute to satisfy this average. "Art. 012# ;he insurers "Art.0(8# and lenders on bottomry and respondentia shall li3ewise contribute. "Art., 2#. N.&<"! of int"!"sts in,ol,"( 4nly one 1everal interest interests involved involved S a!" in t " (a&a+" o! "D0"ns" 177O share +n proportion to the value of the owner@s property saved Ri+ t to !"co,"! -o ;here may be reimbursement reimbursemen t Ain(s -not "Dcl.si,"1 Art. 078 Art. 011 P!oc"(.!" fo! !"co,"!/ 1. Assembly and deliberation 2. 2esolution of the captain . >ntry of the

resolution in the logboo3 $. )etailed minutes (. )elivery of the minutes to the maritime judicial authority of the first port, within 2$ hours from arrival, /. 2atification by captain under oath. "Arts. 01 * 01$# GOODS NOT CO#ERED *Y GENERAL A#ERAGE E#EN IF SACRIFICED 1. Goods carried on dec3. "A2;.0((# 2. Goods not recorded in the boo3s or records of the vessel. "A2;.0(( "2## . !uel for the vessel if there is more than sufficient fuel for the voyage. "2ule +P, Eor3*Antwerp 2ule# ;"ttison Act of throwing cargo overboard in order to lighten the vessel. 4rder of goods to be cast overboard= 1. ;hose which are on the dec3, preferring the heaviest one with the least utility and value9 2. ;hose which are below the upper dec3, beginning with the one with greatest weight and smallest value. "Art. 01(# ?ettisoned goods are not res nullius nor deemed HabandonedI within the meaning of civil law so as to be the object of occupation by salvage. (Pandect o) Co((ercial Law and *urisprudence, *ustice *ose +itu,, $--. ed.& +n order that the jettisoned goods may be included in the gross or general average, the e5istence of the cargo on board should be proven by means of the bill of lading. "Art.

01/# Yo!E'Ant)"!0 -Y'A1 R.l"s on D"t"!&inin+ Lia<ilit/ fo! A,"!a+"s Wit R"+a!( To D"cE Ca!+o 1. )ec3 cargo is allowed only in domestic'coastwise'inter*island shipping, and is prohibited in international'overseas'foreign shipping. 2. +f dec3 cargo is loaded with the consent of the shipper on overseas trade, it must always contribute to general average, but should the same be jettisoned, it would not be entitled to reimbursement because there is violation of the E*A 2ules. . +f dec3 cargo is loaded with the consent of the shipper on coastwise shipping, it must always contribute to general average and if jettisoned would be entitled to reimbursement. 2eason= +n domestic shipping, voyages are usually short and the seas are generally not rough. +n overseas shipping, the vessel is e5posed for many days to perils of the sea. INTERNATIO NAL )ec3 cargo is )ec3 cargo is allowed not allowed &ith shipper@s consent General Particular average average &ithout shipper@s consent Captain is Captain is liable liable ARRI#AL 8NDER STRESS -ARRI*ADA1 ;he arrival of a vessel at the nearest and most convenient port instead of the port of destination, if during the voyage the vessel cannot continue the trip to the port of destination. W "n la)f.l W "n .nla)f.l W o <"a!s "D0"ns" s: DOMESTIC

;he inability to continue voyage is due to lac3 of provision s, well* founded fear of sei.ure, privateer s, pirates, or accident s of the sea disabling it to navigate. "Art. 018#

1. %ac3 of provision s due to negligenc e to carry according to usage and customs9 2. 2is3 of enemy not well 3nown or manifest . )efect of vessel due to improper repair9 and $. Aalice , negligenc e, lac3 of foresight or s3ill of captain. "Art. 027#

;he shipowne r or ship agent is liable in case of unlawful arrival under stress. :ut they shall not be liable for the damages caused by reason of a lawful arrival. "Art. 021#

