Transportation Law Reviewer

Based on the syllabus of Prof. Angeles

Prepared by:
Delfin, Daniel Al B.
Melicor, Ruth F.
Matunog, Raissa N.
UP College of Law (D2019)

For we don't live for ourselves

or die for ourselves. If we live
its to honor God and if we die
its to honor God. So whether we
live or die, we belong to the Lord.
Transportation Law Reviewer
Part I: PUBLIC UTLTITES
General Discussion
What is a public utility?
- A public utility is a business or service engaged
in regularly supplying the public with some
commodity or service of public consequence
such as electricity, gas, water, transportation,
telephone, or telegraph service.
- privately owned and operated businesses whose
services are essential to the general public.
they are enterprises that specially cater to the
needs of the public and conduce to their
comfort and convenience
impressed with public interest and concern
there is a right of public regulation when
private properties are affected with public
interest, hence, they cease to be juris private
only.
- when therefore, one devotes his property to use
in which the public has an interest, he in effect
grants to the public an interest in that use and
must submit to the control by the public for the
common good, to the extent of the interest he
has thus created.
MUNN VS. ILLINOIS
- When private property is affected with public
insterest, it ceases to be juris private only.
Property does become clothed with a public
interest when used in a manner to make it of
public consequence and affect the community at
large
- When therefore, one devotes his property to a
use in which the public has an interest, he in
effect, grants to the public an interest in that use,
and must submit to be controlled by the public for
the common good, to the extent of the interest he
has thus created.
LUZON STEVERDORING CO. VS. PSC
- In the United States, where it is said, there is no
fixed definition of what constitutes public service
or public utility, it is also held that it is not always
necessary, in order to be a public service, that an
organization be dedicated to public use, i.e.,
ready and willing to serve the public as a class. It
is only necessary that it must in some way be
Delfin, Melicor, Matunog (D2019)
impressed with a public interest; and whether the
operation of a given business is a public utility
depends upon whether or not the service
rendered by it is of a public character and of
public consequence and concern.
Thus, a business may be affected with public
interest and regulated for public good although
not under any duty to serve the public.
- It has been seen that public utility, even where
the term is not defined by statute, is not
determined by the number of people actually
served. Nor does the mere fact that service is
rendered only under contract prevent a company
from being a public utility.
On the other hand, casual or incidental service
devoid of public character and interest, it must
be admitted, is not brought within the category
of public utility.
The demarkation line is not susceptible of
exact description or definitions, each case
being governed by its peculiar circumstances.
"The principal determinative characteristic of a
public utility is that of service to, or readiness to
serve, an indefinite public or portion of the public as
such which has a legal right to demand and receive
its services or commodities. Stated otherwise, the
owner or person in control of a public utility must
have devoted it to such use that the public
generally or that part of the public which has been
served and has accepted the service, has the right
to demand that use or service so long as it is
continued, with reasonable efficiency and under
proper charges.
If the use is merely optional with the owners, or the
public benefit is merely incidental, it is not a public
use, authorizing the exercise of jurisdiction of the
public utility commission. There must be, in
general, a right which the law compels the owner to
give to the general public. It is not enough that the
general prosperity of the public is promoted. Public
use is not synonymous with public interest. The
true criterion by which to judge the character of
the use is whether the public may enjoy it by
right or only by permission. (J.G. Summit vs.
Court of Appeals)
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Transportation Law Reviewer Delfin, Melicor, Matunog (D2019)

Public Utility Public Service

What is a public service?
A public utlity is "a (1) the person must
business or service own, operate,
C.A. No. 146, Sec 13(b). The term "public service" engaged in regularly manage, or control
includes every person that now or hereafter may supplying the public in the Philippines
own, operate, manage, or control in the with some commodity public services
Philippines, for hire or compensation, with general or service of public which may include
or limited clientele, whether permanent, occasional consequence such as distribution of goods
or accidental, and done for general business electricity, gas, water, or rendering of
purposes, any common carrier, railroad, street transportation, services to the
railway, traction railway, sub-way motor vehicle, telephone or telegraph public
either for freight or passenger, or both with or service. (2) the ownership must
without fixed route and whether may be its (J.G. Summit Holdings be for hire or
classification, freight or carrier service of any class, vs. CA) compensation
express service, steamboat or steamship line, (3) t h e o w n e r s h i p ,
pontines, ferries, and water craft, engaged in the o p e r a t i o n ,
transportation of passengers or freight or both, management or
shipyard, marine railways, marine repair shop, control must be
[warehouse] wharf or dock, ice plant, ice- done for general
refrigeration plant, canal, irrigation system, gas, business purpose
electric light, heat and power water supply and
power, petroleum, sewerage system, wire or Public Service > impressed with public interest
wireless communications system, wire or wireless
broadcasting stations and other similar public Legal Basis and Rationale for Regulation
services: Provided, however, That a person
engaged in agriculture, not otherwise a public
REPUBLIC OF THE PHILIPPINES VS. MERALCO
service, who owns a motor vehicle and uses it
- The regulation of rates to be charged by public
personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or utilities is founded upon the police powers of the
compensation to a third party or third parties State and statutes prescribing rules for the
engaged in agriculture, not itself or themselves a control and regulation of public utilities are a valid
public service, for operation by the latter for a exercise thereof.
limited time and for a specific purpose directly
- In regulating rates charged by public utlities, the
connected with the cultivation of his or their farm,
the transportation, processing, and marketing of State protects the public against arbitrary and
agricultural products of such third party or third excessive rates while maintaining the efficiency
parties shall not be considered as operating a and quality of services rendered. However, the
public service for the purposes of this Act. power to regulate rates does not give the State
the right to prescribe rates which are so low as to
deprive the public utility of a reasonable return on
investment.
- Thus, the rates prescribed by the State must be
one that yields a fair return on the public utility
upon the value of the property performing the
service and one that is reasonable to the public
for the services rendered. (balance of investor
and consumer interests)
- The compensation which the Constitution
guarantees an opportunity to earn is the
reasonable cost of conducting the business.
- While the power to fix rates is a legislative
function, whether exercised by the legislature
itself or delegated through an administrative
agency, a determination of whether the rates so
fixed are reasonable and just is a purely judicial