$. ;he agreement shall be drafted and the proper minutes shall be signed and entered in the log boo39 (. 4bjections and protests shall li3ewise be entered in the minutes. COLLISION +mpact of two vessels both of which are moving. Allision +mpact between a moving vessel and a stationary one. Na.tical R.l"s to D"t"!&in" N"+li+"nc" 1. &hen two vessels are about to enter a port, the farther one must allow the nearer to enter first9 if they collide, the fault is presumed to be imputable to the one who arrived later, unless it can be proved that there was no fault on its part. 2. &hen two vessels meet, the smaller should give the right of way to the larger one. . A vessel leaving port should leave the way clear for another which may be entering the same port. $. ;he vessel which leaves later is presumed to have collided against one which has left earlier. (. ;here is a presumption against the vessel which sets sail in the night. /. ;here is a presumption against the vessel with spread sails which collides with another which is at anchor and cannot move, even when the crew of the latter has received word to lift anchor, when there was not sufficient time to do so or there was fear of a greater damage or other legitimate reason. ,. ;here is a presumption against an improperly moored vessel. 0. ;here is a presumption against a vessel which has no buoys to indicate the location of its anchors to prevent damage to vessels which may approach it. 8. Bessels must have Hproper loo3*outsI or persons trained as such and who have no other duty aside therefrom. "1mith :ell v. CA#

+t is the duty of the captain to continue the voyage without delay after the cause of the arrival under stress has ceased failing in such duty renders him liable. <owever, in case the cause has been ris3 of enemies, there must first be an assembly before departure. "Art. 02(# 1teps= 1. Captain should determine during the voyage if there is well founded fear of sei.ure, privateers and other valid grounds9 2. Captain shall assemble the officers and summon the persons interested in the cargo who may attend the meeting but without a right to vote9 . ;he officers shall determine and agree if there is well*founded reason after e5amining the circumstances. ;he captain shall have the deciding vote9

Na.tical R.l"s as to Sailin+ #"ss"l an( St"a&s i0 1. &here a steamship and a sailing vessel are approaching each other from opposite directions, or on intersecting lines, the steamship from the moment the sailing vessel is seen, shall watch with the highest diligence her course and movements so as to be able to adopt such timely means of precaution as will necessarily prevent the two boats from coming in contact. 2. ;he sailing vessel is reDuired to 3eep her course unless the circumstances reDuire otherwise. Fon"s of Ti&" in t " Collision of #"ss"ls 1. 3irst >one L all time up to the moment when ris3 of collision begins. -o rule is as yet applicable for none is necessary. 2. 'econd >one L time between moment when ris3 of collision begins and moment it becomes a practical certainty. +t is in this period where conduct of the vessels is primordial. +t is in this .one that vessels must strictly observe nautical rules, unless a departure therefrom becomes necessary to avoid imminent danger. . Third >one L time when collision is certain and time of impact. An error in this .one would no longer be legally conseDuential. 6rror in 6?tre(is * sudden movement made by a faultless vessel during the third .one of collision with another vessel which is at fault during the 2nd .one. >ven if such sudden movement is wrong, no responsibility will fall on said faultless vessel. "6rrutia and Co. v. :aco 2iver Plantation Co., 2/ P<+% / 2# Cas"s Co,"!"( */ Collision an( Allision $. 1ne /essel at )ault Bessel at fault is liable for damage caused to innocent vessel as well as damages suffered by the owners of cargo of both vessels. "Art. 02/# 2. <oth /essels at )ault

>ach vessel must bear its own loss, but the shippers of both vessels may go against the shipowners who will be solidarily liable. "Art. 02,# . +essel at )ault not @nown >ach vessel must bear its own loss, but the shippers of both vessels may go against the shipowners who will be solidarily liable. "Art. 020# ;octrine o) 8nscrutable 3ault L +n case of collision where it cannot be determined which between the two vessels was at fault, both vessels bear their respective damage, but both should be solidarily liable for damage to the cargo of both vessels. #. Third /essel at )ault ;he third vessel will be liable for losses and damages. "Art. 0 1# :. 3ortuitous e/entA)orce (aBeure -o liability. >ach bears its own loss. "Art. 0 7# ;he doctrine of res ipsa loDuitur applies in case a moving vessel stri3es a stationary object, such as a bridge post, doc3, or navigational aid. "!ar >astern 1hipping v. CA, %u.on 1tevedoring vs. CA# >ven if the cause of action against the common carrier is based on Duasi*delict, the defense of due diligence in the selection and supervision of employees is unavailing in case of a maritime tort resulting in collision. +t is not a civil tort governed by the Civil Code but a maritime one governed by Arts. 02/*0 8 of the Code of Commerce. "Aanila 1teamship vs. +nsa Abdulhaman# )octrine of %ast Clear Chance and 2ule on Contributory -egligence cannot be applied in collision cases because of Art.02, of the Code of Commerce. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed.& MARITIME PROTEST Condition precedent or prereDuisite to recovery of damages arising from collisions

and other maritime accidents. +t is a written statement made under oath by the captain of a vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or damaged, with respect to the circumstances attending such occurrence, for the purpose of recovering losses and damages. >5cuses for not filing protest= 1# where the interested person is not on board the vessel9 and 2# on collision time, need not be protested. "Art. 0 /# Cases applicable= 1. Collision "Art. 0 (#9 2. Arrival under stress "Art. /12"0##9 . 1hipwrec3s "Arts. /12"1(#, 0$ #9 $. &here the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages "Art. /2$#. &ho ma3es= Captain &hen made= within 2$ hours from the time the collision too3 place. :efore whom made= competent authority at the point of collision or at the first port of arrival, if in the Philippines and to the Philippine consul, if the collision too3 place abroad. "Art. 0 (# S$IPWRECA +t is the loss of the vessel at sea as a conseDuence of its grounding, or running against an object in sea or on the coast. +t occurs when the vessel sustains injuries due to a marine peril rendering her incapable of navigation. +f the wrec3 was due to malice, negligence or lac3 of s3ill of the captain, the owner of the vessel may demand indemnity from said captain. "Art. 0$1# ;he rules on collision or allision, as may be pertinent, can eDually apply to shipwrec3s. SPECIAL CONCEPTS ARRASTRE SER#ICE A contract for the unloading of goods from a vessel. A00lica<ilit/: 1/erseas trade only.

(Co((ercial Law Re/iew, C. +illanue/a, !""# ed.& Si+nificanc": &hen a person brings in cargo from abroad, he cannot unload and deliver the cargo by himself. ;he unloading must be done by the arrastre operator, which will then deliver the cargo to the importer. (Co((ercial Law Re/iew, C. +illanue/a, !""# ed.& Nat.!" of <.sin"ss: +t is a public utility, discharging functions which are heavily invested with public interest. Lia<ilit/: 1. 1imilar to a warehouseman "%ua Cian v. Aanila 2ailroad# 2. 1imilar to a common carrier "-orthern Aotors v. Prince %ine# . 1olidary liability with the common carrier Not": +n order that the arrastre operator may be held liable, the consignee must prove that the damage was due to the negligence and while the goods are in the custody of the arrastre operator. "<artford !ire +nsurance v. >. 2a.on, +nc.# STE#EDORING SER#ICE ;he carriage of goods from the warehouse or pier to the holds of the vessel. "Chief of 1taff vs. C+2# As understood in the port business, the term consists of the handling of cargo from the hold of the ship to the doc3, in case of pier*side unloading9 or to a barge, in case of unloading at sea. "Anglo*!il ;rading Corp. vs. %a.aro# ;he loading on the ship of outgoing cargo is also part of stevedoring wor3. "+bid.# CONTAINERIFATION/ GSAID'TO' CONTAINH/ GS$IPPER@S LOAD AND CO8NTH SYSTEM 1ystem whereby the shipper loads his cargoes in a specially designed container, seals the container and delivers it to the carrier for transportation. ;he carrier does not participate in the counting of the merchandise for loading into the container, the actual loading, and the sealing of the container. "61 %ines v. Comm. 4f Customs,

+C;1+ v. Prudential Guarantee# ;he matter of Duantity, description and conditions of the cargo inside the container is the sole responsibility of the shipper, unless there is stipulation to the contrary. "61 %ines vs. Comm. 4f Customs, 2eyma :ro3erage v. Phil. <ome Assurance# Not": +n order to attribute to the carrier any damage to the shipment that may be found, inspection o) the ,oods should be done at pier%side. ":an3ers vs. CA# III% CARRIAGE OF GOODS *Y SEA ACT/COGSA -C%A% No% 651 APPLICA*ILITY ;he transportation must be= 1. &ater'maritime transportation9 2. for the carriage of goods9 and . overseas'international'foreign "from foreign port to Philippine port#. +t can be applied in domestic sea transportation if agreed upon by the parties. "Clause para(ount or para(ount clause# IMPORTANT FEAT8RES: 1. Amount of carrier@s liability 2. -otice of damage . Prescriptive period AMO8NT OF CARRIER@S LIA*ILITY 6nder the 1ec. $"(#, the liability limit is set at Q(77 per pac3age or customary freight unit unless the nature and value of such goods is declared by the shipper. ;his is deemed incorporated in the bill of lading even if not mentioned in it. ">astern 1hipping vs. +AC, 1(7 1C2A $/ # -ote that Art. 1,$8, -CC applies to domestic'inter*island'coastwise trade. NOTICE OF DAMAGE -SEC% 4-611 R.l"s: a. Patent damage= shipper should file a claim with the carrier immediately upon delivery b. %atent damage= shipper should file a claim with the carrier within three days from delivery.