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question and is subject to the review of the
courts.
The function of the court, is to determine
whether under the facts and circumstances,
the final order entered by the administrative
agency is unlawful or unreasonable.
What is just and reasonable rate is a question
of fact calling for the exercise of discretion,
good sense, and a fair, enlightened and
independent judgment. The requirement of
reasonableness must be met.
Need for Regulation is caused by the ff.
Problems:
(1) Monopoly Pricing
(2) Price Discrimination
(3) Inefficient Price Structure
Elements of Public Utility Regulation:
(1) Profit control
(2) Entry control
(3) Price structure control
How to determine a reasonable rate of return?
(see notes)
Where does power to regulate Public
Utilities Reside
ALBANO VS. REYES
- Franchises issued by Congress are not required
before each and every public utility. Thus, the law
has granted certain administrative agencies the
power to grant licenses for or to authorize the
operation of certain public utilities.
- That the Constitution provides in Art XII, Sec 11
that the issuance of a franchise, certificate, or
other form of authorization for the operation of a
public utility shall be subject to amendment,
alteration or repeal by Congress does not
necessarily imply, as petitioner posits, that only
Congress has the power to grant such
authorization. Our statute books are replete with
laws granting specified agencies in the Executive
Branch the power to issue such authorization for
certain classes of public utilities.
KMU LABOR CENTER VS. GARCIA
- Legislature delegated to the defunct Public
Service Commission the power of fixing the rates
of public services. Respondent LTFRB, the
Delfin, Melicor, Matunog (D2019)
existing regulatory body today, is likewise vested
with the same under Executive Order No. 202
dated June 19, 1987.
- Sec 5(c) of the said executive order authorizes
LTFRB "to determine, prescribe, approve and
periodically review and adjust, reasonable fares,
rates and other related charges, relative to the
operation of public land transportation services
provided by motorized vehicles.
- Such delegation of legislative power to an
administrative agency is permitted din order to
adapt to the increasing complexity of modern life.
Given the task of determining sensitive and
delicate matters as route-fixing and rate-making
for the transport sector, the responsible
regulatory body is entrusted with the power of
subordinate legislation.
- However, nowhere under the aforesaid
provisions of law are the regulatory bodies, the
PSC and LTFRB alike, authorized to delegate
that power to a common carrier, a transport
operator, or other public service.
- IN the case at bar, the authority given by the
LTFRB to the provincial bus operators to set a
fare range over and above the authorized
existing fare, is illegal and invalid as it is
tantamount to an undue delegation of legislative
authority. Potestas delegata non delegari potest.
Relate to Public Service Act 13(a). The
Commission shall have jurisdiction, supervision,
and control over all public services and their
franchises, equipment, and other properties, and
in the exercise of its authority, it shall have the
necessary powers and the aid of the public force:
Provided, That public services owned or operated
by government entities or government-owned or
controlled corporations shall be regulated by the
Commission in the same way as privately-owned
public services, but certificates of public
convenience or certificates of public convenience
and necessity shall not be required of such entities
or corporations: And provided, further, That it shall
have no authority to require steamboats, motor
ships and steamship lines, whether privately-
owned, or owned or operated by any Government
controlled corporation or instrumentality to obtain
certificate of public convenience or to prescribe
their definite routes or lines of service.
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What happened to the Public Service
Commission?
FOOTNOTE NO. 2 IN KMU LABOR CENTER VS. GARCIA
- The 20th century ushers in the birth and growth
or public utility regulation in the country.
(Introduced by the Americans > various
regulatory bodies were created).
They were the Coastwise Rate Commission
under Act No. 520 passed by the Philippine
Commission on November 17, 1902;
the Board of Rate Regulation under Act No.
1779 dated October 12, 1907;
the Board of Public Utility Commission under
Act No. 2307 dated December 19, 1913;
and the Public Utility Commission under Act
No. 3108 dated March 19, 1923.
- During the Commonwealth period, the National
Assembly passed a more comprehensive public
utility law. This was Commonwealth Act No. 146,
as amended or the Public Service Act, as
amended. Said law created a regulatory and
franchising body known as the Public Service
Commission (PSC).
- The Commission (PSC) existed for thirty-six (36)
years from 1936 up to 1972.
- On September 24, 1972, P.D. No. 1 was issued
and declared "part of the law of the land." The
same effected a major revamp of the executive
department. Under Article III, Part X of P.D. No.
1, the Public Service Commission (PSC) was
abolished and replaced by three (3) specialized
regulatory boards:
The Board of Transportation,
the Board of Communications,
and the Board of Power and Waterworks.
- The Board of Transportation (BOT) lasted for
thirteen (13) years. On March 20, 1985,
Executive Order No. 1011 was issued abolishing
the Board of Transportation and the Bureau of
Land Transportation. Their powers and functions
were merged into the Land Transportation
Commission (LTC).
- 2 years later, LTC was abolished by Executive
Order Nos. 125 dated January 30, 1987 and 125-
A dated April 13, 1987 which reorganized the
Department of Transportation and
Communications.
- On June 19, 1987, the Land Transportation
Franchising and Regulatory Board (LTFRB) was
Delfin, Melicor, Matunog (D2019)
created by Executive Order No. 202. The LTFRB,
successor of LTC, is the existing franchising and
regulatory body for overland transportation today.
What is Not a Public Utility?
TATAD VS. GARCIA
- What private respondent owns are the rail tracks,
not a public utlity.
- The constitution does not require a franchise for
the operation of a public utility. However, it does
not require a franchise before one can own the
facilities needed to operate a public utility so long
as it does not operate them to serve the public.
- In law, there is no clear distinction between the
operation of public utility and ownership of the
facilities and equipment used to serve the public.
The right to operate a public utility may exist
independently and separately from the
ownership of the facilities thereof. One can
own said facilities without operating them as a
public utility, or conversely, one may operate a
public utility without owning the facilities used to
serve the public. The devotion of property to
serve the public may be done by the owner or by
the person in control thereof who may not
necessarily be the owner thereof.
J.G. SUMMIT HOLDINGS INC. VS. COURT OF APPEALS
- The principal determinative characteristic of a
public utility is that of service to, or readiness to
serve, an indefinite public or portion of the public
as such which has a legal right to demand and
receive its services or commodities. Stated
otherwise, the owner or person in control of a
public utility must have devoted it to such use
that the public generally or that part of the public
which has been served and has accepted the
service, has the right to demand that use or
service so long as it is continued, with
reasonable efficiency and under proper charges.
A shipyard is a public or enclosure where
ships are built or repaired. Its nature dictates
that it serves but a limited clientele whom it
may choose to serve at its discretion. While it
offers its facilities to whoever may wish to avail
of its services, a shipyard is not legally
obliged to render its services
indiscriminately to the public.
It has no legal obligation to render the services
sought by each and every client. The fact that
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it publicly offers its services does not give the
public a legal right to demand that such
services be rendered.
- There can be no disagreement that the
shipbuilding and ship repair industry is imbued
with public interest as it involves the
maintenance of the seaworthiness of vessels
dedicated to the transportation of either persons
or goods. Nevertheless, the fact that a business
is affected with public interest does not imply that
it is under a duty to serve the public.
Can Congress declare what is or what is not a
public utility?
Yes, but not if the service involved is inherently
NOT a public utility, however the public policy as
determined by Congress will not be lightly
disregarded by the courts. (Note: EPIRA Law Sec 9
states that electricity generation is not a public
utility)
See: What is not included under PSC as public
utility
PSA Sec 14. The following are exempted from the
provisions of the preceding section:
(a) Warehouses;
(b) Vehicles drawn by animals and bancas moved
by oar or sail, and tugboats and lighters;
(c) Airships within the Philippines except as
regards the fixing of their maximum rates on freight
and passengers;
(d) Radio companies except with respect to the
fixing of rates;
(e) Public services owned or operated by any
instrumentality of the National Government or by
any government-owned or controlled corporation,
except with respect to the fixing of rates.
Constitutional Provisions
Art XII.
Sec 6. The use of property bears a social function,
and all economic agents shall contribute to the
common good. Individuals and private groups,
including corporations, cooperatives, and similar
collective organizations, shall have the right to
own, establish, and operate economic enterprises,
subject to the duty of the State to promote
distributive justice and to intervene when the
common good so demands.
Sec 11. No franchise, certificate, or any other form
of authorization for the operation of a public utility
Delfin, Melicor, Matunog (D2019)
shall be granted except to citizens of the
Philippines or to corporations or associations
organized under the laws of the Philippines at least
sixty per centum of whose capital is owned by
such citizens, nor shall such franchise, certificate,
or authorization be exclusive in character or for a
longer period than fifty years. Neither shall any
such franchise or right be granted except under
the condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the
common good so requires. The State shall
encourage equity participation in public utilities by
the general public. The participation of foreign
investors in the governing body of any public utility
enterprise shall be limited to their proportionate
share in its capital, and all the executive and
managing officers of such corporation or
association must be citizens of the Philippines.
Sec 17. In times of national emergency, when the
public interest so requires, the State may, during
the emergency and under reasonable terms
prescribed by it, temporarily take over or direct the
operation of any privately owned public utility or
business affected with public interest.
Sec 18. The State may, in the interest of national
welfare or defense, establish and operate vital
industries and, upon payment of just
compensation, transfer to public ownership utilities
and other private enterprises to be operated by the
Government.
Sec 19. The State shall regulate or prohibit
monopolies when the public interest so requires.
No combinations in restraint of trade or unfair
competition shall be allowed.
Ownership
GAMBOA VS. TEVES
- for a corporation to be granted authority to
operate a public utility, a least 60% of its capital
must be owned by Filipino citizens.
- The term "capital" in Section 11, Article XII of the
Constitution refers only to shares of stock entitled
to vote in the election of directors, and thus in the
present case only to common shares, and not to
the total outstanding capital stock comprising
both common and non-voting preferred shares.
However, if the preferred shares also have the
right to vote in the election of directors, then
the term "capital" shall include such preferred
shares because the right to participate in the
control or management of the corporation is
exercised through the right to vote in the
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election of directors. In short, the term
"capital" in Section 11, Article XII of the
Constitution refers only to shares of stock
that can vote in the election of directors.
However, if the preferred shares also have the
right to vote in the election of directors, then
the term "capital" shall include such preferred
shares because the right to participate in the
control or management of the corporation is
exercised through the right to vote in the
election of directors. In short, the term
"capital" in Section 11, Article XII of the
Constitution refers only to shares of stock
that can vote in the election of directors.
SEC 2 of SEC MC No. 8-20.
(a) total # of outstanding shares of stock entitled to
vote in the election of directors
(b) the total # of outstanding shares of stock,
whether or not entitled to vote in the election of
directors.
The SEC Memo has a stricter application, applying
it to 2 classes of shares; it applies the 60-40 ratio
separately across the board to each class of
shares.
IN THE MATTER OF: THE CORPORATE REHABILITATION OF
BAYAN TELECOMMUNICATIONS
- Applying the ruling in Gamboa vs. Teves, 2 steps
must be followed in order to determine whether
the conversion of debt to equity in excess of 40%
of the outstanding capital stock violates the
constitutional limit on foreign ownership of a
public utility: First, identify into which class of
shares the debt shall be converted, whether
common shares, preferred shares that have the
right to vote in the election of directors or non-
voting preferred shares; Second, determine the
number of shares with voting right held by foreign
entities prior to conversion. If upon conversion,
the total number of shares held by foreign
entities exceeds 40% of the capital stock with
voting rights, the constitutional limit on foreign
ownership is violated. Otherwise, the conversion
shall be respected.
PSA, Sec 16. The Commission shall have power,
upon proper notice and hearing in accordance
with the rules and provisions of this Act, subject to
the limitations and exceptions mentioned and
Delfin, Melicor, Matunog (D2019)
saving provisions to the contrary :
(a) To issue certificates which shall be known as
certificates of public convenience, authorizing the
operation of public service within the Philippines
whenever the Commission finds that the operation
of the public service proposed and the
authorization to do business will promote the
public interest in a proper and suitable manner.
Provided, That thereafter, certificates of public
c o n v e n i e n c e a n d c e r t i fi c a t e s o f p u b l i c
convenience and necessity will be granted only to
citizens of the Philippines or of the United States or
to corporations, co-partnerships, associations or
joint-stock companies constituted and organized
under the laws of the Philippines; Provided, That
sixty per centum of the stock or paid-up capital of
any such corporations, co-partnership, association
or joint-stock company must belong entirely to
citizens of the Philippines or of the United States:
Provided, further, That no such certificates shall be
issued for a period of more than fifty years.
Sec 20. Acts requiring the approval of the
Commission. - Subject to established limitations
and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service
or for the owner, lessee or operator thereof, without
the approval and authorization of the Commission
previously had -
(i) To sell, alienate or in any manner transfer shares
of its capital stock to any alien if the result of that
sale, alienation, or transfer in itself or in connection
with another previous sale shall be the reduction to
less than sixty per centum of the capital stock
belonging to Philippine citizens. Such sale,
alienation or transfer shall be void and of no effect
and shall be sufficient cause for ordering the
cancellation of the certificate.
Exclusivity
MCWD VS. ADALA
- Nonetheless, while the prohibition in Sec 47 of
PD 198 applies to the issuance of CPCs for the
reasons discussed above, the same provision
must be deemed void ab initio for being
irreconcilable with Article XIV Section 5 of the
1973 Constitution which was ratified on January
17, 1973 - the constitution in force when P.D. 198
was issued on May 25, 1973.
nor shall such franchise, certificate, or
authorization be exclusive in character or for a
longer period than fifty years.
- Since, Sec 47 of PD 198, which vests an
exclusive franchise upon public utlities, is clearly
repugnant to Article XIV, Section 5 of the 1973
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Constitution, it is unconstitutional and may not,
therefore, be relied upon by petitioner in support
of its opposition against respondent's application
for CPC and the subsequent grant thereof by the
NWRB.
Subject to Amendment
RCPI VS. NTC
- Petitioner claims that its franchise cannot be
affected by Executive Order No. 546 on the
ground that it has long been in operation since
1957 cannot be sustained.
Franchise started out as a royal privilege.
Today, a franchise being merely a privilege
emanating form the sovereign power of the
state and owing its existence to a grant, is
subject to regulation by the state itself by
virtue of its police power thru its administrative
agencies.
Fixed-Term
FRANCISCO VS. TOLL REGULATORY BOARD
- We are unable to agree. The limiting thrust of the
foregoing constitutional provision on the grant of
franchise or other forms of authorization to
operate public utilities may, in context, be stated
as follows:
(a) the grant shall be made only in favor of
qualified Filipino citizens or corporations;
(b) Congress can impair the obligation of
franchises, as contracts; and
(c) no such authorization shall be exclusive or
exceed fifty years.
- There are certain aspects in PNCC's legislative
franchise beyond the altering reach of TRB.
We refer to the coverage area of the tollways and
the expiry date of PNCC's original franchise,
which is May 1, 2007, as expressly stated under
Sections 1 and 2 of P.D. 1894, respectively.
The fact that these two items were
specifically and expressly defined by law
indicates an intention that any alterations
could be only done thru the same medium.
Take-Over Power
DAVID VS. MACAPAGAL-ARROYO
- the exercise of emergency powers, such as the
taking over of privately owned public utility or
Delfin, Melicor, Matunog (D2019)
business affected with public interest, is a
different matter. This requires a delegation from
Congress.
Congress is the repository of emergency
powers. This is evident in the tenor of Section
23 (2), Article VI authorizing it to delegate such
powers to the President. Certainly, a body
cannot delegate a power not reposed upon it.
H o w e v e r, k n o w i n g t h a t d u r i n g g r a v e
emergencies, it may not be possible or
practicable for Congress to meet and exercise
its powers, the Framers of our Constitution
deemed it wise to allow Congress to grant
emergency powers to the President, subject to
certain conditions, thus:
There must be war or other emergency
The delegation must be for a limited
period only
The delegations must be subject to such
restrictions as Congress may prescribe
The emergency powers must be
exercised to carry out a national policy
declared by Congress
- Sec 17, Article XII must be understood as an
aspect of the emergency powers clause. The
taking over of private business affected with
public interest is just another facet of the
emergency powers generally reposed upon
Congress. Thus, when Section 17 states that the
"the State may, during the emergency and under
reasonable terms prescribed by it, temporarily
take over or direct the operation of any privately
owned public utility or business affected with
public interest," it refers to Congress, not the
President.
Now whether the President may exercise such
power is dependent on whether Congress may
delegate it to him.
- The President cannot decide whether
exceptional circumstances exist warranting the
take over of privately-owned public utility or
business affected with public interest. Nor can he
determine when such exceptional circumstances
have ceased. Likewise, without legislation, the
President has no power to point out the types of
businesses affected with public interest that
should be taken over. In short, the President has
no absolute authority to exercise all the powers
of the State under Section 17, Article VII in the
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absence of an emergency powers act passed by
Congress.
AGAIN VS. PIATCO
- Sec 17, Art XII grants the State in times of
national emergency the right to temporarily take
over the operation of any business affected with
public interest. This right is an exercise of police
power which is one of the inherent powers of the
State.
Police Power has been defined as the state
authority to enact legislation that may interfere
with personal liberty or property in order to
promote the general welfare.
It is also settled that public interest on the
occasion of a national emergency is the
primary consideration when the government
decides to temporarily take over or direct the
operation of a public utility or a business
affected with public interest. The nature and
extent of the emergency is the measure of the
duration of the takeover as well as the terms
thereof.
- Law clearly obligates the government in the
exercise of its police power to compensate
respondent PIATCO and this obligation is
offensive to the Constitution. Police power can
not be diminished, let alone defeated by any
contract for its paramount consideration is public
welfare and interest.
Privatization of State Operated Public
Utilities
KUWAIT AIRWAYS VS. PAL
- by the time ownership of Philippine Airlines was
transferred into private hands, the controverted
"Whereas" clause had taken on a different
complexion, for it was newly evident that an act
of the Philippine government negating the
commercial arrangement between the two
airlines would infringe the vested rights of a
private individual.
- As with all regulatory subjects of the government,
infringement of property rights can only avail with
due process of law. Legislative regulation of
public utilities must not have the effect of
depriving an owner of his property without due
p r o c e s s o f l a w, n o r o f c o n fi s c a t i n g o r
appropriating private property without due
p r o c e s s o f l a w, n o r o f c o n fi s c a t i n g o r
Delfin, Melicor, Matunog (D2019)
appropriating private property without just
compensation, nor of limiting or prescribing
irrevocably vested rights or privileges lawfully
acquired under a charter or franchise.
- However this is not a case where the CAB had
duly exercised its regulatory authority over a
local airline in order to implement or further
government air policy. What happened instead
was an officer of the CAB, acting in behalf not of
the Board but of the Philippine government, had
committed to a foreign nation the immediate
abrogation of Philippine Airlines's commercial
agreement with Kuwait Airways. And while we do
not question that ability of that member of the
CAB to represent the Philippine government in
signing the CMU, we do question whether such
member could have bound Philippine Airlines in a
manner that can be accorded legal recognition
by our courts.
Regulation of Public Utilities
Authority to Operate
ALBANO VS. REYES
- That the Constitution provides in Art XII, Sec 11
that the issuance of a franchise, certificate, or
other form of authorization for the operation of a
public utility shall be subject to amendment,
alteration or repeal by Congress does not
necessarily imply, as petitioner posits, that only
Congress has the power to grant such
authorization. Our statute books are replete with
laws granting specified agencies in the Executive
Branch the power to issue such authorization for
certain classes of public utilities.
PLDT VS. NTC
- There can be no question that the NTC is the
regulatory agency of the national government
with jurisdiction over all telecommunications
entities. It is legally clothed with authority and
given ample discretion to grant a provisional
permit or authority
- It may even grant relief even in the absence of a
motion. (after the filing of an application)
FRANCISCO VS. TOLL REGULATORY BOARD
While not determinative of the issue immediately at
hand, the grant to and the exercise by an
administrative agency of regulating and allowing
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the operation of public utilities and, at the same
time, fixing the fees that they may charge their
customers is now commonplace. It must be
presumed that the Congress, in creating said
agencies and clothing them with both adjudicative
powers and contract-making prerogatives, must
have carefully studied such dual authority and
found the same not breaching any constitutional
principle or concept.
- To summarize, the fact that an administrative
agency is exercising its administrative or
executive functions (such as the granting of
franchises or awarding of contracts) and at the
same time exercising its quasi-legislative (e.g.
rule-making) and/or quasi-judicial functions (e.g.
rate-fixing), does not support a finding of a
violation of due process or the Constitution.
NAPOCOR VS. COURT OF APPEALS
In view of the foregoing, it is our opinion that only
the non-price regulatory functions of ERB under
Section 3 of E.O. 172 are transferred to the DOE.
All other powers of ERB which are not within the
purview of its 'non-price regulatory jurisdiction,
powers and functions' as defined in Section 3 are
not so transferred to DOE and accordingly remain
vested in ERB.
Public Service Act Sec 16(a). Proceedings of the
Commission, upon notice and hearing. - The
Commission shall have power, upon proper notice
and hearing in accordance with the rules and
provisions of this Act, subject to the limitations and
exceptions mentioned and saving provisions to the
contrary :
(a) To issue certificates which shall be known as
certificates of public convenience, authorizing the
operation of public service within the Philippines
whenever the Commission finds that the operation
of the public service proposed and the
authorization to do business will promote the
public interest in a proper and suitable manner.
Provided, That thereafter, certificates of public
c o n v e n i e n c e a n d c e r t i fi c a t e s o f p u b l i c
convenience and necessity will be granted only to
citizens of the Philippines or of the United States or
to corporations, co-partnerships, associations or
joint-stock companies constituted and organized
under the laws of the Philippines; Provided, That
sixty per centum of the stock or paid-up capital of
any such corporations, co-partnership, association
or joint-stock company must belong entirely to
citizens of the Philippines or of the United States:
Provided, further, That no such certificates shall be
Delfin, Melicor, Matunog (D2019)
issued for a period of more than fifty years.
Sec 18. It shall be unlawful for any individual, co-
partnership, association, corporation or joint-stock
company, their lessees, trustees or receivers
appointed by any court whatsoever, or any
municipality, province, or other department of the
Government of the Philippines to engage in any
public service business without having first
secured from the Commission a certificate of
public convenience or certificate of public
convenience and necessity as provided for in this
Act, except grantees of legislative franchises
expressly exempting such grantees from the
requirement of securing a certificate from this
Commission as well as concerns at present
existing expressly exempted from the jurisdiction
of the Commission, either totally or in part, by the
provisions of section thirteen of this Act.
General Qualifications
VDA DE LAT VS. PSC
- We are convinced that the private respondent
deserves to be awarded the Certificate of Public
Convenience. He was able to fully satisfy the
requisites before such a certificate may be
granted, namely:
(1) the applicant must be a citizen of the
Philippines,, or a corporation or co-
partnership, association or joint-stock
company constituted and organized under
the laws of the Philippines, 60 per centum at
least of the stock or paid-up capital of which
belong entirely to citizens of the Philippines;
(2) the applicant must be financially capable
of undertaking the proposed service and
meeting the responsibilities incident to its
operation; and
(3) the applicant must prove that the
operation of the public service proposed and
the authorization to do business will promote
the public interest in a proper and suitable
manner.
KMU LABOR CENTER VS. GARCIA
- As one of the basic requirements for the grant of
a CPC, public convenience and necessity
exists when the proposed facility or service
meets a reasonable want of the public and
supply a need which the existing facilities do not
adequately supply. The existence or non-
existence of public convenience and necessity is
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therefore a question of fact that must be
established by evidence, real and/or testimonial;
empirical data; statistics and such other means
necessary, in a public hearing conducted for that
purpose.
Revocation or Cancellation
DIVINAGRACIA VS. CONSOLIDATED BROADCASTING
SYSTEM
- It is still evident that E.O. No. 546 provides no
explicit basis to assert that the NTC has the
power to cancel the licenses or CPCs it has duly
issued, even as the government office previously
tasked with the regulation of radio stations, the
Secretary of Public Works and Communications,
previously possessed such power by express
mandate of law. In order to sustain petitioner's
premise, the Court will be unable to rely on an
unequivocally current and extant provision of law
that justifies the NTC's power to cancel CPCs.
Petitioner suggests that since the NTC has the
power to issue CPCs, it necessarily has the
power to revoke the same. One might also argue
that through the general rule-making power of
the NTC, we can discern a right of the NTC to
cancel CPCs.
PSA Sec 16(m). Proceedings of the Commission,
upon notice and hearing. - The Commission shall
have power, upon proper notice and hearing in
accordance with the rules and provisions of this
Act, subject to the limitations and exceptions
mentioned and saving provisions to the contrary :
(m) To amend, modify or revoke at any time
certificate issued under the provisions of this Act,
whenever the facts and circumstances on the
strength of which said certificate was issued have
been misrepresented or materially changed.
CPC vs. CPCN
PSA, Sec 15. With the exception of those
enumerated in the preceding section, no public
service shall operate in the Philippines without
possessing a valid and subsisting certificate from
the Public Service Commission known as
"certificate of public convenience," or "certificate of
public convenience and necessity," as the case
may be, to the effect that the operation of said
service and the authorization to do business will
promote the public interests in a proper and
Delfin, Melicor, Matunog (D2019)
suitable manner.
The Commission may prescribe as a condition for
the issuance of the certificate provided in the
preceding paragraph that the service can be
acquired by the Republic of the Philippines or any
instrumentality thereof upon payment of the cost
price of its useful equipment, less reasonable
depreciation; and likewise, that the certificate shall
be valid only for a definite period of time; and that
the violation of any of these conditions shall
produce the immediate cancellation of the
certificate without the necessity of any express
action on the part of the Commission.
In estimating the depreciation, the effect of the use
of the equipment, its actual condition, the age of
the model, or other circumstances affecting its
value in the market shall be taken into
consideration.
The foregoing is likewise applicable to any
extension or amendment of certificates actually in
force and to those which may hereafter be issued,
to permit to modify itineraries and time schedules
of public services, and to authorizations to renew
and increase equipment and properties.
PAL VS. CAB
Petitioner argues that since R.A. 776 gives the
Board the authority to issue "Certificates of Public
Convenience and Necessity", this, according to
petitioner, means that a legislative franchise is an
absolute requirement. It cites a number of
authorities supporting the view that a Certificate of
Public Convenience and Necessity is issued to a
public service for which a franchise is required by
law, as distinguished from a "Certificate of Public
Convenience" which is an authorization issued for
the operation of public services for which no
franchise, either municipal or legislative, is required
by law.
Supreme Court does not agree
- Many and varied are the definitions of certificates
of public convenience which courts and legal
writers have drafted. Some statutes use the
terms "convenience and necessity" while others
use only the words "public convenience." The
terms "convenience and necessity", if used
together in a statute, are usually held not to be
separable, but are construed together.
both worlds must be construed together. The
word 'necessity' is so connected, not as an
additional requirement but to modify and
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Transportation Law Reviewer
qualify what might otherwise be taken as the
strict significance of the word necessity.
public convenience and necessity exists when
the proposed facility will meet a reasonable
want of the public and supply a need which
the existing facilities do not adequately afford.
It does not mean or require an actual physical
necessity or an indispensable thing
- The use use of the word "necessity", in
conjunction with "public convenience" in a
certificate of authorization to a public service
entity to operate, does not in any way modify the
nature of such certification, or the requirements
for the issuance of the same.
- It is the law which determines the requisites for
the issuance of such certification, and not the title
indicating the certificate.
Rate-Fixing
Sec 16(c). Proceedings of the Commission,
upon notice and hearing. - The Commission shall
have power, upon proper notice and hearing in
accordance with the rules and provisions of this
Act, subject to the limitations and exceptions
mentioned and saving provisions to the contrary :
(c) To fix and determine individual or joint rates,
tolls, charges, classifications, or schedules thereof,
as well as commutation, mileage, kilometrage, and
other special rates which shall be imposed
observed and followed thereafter by any public
service: Provided, That the Commission may, in its
discretion, approve rates proposed by public
services provisionally and without necessity of any
hearing; but it shall call a hearing thereon within
thirty days, thereafter, upon publication and notice
to the concerns operating in the territory affected:
Provided, further, That in case the public service
equipment of an operator is used principally or
secondarily for the promotion of a private business,
the net profits of said private business shall be
considered in relation with the public service of
such operator for the purpose of fixing the rates.
Sec 20(a). Acts requiring the approval of the
Commission. - Subject to established limitations
and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service
or for the owner, lessee or operator thereof, without
the approval and authorization of the Commission
previously had -
(a) To adopt, establish, fix, impose, maintain,
Delfin, Melicor, Matunog (D2019)
collect or carry into effect any individual or joint
rates, commutation, mileage or other special rate,
toll, fare, charge, classification or itinerary. The
Commission shall approve only those that are just
and reasonable and not any that are unjustly
discriminatory or unduly preferential, only upon
reasonable notice to the public services and other
parties concerned, giving them a reasonable
opportunity to be heard and the burden of the
proof to show that the proposed rates or
regulations are just and reasonable shall be upon
the public service proposing the same.
PHILCOMSAT VS. ALCUAZ
- In case of a delegation of the rate-fixing power,
the only standard which the legislature is
required to prescribe for the guidance of the
administrative authority is that the rate be
reasonable and just. However, it has been held
that even in the absence of an express
requirement as to reasonableness, this standard
may be implied.
- The power to regulate is not the power to destroy
useful and harmless enterprises, but is the power
to protect, foster, promote, preserve, and control
with due regard for the interests, first and
foremost, of the public, then of the utility and of
its patrons. Any regulation, therefore, which
operates as an effective confiscation of private
property or constitutes an arbitrary or
unreasonable infringement of property rights is
void, because it is repugnant to the constitutional
guaranties of due process and equal protection
of the laws
- The basic requirement of reasonableness
comprehends such rates which must not be so
low as to be confiscatory, or too high as to be
oppressive
REPUBLIC VS. MERIALCO
- In determining the just and reasonable rates to
be charged by a public utility, three major factors
are considered by the regulating agency: a) rate
of return; b) rate base and c) the return itself or
the computed revenue to be earned by the public
utility based on the rate of return and rate base
The rate of return is a judgment percentage,
which, if multiplied with the rate base, provides
a fair return on the public utility for the use of
its property for service to the public.
The rate of return of a public utility is not
prescribed by statute but by administrative and
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Transportation Law Reviewer
judicial pronouncements. This Court has
consistently adopted a 12% rate of return for
public utilities.
The rate base, on the other hand, is an
evaluation of the property devoted by the utility
to the public service or the value of invested
capital or property which the utility is entitled to
a return.
- Factual findings of administrative bodies on
technical matters within their area of expertise
should be accorded not only respect but even
finality if they are supported by substantial
evidence even if not overwhelming or
preponderant.
Undue Delegation
KMUL LABOR CENTER VS. GARCIA
- Sec 16(c) of the public service act provides that
Commission has power UPON PROPER
NOTICE AND HEARING to fix and determine
rates.
- IN the case at bar, the authority given by the
LTFRB to the provincial bus operators to set a
fare range over and above the authorized
existing fare, is illegal and invalid as it is
tantamount to an undue delegation of legislative
authority. Potestas delegata non delegari potest.
- What has been delegated cannot be delegated.
This doctrine is based on the ethical principle
that such a delegated power constitutes not only
a right but a duty to be performed by the
delegate through the instrumentality of his own
judgment and not through the intervening mind of
another
Provisional Rates
PADUA VS. RANADA
- The question of whether the rates are exorbitant,
oppressive, onerous, and unconscionable is a
question of fact requiring knowledge of the
formula used.
- All that is necessary that a provisional approval
of a toll rate be issued is: (1) a finding that the
main petition is sufficient in form and substance;
(2) the submission of an affidavit showing that
the increase in rates substantially conforms to
the formula, if any is stipulated in the
franchise or toll operation agreement, and that
failure to immediately impose and collect the
increase in rates would result in great irreparable
Delfin, Melicor, Matunog (D2019)
injury to the petitioner; and (3) the submission of
a bond. Again, whether or not CITRA complied
with these requirements is an issue that must
be addressed to the TRB.
- Admin agency may be empowered to approve
provisionally, when demanded by urgent public
need, rates of public utilities without a hearing.
The reason is easily discerned from the fact that
provisional rates are by their nature temporary
and subject to adjustment in conformity with the
definitive rates approved after final hearing.
FREEDOM FROM DEBT COALITION VS. ENERGY
REGULATORY COMMISSION
new order on rate adjustments:
(1) The applicant must file with the ERC a verified
application/petition for rate adjustment. It must
indicate that a copy thereof was received by the
legislative body of the LGU concerned. It must also
include a certification of the notice of publication
thereof in a newspaper of general circulation in the
same locality.
(2) Within 30 days from receipt of the application/
petition or the publication thereof, any consumer
affected by the proposed rate adjustment or the
LGU concerned may file its comment on the
application/petition, as well as on the motion for
provisional rate adjustment.
(3) If such comment is filed, the ERC must consider
it in its action on the motion for provisional rate
adjustment, together with the documents submitted
by the applicant in support of its application/
petition. If no such comment is filed within the 30-
day period, then and only then may the ERC
resolve the motion for provisional rate adjustment
on the basis of the documents submitted by the
applicant.
(4) However, the ERC need not conduct a hearing
on the motion for provisional rate adjustment. It is
sufficient that it consider the written comment, if
there is any.
(5) The ERC must resolve the motion for
provisional rate adjustment within 75 days from the
filing of the application/petition.
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Transportation Law Reviewer
(6) Thereafter, the ERC must conduct a full-blown
hearing on the application/petition not later than 30
days from the date of issuance of the provisional
order and must resolve the application/petition not
later than 12 months from the issuance of the
provisional order. Effectively, this provision limits
the lifetime of the provisional order to only 12
months.
Rate Refund
BF HOMES VS. MERALCO
- Jurisdiction is conferred only upon the
Constitution or by law. nature of an action and
the subject matter thereof, as well as which court
or agency of the government has jurisdiction over
the same, are determined by the material
allegations of the complaint in relation to the law
involved and the character of the reliefs prayed
for, whether or not the complainant/plaintiff is
entitled to any or all of such reliefs.
- Careful review of the material allegations of BF
Homes and PWCC in their Petition before the
RTC reveals that the very subject matter thereof
is the off-setting of the amount of refund they are
supposed to receive from MERALCO against the
electric bills they are to pay to the same
company. This is squarely within the primary
jurisdiction of the ERC.
Vis-a-vis Power to Grant Authority
FRANCISCO VS. TOLL REGULATORY BOARD
While not determinative of the issue immediately at
hand, the grant to and the exercise by an
administrative agency of regulating and allowing
the operation of public utilities and, at the same
time, fixing the fees that they may charge their
customers is now commonplace. It must be
presumed that the Congress, in creating said
agencies and clothing them with both adjudicative
powers and contract-making prerogatives, must
have carefully studied such dual authority and
found the same not breaching any constitutional
principle or concept.
- To summarize, the fact that an administrative
agency is exercising its administrative or
executive functions (such as the granting of
franchises or awarding of contracts) and at the
same time exercising its quasi-legislative (e.g.
rule-making) and/or quasi-judicial functions (e.g.
Delfin, Melicor, Matunog (D2019)
rate-fixing), does not support a finding of a
violation of due process or the Constitution.
Area of Operation
NAPOCOR VS. COURT OF APPEALS
- The determination of which of two public utilities
has the right to supply electric power to an area
which is within the coverage of both is certainly
not a rate-fixing function which should remain
with the ERB. It deals with the regulation of the
distribution of energy resources which, under
Executive Order No. 172, was expressly a
function of ERB. However, with the enactment of
Republic Act No. 7638, the Department of
Energy took over such function. Hence, it is this
Department which shall then determine whether
CEPALCO or PIA should supply power to PIE-
MO.
- "(i)t is only after a hearing (or an opportunity for
such a hearing) where it is established that the
affected private franchise holder is incapable or
unwilling to match the reliability and rates of NPC
that a direct connection with NPC may be
granted.
Approval of Sale and Mortgages of
Public Utility Assets or Equity
PSA, Sec 20. Acts requiring the approval of the
Commission. - Subject to established limitations
and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service
or for the owner, lessee or operator thereof, without
the approval and authorization of the Commission
previously had:
(g) To sell, alienate, mortgage, encumber or lease
its property, franchises, certificates, privileges, or
rights or any part thereof; or merge or consolidate
its property, franchises privileges or rights, or any
part thereof, with those of any other public service.
The approval herein required shall be given, after
notice to the public and hearing the persons
interested at a public hearing, if it be shown that
there are just and reasonable grounds for making
the mortgaged or encumbrance, for liabilities of
more than one year maturity, or the sale, alienation,
lease, merger, or consolidation to be approved,
and that the same are not detrimental to the public
interest, and in case of a sale, the date on which
the same is to be consummated shall be fixed in
the order of approval: Provided, however, that
nothing herein contained shall be construed to
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prevent the transaction from being negotiated or
completed before its approval or to prevent the
sale, alienation, or lease by any public service of
any of its property in the ordinary course of its
business.
(h) To sell or register in its books the transfer or
sale of shares of its capital stock, if the result of
that sale in itself or in connection with another
previous sale, shall be to vest in the transferee
more than forty per centum of the subscribed
capital of said public service. Any transfer made in
violation of this provision shall be void and of no
effect and shall not be registered in the books of
the public service corporation. Nothing herein
contained shall be construed to prevent the
holding of shares lawfully acquired. (As amended
by Com. Act No. 454.)
(i) To sell, alienate or in any manner transfer shares
of its capital stock to any alien if the result of that
sale, alienation, or transfer in itself or in connection
with another previous sale shall be the reduction to
less than sixty per centum of the capital stock
belonging to Philippine citizens. Such sale,
alienation or transfer shall be void and of no effect
and shall be sufficient cause for ordering the
cancellation of the certificate.
MONTOYA VS. IGNACIO
- The law really requires the approval of the Public
Service Commission in order that a franchise, or
any privilege pertaining thereto, may be sold or
leased without infringing the certificate issued to
the grantee. The reason is obvious. Since a
franchise is personal in nature any transfer or
lease thereof should be notified to the Public
Service Commission so that the latter may take
proper safeguards to protect the interest of the
public.
- In fact the law requires that before the approval
is granted, there should be a public hearing, with
notice to all interested parties, in order that the
Commission may determine if there are good
and reasonable grounds justifying the transfer or
lease of the property covered by the franchise, or
if the sale or lease is detrimental to public
interest.
- Such being the reason and philopshy behind this
requirement, it follows that if the property
covered by the franchise is transferred, or leased
to another without obtaining the requisite
approval, the transfer is not binding against the
Public Service Commission and in contemplation
of law the grantee continues to be responsible
Delfin, Melicor, Matunog (D2019)
under the franchise in relation to the Commission
and to the public.
such provision only means that even if the approval
has not been obtained the transfer or lease is valid
and binding between parties although not effective
against the public and the Public Service
Commission. The approval is only necessary to
protect public interest.
Y. TRANSIT VS. NLRC
- There being no prior BOT approval in the transfer
of property from Yujuico Transit Co., Inc. to Jesus
Yujuico, it only follows that as far as the BOT and
third parties are concerned, Yujuico Transit Co.,
Inc. still owned the properties. and Yujuico, and
later, "Y" Transit Co., Inc. only held the same as
agents of the former.
- Conversely where the registered owner is liable
for obligations to third parties and vehicles
registered under his name are levied upon to
satisfy his obligations, the transferee of such
vehicles cannot prevent the levy by asserting his
ownership because as far as the law is
concerned, the one in whose name the vehicle is
registered remains to be the owner and the
transferee merely holds the vehicles for the
registered owner.
Thus, "Y" Transit Co., Inc. cannot now argue
that the buses could not be levied upon to
satisfy the money judgment in favor of herein
respondents. However, this does not deprive
the transferee of the right to recover from the
registered owner any damages which may
have been incurred by the former since the . . .
transfer or lease is valid and binding between
the parties. . .
PLDT VS. NTC
- transfers of shares of a public utility corporation
need only NTC approval, not Congressional
authorization. What transpired in ETCI were a
series of transfers of shares starting in 1964 until
1987. The approval of the NTC may be deemed
to have been met when it authorized the
issuance of the provisional authority to ETCI.
- A distinction should be made between shares of
stock, which are owned by stockholders, the sale
of which requires only NTC approval, and the
franchise itself which is owned by the corporation
as the grantee thereof, the sale or transfer of
which requires Congressional sanction. Since
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Transportation Law Reviewer
stockholders own the shares of stock, they may
dispose of the same as they see fit. They may
not, however, transfer or assign the property of a
corporation, like its franchise. In other words,
even if the original stockholders had transferred
their shares to another group of shareholders,
the franchise granted to the corporation subsists
as long as the corporation, as an entity,
continues to exist The franchise is not thereby
invalidated by the transfer of the shares. A
corporation has a personality separate and
distinct from that of each stockholder. It has the
right of continuity or perpetual succession
Power to Set Fees and Other Charges
REPUBLIC VS. INTERNATIONAL COMMUNICATIONS
CORPORATION
- there does not even appear to be a conflict
between Section 40(g) of the Public Service Act,
as amended, and Section 5(g) of R.A. 7925. In
fact, the latter provision directs petitioner NTC to
continue to impose such fees and charges as
may be necessary to cover reasonable costs and
expenses for the regulation and supervision of
telecommunications entities. The absence alone
of the word authorization in Section 5(g) of R.A.
No. 7921 cannot be construed to mean that
petitioner NTC had thus been deprived of the
power to collect such fees.
- Taken in their entirety, they are the quintessence
of the Commission's regulatory functions, and
must go hand-in-hand with one another. In
petitioner's own words, [t]he Commission
authorizes, supervises and regulates
telecommunications entities and these
functions... cannot be considered singly without
destroying the whole concept of the
Commission's regulatory functions
Other Means of Regulation
See: PSA Sec 16 and 20.
PLDT VS. NTC
- In the provisional authority granted by NTC to
ETCi, one of the conditions imposed was that the
latter and PLDT were to enter into an
interconnection agreement to be jointly submitted
to NTC for approval.
Delfin, Melicor, Matunog (D2019)
- The interconnection which has been required of
PLDT is a form of "intervention" with property
rights dictated by "the objective of government to
promote the rapid expansion of
telecommunications services in all areas of the
Philippines, ... to maximize the use of
telecommunications facilities available, ... in
recognition of the vital role of communications in
nation building ... and to ensure that all users of
the public telecommunications service have
access to all other users of the service wherever
they may be within the Philippines at an
acceptable standard of service and at reasonable
cost" (DOTC Circular No. 90-248). Undoubtedly,
the encompassing objective is the common
good. The NTC, as the regulatory agency of the
State, merely exercised its delegated authority to
regulate the use of telecommunications networks
when it decreed interconnection.
BF HOMES VS. MERALCO
Indubitably, the ERC is the regulatory agency of the
government having the authority and supervision
over MERALCO. Thus, the task to approve the
guidelines, schedules, and details of the refund by
MERALCO to its consumers, to implement the
judgment of this Court in the MERALCO Refund
cases, also falls upon the ERC. By filing their
Petition before the RTC, BF Homes and PWCC
intend to collect their refund without submitting to
the approved schedule of the ERC, and in effect,
enjoy preferential right over the other equally
situated MERALCO consumers.
- ERC may grant provisional relief; may approve
guidelines and schedules and details of refund
TAXICAB OPERATORS OF METRO MANILA VS. BOARD OF
TRANSPORTATION
- Previous notice and hearing as elements of due
process, are constitutionally required for the
protection of life or vested property rights, as well
as of liberty, when its limitation or loss takes
place in consequence of a judicial or quasi-
judicial proceeding, generally dependent upon a
past act or event which has to be established or
ascertained. It is not essential to the validity of
general rules or regulations promulgated to
govern future conduct of a class or persons or
enterprises, unless the law provides otherwise.
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Transportation Law Reviewer Delfin, Melicor, Matunog (D2019)