Not"= ;he filing of a notice of claim is not a condition precedent. PRESCRIPTI#E PERIOD Action for loss or damage to the cargo should be brought within one year after= a. )elivery of the goods "delivered but damaged goods#9 or b. ;he date when the goods should have been delivered "non*delivery#. "1ec. F/G# H%oss or )amageI as applied to the C4G1A contemplates a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their e5istence is un3nown or they cannot be recovered. ;hus, it is inapplicable in case of misdelivery or conversion. "Ang vs. American 1teamship Agencies +nc.# and damage arising from delay or late delivery "Aitsui 4.1.C. %ines %td. vs. CA#. +n such instance the, Civil Code rules on prescription shall apply. ;he one*year prescriptive period is suspended by= 1. ;he e5press agreement of the parties "6niversal 1hipping %ines, +nc. vs. +AC, 100 1C2A 1,7# 2. ;he filing of an action in court until it is dismissed. "1tevens J Co. vs. -ordeutscher %loyd, / 1C2A 107# ;he one*year period shall run from delivery of the last pac3age and is not suspended by e5trajudicial demand. ")ole Phils.,+nc. vs. Aaritime Co.,1$0 1C2A 110# ;he one*year period shall run from delivery to the arrastre operator and not to the consignee. "6nion Carbide Phils, +nc. vs. Aanila 2ailroad Co.,1C2A (8# ;he insurer e5ercising its right of subrogation is bound by the one*year prescriptive period. <owever, it does not apply to the claim against the insurer for the

insurance proceeds. "!il. Aerchants +ns. Co. vs. Alejandro9 Aayer 1teel Pipe Corp. vs. CA# I#% WARSAW CON#ENTION OF 2>5> -WC1 P8RPOSE: ;o protect the emerging air transportation industry and to secure the uniformity of recovery by the passengers. APPLICA*ILITY ;he transportation must be= 1. +nternational transportation9 2. Air transportation9 and . Carriage of passengers, baggage or goods. ;he &C shall also apply to fortuitous transportation by aircraft performed by an air transportation enterprise. 8nternational transportation * any transportation in which the place of departure and the place of destination are situated either= 1. &ithin the territories of two <igh Contracting Parties regardless of whether or not there be a brea3 in the transportation or transshipment, or 2. &ithin the territory of a single <igh Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though that power is not a party to the Convention. "Hround tripI, Am. ?ur.# ;ransportation to be performed by several successive air carriers shall be deemed to be one undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form of a single contract or of a series of contracts, and it shall not lose its international character merely because one contract or a series of contracts is to be performed entirely within a territory subject to the sovereignty, su.erainty, mandate, or authority of the same <igh Contracting Party. "Art. 1 1ec. #

W$EN INAPPLICA*LE 1. &hen public policy is contradicted9 2. +f the reDuirements under the Convention are not complied with. IMPORTANT CONCEPTS: 1. ;ransportation documents a. Passenger tic3et b. :aggage chec3 c. Air way bill 2. %iability of the carrier for damages a. )eath or injury to passengers b. %oss or damage to baggage or goods c. )elay . 1uccessive carrier agreement $. ?urisdiction (. Combined transportation agreement PASSEN *AGGA GER GE TICAET C$ECA Passeng Chec3ed er *in baggage AIR WAY*IL L Goods to be shipped

LIA*ILITY OF CARRIER FOR DAMAGES 1. )eath or injury of a passenger if the accident causing it too3 place on board the aircraft or in the course of its operations of embar3ing or disembar3ing9 "Art. 1,# 2. )estruction, loss or damage to any baggage or goods, if it too3 place during the Htransportation by airI9 "Art. 10# and Transportation b4 air L ;he period during which the baggage or goods are in the charge of the carrier, whether in an airport or on board an aircraft, or, in case of a landing outside an airport, in any place whatsoever. +t includes any transportation by land or water outside an airport if such ta3es place in the performance of a contract for transportation by air, for the purpose of loading, delivery, or transshipment. . )elay in the transportation of passengers, baggage or goods. "Art. 18# Not"= ;he <ague Protocol amended the &C by removing the provision that if the airline too3 all necessary steps to avoid the

damage, it could e5culpate itself completely "Art. 27"1##. "Alitalia vs. +AC, 182 1C2A 8# LIMIT OF LIA*ILITY -A!t% 55I as a&"n("( </ G.at"&ala P!otocolI 2>32J Alitalia ,s% IAC1 2% Pass"n+"!s 56N6RAL RUL6: Q177,777 per passenger 67C6PT81N: Agreement to a higher limit

+n PanAm v. +AC, the &C was applied as regards the limitation on the carrier@s liability, there being a simple loss of baggage without any improper conduct on the part of the officials or employees of the airline or other special injury sustained by the passenger. +n C%A 2oyal v. ;uller, the &C has invariably been held inapplicable, or as not restrictive of the carrier@s liability, where there was satisfactory evidence of malice or bad faith attributable to its officers and employees. "Alitalia vs. +AC#

5% C "cE"('in <a++a+" 56N6RAL RUL6: Q27 per 3ilogram 67C6PT81N: +n case of special declaration of value and payment of a supplementary sum by consignor, carrier is liable to not more than the declared sum unless it proves the sum is greater than actual value. 4% $an('ca!!i"( <a++a+" Q1777'passenger 4% Goo(s to <" s i00"( 56N6RAL RUL6: Q27 per 3ilogram 67C6PT81N: +n case of special declaration of value and payment of a supplementary sum by consignor, carrier is liable to not more than the declared sum unless it proves the sum is greater than actual value. An agreement relieving the carrier from liability or fi5ing a lower limit is null and void. "Art. 2 # Carrier is not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part. "Art. 2(# ;hus, the &C does not operate as an e5clusive enumeration of the instances of an absolute limit of the e5tent of liability. +t does not preclude the application of the Civil Code and other pertinent local laws. +t does not regulate or e5clude liability for other breaches of contract by the carrier, or misconduct of its employees, or for some particular or e5ceptional type of damage. "Alitalia vs. CA#

ACTION FOR DAMAGES 1. -otice of claim A written complaint must me made within= a. days from receipt of baggage b. , days from receipt of goods c. +n case of delay, 1$ days from receipt of baggage'goods ;he complaint is a condition precedent. &ithout the complaint, the action is barred e5cept in case of fraud on the part of the carrier. "Art. 2/# 2. Prescriptive period Action must be filed within 2 years from= a. date of arrival at the destination b. date of e5pected arrival c. date on which the transportation stopped. "Art. 28# +n 6nited Airlines vs. 6y the two*year prescriptive period was not applied where the airline employed delaying tactics. R8LE IN CASE OF #ARIO8S S8CCESSI#E CARRIERS 1. Carriage of passengers 56N6RAL RUL6: Action is filed only against the carrier in which the accident or delay occurred. 67C6PT81N: Agreement or contract whereby the first carrier assumed liability for the whole journey. 2. Carriage of baggage or goods

a. Passenger or consignor can file an action against the )irst carrier and the carrier in which the damage occurred b. Passenger or consignee can file an action against the last carrier and the carrier in which the damage occurred. ;hese carriers are jointly and severally liable. "Art. 7# A contract of international carriage by air, although performed by different carriers under a series of airline tic3ets constitutes a single operation. Aembers of the +nternational Air ;ransportation Association "+A;A# are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tic3ets to contracted passengers to boost tic3et sales worldwide and at the same time provide passengers easy access to airlines which are otherwise inaccessible in some parts of the world. "American Airlines vs. CA# 6nder a general pool partnership agreement, the tic3et*issuing airline is the principal in a contract of carriage while the endorsee*airline is the agent. ;he obligation of the former remained and did not cease even when the breach occurred not on its own flight but on that of another airline which had underta3en to carry the passengers to one of their destinations. "China Airlines vs. Chio3# ;8RISDICTION At the option of the plaintiff, the action for damages may be filed in the= a. Court of domicile of the carrier9 b. Court of its principal place of business9 c. Court where it has a place of business through which the contract has been made9 or d. Court of the place of destination. "Art. 20"1## NOTE: +t is the passenger@s Hultimate destinationI not Han agreed stopping placeI that determines the country where suit is to be filed. ;he forum of action provided in Art. 20"1# is a matter of jurisdiction rather than of