Due Process Requirements Part II: Transportation Law

PANTRANCO VS. PSC General Discussion

- Whilst the challenged provisions of
Commonwealth Act No. 454 are valid and Definition
constitutional, we are, however, of the opinion
that the decision of the Public Service Contract of Transportation - Contract where a
Commission should be reversed and the case person obligates himself to transport persons or
remanded thereto for further proceedings for the property from one place to another for a
reason now to be stated. The Public Service consideration.
Commission has power, upon proper notice and - The contract may involve carriage of passengers
hearing, "to amend, modify or revoke at any time or carriage of goods.
any certificate issued under the provisions of this
Act, whenever the facts and circumstances on Relationship to a Public Utility
the strength of which said certificate was issued
have been misrepresented or materially
changed." The petitioner's application here was Art. 1732. Common carriers are persons,
corporations, firms, or associations engaged in the
for an increase of its equipment to enable it to
business of carrying or transporting passengers or
comply with the conditions of its certificates of goods or both by land, by water, or air, for
public convenience. On the matter of limitation to compensation, offering their services to the public.
twenty five (25) years of the life of its certificates
of public convenience, there had been neither
one that holds itself out as ready to engage in the
notice nor opportunity given the petitioner to be
transportation of goods for hire as a public
heard or present evidence.
employment and not as a casual occupation.
- There are cardinal primary rights which must be
respected even in proceedings of this character. - The term public service coincide needly with
The first of these rights is the right to a hearing,
common carriers. In Section 13(b) of the Public
which includes the right of the party interested or
Service Act, various modes of transportation are
affected to present his own case and submit
listed, thus putting such modes within the
evidence in support thereof.
coverage of the term public service if used by
certain persons for hire or compensation, with
KMU LABOR CENTER VS. GARCIA
general or limited clientele. The enumeration of
- It is understood that there must be proper notice
Public Utilities rests solely on the legislature
and hearing before the PSC can exercise its
power to issue a CPC.
- Public Service Act which requires that before a Nature of a Franchise
CPC will be issued, the applicant must prove by
RAYMUNDO VS. LUNETA MOTOR
proper notice and hearing that the operation of
the prime question need not be complicated by
the public service proposed will promote public
determining if a sale of a certificate of public
interest in a proper and suitable manner
convenience without any equipment may be the
- The power of a regulatory body to issue a CPC is
object of execution and garnishment sale
founded on the condition that after full-dress - the question to be decided on this appeal is,
hearing and investigation, it shall find, as a fact,
which of the two sales, the one at public auction
that the proposed operation is for the
by virtue of an attachment, or two voluntary sale
convenience of the public. Basic convenience is
made after the property had been levied upon,
the primary consideration for which a CPC is
should prevail, and a decision on this question is
issued, and that fact alone must be consistently
dependent on a decision relative to the liability to
borne in mind.
execution of certificates of public convenience.

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COURT:
- A certificate of public convenience granted to the
owner or operator of public service motor
vehicles, it has been held, grants a right in the
nature of a limited franchise.
- It will be noted that the Public Service Law and
the Code of Civil Procedure are silent on the
question at issue, that is, silent in the sense of
not containing specific provisions on the right to
attach certificates of public convenience.
- Certificates of public convenience have come to
have considerable material value. They are
valuable assets. In many cases the certificates
are the cornerstones on which are builded the
business of bus transportation.
If the holder of the certificate of public
convenience can thus be protected in his
constitutional rights, we see no reason why
the certificate of public convenience should
not assume corresponding responsibilities and
be susceptible as property or an interest
therein of being liable to execution.
COGEO-CUBAO OPERATOR & DRIVER ASSOC. VS. CA
- Under the Public Service Law, a certificate of
public convenience is an authorization issued by
the Public Service Commission for the operation
of public services for which no franchise is
required by law.
- A certification of public convenience is included
in the term "property" in the broad sense of the
term. Under the Public Service Law, a certificate
of public convenience can be sold by the holder
thereof because it has considerable material
value and is considered as valuable asset
(Raymundo v. Luneta Motor Co., et al., 58 Phil.
889). Although there is no doubt that it is private
property, it is affected with a public interest and
must be submitted to the control of the
government for the common good (Pangasinan
Transportation Co. v. PSC, 70 Phil 221). Hence,
insofar as the interest of the State is involved, a
certificate of public convenience does not confer
upon the holder any proprietary right or interest
or franchise in the route covered thereby and in
the public highways (Lugue v. Villegas, L-22545,
Nov . 28, 1969, 30 SCRA 409). However, with
respect to other persons and other public utilities,
a certificate of public convenience as property,
which represents the right and authority to
Delfin, Melicor, Matunog (D2019)
operate its facilities for public service, cannot be
taken or interfered with without due process of
law.
Scope of Franchise
SAN PABLO VS. PANTRANCO
whether a ferry service is a part of the authority
originally granted PANTRANCO
- the conveyance of passengers, trucks and cargo
from Matnog to Allen is certainly not a ferry boat
service but a coastwise or interisland shipping
service. Under no circumstance can the sea
between Matnog and Allen be considered a
continuation of the highway. While a ferry boat
service has been considered as a continuation of
the highway when crossing rivers or even lakes,
which are small body of waters - separating the
land, however, when as in this case the two
terminals, Matnog and Allen are separated by an
open sea it can not be considered as a
continuation of the highway
Prior-Operator Rule
BATANGAS TRANSPORTATION VS. ORLANES
Is a certificate of public convenience going to be
issued to a second operator to operate a public
utility in a field where, and in competition with, a
first operator who is already operating, adequate
and satisfactory service?
- the power of the Commission to issue a
certificate of public convenience depends on the
condition precedent that, after a full hearing and
investigation, the Commission shall have found
as a fact that the operation of the proposed
public service and its authority to do business
must be based upon the finding that it is for the
convenience of the public.
- So long as the first licensee keeps and performs
the terms and conditions of its license and
complies with the reasonable rules and
regulations of the Commission and meets the
reasonable demands of the public, it should have
more or less of a vested and preferential right
over a person who seeks to acquire another and
a later license over the same route. Otherwise,
the first license would not have protection on his
investment, and would be subject to ruinous
competition and thus defeat the very purpose
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and intent for which the Public Service
Commission was created.
Kabit System
TEJA VS. IAC
- Unquestionable the parties herein operated
under an arrangement, commonly known as the
"kabit system" whereby a person who has been
granted a certificate of public convenience allows
another person who owns motor vehicles to
operate under such franchise for a fee. A
certificate of public convenience is a special
privilege conferred by the government.
- Although not outrightly penalized as a criminal
offense, the kabit system is invariably recognized
as being contrary to public policy and, therefore,
void and inexistent under Article 1409 of the Civil
Code.
LIM VS. CA
- The kabit system is an arrangement whereby a
person who has been granted a certificate of
public convenience allows other persons who
own motor vehicles to operate them under his
license, sometimes for a fee or percentage of the
earnings.
Although the parties to such an agreement are
not outrightly penalized by law, the kabit
system is invariably recognized as being
contrary to public policy and therefore void
and inexistent under Art. 1409 of the Civil
Code.
The kabit system renders illusory such
purpose and, worse, may still be availed of by
the grantee to escape civil liability caused by a
negligent use of a vehicle owned by another
and operated under his license. If a registered
owner is allowed to escape liability by proving
who the supposed owner of the vehicle is, it
would be easy for him to transfer the subject
vehicle to another who possesses no property
with which to respond financially for the
damage done.
Thus, for the safety of passengers and the
public who may have been wronged and
deceived through the baneful kabit system, the
registered owner of the vehicle is not allowed
to prove that another person has become the
owner so that he may be thereby relieved of
Delfin, Melicor, Matunog (D2019)
responsibility. Subsequent cases affirm such
basic doctrine.
- In the present case it is at once apparent that the
evil sought to be prevented in enjoining the kabit
system does not exist.
First, neither of the parties to the pernicious
kabit system is being held liable for damages.
Second, the case arose from the negligence of
another vehicle in using the public road to
whom no representation, or misrepresentation,
as regards the ownership and operation of the
passenger jeepney was made and to whom no
such representation, or misrepresentation,
was necessary.
- THus, it cannot be said that private
respondent Gonzales and the registered
owner of the jeepney were in estoppel for
leading the public to believe that the
jeepney belonged to the registered owner.
Third, the riding public was not bothered nor
inconvenienced at the very least by the illegal
arrangement. On the contrary, it was private
respondent himself who had been wronged
and was seeking compensation for the
damage done to him. Certainly, it would be
the height of inequity to deny him his right.
- In light of the foregoing, it is evidence that private
respondent has the right to proceed against
petitioners for the damage caused on his
passenger jeepwney as well as on his business.
Any effort then to frustrate his claim of damages
by the ingenuity with which petitioners framed the
issue should be discouraged, if not repelled.
Public policy loses its force when public at large is
not involved
Private Nature; Rights and Obligations of
Parties inter se arising from transactions
relating to transportation.
absent a transportation contract
LARA VS. VALENCIA
- It therefore appears that the deceased as well as
his companions who rode in the pick-up of
defendant, were merely accommodation
passengers who paid nothing for the service and
so they can be considered as invited guests
within the meaning of the law. As accommodation
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passengers or invited guests, defendant as
owner and driver of the pick-up owes to them
merely the duty to exercise reasonable care so
that they may be transported safely to their
destination.
- Thus "The rule is established by the weight of
authority that the owner or operator of an
automobile owes the duty to an invited guest to
exercise reasonable care in its operation, and not
unreasonably to expose him to danger and injury
by increasing the hazard of travel. This rule, as
frequently stated by the courts, is that an owner
of an automobile owes a guest the duty to
exercise ordinary or reasonable care to avoid
injuring him. Since one riding in an automobile is
no less a guest because he asked for the
privilege of doing so, the same obligation of care
is imposed upon the driver as in the case of one
expressly invited to ride
Liability of Registered Owner
PCI LEASING VS. UCPB GENERAL INSURANCE
- In synthesis, we hold that the registered owner,
the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle
of the plaintiff-appellee, but he (defendant-
appellant) has a right to be indemnified by the
real or actual owner of the amount that he may
be required to pay as damage for the injury
caused to the plaintiff-appellant.
- For damage or injuries arising out of negligence
in the operation of a motor vehicle, the registered
owner may be held civilly liable with the negligent
driver either 1) subsidiarily, if the aggrieved party
seeks relief based on a delict or crime under
Articles 100 and 103 of the Revised Penal Code;
or 2) solidarily, if the complainant seeks relief
based on a quasi-delict under Articles 2176 and
2180 of the Civil Code. It is the option of the
plaintiff whether to waive completely the filing of
the civil action, or institute it with the criminal
action, or file it separately or independently of a
criminal action; his only limitation is that he
cannot recover damages twice for the same act
or omission of the defendant.
- In case a separate civil action is filed, the long-
standing principle is that the registered owner of
a motor vehicle is primarily and directly
responsible for the consequences of its
Delfin, Melicor, Matunog (D2019)
operation, including the negligence of the driver,
with respect to the public and all third persons
In contemplation of law, the registered owner
of a motor vehicle is the employer of its driver,
with the actual operator and employer, such as
a lessee, being considered as merely the
owner's agent.
This being the case, even if a sale has been
executed before a tortious incident, the sale, if
unregistered, has no effect as to the right of
the public and third persons to recover from
the registered owner.
The public has the right to conclusively
presume that the registered owner is the real
owner, and may sue accordingly.
- a sale, lease, or financial lease, for that matter,
that is not registered with the Land
Transportation Office, still does not bind third
persons who are aggrieved in tortious incidents,
for the latter need only to rely on the public
registration of a motor vehicle as conclusive
evidence of ownership.
Regulation of the Transportation Industry
EO 292, Book 4, Title XV (Transportation &
Communication)
SEC 1. Declaration of Policy.The State is
committed to the maintenance and expansion of
viable, efficient, fast, safe and dependable
transportation and communications systems as
effective instruments for national recovery and
economic progress. It shall not compete as a
matter of policy with private enterprise and shall
operate transportation and communications
facilities only in those areas where private
initiatives are inadequate or non-existent.
S E C 2 . M a n d a t e . T h e D e p a r t m e n t o f
Transportation and Communications shall be the
p r i m a r y p o l i c y, p l a n n i n g , p ro g r a m m i n g ,
coordinating, implementing, regulating and
administrative entity of the Executive Branch of the
government in the promotion, development and
regulation of dependable and coordinated
networks of transportation and communications
systems as well as in the fast, safe, efficient and
reliable postal, transportation and communications
services.
SEC 3.Powers and Functions.To accomplish its
mandate, the Department shall:
(1) Formulate and recommend national policies
a n d g u i d e l i n e s f o r t h e p re p a r a t i o n a n d
implementation of integrated and comprehensive
transportation and communications systems at the
national, regional and local levels;
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(2) Establish and administer comprehensive and
integrated programs for transportation and
communications, and for this purpose, it may call
on any agency, corporation or organization,
whether public or private, whose development
programs include transportation and
communications as integral parts thereof, to
participate and assist in the preparation and
implementation of such programs;
(3) Assess, review and provide direction to
transportation and communications research and
development programs of the government in
coordination with other institutions concerned;
(4) Administer and enforce all laws, rules and
regulations in the field of transportation and
communications;
(5) Coordinate with the Department of Public
Works and Highways in the design, location,
development, rehabilitation, improvement,
construction, maintenance and repair of all
infrastructure projects and facilities of the
Department. However, government corporate
entities attached to the Department shall be
authorized to undertake specialized
telecommunications, ports, airports and railways
projects and facilities as directed by the President
of the Philippines or as provided by law;
(6) Establish, operate and maintain a nationwide
postal system that shall include mail processing,
delivery services and money order services and
promote the art of philately;
(7) Issue certificates of public convenience for the
operation of public land and rail transportation
utilities and services;
(8) Accredit foreign aircraft manufacturers or
international organizations for aircraft certification
in accordance with established procedures and
standards;
(9) Establish and prescribe rules and regulations
for identification of routes, zones or areas of
operation of particular operators of public land
services;
(10) Establish and prescribe rules and regulations
for the establishment, operation and maintenance
of such telecommunications facilities in areas not
adequately served by the private sector in order to
render such domestic and overseas services that
are necessary with due consideration for advances
in technology;
(11) Establish and prescribe rules and regulations
for the issuance of certificates of public
convenience for public land transportation utilities,
such as motor vehicles, trimobiles and railways;
(12) Establish and prescribe rules and regulations
for the inspection and registration of air and land
transportation facilities, such as motor vehicles,
trimobiles, railways and aircraft;
(13) Establish and prescribe rules and regulations
for the issuance of licenses to qualified motor
vehicle drivers, conductors and airmen;
Delfin, Melicor, Matunog (D2019)
(14) Establish and prescribe the corresponding
rules and regulations for enforcement of laws
governing land transportation, air transportation
and postal services, including the penalties for
violations thereof, and for the deputation of
appropriate law enforcement agencies in
pursuance thereof;
(15) Determine, fix or prescribe charges or rates
pertinent to postal services and to the operation of
public air and land transportation utility facilities
and services, except such rates or charges as
may be prescribed by the Civil Aeronautics Board
under its charter and, in cases where charges or
rates are established by international bodies or
associations of which the Philippines is a
participating member or by bodies or associations
recognized by the Philippine government as the
proper arbiter of such charges or rates;
(16) Establish and prescribe the rules, regulations,
procedures and standards for the accreditation of
driving schools;
(17) Administer and operate the Civil Aviation
Training Center (CATC) and the National
Telecommunications Training Institute (NTTI); and
(18) Perform such other powers and functions as
may be provided by law.
SEC 4.Organizational Structure.The Department
shall consist of the Department Proper, the
D e p a r t m e n t R e g i o n a l O f fi c e s , t h e L a n d
Transportation Franchising and Regulatory Board,
and the Attached Agencies.
MIRASOL VS. DPWH
- Clearly, under EO 546, it is the DOTC, not the
DPWH, which has authority to regulate, restrict,
or prohibit access to limited access facilities.
- Thus, DO 74 and DO 215 are void because the
DPWH has no authority to declare certain
expressways as limited access facilities. Under
the law, it is the DOTC which is authorized to
administer and enforce all laws, rules and
regulations in the field of transportation and to
regulate related activities.
Since, the DPWH has no authority to regulate
activities relative to transportation, the TRB
cannot derive its power from the DPWH to
issue regulations governing limited access
facilities. The DPWH cannot delegate a power
or function which it does not possess in the
first place.
Since DO 74 and DO 215 are void, it follows
that the rules implementing them are likewise
void.
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AIR
Civil Aviation Authority
Civil Aviation Authority of the PH (RA 9497) RA
9497 (2008), Sections 4, 21, 24, 35
SEC. 4. Creation of the Authority. - There is
hereby created an independent regulatory body
with quasi-judicial and quasi-legislative powers and
possessing corporate attributes to be known as the
Civil Aviation Authority of the Philippines (CAAP),
hereinafter referred to as the "Authority" attached to
t h e D e p a r t m e n t o f Tr a n s p o r t a t i o n a n d
Communications (DOTC) for the purpose of policy
coordination. For this purpose, the existing Air
Transportation Office created under the provisions
of Republic Act No. 776, as amended, is hereby
abolished.
Notwithstanding the foregoing, nothing in this Act
shall diminish the powers and functions of the Civil
Aeronautics Board (CAB) as provided for under
Republic Act. No. 776, also known as "The Civil
Aeronautics Act of the Philippines", as amended.
(a) Establishment of Authority Headed by a Director
General - The Authority shall beheaded by a
Director General of Civil Aviation, referred to in this
Act as the "Director General," who shall be
appointed by the President of the Philippines and
shall be responsible for all civil aviation in the
Philippines and the administration of this Act. The
Director General shall be appointed based on the
qualifications herein provided and shall have a
tenure of office for a period of four (4) years. His
appointment may be extended for another non-
extendible term of four (4) years and shall only be
removed for cause in accordance with the rules
and regulations prescribed by the Civil Service
Commission.
(b) Responsibility of the Director General - The
Director General shall be responsible for the
exercise of all powers and the discharge of all
duties of the Authority and shall have control over
all personnel and activities of the Authority.
SEC. 21. Policies. - In the exercise and
performance of its powers and duties under this
Act, the Authority shall consider the following,
among other things, as being in the public interest
and in accordance with the public convenience and
necessity:
(a) The development and utilization of the air
Delfin, Melicor, Matunog (D2019)
potential of the Philippines;
(b) The encouragement and development of an air
transportation system properly adapted to the
present and future of foreign and domestic
commerce of the Philippines;
(c) The regulation of air transportation in such
manner as to support sound economic condition in
such transportation and to improve the relations
between air carriers;
(d) Ensuring the safety, quality, reliability, and
affordability of air transport services for the riding
public; and
(e) The encouragement and development of a
viable and globally competitive Philippine aviation
industry.
SEC. 24.Powers of the Board.- The Board shall
have the following general powers:
(a) Provide comprehensive policy guidance for the
promotion and development of the Philippine
aviation industry, as provided for in this Act;
(b) Ensure that the Authority performs its functions
in a proper, efficient and effective manner;
(c) Decide the objectives, strategies and policies of
the Authority in accordance with the provisions of
this Act;
(d) Determine the organizational structure of the
Authority in accordance with the provisions of this
Act, establish a human resources management
system based on merit and fitness, and adopt a
rational compensation and benefits scheme;
(e) Exercise appellate powers on any decisions,
findings and rulings of the Director General, to
issuesubpoena ad testificandum or subpoena
duces tecum requiring the attendance and
testimony of witnesses in any matter or inquiry
pending before the Board and require the
production of books, papers, contracts, agreements
and all other documents submitted for purposes of
this section to be under oath and verified by the
person in custody thereof as to the truth and
correctness of data appearing in such books,
papers, tariffs, contracts, agreements and all other
documents;
(f) Exercise appellate powers to order the taking of
depositions in any proceeding, or investigation,
pending before the Board at any stage of such
proceeding or investigation;
(g) Use available services, equipment, personnel
and facilities of other agencies of the Philippine
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Transportation Law Reviewer
Government, on a reimbursable basis when
appropriate and, on a similar basis, to co-operate
with those agencies in the establishment and use
of services, equipment and facilities of the
Authority;
(h) Use the property of the Authority in such a
manner as may appear to the Authority to be
requisite, advantageous or convenient with a view
to making the best use of any of the property of the
Authority in relation to its functions under this Act;
(i) Invest such of the Authority's funds that are not
immediately required for operating expenses, or
other immediate obligations in any business
venture the Board may deem appropriate, or in
such secured note, government securities, and
other negotiable instruments that satisfy the
guidelines prescribed by the Board. Funds of the
Authority shall be deposited in such commercial
and universal banks as the Board may determine,
subject to the requirements of existing laws. The
Board shall designate the officials authorized to
deposit in or withdraw funds from such depository
banks;
(j) Promulgate rules and regulations as may be
necessary in the interest of safety in air commerce
pertaining to the issuance of the airman's certificate
including the licensing of operating and mechanical
personnel, type certificate for aircraft, aircraft
engines, propellers and appliances, airworthiness
certificates, air carrier operating certificates, air
agency certificates, navigation facility and
aerodrome certificates; air traffic routes; radio and
aeronautical telecommunications and air navigation
aids; aircraft accident inquiries; aerodromes, both
public and private-owned; construction of
obstructions to aerodromes; height of buildings;
antennae and other edifices; registration of
aircrafts; search and rescue; facilitation of air
transports; operations of aircrafts, both for domestic
and international, including scheduled and non-
scheduled; meteorology in relation to civil aviation;
rules of the air; air traffic services; rules for
prevention of collision of aircrafts, identification of
aircraft; rules for safe altitudes of flight; and such
other rules and regulations, standards, governing
other practices, methods and/or procedures as the
Director General may find necessary and
appropriate to provide adequately for safety
regularity and efficiency in air commerce and air
navigation;
Delfin, Melicor, Matunog (D2019)
(k) Impose and fix reasonable charges and fees for
the use of government aerodromes or air
navigation facilities; for services rendered by the
Authority in the rating of any aerodrome or air
navigation facilities, civil aviation schools and
instructors, aircraft repair stations, and aircraft radio
and aeronautical telecommunications stations;
(l) Fix the reasonable charges to be imposed in the
use of privately-owned air navigation facilities and
aerodromes;
(m) Adopt a system for the registration of aircraft as
hereinafter provided;
(n) Determine and fix, landing fees, parking space
fees, royalties on sales or deliveries, direct or
indirect, to any aircraft for its use of aviation
gasoline, oil and lubricants, spare parts,
accessories and supplies, tools, other royalties,
fees or rentals for the use of any of the property
under its management and control;
(o) Approve the annual and supplementary budget
plan and utilization of retained revenue;
(p) Exercise the corporate powers granted to the
Authority;
(q) Upon its own initiative or the recommendation of
the Director General or an application of a private
person, grant exemption from the requirements of
observing rules or regulations issued in accordance
with this Act: Provided, That said grant of
exemption is not prejudicial to flight safety;
(r) Formulate rules and regulations concerning
compliance of the carrier and the public for the safe
transport of goods and materials by air pursuant to
international standards or Annexes to the Chicago
Convention; and
(s) In coordination with the appropriate government
agency tasked to provide airport security, shall:
(1) Prescribe reasonable regulation requiring that
all passengers and all property intended to be
carried in the aircraft cabin in commercial air
transport be screened by weapon-detecting
procedure or facilities employed or operated by
employees or agents of the air operator or foreign
air operator prior to boarding the aircraft for such
transportation;
(2) Prescribe such other reasonable rules and
regulations requiring such parties, methods and
procedures as the Director General may find
necessary to protect persons and property aboard
aircraft operating in commercial air transport
against acts of criminal violence and aircraft piracy;
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and
(3) To the extent practicable, require uniform
procedures for the inspection, detention, and
search of persons and property in domestic
commercial air transport and international
commercial air transport to assure their safety and
to assure that they will receive courteous and
efficient treatment by air operators and their agents
and employees.
SEC. 35. Powers and Functions of the Director
General. - The Director General shall be the chief
executive and operating officer of the Authority. He
shall have the following powers, duties and
responsibilities:
(a) To carry out the purposes and policies
established in this Act; to enforce the provisions of
the rules and regulations issued in pursuance to
said Act; and he shall primarily be vested with
authority to take charge of the technical and
operational phase of civil aviation matters;
(b) To designate and establish civil airways, to
acquire, control, operate and maintain along such
airways, navigation facilities and to chart such
airways and arrange for their publication including
the aeronautical charts or maps required by the
international aeronautical agencies, by utilizing the
equipment, supplies or assistance of existing
agencies of the government as far as practicable;
(c) To issue airman's certificate specifying the
capacity in which the holder thereof is authorized to
serve as airman in connection with aircraft and
shall be issued only upon the finding that the
applicant is properly qualified and physically able to
perform the duties of the position. The certificate
shall contain such terms, conditions and limitations
as the Director General may determine to be
necessary to assure safety in air
commerce: Provided, however, That the airman's
license shall be issued only to qualified persons
who are citizens of the Philippines or qualified
citizens of countries granting similar rights and
privileges to citizens of the Philippines;
(d) To issue airworthiness certificate for aircraft
which shall prescribe the duration of such
certificate, the type of service for which the aircraft
may be used, and such other terms and conditions
and limitations as are required;
(e) To issue air carrier operating certificate in
accordance with the minimum safety standards for
the operation of the air carrier to whom such
Delfin, Melicor, Matunog (D2019)
certificate is issued. The air carrier operating
certificate shall be issued only to aircrafts
registered under the provisions of this Act;
(f) To issue type certificate for aircraft, aircraft
engine, propellers and appliances;
(g) To inspect, classify and rate any air navigation
facilities and aerodromes available for the use of
aircraft as to its suitability for such use and to issue
a certificate for such air navigation facility and
aerodrome; and to determine the suitability of
foreign aerodromes, air navigation facilities as well
as air routes to be used prior to the operation of
Philippine-registered aircraft in foreign air
transportation and from time to time thereafter as
may be required in the interest of safety in air
commerce;
(h) To issue certificates of persons or civil aviation
schools giving instruction in flying, repair stations,
and other air agencies and provide for the
examination and rating thereof;
(i) To provide for the enforcement of the rules and
regulations issued under the provisions of this Act
and to conduct investigation for violations thereto.
In undertaking such investigation, to require
by subpoena ad testificandum or subpoena duces
tecum, the attendance and testimony of witnesses,
the production of books, papers, documents,
exhibits matter, evidence, or the taking of
depositions before any person authorized to
administer oath. Refusal to submit the reasonable
requirements of the investigation committee shall
be punishable in accordance with the provisions of
this Act;
(j) To collect and disseminate information relative to
civil aeronautics and the development of air
commerce and the aeronautical industry; to
exchange with foreign governments, information
pertaining to civil aeronautics; and to provide for
direct communication on all matters relating to the
technical or operational phase of aeronautics with
international aeronautical agencies:
(k) To acquire and operate such aircraft as may be
necessary to execute the duties and functions of
the Authority prescribed in this Act;
(l) To plan, design, acquire, establish, construct,
operate, improve, maintain, and repair necessary
aerodromes and other air navigation facilities;
(m) To collect and receive charges and fees for the
registration of aircraft and for the issuance and/or
renewal of licenses or certificates for aircraft,
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Transportation Law Reviewer Delfin, Melicor, Matunog (D2019)

aircraft engines, propellers and appliances, and CHICAGO CONVENTION

airmen as provided in this Act;
(n) To impose fines and/or civil penalties in respect
Civil Aeronautics Board
thereto;
RA 9497 (2008), Sections 4, 21, 24, 35
(o) To participate actively with the largest possible
SEC. 4. Creation of the Authority. - There is
degree in the development of international
hereby created an independent regulatory body
standardization of practices in aviation matters
with quasi-judicial and quasi-legislative powers and
important to safe, expeditious, and easy navigation,
possessing corporate attributes to be known as the
and to implement as far as practicable the
Civil Aviation Authority of the Philippines (CAAP),
international standards, recommended practices
hereinafter referred to as the "Authority" attached to
and policies adopted by appropriate international
t h e D e p a r t m e n t o f Tr a n s p o r t a t i o n a n d
aeronautical agencies;
Communications (DOTC) for the purpose of policy
(p) To exercise and perform its powers and duties
coordination. For this purpose, the existing Air
under this Act consistent with any obligation
Transportation Office created under the provisions
assumed by the Republic of the Philippines in any
of Republic Act No. 776, as amended, is hereby
treaty, convention or agreement on civil aviation
abolished.
matters;
Notwithstanding the foregoing, nothing in this Act
(q) To cooperate, assist and coordinate with any
shall diminish the powers and functions of the Civil
research and technical agency of the government
Aeronautics Board (CAB) as provided for under
on matters relating to research and technical
Republic Act. No. 776, also known as "The Civil
studies on design, materials, workmanship,
Aeronautics Act of the Philippines", as amended.
construction, performance, maintenance and
(a) Establishment of Authority Headed by a Director
operation of aircraft, aircraft engines, propellers,
General - The Authority shall beheaded by a
appliances, and air navigation facilities including
Director General of Civil Aviation, referred to in this
aircraft fuel and oil: Provided, That nothing in this
Act as the "Director General," who shall be
Act shall be construed to authorize the duplication
appointed by the President of the Philippines and
of the laboratory research, activities or technical
shall be responsible for all civil aviation in the
studies of any existing governmental agency;
Philippines and the administration of this Act. The
(r) To designate such prohibited and danger areas,
Director General shall be appointed based on the
in consonance with the requirements of the
qualifications herein provided and shall have a
international aeronautical agencies and national
tenure of office for a period of four (4) years. His
security;
appointment may be extended for another non-
(s) To issue, deny, suspend, cancel or revoke any
extendible term of four (4) years and shall only be
certificate, license pertaining to aircraft, airmen and
removed for cause in accordance with the rules
air agencies: Provided, That any order denying,
and regulations prescribed by the Civil Service
suspending, cancelling, revoking the certificate or
Commission.
license may he appealed to the Board, whose
(b) Responsibility of the Director General - The
decisions shall he final within fifteen (15) days from
Director General shall be responsible for the
the date of notification of such denial, cancellation
exercise of all powers and the discharge of all
or revocation;
duties of the Authority and shall have control over
(t) To grant authorization to civil aircraft or persons
all personnel and activities of the Authority.
to carry instruments or photographic devices to be
SEC. 21. Policies. - In the exercise and
used for aerial photography or taking of pictures by
performance of its powers and duties under this
photograph or sketching of any part of the
Act, the Authority shall consider the following,
Philippines; and
among other things, as being in the public interest
(u) Pursuant to a board resolution, to enter into,
and in accordance with the public convenience and
make and execute contracts of any kind with any
necessity:
person, firm, or public or private corporation.
(a) The development and utilization of the air
potential of the Philippines;