venue. "1antos +++ vs. -orthwest9 2A C.?.1.# #% SAL#AGE LAW -Act No% 56261 SAL#AGE T)o conc"0ts: 1. 1ervices one person renders to the owner of a ship or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are unable to protect or secure. 2. Compensation allowed to persons by whose voluntary assistance a ship at sea or her cargo or both have been saved in whole or in part from impending sea peril, or such property recovered from actual peril or loss, as in cases of shipwrec3, derelict or recapture. R":.isit"s: 1. Balid object of salvage9 2. 4bject must have been e5posed to marine peril "not perils of the ship#9 . 1ervices rendered voluntarily "neither an e5isting duty nor out of a pre* e5isting contract#9 $. 1ervices are successful, total or partial. S.<K"cts of Sal,a+": 1. 1hip itself9 2. ?etsam L goods which are cast into the sea, and there sin3 and remain under water9 . !loatsam or !lotsam L goods which float upon the sea when cast overboard9 $. %igan or %agan L goods cast into the sea tied to a buoy, so that they may be found again by the owners (p.$.C, *ud,e ;ia>&. P"!sons ) o a," no !i+ t to a !")a!( fo! sal,a+"= 1. Crew of the vessel saved9 2. Person who commenced 1alvage in spite of opposition of the Captain or his representative9 . +n accordance with 1ec. of the 1alvage %aw, a person who fails to deliver a salvaged vessel or cargo to the Collector of Customs. Derelict L a ship or her cargo which is abandoned and deserted at sea by those

who are in charge of it, without any hope of recovering it, or without any intention of returning to it. ;he intention of those in charge must be ascertained. +f those in charge left with the intention of returning, or of procuring assistance, the property is not derelict, but if they Duitted the property with the intention of finally leaving it, it is derelict and a change of their intention and an attempt to return will not change its nature ">rlanger J Galinger vs. 1wedish >ast Asiatic Co. %td.#. +f it is clear that the intention to return is slight, the salvage which was done thereafter is considered valid. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p. 0$0& CONTRACT OF TOWAGE A contract whereby one vessel, usually motori.ed, pulls another, whether loaded or not with merchandise, from one place to another, for a compensation. +t is a contract for services rather than a contract of carriage. SAL#AGE Governed by special law "Act -o. 2/1/# 2eDuires success, otherwise no payment Aust be done with the consent of the captain'crew men Bessel must be involved in an accident !ees distributed TOWAGE Governed by Civil Code on contract of lease 1uccess is not reDuired 4nly the consent of the tugboat owner is needed Bessel need not be involved in an accident !ees belong to the tugboat

among crewmen


R8LES ON SAL#AGE REWARD 1. ;he reward is fi5ed by the 2;C judge in the absence of agreement or where the latter is e5cessive. "1ec. 8# 2. ;he reward should constitute a sufficient compensation for the outlay and effort of the salvors and should be liberal enough to offer an inducement to others to render services in similar emergencies in the future. . +f sold "no claim being made within months from publication#, the proceeds, after deducting e5penses and the salvage claim, shall go to the owner9 if the latter does not claim it within years, (7O of the said proceeds shall go to the salvors, who shall divide it eDuitably, and the other half to the government. "1ecs. 11*12# $. +f a vessel is the salvor, the reward shall be distributed as follows= a. (7O to the shipowner9 b. 2(O to the captain9 and c. 2(O to the officers and crew in proportion to their salaries. "1ec. 1 # ;a3ing passengers from a sin3ing ship, without rendering any service in rescuing the vessel, is not a salvage service, being a duty of humanity and not for reward. #I% P8*LIC SER#ICE ACT -C%A% No% 2461 P8RPOSES: 1. ;o secure adeDuate, sustained service for the public at the least possible cost9 2. ;o protect the public against unreasonable charges and poor, inefficient service9 . ;o protect and secure investments in public services9 $. ;o prevent ruinous competition.

A8T$ORITY TO OPERATE P8*LIC SER#ICES 56N6RAL RUL6: -o public service shall operate without having been issued a certificate of public convenience or a certificate of public convenience and necessity. 67C6PT81N': 1. &arehouses9 2. Animal drawn vehicles and bancas moved by oar or sail9 . Airships, e5cept for the fi5ing of ma5imum rates for fare and freight9 $. 2adio companies, e5cept for rates fi5ing9 (. Public services owned or operated by the government, e5cept as to rates fi5ing9 /. +ce plants9 and ,. Public mar3ets. P8*LIC SER#ICE A person who owns, operates, manages or controls in the Philippines for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier or public utility, ice plants, power and water supplies, communication and similar public services. "1ec. 1 b, CA 1$/# A casual or incidental service devoid of public character and interest is not brought within the category. ;he Duestion depends on such factors as the e5tent of services, whether such person or company has held himself or itself out as ready to serve the public or a portion of the public generally. "%u.on 1tevedoring vs. P1C# NOTE= ;he Public 1ervice Commission created under the Public 1ervice %aw has already been abolished under P.). -o. 1 and other issuances. +t has been replaced by the following government agencies= %;49 %;!2:9 A;49 :4>9 -;C9 ->A9 >2:9 -&2C9 CA:9 and A+A.

CERTIFICAT E OF P8*LIC CON#ENIEN CE -CPC1 An authori.ation issued by the appropriate government agency for the operation of public services for which no franchise, either municipal or legislative, is reDuired by law, e.g., common carriers.

CERTIFICAT E OF P8*LIC CON#ENIEN CE AND NECESSITY -CPCN1 An authori.ation issued by the appropriate government agency for the operation of public service for which a prior franchise is reDuired by law9 e.g. telephone and other services.

A CPC or a CPC- constitutes neither a franchise nor a contract, confers no property right, and is a mere license or a privilege. ;he holder of said certificate does not acDuire a property right in the route covered thereby. -or does it confer upon the holder any proprietary right or interest or franchise in the public highways. 2evocation of this certificate deprives him of no vested right. -ew and additional burdens, alteration of the certificate, or even revocation or annulment thereof is reserved to the 1tate. "%uDue vs. Billegas, 7 1C2A $70# +t is a HpropertyI and has a considerable value and can be the subject of sale or attachment. "Cogeo*Cubao 4perators and )rivers Assn. vs. CA, 27, 1C2A $ , 2aymundo vs. %uneta Aotor Co.# RE78REMENTS FOR GRANTING CPC OR CPCN 1. Applicant must be a citi.en of the Philippines or a corporation or entity /7O

of the capital of which is owned by such citi.ens9 2. Applicant must prove public necessity9 . Applicant must prove that the operation of the public service proposed and the authori.ation to do business will promote the public interest on a proper and suitable manner9 $. Applicant must have sufficient financial capability to underta3e the proposed services and meeting the responsibilities incident to its operation. POWERS RE78IRING PRIOR NOTICE AND $EARING 1. +ssuance of CPC or CPC-9 2. !i5ing of rates, tolls, and charges9 . 1etting up of standards and classification s9 $. >stablish ment of rules to secure accuracy of all meters and all measuring appliances9 (. +ssuance of orders reDuiring establishmen t or maintenance of e5tension of facilities9 /. 2evocatio POWERS E9ERCISA*L E WIT$O8T PRIOR NOTICE AND $EARING 1. +nvestigatio n any matter concerning public service9 2. 2eDuiring operators to furnish safe, adeDuate, and proper service9 . 2eDuiring public services to pay e5penses of investigation9 $. Baluation of properties of public utilities9 (. >5aminatio n and test of measuring appliances9 /. Grant of special permits to ma3e e5tra or

n, or modification of CPC or CPC-9 ,. 1uspension of CPC or CPC-, e5cept when it is necessary to avoid serious and irreparable damage or inconvenienc e to the public or private interest, in which case, a suspension not more than 7 days may be ordered, prior to the hearing. "1oriano v. Aedina, 1/$ 1C2A /#

special trips in territories specified in the certificate9 ,. 6niform accounting system and furnishing of annual reports9 0. Compelling compliance with the laws and regulations.