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Transportation Law Reviewer
(b) The encouragement and development of an air
transportation system properly adapted to the
present and future of foreign and domestic
commerce of the Philippines;
(c) The regulation of air transportation in such
manner as to support sound economic condition in
such transportation and to improve the relations
between air carriers;
(d) Ensuring the safety, quality, reliability, and
affordability of air transport services for the riding
public; and
(e) The encouragement and development of a
viable and globally competitive Philippine aviation
industry.
SEC. 24.Powers of the Board.- The Board shall
have the following general powers:
(a) Provide comprehensive policy guidance for the
promotion and development of the Philippine
aviation industry, as provided for in this Act;
(b) Ensure that the Authority performs its functions
in a proper, efficient and effective manner;
(c) Decide the objectives, strategies and policies of
the Authority in accordance with the provisions of
this Act;
(d) Determine the organizational structure of the
Authority in accordance with the provisions of this
Act, establish a human resources management
system based on merit and fitness, and adopt a
rational compensation and benefits scheme;
(e) Exercise appellate powers on any decisions,
findings and rulings of the Director General, to
issuesubpoena ad testificandum or subpoena
duces tecum requiring the attendance and
testimony of witnesses in any matter or inquiry
pending before the Board and require the
production of books, papers, contracts, agreements
and all other documents submitted for purposes of
this section to be under oath and verified by the
person in custody thereof as to the truth and
correctness of data appearing in such books,
papers, tariffs, contracts, agreements and all other
documents;
(f) Exercise appellate powers to order the taking of
depositions in any proceeding, or investigation,
pending before the Board at any stage of such
proceeding or investigation;
(g) Use available services, equipment, personnel
and facilities of other agencies of the Philippine
Government, on a reimbursable basis when
appropriate and, on a similar basis, to co-operate
Delfin, Melicor, Matunog (D2019)
with those agencies in the establishment and use
of services, equipment and facilities of the
Authority;
(h) Use the property of the Authority in such a
manner as may appear to the Authority to be
requisite, advantageous or convenient with a view
to making the best use of any of the property of the
Authority in relation to its functions under this Act;
(i) Invest such of the Authority's funds that are not
immediately required for operating expenses, or
other immediate obligations in any business
venture the Board may deem appropriate, or in
such secured note, government securities, and
other negotiable instruments that satisfy the
guidelines prescribed by the Board. Funds of the
Authority shall be deposited in such commercial
and universal banks as the Board may determine,
subject to the requirements of existing laws. The
Board shall designate the officials authorized to
deposit in or withdraw funds from such depository
banks;
(j) Promulgate rules and regulations as may be
necessary in the interest of safety in air commerce
pertaining to the issuance of the airman's certificate
including the licensing of operating and mechanical
personnel, type certificate for aircraft, aircraft
engines, propellers and appliances, airworthiness
certificates, air carrier operating certificates, air
agency certificates, navigation facility and
aerodrome certificates; air traffic routes; radio and
aeronautical telecommunications and air navigation
aids; aircraft accident inquiries; aerodromes, both
public and private-owned; construction of
obstructions to aerodromes; height of buildings;
antennae and other edifices; registration of
aircrafts; search and rescue; facilitation of air
transports; operations of aircrafts, both for domestic
and international, including scheduled and non-
scheduled; meteorology in relation to civil aviation;
rules of the air; air traffic services; rules for
prevention of collision of aircrafts, identification of
aircraft; rules for safe altitudes of flight; and such
other rules and regulations, standards, governing
other practices, methods and/or procedures as the
Director General may find necessary and
appropriate to provide adequately for safety
regularity and efficiency in air commerce and air
navigation;
(k) Impose and fix reasonable charges and fees for
the use of government aerodromes or air
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Transportation Law Reviewer
navigation facilities; for services rendered by the
Authority in the rating of any aerodrome or air
navigation facilities, civil aviation schools and
instructors, aircraft repair stations, and aircraft radio
and aeronautical telecommunications stations;
(l) Fix the reasonable charges to be imposed in the
use of privately-owned air navigation facilities and
aerodromes;
(m) Adopt a system for the registration of aircraft as
hereinafter provided;
(n) Determine and fix, landing fees, parking space
fees, royalties on sales or deliveries, direct or
indirect, to any aircraft for its use of aviation
gasoline, oil and lubricants, spare parts,
accessories and supplies, tools, other royalties,
fees or rentals for the use of any of the property
under its management and control;
(o) Approve the annual and supplementary budget
plan and utilization of retained revenue;
(p) Exercise the corporate powers granted to the
Authority;
(q) Upon its own initiative or the recommendation of
the Director General or an application of a private
person, grant exemption from the requirements of
observing rules or regulations issued in accordance
with this Act: Provided, That said grant of
exemption is not prejudicial to flight safety;
(r) Formulate rules and regulations concerning
compliance of the carrier and the public for the safe
transport of goods and materials by air pursuant to
international standards or Annexes to the Chicago
Convention; and
(s) In coordination with the appropriate government
agency tasked to provide airport security, shall:
(1) Prescribe reasonable regulation requiring that
all passengers and all property intended to be
carried in the aircraft cabin in commercial air
transport be screened by weapon-detecting
procedure or facilities employed or operated by
employees or agents of the air operator or foreign
air operator prior to boarding the aircraft for such
transportation;
(2) Prescribe such other reasonable rules and
regulations requiring such parties, methods and
procedures as the Director General may find
necessary to protect persons and property aboard
aircraft operating in commercial air transport
against acts of criminal violence and aircraft piracy;
and
Delfin, Melicor, Matunog (D2019)
(3) To the extent practicable, require uniform
procedures for the inspection, detention, and
search of persons and property in domestic
commercial air transport and international
commercial air transport to assure their safety and
to assure that they will receive courteous and
efficient treatment by air operators and their agents
and employees.
SEC. 35. Powers and Functions of the Director
General. - The Director General shall be the chief
executive and operating officer of the Authority. He
shall have the following powers, duties and
responsibilities:
(a) To carry out the purposes and policies
established in this Act; to enforce the provisions of
the rules and regulations issued in pursuance to
said Act; and he shall primarily be vested with
authority to take charge of the technical and
operational phase of civil aviation matters;
(b) To designate and establish civil airways, to
acquire, control, operate and maintain along such
airways, navigation facilities and to chart such
airways and arrange for their publication including
the aeronautical charts or maps required by the
international aeronautical agencies, by utilizing the
equipment, supplies or assistance of existing
agencies of the government as far as practicable;
(c) To issue airman's certificate specifying the
capacity in which the holder thereof is authorized to
serve as airman in connection with aircraft and
shall be issued only upon the finding that the
applicant is properly qualified and physically able to
perform the duties of the position. The certificate
shall contain such terms, conditions and limitations
as the Director General may determine to be
necessary to assure safety in air
commerce: Provided, however, That the airman's
license shall be issued only to qualified persons
who are citizens of the Philippines or qualified
citizens of countries granting similar rights and
privileges to citizens of the Philippines;
(d) To issue airworthiness certificate for aircraft
which shall prescribe the duration of such
certificate, the type of service for which the aircraft
may be used, and such other terms and conditions
and limitations as are required;
(e) To issue air carrier operating certificate in
accordance with the minimum safety standards for
the operation of the air carrier to whom such
certificate is issued. The air carrier operating
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Transportation Law Reviewer
certificate shall be issued only to aircrafts
registered under the provisions of this Act;
(f) To issue type certificate for aircraft, aircraft
engine, propellers and appliances;
(g) To inspect, classify and rate any air navigation
facilities and aerodromes available for the use of
aircraft as to its suitability for such use and to issue
a certificate for such air navigation facility and
aerodrome; and to determine the suitability of
foreign aerodromes, air navigation facilities as well
as air routes to be used prior to the operation of
Philippine-registered aircraft in foreign air
transportation and from time to time thereafter as
may be required in the interest of safety in air
commerce;
(h) To issue certificates of persons or civil aviation
schools giving instruction in flying, repair stations,
and other air agencies and provide for the
examination and rating thereof;
(i) To provide for the enforcement of the rules and
regulations issued under the provisions of this Act
and to conduct investigation for violations thereto.
In undertaking such investigation, to require
by subpoena ad testificandum or subpoena duces
tecum, the attendance and testimony of witnesses,
the production of books, papers, documents,
exhibits matter, evidence, or the taking of
depositions before any person authorized to
administer oath. Refusal to submit the reasonable
requirements of the investigation committee shall
be punishable in accordance with the provisions of
this Act;
(j) To collect and disseminate information relative to
civil aeronautics and the development of air
commerce and the aeronautical industry; to
exchange with foreign governments, information
pertaining to civil aeronautics; and to provide for
direct communication on all matters relating to the
technical or operational phase of aeronautics with
international aeronautical agencies:
(k) To acquire and operate such aircraft as may be
necessary to execute the duties and functions of
the Authority prescribed in this Act;
(l) To plan, design, acquire, establish, construct,
operate, improve, maintain, and repair necessary
aerodromes and other air navigation facilities;
(m) To collect and receive charges and fees for the
registration of aircraft and for the issuance and/or
renewal of licenses or certificates for aircraft,
Delfin, Melicor, Matunog (D2019)
aircraft engines, propellers and appliances, and
airmen as provided in this Act;
(n) To impose fines and/or civil penalties in respect
thereto;
(o) To participate actively with the largest possible
degree in the development of international
standardization of practices in aviation matters
important to safe, expeditious, and easy navigation,
and to implement as far as practicable the
international standards, recommended practices
and policies adopted by appropriate international
aeronautical agencies;
(p) To exercise and perform its powers and duties
under this Act consistent with any obligation
assumed by the Republic of the Philippines in any
treaty, convention or agreement on civil aviation
matters;
(q) To cooperate, assist and coordinate with any
research and technical agency of the government
on matters relating to research and technical
studies on design, materials, workmanship,
construction, performance, maintenance and
operation of aircraft, aircraft engines, propellers,
appliances, and air navigation facilities including
aircraft fuel and oil: Provided, That nothing in this
Act shall be construed to authorize the duplication
of the laboratory research, activities or technical
studies of any existing governmental agency;
(r) To designate such prohibited and danger areas,
in consonance with the requirements of the
international aeronautical agencies and national
security;
(s) To issue, deny, suspend, cancel or revoke any
certificate, license pertaining to aircraft, airmen and
air agencies: Provided, That any order denying,
suspending, cancelling, revoking the certificate or
license may he appealed to the Board, whose
decisions shall he final within fifteen (15) days from
the date of notification of such denial, cancellation
or revocation;
(t) To grant authorization to civil aircraft or persons
to carry instruments or photographic devices to be
used for aerial photography or taking of pictures by
photograph or sketching of any part of the
Philippines; and
(u) Pursuant to a board resolution, to enter into,
make and execute contracts of any kind with any
person, firm, or public or private corporation.
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Transportation Law Reviewer Delfin, Melicor, Matunog (D2019)

Land

Land Transportation Office (LTO)

- Concerned with the registration of drivers and
motor vehicles.
- RA 4136 prescribes procedure for the
examination, licensing and bonding of drivers;
the registration and re-registration of motor
vehicles, transfer of ownership, change of status
etc

L a n d Tr a n s p o r t a t i o n F r a n c h i s i n g a n d
Regulatory Board (LTFRB)
- Exercises quasi-judical and regulatory powers
with respect to land-transportation; among its
more important powers include the power to
issue, amend and revise CPCs; prescribe routes
and reasonable fare rates.

Notes:
DOTC has control and supervision over land
agencies, which isnt the case in air agencies. This
is because land transportation is more sensitive
and requires more care and caution.

Water

Maritime Industry Authority (MARINA)

- Has jurisdiction over the development, promotion
and regulation of all enterprises engaged in the
business of vessels, shipyards, dry-docks,
marine railways, shipping and freight forwarding
agencies and similar enterprises.

Rationale for deregulation of the shipping industry:

- To encourage investments in the industry by
existing operators and to attract new
investments.

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Transportation Law Reviewer
Common Carriers
In General
Definition ; Essentail Elements
Ar t 1732. Common carriers are 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.
US VS. TAN PIACO
- These trucks, so far as indicated by the evidence
and as far as the appellant is concerned,
furnished service under special agreements to
carry particular persons and property.
- In determining whether a use is public, we must
look not only to the character of the business to
be done, but also to the proposed mode of doing
it. If the use is merely optional with the owners,
or the public benefit is merely incidental, it is not
a public use, authorizing the exercise of the
jurisdiction of the public utility commission.
- There must be in general, a right which the law
compels the owner to give to the general public.
It is not enough that the general prosperity of the
public is promoted.
- Public use is not synonymous with public
interest. The true criterion by which to judge of
the character of the use is whether the public
may enjoy it by right or only by permission.
HOME INSURANCE CO. VS. AMERICAN STEAMSHIP
- Under American Jurisprudence, a common
carrier undertaking to carry a special cargo or
chartered to a special person only, becomes a
private carrier. As a private carrier, a stipulation
exerting the owner from liability for the
negligence of its agent is not against public
policy, and is deemed valid.
- Such doctrine we fine reasonable. The Civil Code
provisions on common carriers should not be
applied where the carrier is not acting as such
but as a private carrier.(due to charter party)
DE GUZMAN VS. CA
Civil Code Art 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
Delfin, Melicor, Matunog (D2019)
goods or both, by land, water, or air for
compensation, offering their services to the public.
- The above article makes no 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 (in local idiom, as "a sideline).
It also carefully avoids making any 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.
Neither does it distinguish between a carrier
offering its services to the "general public,"
i.e., the general community or population, and
one who offers services or solicits business
only from a narrow segment of the general
population.
- The concept of "common carrier" under Article
1732 may be seen to coincide neatly with the
notion of "public service" under the Public
Service Act
- It appears that private respondent is properly
characterized as a common carrier even though
he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although
such backhauling was done on a periodic or
occasional rather than regular or scheduled
manner, and even though private respondent's
principal occupation was not the carriage of
goods for others.
He charged his customers a fee for hauling
their goods; that that fee frequently fell below
commercial freight rates is not relevant here.
- That liability arises the moment a person or
firm acts as a common carrier, without
regard to whether or not such carrier has
also complied with the requirements of the
applicable regulatory statute and
implementing regulations and has been
granted a certificate of public convenience
or other franchise.
BASCOS VS. CA
- We agree that petitioner is a common carrier.
The test to determine a common carrier is
"whether the given undertaking is a part of the
business engaged in by the carrier which he has
held out to the general public as his occupation
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Transportation Law Reviewer
rather than the quantity or extent of the business
transacted.
PLANTERS PRODUCTS INC VS. CA
- It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of
the whole or portion of a vessel by one or more
persons, provided the charter is limited to the
ship only, as in the case of a time-charter or
voyage-charter.
It is only when the charter includes both the
vessel and its crew, as in a bareboat or
demise that a common carrier becomes
private, at least insofar as the particular
voyage covering the charter-party is
concerned.
A shipowner in a time or voyage charter
retains possession and control of the ship,
although her holds may, for the moment, be
the property of the charterer.
(contract of affreightment > remains to be a
common carrier)
FABRE VS. COURT OF APPEALS
Minibus originally meant to bring children to school,
were rented out to a church group.
- The case actually involves a contract of carriage.
Petitioners, the Fabres, did not have to be
engaged in the business of public transportation
for the provisions of the Civil Code on common
carriers to apply to them.
Art 1732 makes no 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 (in local idiom, as "a sideline"). Article
1732 also carefully avoids making any
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. Neither does Article 1732 distinguish
between a carrier offering its services to the
"general public," i.e., the general community or
population, and one who offers services or
solicits business only from a narrow segment
of the general population. We think that Article
1732 deliberately refrained from making such
distinctions.
Delfin, Melicor, Matunog (D2019)
FIRST PHILIPPINE INDUSTRIAL CORPORATION
Pipeline was ruled to be a common carrier. The test
for determining whether a party is a common
carrier of goods is:
(1) He must be engaged in the business of carrying
goods for others as a public employment, and
must hold himself out as ready to engage in the
transportation of goods for person generally as
a business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to
which his business is confined;
(3) He must undertake to carry by the method by
which his business is conducted and over his
established roads;
(4) The transportation must be for hire
- B a s e d o n t h e a b o v e d e fi n i t i o n s a n d
requirements, there is no doubt that petitioner is
a common carrier. It is engaged in the business
of transporting or carrying goods, i.e. petroleum
products, for hire as a public employment. It
undertakes to carry for all persons indifferently,
that is, to all persons who choose to employ its
services, and transports the goods by land and
for compensation. The fact that petitioner has a
limited clientele does not exclude it from the
definition of a common carrier.
LOADSTAR SHIPPING CO. INC VS. COURT OF APPEALS
- LOADSTAR submits that the vessel was a
private carrier because it was not issued a
certificate of public convenience, it did not have a
regular trip or schedule nor a fixed route, and
there was only one shipper, one consignee for a
special cargo.
- MIC argues that the issue as to the classification
of the M/V Cherokee was not timely raised
below; hence, it is barred by estoppel. While it is
true that the vessel had on board only the cargo
of wood products for delivery to one consignee, it
was also carrying passengers as part of its
regular business.
- Further, the bare fact that the vessel was
carrying a particular type of cargo for one
shipper, which appears to be purely coincidental,
is not reason enough to convert the vessel from
a common to a private carrier, especially where,
as in this case, it was shown that the vessel was
also carrying passengers.
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Transportation Law Reviewer
CRISOSTOMO VS. CA
- While petitioner bought her plane ticket through
the efforts of respondent company, this does not
mean that the latter ipso facto is a common
carrier. At most, respondent acted merely as an
agent of the airline, with whom petitioner
ultimately contracted for her carriage to Europe.
- Respondents obligation to petitioner in this
regard was simply to see to it that petitioner was
properly booked with the airline for the appointed
date and time. Her transport to the place of
destination, meanwhile, pertained directly to the
airline.
CRUZ VS. SUN HOLIDAYS
- Respondent is a common carrier. Its ferry
services are so intertwined with its main business
as to be properly considered ancillary thereto.
The constancy of respondent's ferry services in
its resort operations is underscored by its having
its own Coco Beach boats.
The tour packages it offers, which include the
ferry services, may be availed of by anyone
who can afford to pay the same. These
services are thus available to the public.
That the respondent does not charge a
separate fee or fare for its ferry services is of
no moment. It would be imprudent to suppose
that it provides said services at a loss. The
Court is aware of the practice of beach resort
operators offering tour packages to factor the
transportation fee in arriving at the tour
package price. That guests who opt not to
avail of respondent's ferry services pay the
same amount is likewise inconsequential.
These guests may only be deemed to have
overpaid.
Nature and Basis of Liability
Art 1733. Common carriers, from the nature of their
business and for reasons of public policy, are
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all
the circumstances of each case..
CANGCO VS. MRR
- the liability of masters and employers for the
negligent acts or omissions of their servants or
agents, when such acts or omissions cause
Delfin, Melicor, Matunog (D2019)
damages which amount to the breach of
contract, is not based upon a mere presumption
of the masters negligence in their selection or
control, and proof of exercise of utmost diligence
and care does not relieve the master of his
liability for the breach of contract
- Proof of the contract and its non-performance is
sufficient prima facie to warrant a recover. (Not
necessary for the plaintiff in an action for a
breach to show that the breach was due to
negligent conduct of defendant or servants.
ISAAC VS. A.L. AMMEN
- From the Civil Code provisions on common
carrier, we can make the following
restatement of the principles governing the
liability of a common carrier:
(1) the liability of a carrier is contractual and
arises upon breach of its obligation. There is
breach if it fails to exert extraordinary diligence
according to all the circumstances of each
case;
(2) a carrier is obliged to carry its passenger with
the utmost diligence of a very cautious person,
having due regard for all the circumstances;
(3) a carrier is presumed to be at fault or to
have" acted negligently in case of death of, or
injury to, passengers, it being its duty to prove
that it exercised extraordinary diligence; and
(4) the carrier is not an insurer against all
risks of travel.
FORES VS. MIRANDA
- The advantageous position of a party suing a
carrier for breach of the contract of transportation
explains, to some extent, the limitations imposed
by the new Code on the amount of the recovery.
- The action for breach of contract imposes on
the defendant carrier a presumption of liability
upon mere proof of injury to the passenger; that
latter is relieved from the duty to establish the
fault of the carrier, or of his employees, and the
burden is placed on the carrier to prove that it
was due to an unforseen event or to force
majeure
- Moreover, the carrier, unlike in suits for quasi-
delict, may not escape liability by proving that it
has exercised due diligence in the selection and
supervision of its employees
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PHIL RABBIT VS. IAC
- The principle about the 'last clear chance' would
call for application in a suit between the owners
and drivers of the two colliding vehicles. It does
not arise where a passenger demands
responsibility from the carrier to enforce its
contractual obligations.
- It would be inequitable to exempt the negligent
driver of the jeepney and its owners on the
ground that the other driver was likewise guilty of
negligence.
- In culpa contractual, the moment a passenger
dies or is injured, the carrier is presumed to have
been at fault or to have acted negligently, and
this disputable presumption may only be
overcome by evidence that he had observed
extra-ordinary diligence as prescribed in Articles
1733, 1755 and 1756 of the New Civil Code or
that the death or injury of the passenger was due
to a fortuitous event.
LRTA VS. NAVIDAD
- The law requires common carriers to carry
passengers safely using the utmost diligence of
very cautious persons with due regard for all
circumstances. Such duty of a common carrier to
provide safety to its passengers so obligates it
not only during the 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.
- In case of such death or injury, a carrier is
presumed to have been at fault or been
negligent, and by simple proof of injury, the
passenger is relieved of the duty to still establish
the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier
to prove that the injury is due to an unforeseen
event or to force majeure.
- In absence of satisfactory explanation by the
carrier on how the accident occurred, which
petitioners, according to the appellate court, have
failed to show, the presumption would be that it
has been at fault, an exception from the general
rule that negligence must be proved.
Classes of Common Carriers
Art 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
Delfin, Melicor, Matunog (D2019)
goods or both, by land, water, or air, for
compensation, offering their services to the public.
Article 1733. Common carriers, from the nature of
their business and for reasons of public policy, are
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all
the circumstances of each case.
Such extraordinary diligence in the vigilance over
the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and
1756.
Article 1755. A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all
the circumstances.
Law Applicable
Art 1766. In all matters not regulated by this Code,
the rights and obligations of common carriers shall
be governed by the Code of Commerce and by
special laws.
Art 1753. The law of the country to which the
goods are to be transported shall govern the
liability of the common carrier for their loss,
destruction or deterioration.
Common Carriage of Goods
Liability and Presumption of Negligence
Article 1733. Common carriers, from the nature of
their business and for reasons of public policy, are
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all
the circumstances of each case.
Such extraordinary diligence in the vigilance over
the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and
1756.
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Article 1734. Common carriers are responsible for
the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following
causes only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity; (2) Act of the public
enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers; (5) Order or act of
competent public authority.
Article 1735. In all cases other than those
mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost, destroyed
or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed extraordinary
diligence as required in article 1733.
YNCHAUSTI STEAMSHIP CO VS. DEXTER
- The mere proof of delivery of goods in good
order to a carrier, and of their arrival at the place
of destination in bad order, makes out a prima
facie case against the carrier, so that if no
explanation is given as to how the injury
occurred, the carrier must be held responsible.
- It is incumbent upon the carrier to prove that the
loss was due to accident or some other
circumstance inconsistent with its liability.
MIRASOL VS. DOLLAR
- In the final analysis, the cases were received by
the defendant in New York in good order and
condition and when they arrived in Manila, they
were in bad condition, and one was a total loss.
The fact that the cases were damaged by "sea
water," standing alone and within itself, is not
evidence that they were damaged by force
majeure or for a cause beyond the defendant's
control. The words "perils of the sea," as
stated in defendant's brief apply to "all kinds of
marine casualties, such as shipwreck,
foundering, stranding," and among other
things, it is said: "Tempest, rocks, shoals,
icebergs and other obstacles are within the
expression," and "where the peril is the;
proximate cause of the loss, the shipowner is
excused." "Something fortuitous and out of the
ordinary course is involved in both words 'peril'
or accident."
Delfin, Melicor, Matunog (D2019)
Exemption from Liability
Natural Disaster
Art 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods,
unless the same is due to any of the following
causes only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.
Art 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster
must have been the proximate and only cause of
the loss. However, the common carrier must
exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood,
storm or other natural disaster in order that the
common carrier may be exempted from liability for
the loss, destruction, or deterioration of the goods.
The same duty is incumbent upon the common
carrier in case of an act of the public enemy
referred to in article 1734, No. 2.
Art 1740. If the common carrier negligently incurs
in delay in transporting the goods, a natural
disaster shall not free such carrier from
responsibility.
Code of Commerce. Art 361. The merchandise
shall be transported at the risk and venture of the
shipper, if the contrary has not been expressly
stipulated. As a consequence, all the losses and
deterioration which the goods may suffer during
the transportation by reason of fortuitous event,
forcemajeure, or the inherent nature and defect of
the goods, shall be for the account and risk of the
shipper. Proof of these accidents is incumbent
upon the carrier.
TAN CHIONG VS. INCHAUSTI
- From the moment that it is held that the loss of
the said lorcha was due to force majeure, a
fortuitous event, with no conclusive proof of
negligence or of the failure to take the
precautions such as diligent and careful persons
usually adopt to avoid the loss of the boat and its
cargo, it is neither just nor proper to attribute the
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loss or damage of the goods in question to any
fault, carelessness, or negligence on the part of
the defendant company and its agents and,
especially, the patron of the lorcha Pilar.
MARTINI VS. MACONDRAY
- The foregoing authorities fully sustain the
proposition that where the shipper consents to
have his goods carried on deck he takes the
risks of any damage or loss sustained as a
consequence of their being so carried.
In the present case, it is indisputable that the
goods were injured during the voyage and
solely as a consequence of their being on
deck, instead of in the ship's hold. The loss
must therefore fall on the owner. And this
would be true, under the authorities, even
though paragraph 19 of the bills of lading,
quoted near the beginning of this opinion, had
not been made a term of the contract.
EASTERN SHIPPING VS. IAC
- Plainly the heavy seas and rains referred to in
the master's report were not caso fortuito, but
normal occurrences that an ocean-going vessel,
particularly in the month of September which, in
our area, is a month of rains and heavy seas
would encounter as a matter of routine. They are
not unforeseen nor unforeseeable.
These are conditions that ocean-going vessels
would encounter and provide for, in the
ordinary course of a voyage.
Since the carrier has failed to establish any
caso fortuito, the presumption by law of fault
or negligence on the part of the carrier applies;
and the carrier must present evidence that it
has observed the extraordinary diligence
required by Article 1733 of the Civil Code in
order to escape liability for damage or
destruction to the goods that it had admittedly
carried in this case. No such evidence exists
of record. Thus, the carrier cannot escape
liability
ASIA LIGHTERAGE VS. CA
In the case at bar, the barge completely sank after
its towing bits broke, resulting in the total loss of its
cargo. Petitioner claims that this was caused by a
typhoon, hence, it should not be held liable for the
loss of the cargo. However, petitioner failed to
Delfin, Melicor, Matunog (D2019)
prove that the typhoon is the proximate and only
cause of the loss of the goods, and that it has
exercised due diligence before, during and after the
occurrence of the typhoon to prevent or minimize
the loss
- The evidence shows that even before the towing
bits of the barge broke, it had previously
sustained damage when it hit a sunken object
while docked at Engineering Island. It even
suffered a hole. Clearly, this could not be solely
attributed to the typhoon. The partly-submerged
vessel was refloated but its hole was patched
with only clay and cement. The patch work was
merely a provisional remedy, not enough for the
barge to sail safely. Thus, when petitioner
persisted to proceed with the voyage, it
recklessly exposed the cargo to further damage.
Act of Public Enemy
Art 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods,
unless the same is due to any of the following
causes only:
xxx
(2) Act of the public enemy in war, whether
international or civil;
Art 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster
must have been the proximate and only cause of
the loss. However, the common carrier must
exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood,
storm or other natural disaster in order that the
common carrier may be exempted from liability for
the loss, destruction, or deterioration of the goods.
The same duty is incumbent upon the common
carrier in case of an act of the public enemy
referred to in article 1734, No. 2.
Act or Omission of the shipper
Art 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods,
unless the same is due to any of the following
causes only:
xxx
(3) Act or omission of the shipper or owner of the
goods;
Art 1741. If the shipper or owner merely
contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being
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the negligence of the common carrier, the latter
shall be liable in damages, which however, shall
be equitably reduced.
Character of the goods
Art 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods,
unless the same is due to any of the following
causes only:
xxx
(4) The character of the goods or defects in the
packing or in the containers; (5) Order or act of
competent public authority.
SOUTHERN LINES VS. CA
Art 1742. Even if the loss, destruction, or
deterioration of the goods should be caused by
the character of the goods, or the faulty nature of
the packing or of the containers, the common
carrier must exercise due diligence to forestall or
lessen the loss.
Art 366 Code of Commerce
Art 366. Within the twenty-four hours following the
receipt of the merchandise, the claim against the
carrier for damage or average be found therein
upon opening the packages, may be made,
provided that the indications of the damage or
average which gives rise to the claim cannot be
ascertained from the outside part of such
packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim
shall be admitted against the carrier with regard to
the condition in which the goods transported were
delivered.
GOVERNMENT VS. YNCHAUSTI
- Finding as we do that the tiles in question were
shipped at the owner's risk, under the law in this
jurisdiction, the carrier is only liable where the
evidence shows that he was guilty of some
negligence and that the damages claimed were
the result of such negligence. As was said above,
the plaintiff offered no proof whatever to show
negligence on the part of the defendant.
Under the provisions of article 361 the defendant,
in order to free itself from liability, was only obliged
to prove that the damages suffered by the goods
were "by virtue of the nature or defect of the
articles." Under the provisions of article 362 the
plaintiff, in order to hold the defendant liable, was
Delfin, Melicor, Matunog (D2019)
obliged to prove that the damages to the goods by
virtue of their nature, occurred on account of its
negligence or because the defendant did not take
the precaution usually adopted by careful persons.
- The defendant herein proved, and the plaintiff did
not attempt to dispute, that the tiles in question
were of a brittle and fragile nature and that they
were delivered by the plaintiff to the defendant
without any packing or protective covering. The
defendant also offered proof to show that there
was no negligence on its part, by showing that
the tiles were loaded, stowed, and discharged in
a careful and diligent manner.
- Under the provisions of Article 361, the
defendantcarrier in order to free itself from
liability, was only obliged to prove that the
damages suffered by the goods were "by virtue
of the nature or defect of the articles." Under the
provisions of Article 362, the plaintiff, in order to
hold the defendant liable, was obliged to prove
that the damages to the goods by virtue of their
nature, occurred on account of its negligence or
because the defendant did not take the
precaution adopted by careful persons.
- Petitioner claims exemption from liability by
contending that the shortage in the shipment of
rice was due to such factors as the shrinkage,
leakage or spillage of the rice on account of the
bad condition of the sacks at the time it received
the same and the negligence of the agents of
respondent City of Iloilo in receiving the
shipment.
This contention is untenable, for, if the fact of
improper packing is known to the carrier or his
servants, or apparent upon ordinary
observation, but it accepts the goods
notwithstanding, such condition, it is not
relieved of liability for loss or injury resulting
therefrom.
Order of competent authority
Article 1734(5). Common carriers are responsible
for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the
following causes only:
(5) Order or act of competent public authority.
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Article 1743. If through the order of public
authority the goods are seized or destroyed, the
common carrier is not responsible, provided said
public authority had power to issue the order.
GANZON VS. COURT OF APPEALS
Before the appellee Ganzon could be absolved
from responsibility on the ground that he was
ordered by competent public authority to unload the
scrap iron, it must be shown that Acting Mayor
Basilio Rub had the power to issue the disputed
order, or that it was lawful, or that it was issued
under legal process of authority. The appellee failed
to establish this. Indeed, no authority or power of
the acting mayor to issue such an order was given
in evidence.
Duration of Extraordinary Responsibility
Article 1736. The extraordinary responsibility of
the common carrier lasts from the time the goods
are unconditionally placed in the possession of,
and received by the carrier for transportation until
the same are delivered, actually or constructively,
by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice
to the provisions of article 1738.
Article 1737. The common carrier's duty to
observe extraordinary diligence over the goods
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.
Article 1738. The extraordinary liability of the
common carrier 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 been advised
of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise
dispose of them.
COMPANIA MARTIMA VS. INSURANCE COMPANY
Was there a contract of carriage between the
carrier and the shipper even if the loss occurred
when the hemp was loaded on a barge owned by
the carrier which was loaned free of charge and
was not actually loaded on the S.S. Bowline Knot
which would carry the hemp to Manila and no bill of
lading was issued therefor? YES
Delfin, Melicor, Matunog (D2019)
- patrons of said lighters were employees of the
carrier with due authority to undertake the
transportation and to sign the documents that
may be necessary therefor
The fact that the carrier sent its lighters free of
charge to take the hemp from Macleod's wharf at
Sasa preparatory to its loading unto the ship
Bowline Knot does not in any way impair the
contract of carriage already entered into between
the carrier and the shipper, for that preparatory
steps is but a part and parcel of said contract of
carriage.
- The lighters were merely employed as the first
step of the voyage, but once that step was taken
and the hemp delivered to the carrier's
employees, the rights and obligations of the
parties attached thereby subjecting them to the
principles and usages of the maritime law.
LU DO VS. BINAMIRA
- While the goods are in its possession, it is but
fair that it exercise extraordinary diligence in
protecting them from damage, and if loss occurs,
the law presumes that it was due to its fault or
negligence. This is necessary to protect the
interest of the owner who is at its mercy. The
situation changes after the goods are delivered
to the consignee.
- While we agree with the Court of Appeals that
while delivery of the cargo to the customs
authorities is not delivery to the consignee, or "to
the person who has a right to receive them",
contemplated in Article 1736, because in such
case the goods are still in the hands of the
Government and the owner cannot exercise
dominion over them, we believe however that the
parties may agree to limit the liability of the
carrier considering that the goods have still to go
through the inspection of the customs authorities
before they are actually turned over to the
consignee.
- situation where we may say that the carrier loses
control of the goods because of a custom
regulation and it is unfair that it be made
responsible for what may happen during the
interregnum.
It therefore appears clear that the carrier does not
assume liability for any loss or damage to the
goods once they have been "taken into the custody
of customs or other authorities", or when they have
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been delivered at ship's tackle. These stipulations
are clear.
APL VS. KLEPPER
- damage during unloading; still liable
- being a common carrier its responsibility is extra-
ordinary and lasts from the time the goods are
placed in its possession until they are delivered,
actually or constructively, to the consignee or to
the person who has a right to receive them
(Article 1736, Idem.) It can only be exempt
therefrom for causes enumerated in Article 1734.
SAMAR MINING CO. INC VS. NORDEUTSCHER LLOYD
- There is no doubt that Art. 1738 (requiring
extraordinary liability of the common carrier) finds
no applicability to the instant case. The said
article contemplates a situation where the goods
had already reached their place of destination
and are stored in the warehouse of the carrier.
- The subject goods were still awaiting
transshipment to their port of destination, and
were stored in the warehouse of a third party
when last seen and/or heard of. However, Article
1736 is applicable to the instant suit. Under said
article, the carrier may be relieved of the
responsibility for loss or damage to the goods
upon actual or constructive delivery of the same
by the carrier to the consignee, or to the person
who has a right to receive them. In sales, actual
delivery has been defined as the ceding of
corporeal possession by the seller, and the
actual apprehension of corporeal possession by
the buyer or by some person authorized by him
to receive the goods as his representative for the
purpose of custody or disposal.
- By the same token, there is actual delivery in
contracts for the transport of goods when
possession has been turned over to the con-
signee or to his duly authorized agent and a
reasonable time is given him to remove the
goods. The court a quo found that there was
actual delivery to the consignee through its duly
authorized agent, the carrier.
- Upon such delivery, the appellant, as erstwhile
carrier, ceases to be responsible for any loss or
damage that may befall the goods from that point
onwards. This is the full import of Article 1736, as
applied to the case before Us.
Delfin, Melicor, Matunog (D2019)
EASTERN SHIPPING VS. CA
The common carriers duty to observe the requisite
diligence in the shipment of goods lasts from the
time the articles are surrendered to or
unconditionally placed in the possession of, and
received by, the carrier for transportation until
delivered to, or until the lapse of a reasonable time
for their acceptance by, the person entitled to
receive them.
- The legal relationship between the consignee
and the arrastre operator is akin to that of a
depositor and warehouseman
- Since it is the duty of the ARRASTRE to take
good care of the goods that are in its custody
and to deliver them in good condition to the
consignee, such responsibility also devolves
upon the CARRIER. Both the ARRASTRE and
the CARRIER are therefore charged with the
obligation to deliver the goods in good condition
to the consignee.
- We do not, of course, imply by the above
pronouncement that the arrastre operator and
the customs broker are themselves always and
necessarily liable solidarily with the carrier, or
vice-versa, nor that attendant facts in a given
case may not vary the rule. The instant petition
has been brought solely by Eastern Shipping
Lines which, being the carrier and not having
been able to rebut the presumption of fault, is, in
any event, to be held liable in this particular case.
Agreement Limiting Liability
As to diligence required
Article 1744. A stipulation between the common
carrier and the shipper or owner limiting the liability
of the former for the loss, destruction, or
deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it
be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other
than the service rendered by the common carrier;
and
(3) Reasonable, just and not contrary to public
policy.
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Article 1745. Any of the following or similar
stipulations shall be considered unreasonable,
unjust and contrary to public policy:
(1) That the goods are transported at the risk of the
owner or shipper;
(2) That the common carrier will not be liable for
any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any
diligence in the custody of the goods;
(4) That the common carrier shall exercise a
degree of diligence less than that of a good father
of a family, or of a man of ordinary prudence in the
vigilance over the movables transported;
(5) That the common carrier shall not be
responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished;
(7) That the common carrier is not responsible for
the loss, destruction, or deterioration of goods on
account of the defective condition of the car,
vehicle, ship, airplane or other equipment used in
the contract of carriage.
Article 1751. The fact that the common carrier has
no competitor along the line or route, or a part
thereof, to which the contract refers shall be taken
into consideration on the question of whether or
not a stipulation limiting the common carrier's
liability is reasonable, just and in consonance with
public policy.
As to amount liability
Article 1749. A stipulation that the common
carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper
or owner declares a greater value, is binding.
Article 1750. A contract fixing the sum that may be
recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if
it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.
HEACOCK VS. MACONDRAY
May a common carrier, by stipulations inserted in
the bill of lading, limit its liability for the loss of or
damage to the cargo to an agreed valuation of the
latter?
- Three kinds of stipulations have often been made
in a bill of lading.
Delfin, Melicor, Matunog (D2019)
The first is one exempting the carrier from any
and all liability for loss or damage occasioned
by its own negligence.
The second is one providing for an unqualified
limitation of such liability to an agreed
valuation.
the third is one limiting the liability of the
carrier to an agreed valuation unless the
shipper declares a higher value and pays a
higher rate of freight.
- According to an almost uniform weight of
authority, the first and second kinds of
stipulations are invalid as being contrary to
public policy, but the third is valid and
enforceable.
SHEWARAM VS. PAL
- In accordance with the above-quoted provision of
Article 1750 of the New Civil Code, the pecuniary
liability of a common carrier may, by contract, be
limited to a fixed amount. It is required, however,
that the contract must be "reasonable and just
under the circumstances and has been fairly and
freely agreed upon.
The requirements provided in Article 1750 of
the New Civil Code must be complied with
before a common carrier can claim a limitation
of its pecuniary liability in case of loss,
destruction or deterioration of the goods it has
undertaken to transport. In the case before us
We believe that the requirements of said
article have not been met.
The fact that those conditions are printed at
the back of the ticket stub in letters so small
that they are hard to read would not warrant
the presumption that the appellee was aware
of those conditions such that he had "fairly
and freely agreed" to those conditions.
ONG YIU VS. CA
- While it may be true, that petitioner had not
signed the plane ticket (Exh. "12"), he is
nevertheless bound by the provisions thereof.
"Such provisions have been held to be a part of
the contract of carriage, and valid and binding
upon the passenger regardless of the latter's lack
of knowledge or assent to the regulation". It is
what is known as a contract of "adhesion", in
regards which it has been said that contracts of
adhesion wherein one party imposes a ready
made form of contract on the other, as the plane
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ticket in the case at bar, are contracts not entirely
prohibited.
- The one who adheres to the contract is in reality
free to reject it entirely, if he adheres, he gives
his consent.
PAN AM VS. IAC
- The ruling in Shewaram v. Philippine Air Lines,
Inc. [G.R. No. L-20099, July 2, 1966, 17 SCRA
606], where the Court held that the stipulation
limiting the carrier's liability to a specified amount
was invalid, finds no application in the instant
case, as the ruling in said case was premised on
the finding that the conditions printed at the back
of the ticket were so small and hard to read that
they would not warrant the presumption that the
passenger was aware of the conditions and that
he had freely and fairly agreed thereto. In the
instant case, similar facts that would make the
case fall under the exception have not been
alleged, much less shown to exist.
CATHAY PACIFIC VS CA
- Although the Warsaw Convention has the force
and effect of law in this country, being a treaty
commitment assumed by the Philippine
government, said convention does not operate
as an exclusive enumeration of the instances for
declaring a carrier liable for breach of contract of
carriage or as an absolute limit of the extent of
that liability.
- The Warsaw Convention declares the carrier
liable for damages in the enumerated cases and
under certain limitations. However, it must not be
construed to preclude the operation of the Civil
Code and other pertinent laws. It does not
regulate, much less exempt the carrier from
liability for damages for violating the rights of its
passengers under contract of carriage, especially
if willful misconduct on the part of the carriers
employees is found or established.
As to delay in delivery
MAERSK LINE VS. COURT OF APPEALS
- While there was no special contract entered into
by the parties indicating the date of arrival of the
subject shipment, petitioner nevertheless, was
very well aware of the specific date when the
Delfin, Melicor, Matunog (D2019)
goods were expected to arrive as indicated in the
bill of lading itself.
In this regard, there arises no need to execute
another contract for the purpose as it would be
a mere superfluity.
- In the case before us, we find that a delay in the
delivery of the goods spanning a period of two
(2) months and seven (7) days falls way beyond
the realm of reasonableness.
- In this case, the provision limiting liability as to
delay in delivery practical left the date of arrival
on sole determination and will of the carrier.
Factors affecting agreement
Article 1746. An agreement limiting the common
carrier's liability may be annulled by the shipper or
owner if the common carrier refused to carry the
goods unless the former agreed to such
stipulation.
Article 1747. If the common carrier, without just
cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract
limiting the common carrier's liability cannot be
availed of in case of the loss, destruction, or
deterioration of the goods.
Article 1748. An agreement limiting the common
carrier's liability for delay on account of strikes or