8NLAWF8L ACTS OF P8*LIC 8TILITY COMPANIES 1. >ngagement in public service business without first securing the proper certificate9 2. Providing or maintaining unsafe, improper or inadeDuate service as determined by the proper authority9 . Committing any act of unreasonable and unjust preferential treatment to any particular person, corporation or entity as determined by the proper authority9 $. 2efusing or neglecting to carry public mail upon reDuest. "1ecs. 10 and 18# ACTS RE78IRING PRIOR APPRO#AL 1. >stablish and maintain individual or joint rates9

2. >stablish and operate new units9 . +ssue free tic3ets9 $. +ssue any stoc3 or stoc3 certificates representing an increase of capital9 (. Capitali.e any franchise in e5cess of the amount actually paid to the Government9 /. 1ell, alienate, mortgage or lease property, certificates or franchise. 6nder 1ec. 27"g# of C.A. -o. 1$/, the sale, etc. may be negotiated and completed before the approval by the proper authority. +ts approval is not a condition precedent to the validity of the contract. ;he approval is necessary only to protect public interest. PRIOR OPERATOR/OLD OPERATOR R8LE ;he rule allowing an e5isting franchised operator to invo3e a preferential right within the authori.ed territory as long as he renders satisfactory and economical service. ;he policy is not to issue a certificate to a second operator to cover the same field and in competition with a first operator who is rendering sufficient, adeDuate and satisfactory service. ;he prior operator must first be given an opportunity to improve its service, if inadeDuate or deficient. Purpose= ;o prevent ruinous and wasteful competition in order that the interests of the public would be conserved and preserved. +t subordinates the prior applicant rule which gives the first applicant priority only if things and circumstances are eDual. &here the operator either fails or neglects to ma3e the improvement or effect the increase in services, especially when given the opportunity, new operators should be given the chance to give the services needed by the public. PRIOR APPLICANT R8LE Presupposes a situation when two interested persons apply for a certificate to operate a public utility in the same community over which no person has as yet granted any certificate. +f it turns out, after

the hearing, that the circumstances between the two applicants are more or less eDual, then the applicant who applied ahead of the other, will be granted the certificate. RATE'FI9ING POWER ;he rate to be fi5ed must be just, founded upon conditions which are fair and reasonable to both the owner and the public. A rate is just and reasonable if it conforms to the following reDuirements= 1. 4ne which yields to the carrier a fair return upon the value of the property employed in performing the service9 and 2. 4ne which is fair to the public for the service rendered. REGISTERED OWNER R8LE ;he registered owner of a certificate of public convenience is liable to the public for the injuries or damages suffered by third persons caused by the operation of said vehicle, even though the same had been transferred to a third person. ;he registered owner is not allowed to escape responsibility by proving that a third person is the actual and real owner Reason= +t would be easy for him, by collusion with others or otherwise, to transfer the responsibility to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. ">re.o, et al. vs. ?epte 172 Phil 17 #. AA*IT SYSTEM A system whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate under such license, for a fee or percentage of such earnings. +t is void and ine5istent under Art. 1$78, Civil Code. Eff"cts: 1. ;he transfer, sale, lease or assignment of the privilege granted is valid between the contracting parties but not upon the public or third persons. "Gelisan vs. Alday, 1($ 1C2A 00#

owner are jointly and severally liable with the driver. "Kamboanga ;ransportation Co. vs. CA#

2. ;he registered owner is primarily liable for all the conseDuences flowing from the operations of the carrier. ;he public has the right to assume that the registered owner is the actual or lawful owner thereof. +t would be very difficult and often impossible, as a practical matter, for the public to enforce their rights of action that they may have for injuries inflicted by the vehicle i) the4 should be required to pro/e who the actual owner is. ":enedicto vs. +AC, 10, 1C2A ($,# . ;he thrust of the law in enjoining the 3abit system is to identify the person upon whom responsibility may be fi5ed with the end in view of protecting the riding public "%im vs. CA , 1C2A 8$#. $. ;he registered owner cannot recover from the actual owner and the latter cannot obtain transfer of the vehicle to himself, both being in pari delicto. ";eja Aar3eting vs. +AC# (. !or the better protection of the public, both the registered owner and the actual