riots is valid
Article 1751. The fact that the common carrier has
no competitor along the line or route, or a part
thereof, to which the contract refers shall be taken
into consideration on the question of whether or
not a stipulation limiting the common carrier's
liability is reasonable, just and in consonance with
public policy.
Article 1752. Even when there is an agreement
limiting the liability of the common carrier in the
vigilance over the goods, the common carrier is
disputably presumed to have been negligent in
case of their loss, destruction or deterioration.
Applicable Law in Foreign Trade
Art 1753. The law of the country to which the
goods are to be transported shall govern the
liability of the common carrier for their loss,
destruction or deterioration.
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Rules on Passenger Baggage
Article 1754. The provisions of articles 1733 to
1753 shall apply to the passenger's baggage
which is not in his personal custody or in that of his
employee. As to other baggage, the rules in
articles 1998 and 2000 to 2003 concerning the
responsibility of hotel- keepers shall be applicable.
Art 1998. The deposit of effects made by travellers
in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be
responsible for them as depositaries, provided that
notice was given to them, or to their employees, of
the effects brought by the guests and that, on the
part of the latter, they take the precautions which
said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects.
Article 2000. The responsibility referred to in the
two preceding articles shall include the loss of, or
injury to the personal property of the guests
caused by the servants or employees of the
keepers of hotels or inns as well as strangers; but
not that which may proceed from any force
majeure. The fact that travellers are constrained to
rely on the vigilance of the keeper of the hotels or
inns shall be considered in determining the degree
of care required of him.
Article 2001. The act of a thief or robber, who has
entered the hotel is not deemed force majeure,
unless it is done with the use of arms or through an
irresistible force.
Article 2002. The hotel-keeper is not liable for
compensation if the loss is due to the acts of the
guest, his family, servants or visitors, or if the loss
arises from the character of the things brought into
the hotel. (n)
Article 2003. The hotel-keeper cannot free himself
from responsibility by posting notices to the effect
that he is not liable for the articles brought by the
guest. Any stipulation between the hotel-keeper
and the guest whereby the responsibility of the
former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void
Common Carriage of Passengers
Nature and Extent of Responsibility
Article 1733. Common carriers, from the nature of
their business and for reasons of public policy, are
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
Delfin, Melicor, Matunog (D2019)
passengers transported by them, according to all
the circumstances of each case.
Such extraordinary diligence in the vigilance over
the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and
1756.
Article 1755. A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all
the circumstances.
ISAAC VS. A.L. AMNEN TRANS CO.
- From the Civil Code provisions on common
carrier, we can make the following
restatement of the principles governing the
liability of a common carrier:
(1) the liability of a carrier is contractual and
arises upon breach of its obligation. There is
breach if it fails to exert extraordinary diligence
according to all the circumstances of each
case;
(2) a carrier is obliged to carry its passenger with
the utmost diligence of a very cautious person,
having due regard for all the circumstances;
(3) a carrier is presumed to be at fault or to
have" acted negligently in case of death of, or
injury to, passengers, it being its duty to prove
that it exercised extraordinary diligence; and
(4) the carrier is not an insurer against all
risks of travel.
LANDINGIN VS. PANTRANCO
- as a common carrier, defendant PANTRANCO
was duty bound to carry its passengers "safely
as far as human care and foresight can provide,
using the utmost diligence of very cautious
persons, with a due regard for all the
circumstances
- When a passenger dies or is injured, the
presumption is that the common carrier's is at
fault or that it acted negligently (Article 1756).
This presumption is only rebutted by proof on t
e carrier's part that it observed the
"extraordinary diligence" required in Article
1733 and the "utmost diligence of very
cautious persons" required in Article 1755
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LANDICHO VS. BTCO
- The duty of the common carrier does not
encompass all risks attendant to a passenger in
transit, for if that would be the case then the
transportation firm would be a good source of
stipends for the family of one who would like to
end it all by simply boarding a bus, pay fare, and
intentionally fall from it.
A carrier could not be charged with all the care
and diligence for each and every individual
passenger.
It is enough that the employees must see to it
that a passenger places himself safely inside
the vehicle, that it operated carefully, and that
its mechanism is perfectly alright to avoid
mishaps.
- Surely a passenger must see to it that he seat
himself in a safe portion of the vehicle to avoid
falling.
NECESITO VS. PARAS
- It is clear that the carrier is not an insurer of the
passengers' safety. His liability rests upon
negligence, his failure to exercise the "utmost"
degree of diligence that the law requires, and by
Art. 1756, in case of a passenger's death or
injury the carrier bears the burden of satisfying
the court that he has duly discharged the duty of
prudence required.
The preponderance of authority is in favor of
the doctrine that a passenger is entitled to
recover damages from a carrier for an injury
resulting from a defect in an appliance
purchased from a manufacturer, whenever it
appears that the defect would have been
discovered by the carrier if it had exercised the
degree of care which under the circumstances
was incumbent upon it, with regard to
inspection and application of the necessary
tests.
For the purposes of this doctrine, the
manufacturer is considered as being in law the
agent or servant of the carrier, as far as
regards the work of constructing the
appliance. According to this theory, the good
repute of the manufacturer will not relieve the
carrier from liability"
- The rationale of the carrier's liability is the fact
that the passenger has neither choice nor control
over the carrier in the selection and use of the
equipment and appliances in use by the carrier.
Delfin, Melicor, Matunog (D2019)
Having no privity whatever with the
manufacturer or vendor of the defective
equipment, the passenger has no remedy
against him, while the carrier usually has.
It is but logical, therefore, that the carrier, while
not an insurer of the safety of his passengers,
should nevertheless be held to answer for the
flaws of his equipment if such flaws were at all
discoverable.
PAL VS. CA
- The duty to exercise the utmost diligence on the
part of common carriers is for the safety of
passengers as well as for the members of the
crew or the complement operating the carrier, the
airplane in the case at bar. And this must be so
for any omission, lapse or neglect thereof will
certainly result to the damage, prejudice, nay
injuries and even death to all aboard the plane,
passengers and crew members alike.
SULPICIO VS. CA
- We agree with the CA that although Pamalaran
was never a passenger of petitioner, still the
latter is liable as a common carrier for his death.
The CA relied on Canas v. Dabatos, 8 Court of
Appeals Report 918 (1965). In said case, 13
persons were on board the vessel of
defendant not as passengers but as
'cargadores' of the shipper's goods. They
were there with the consent and knowledge of
the owner of the vessel. Despite the absence
of a passenger-carrier relationship between
them, the appellate court, just the same, held
the patron thereof liable as a common carrier.
JAPAN AIRLINES VS. CA
- Under Article 1755 of the Civil Code, a common
carrier such as JAL is bound to carry its
passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with due regard for all
the circumstances.
- When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date,
a contract of carriage arises. The passenger has
every right to expect that he be transported on
that flight and on that date and it becomes the
carriers obligation to carry him and his luggage
safely to the agreed destination.
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If a passenger is not so transported or if in the
process of transporting he dies or is injured,
the carrier may be held liable for a breach of
contract of carriage
- We find that JAL did not breach its contract of
carriage with respondents. It may be true that
JAL has the duty to inspect whether its
passengers have the necessary travel
documents, however, such duty does not extend
to checking the veracity of every entry in these
documents.
JAL could not vouch for the authenticity of a
passport and the correctness of the entries
therein.
Duration of Responsibility
Art 1736. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the
same are delivered, actually or constructively, by
the carrier to the consignee, or to the person who
has a right to receive them, without prejudice to the
provisions of article 1738.
CANGCO VS. MRR
Bound to provide facilities for safe egress from
trains in the terminal
DEL PRADO VS. MERALCO
- The relation between a carrier of passengers for
hire and its patrons is of a contractual nature and
a failure on the part of the carrier to use due care
in carrying its passengers safely is a breach of
duty (culpa contractual) under articles 1101,
1103, and 1104 of the Civil Code.
Furthermore, the duty that the carrier of
passengers owes to its patrons extends to
persons boarding the cars as well as those
alighting therefrom.
LA MALLORCA VS. CA
- It has been recognized as a rule that the relation
of carrier and passenger does not cease at the
moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the
point of destination, but continues until the
passenger has had a reasonable time or a
reasonable opportunity to leave the carrier's
premises.
Delfin, Melicor, Matunog (D2019)
An what is a a reasonable time or a
reasonable delay within this rule is to be
determined from all the circumstances. Thus,
a person who, after alighting from a train,
walks along the station platform is considered
still a passenger.
BATACLAN VS. MEDINA
- According to the witnesses, the driver and the
conductor were on the road walking back and
forth. They, or at least, the driver should and
must have known that in the position in which the
overturned bus was, gasoline could and must
have leaked from the gasoline tank and soaked
the area in and around the bus, this aside from
the fact that gasoline when spilled, specially over
a large area, can be smelt and detected even
from a distance, and yet neither the driver nor
the conductor would appear to have cautioned or
taken steps to warn the rescuers not to bring the
lighted torch too near the bus.
- Said negligence on the part of the agents of the
carrier come under the codal provisions above-
reproduced, particularly, Articles 1733, 1759 and
1763.
ABOITIZ VS. CA
- The rule is that the relation of carrier and
passenger continues until the passenger has
been landed at the port of destination and has
left the vessel owner's dock or premises.
- Once created the relationship will not ordinarily
terminate until the passenger has, after reaching
his destination safely alighted from the carrier's
conveyance or had a reasonable opportunity to
leave the carrier's premises.
All persons who remain on the premises 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
The carrier-passenger relationship is not
terminated merely by the fact that the person
transported has been carried to his destination
if, for example, such person remains in the
carrier's premises to claim his baggage.
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That reasonableness of time should be made
to depend on the attending circumstances of
the case, such as the kind of common carrier,
the nature of its business, the customs of the
place, and so forth, and therefore precludes a
consideration of the time element per se
without taking into account such other factors.
PAL VS. CA
- Undisputedly, PAL'S diversion of its flight due to
inclement weather was a fortuitous event.
Nonetheless, such occurrence did not
terminate PAL's contract with its passengers.
Being in the business of air carriage and the
sole one to operate in the country, PAL is
deemed equipped to deal with situations as in
the case at bar.
What we said in once case once again must
be stressed, the relation of the carrier and
passenger continues until the latter has been
landed at the port of destination and has left
the carrier's premises
Hence, PAL necessarily would still have to
exercise extraordinary diligence in
safeguarding the comfort, convenience and
safety of its stranded passengers until they
have reached their final destination. On this
score, PAL grossly failed considering the then
ongoing battle between government forces
and Muslim rebels in Cotabato City and the
fact that the private respondent was a stranger
to the place.
Presumption of Negligence
Art 1756. In case of death of or injuries to
passengers, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
Force Majeure
BACHELOR EXPRESS VS. CA
The running amuck of the passenger was the
proximate cause of the incident as it triggered off a
commotion and panic among the passengers such
that the passengers started running to the sole exit
shoving each other resulting in the falling off the
Delfin, Melicor, Matunog (D2019)
bus by passengers Beter and Rautraut causing
them fatal injuries. The sudden act of the
passenger who stabbed another passenger in the
bus is within the context of force majeure.
- However, in order that a common carrier may be
absolved from liability in case of force majeure, it
is not enough that the accident was caused by
force majeure. The common carrier must still
prove that it was not negligent in causing the
injuries resulting from such accident.
YOBIDO VS. CA
- To our mind the explosion of the tire is not in
itself a fortuitous event. The cause of the blow-
out, if due to a factory defect, improper mounting,
excessive tire pressure, is not an unavoidable
event. On the other hand, there may have been
adverse conditions on the road that were
unforeseeable and/or inevitable, which could
make the blow-out a caso fortuito.
- The fact that the cause of the blow-out was not
known does not relieve the carrier of liability.
Owing to the statutory presumption of negligence
against the carrier and its obligation to exercise
the utmost diligence of very cautious persons to
carry the passenger safely as far as human care
and foresight can provide, it is the burden of the
defendants to prove that the cause of the blow-
out was a fortuitous event. It is not incumbent
upon the plaintiff to prove that the cause of the
blow-out is not caso-fortuito.
- Proving that the tire that exploded is a new
Goodyear tire is not sufficient to discharge
defendants burden. As enunciated in Necesito
vs. Paras, the passenger has neither choice nor
control over the carrier in the selection and use
of its equipment, and the good repute of the
manufacturer will not necessarily relieve the
carrier from liability.
Limitation of Liability
Art 1757. The responsibility of a common carrier
for the safety of passengers as required in articles
1733 and 1755 cannot be dispensed with or
lessened by stipulation, by the posting of notices,
by statements on tickets, or otherwise.
Article 1758. When a passenger is carried
gratuitously, a stipulation limiting the common
carrier's liability for negligence is valid, but not for
willful acts or gross negligence.
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The reduction of fare does not justify any limitation
of the common carrier's liability.
Responsibility for acts of employees
Art 1759. Common carriers are liable for the death
of or injuries to passengers through the negligence
or wilful acts of the former's employees, although
such employees may have acted beyond the
scope of their authority or in violation of the orders
of the common carriers.
This liability of the common carriers does not
cease upon proof that they exercised all the
diligence of a good father of a family in the
selection and supervision of their employees.
Article 1760. The common carrier's responsibility
prescribed in the preceding article cannot be
eliminated or limited by stipulation, by the posting
of notices, by statements on the tickets or
otherwise.
DE GILLACO VS. MRR
- There can be no quarrel with the principle that a
passenger is entitled to protection from personal
violence by the carrier or its agents or
employees, since the contract of transportation
obligates the carrier to transport a passenger
safely to his destination. But under the law of the
case, this responsibility extends only to those
that the carrier could foresee or avoid through
the exercise of the degree of care and diligence
required of it.
- The act of guard Devesa in shooting passenger
Gillaco (because of a personal grudge nurtured
against the latter since the Japanese occupation)
was entirely unforseeable by the Manila Railroad
Co. The latter had no means to ascertain or
anticipate that the two would meet, nor could it
reasonably foresee every personal rancor that
might exist between each one of its many
employees and any one of the thousands of
eventual passengers riding in its trains.
Another very important consideration that must be
borne in mind is that, when the crime took place,
the guard Devesa had no duties to discharge in
connection with the transportation of the deceased
from Calamba to Manila.
Delfin, Melicor, Matunog (D2019)
MARANAN VS. PEREZ
- here, the killing was perpetrated by the driver of
the very cab transporting the passenger, in
whose hands the carrier had entrusted the duty
of executing the contract of carriage. In other
words, unlike the Gillaco case, the killing of the
passenger here took place in the course of duty
of the guilty employee and when the employee
was acting within the scope of his duties.
- Moreover, the Gillaco case was decided under
the provisions of the Civil Code of 1889 which,
unlike the present Civil Code, did not impose
upon common carriers absolute liability for the
safety of passengers against willful assaults or
negligent acts committed by their employees.
- The Civil Code provisions on the subject of
Common Carriers[1] are new and were taken from
Anglo-American Law.[2] There, the basis of the
carrier's liability for assaults on passengers
committed by its drivers rests either on (1) the
doctrine of respondent superior or (2) the
principle that it is the carrier's implied duty to
transport the passenger safely.
Under the first, which is the minority view, the
carrier is liable only when the act of the
employee is within the scope of his authority
and duty. It is not sufficient that the act be
within the course of employment only.
Under the second view, upheld by the majority
and also by the later cases, it is enough that
the assault happens within the course of the
employee's duty. It is no defense for the
carrier that the act was done in excess of
authority or in disobedience of the carrier's
orders. The carrier's liability here is absolute in
the sense that it practically secures the
passengers from assaults committed by its
own employees
- As can be gleaned from Art. 1759, the Civil Code
of the Philippines evidently follows the rule based
on the second view. At least three very cogent
reasons underlie this rule.
(1) the special undertaking of the carrier
requires that it furnish its passenger that full
measure of protection afforded by the exercise
of the high degree of care prescribed by the
law, inter alia from violence and insults at the
hands of strangers and other passengers, but
above all, from the acts of the carrier's own
servants charged with the passenger's safety;
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(2) said liability of the carrier for the servant's
violation of duty to passengers, is the result of
the former's confiding in the servant's hands
the performance of his contract to safely trans-
port the passenger, delegating therewith the
duty of protecting the passenger with the
utmost care prescribed by law; and
(3) as between the carrier and the passenger,
the former must bear the risk of wrongful acts
or negligence of the carrier's employees
against passengers, since it, and not the
passengers, has power to select and remove
them.
Responsibility for acts of passengers and
strangers
Article 1763. A common carrier is responsible for
injuries suffered by a passenger on account of the
wilful acts or negligence of other passengers or of
strangers, if the common carrier's employees
through the exercise of the diligence of a good
father of a family could have prevented or stopped
the act or omission.
PALIPIL VS. COURT OF APPEALS
- First, as stated earlier, the presumption of fault or
negligence against the carrier is only a
disputable presumption. It gives in where
contrary facts are established proving either that
the carrier had exercised the degree of diligence
required by law or the injury suffered by the
passenger was due to a fortuitous event.
Where as in the instant case, the injury
sustained by the petitioner was in no way due
to any defect in the means of transport or in
the method of transporting or to the negligent
or wailful acts of private respondent's
employees, and therefore involving no issue of
negligence in its duty to provide safe and
suitable cars as well as competent employees,
with the injury arising wholly from causes
created by strangers over which the carrier
had no control or even knowledge or could not
have prevented, the presumption is rebutted
and the carrier is not and ought not to be held
liable.
Clearly, under the above provision, a tort
committed by a stranger which causes injury
Delfin, Melicor, Matunog (D2019)
to a passenger does not accord the latter a
cause of action against the carrier.
BACHELOR EXPRESS INC VS. CA
- the bus driver did not immediately stop the bus at
the height of the commotion; the bus was
speeding from a full stop; the victims fell from the
bus door when it was opened or gave way while
the bus was still running; the conductor panicked
and blew his whistle after people had already
fallen off the bus; and the bus was not properly
equipped with doors in accordance with law - it is
clear that the petitioners have failed to overcome
the presumption of fault and negligence found in
the law governing common carriers.
- bus driver could have stopped the car when
stranger was running amuck.
LRTA VS. NAVIDAD
- The foundation of LRTAs liability is the contract
of carriage and its obligation to indemnify the
victim arises from the breach of that contract by
reason of its failure to exercise the high diligence
required of the common carrier. In the discharge
of its commitment to ensure the safety of
passengers, a carrier may choose to hire its own
employees or avail itself of the services of an
outsider or an independent firm to undertake the
task. In either case, the common carrier is not
relieved of its responsibilities under the contract
of carriage.
Duty of Passenger; Effect of Contributory
Negligence
Article 1761. The passenger must observe the
diligence of a good father of a family to avoid injury
to himself.
Article 1762. The contributory negligence of the
passenger does not bar recovery of damages for
his death or injuries, if the proximate cause thereof
is the negligence of the common carrier, but the
amount of damages shall be equitably reduced.
CNAGCO VS. MRR
Damages Equitably reduced because of
contributory negligence
ISAAC VS. A.L. AMMEN
- A circumstance which militates against the
stand of appellant is the fact borne out by the
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evidence that when he boarded the bus in
question, he seated himself on the left side
thereof resting his left arm on the window sill but
with his left elbow outside the window, this
being his position in the bus when the collision
took place. It is for this reason that the collision
resulted in the severance of said left arm from
the body of appellant thus doing him a great
damage. It is therefore apparent that appellant is
guilty of contributory negligence. Had he not
placed his left arm on the window sill with a
portion thereof protruding outside, perhaps the
injury would have been avoided as is the case
with the other passengers. It is to be noted
that appellant was the only victim of the collision
Damages Recoverable from Common
Carriers
Actual or Compensatory
Art 2199. Except as provided by law or by
stipulation, one is entitled to an adequate
compensation only for such pecuniary loss
suffered by him as he has duly proved. Such
compensation is referred to as actual or
compensatory damages.
Art 2201. In contracts and quasi-contracts, the
damages for which the obligor who acted in good
faith is liable shall be those that are the natural and
probable consequences of the breach of the
obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to
the non-performance of the obligation.
Art 2203. The party suffering loss or injury must
exercise the diligence of a good father of a family
to minimize the damages resulting from the act or
omission in question.
Art 1764. Damages in cases comprised in this
Section shall be awarded in accordance with Title
XVIII of this Book, concerning Damages. Article
2206 shall also apply to the death of a passenger
caused by the breach of contract by a common
carrier.
Art 2206. The amount of damages for death
caused by a crime or quasi-delict shall be at least
Delfin, Melicor, Matunog (D2019)
three thousand pesos, even though there may
have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the
earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed
and awarded by the court, unless the deceased on
account of permanent physical disability not
caused by the defendant, had no earning capacity
at the time of his death;
(2) If the deceased was obliged to give support
according to the provisions of article 291, the
recipient who is not an heir called to the
decedent's inheritance by the law of testate or
intestate succession, may demand support from
the person causing the death, for a period not
exceeding five years, the exact duration to be
fixed by the court;
(3) The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental anguish
by reason of the death of the deceased
CARIAGA VS. LTBCO. AND MRR
- company claims that only the actual damages
suffered by Edgardo Cariaga consisting of
medical; hospital and other expenses in the total
sum of P17,719.75 are within this category
- We are of the opinion however, that the income
which Edgardo Cariaga could earn if he should
finish the medical course and pass the
corresponding board examinations must be
deemed to be within the same category because
they could have reasonably been foreseen by
the parties at the time he boarded the bus No.
133 owned and operated by the LTB.
- At the time he was already a fourth-year student
in medicine in a reputable university. While his
scholastic record may not be first rate (Exhibits 4,
4-A to 4-C), it is, nevertheless, sufficient to justify
the assumption that he could have finished the
course and would have passed the board test in
due time.
PAN AM VS. IAC
- in order to impose on the defaulting party further
liability than for damages naturally and directly,
i.e., in the ordinary course of things, arising from
a breach of contract, such unusual or
extraordinary damages must have been brought
within the contemplation of the parties as the
probable result of breach at the time of or prior to
contracting. Generally, notice then of any special
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circumstances which will show that the damages
to be anticipated from a breach would be
enhanced has been held sufficient for this effect.
- Applying the ruling to the facts of the instant
case, in the absence of a showing that
petitioner's attention was called to the special
circumstances requiring prompt delivery of
private respondent Pangan's luggages, petitioner
cannot be held liable for the cancellation of
private respondents' contracts as it could not
have foreseen such an eventuality when it
accepted the luggages for transit.
VILLA REY VS. CA
- The determination of such amount depends,
mainly upon two (2) factors, namely: (1) the num-
ber of years on the basis of which the damages
shall be computed; and (2) the rate at which the
losses sustained by said respondents should be
fixed.
In fixing the amount of that support, We must
reckon with the "necessary expenses of his
own living", which should be deducted from
his earnings. Thus, it has been consistently
held that earning capacity, as an element of
damages to one's estate for his death by
wrongful act is necessarily his net earning
capacity or his capacity to acquire money,
'less the necessary expense for his own
living.
Stated otherwise, the amount recoverable is
not the loss of the entire earning, but rather
the loss of that portion of the earnings which
the beneficiary would have received
In other words, only the net earnings, not
gross earning are to be considered, that is, the
total of the earnings less expenses necessary
in the creation of such earnings or income[6]
and less living and other incidental expenses.
PAL VS. CA
Consider the life-expectancy of the deceased and
not of the beneficiary
- resort to foreign jurisprudence will be proper
only if no law or jurisprudence is available locally
to settle a controversy. Even in the absence of
local statute and case law, foreign jurisprudence
is only persuasive.
- Under Article 1764 and Article 2206(1) of the Civil
Code, the award of damages for death is
Delfin, Melicor, Matunog (D2019)
computed on the basis of the life expectancy of
the deceased, not of beneficiary.
VICTORY LINER VS. GAMMAS
- The award of compensatory damages for the
loss of the deceaseds earning capacity should
be deleted for lack of basis.
- As a rule, documentary evidence should be
presented to substantiate the claim for damages
for loss of earning capacity.
- By way of exception, damages for loss of earning
capacity may be awarded despite the absence of
documentary evidence when (1) the deceased is
self-employed earning less than the minimum
wage under current labor laws, and judicial
notice may be taken of the fact that in the
deceaseds line of work no documentary
evidence is available; or (2) the deceased is
employed as a daily wage worker earning less
than the minimum wage under current labor
laws.
Moral Damages
Art 2217. Moral damages include physical
suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral
damages may be recovered if they are the
proximate result of the defendant's wrongful act for
omission.
Art 2216. No proof of pecuniary loss is necessary
in order that moral, nominal, temperate, liquidated
or exemplary damages, may be adjudicated. The
assessment of such damages, except liquidated
ones, is left to the discretion of the court,
according to the circumstances of each case.
Art 2219. Moral damages may be recovered in the
following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious
acts
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26,
27, 28, 29, 30, 32, 34, and 35.
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The parents of the female seduced, abducted,
raped, or abused, referred to in No. 3 of this
article, may also recover moral damages.
The spouse, descendants, ascendants, and
brothers and sisters may bring the action
mentioned in No. 9 of this article, in the order
named.
Art 2220. Willful injury to property may be a legal
ground for awarding moral damages if the court
should find that, under the circumstances, such
damages are justly due. The same rule applies to
breaches of contract where the defendant acted
fraudulently or in bad faith.
Art 2206(3). The amount of damages for death
caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may
have been mitigating circumstances. In addition:
(3) The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental anguish
by reason of the death of the deceased.
FORES VS. MIRANDA
(a) in case of breach of contract (including one of
transportation) proof of bad faith or fraud
(dolus), i.e., wanton or deliberately injurious
conduct, is essential to justify an award of
moral damages
(b) a breach of contract can not be considered
included in the descriptive term "analogous
cases" used in Art. 2219; not only because Art.
2220 specifically provides for the damages
that are caused by contractual breach, but
because the definition of quasi-delict in Art.
2176 of the Code expressly excludes the cases
where there is a "preexisting contractual
relation between the parties.
- But the exceptional rule of Art. 1764 makes it all
the more evident that where the injured
passenger does not die, moral damages are
not recoverable unless it is proved that the
carrier was guilty of malice or bad faith.
We think it is clear that the mere carelessness
of the carrier's driver does not per se
constitute or justify an inference of malice or
bad faith on the part of the carrier; and in the
case at bar there is no other evidence of
such malice to support the award of moral
damages by the Court of Appeals.
Delfin, Melicor, Matunog (D2019)
To award moral damages for breach of
contract, therefore, without proof of bad faith
or malice on the part of the defendant, as
required by Art. 2220", would be to violate
the clear provisions of the law, and constitute
unwarranted judicial legislation
- bad faith is breach of known duty through
some motive of self interest or ill will.
AIR FRANCE VS. CARRASCOSO
- It is true that there is no specific mention of the
term bad faith in the complaint. But, the inference
of bad faith is there; it may be drawn from the
facts and circumstances set forth therein.
The contract was averred to establish the
relation between the parties. But the stress of
the action is put on wrongful expulsion.
Quite apart from theforegoing is that (a) right
at the start of the trial, respondent's counsel
placed petitioner on guard on what
Carrascoso intended to prove: That while
sitting in the plane in Bangkok, Carrascoso
was ousted by petitioner's manager who gave
his seat to a white man;and (b) evidence of
bad faith in the fulfillment of the contract was
presented without objection on the part of the
petitioner. It is, therefore, unnecessary to
inquire as to whether or not there is sufficient
averment in the complaint to justify an award
for moral damages. Deficiency in the
complaint, if any, was cured by the evidence.
An amendment thereof to conform to the
evidence is not even required.
LOPEZ VS. PAN AM
- From the foregoing evidence of the defendant, it
is in effect admitted that defendantthrough its
agentsfirst cancelled plaintiffs' reservations by
mistake and thereafter deliberately and
intentionally withheld from plaintiffs or their travel
agent the fact of said cancellation, letting them
go on believing that their first class reservations
stood valid and confirmed.
- In so they had confirmed reservations for the
same, when in fact they had none, defendant
wilfully and knowingly placed itself into the
position of having to breach its aforesaid
contracts with plaintiffs should there be no last-
minute cancellation by other passengers before
flight time, as it turned out in this case
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- Such actuation of defendant may indeed have
been prompted by nothing more than the
promotion of its self-interest in holding on to
Senator Lopez and party as passengers in its
flight and foreclosing on their chances to seek
the services of other airlines that may have been
able to afford them first class accommodations.
- As if to further emphasize its bad faith on the
matter, defendant subsequently promoted the
employee who cancelled plaintiffs' reservations
and told them nothing about it. The record shows
that said employeeMariano Herranzwas not
subjected to investigation and suspension by
defendant but instead was given a reward in the
form of an increase of salary in June of the
following year
- Granting all the mistakes advanced by the
defendant, there would at least be negligence
so gross and reckless as to amount to malice
or bad faith (Fores vs. Miranda,105 Phil. 266;
Necesito vs. Paras, 104 Phil. 75). Firstly,
notwithstanding the entries in the reservation
cards (Exhs. 1 & 3) that the reservations
cancelled are those of the Rufinos only, Herranz
made the mistake, after reading said entries, of
sending a wire cancelling all the reservations,
including those of Senator Lopez and party (Tsn.,
pp. 103-108, Nov. 17, 1961). Secondly, after
sending a wire to San Francisco head office on
April 19, 1960 stating his error and asking for
reinstatement, Herranz simply forgot about the
matter.
ORTIGAS VS. LUFTHANSA
- Indubitable proof of the defendant's bad faith is
found in the fact that while its employee was
assuring the plaintiff he would be transferred to
first class in Cairo, he was at the same time
writing on his ticket the following notation:
TRVLDY /c ROME HEG ROME ST', which
means 'Travelled economy class Rome to
Hongkong St', thereby barring Ortigas from
asserting any right to demand first class
accommodation. The defendant's employee,
therefore, knew all along the plaintiff would not
travel first class, and yet he deliberately made
him believe he would be transferred to first class
from Cairo to Hongkong.
- It is our considered view that when it comes to
contracts of common carriage, inattention and
Delfin, Melicor, Matunog (D2019)
lack of care on the part of the carrier resulting in
the failure of the passenger to be accommodated
in the class contracted for, amounts to bad faith
or fraud which entitles the passenger to the
award of moral damages in accordance with
Article 2220 of the Civil Code.
But in the instant case, the breach appears to
be of graver nature, since the preference
given to the Belgian passenger over plaintiff
was done willfully and in wanton disregard of
plaintiffs rights and his dignity as a human
being and as a Filipino, who may not be
discriminated against with impunity.
CATHAY PACIFIC VS. VASQUEZ
The upgrading was a breach of contract of
carriage, because the passengers have the right to
waive the privilege.
W/N the upgrading was tainted with fraud or bad
faith; and
- NO! WE ARE NOT CONVINCED.
- Bad faith and fraud are allegations of fact that
demand clear and convincing proof. They are
serious accusations that can be so conveniently
and casually invoked, and that is why they are
never presumed. They amount to mere slogans
or mudslinging unless convincingly substantiated
by whoever is alleging them.
Fraud - has been defined to include an
inducement through insidious machination.
Insidious machination refers to a deceitful
scheme or plot with an evil or devious
purpose. Deceit exists where the party, with
intent to deceive, conceals or omits to state
material facts and, by reason of such omission
or concealment, the other party was induced
to give consent that would not otherwise have
been given.
Bad faith - does not simply connote bad
judgment or negligence; it imports a dishonest
purpose or some moral obliquity and
conscious doing of a wrong, a breach of a
known duty through some motive or interest or
ill will that partakes of the nature of fraud
- We find no persuasive proof of fraud or bad faith
in this case.
The Vazquezes were not induced to agree to
the upgrading through insidious words or
deceitful machination or through willful
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concealment of material facts. Upon boarding,
Ms. Chiu told the Vazquezes that their
accommodations were upgraded to First Class
in view of their being Gold Card members of
Cathays Marco Polo Club. She was honest in
telling them that their seats were already given
to other passengers and the Business Class
Section was fully booked. Ms. Chiu might have
failed to consider the remedy of offering the
First Class seats to other passengers. But, we
find no bad faith in her failure to do so, even if
that amounted to an exercise of poor
judgment.
AIR FRANCE VS. GILLEGO
- In awarding moral damages for breach of
contract of carriage, the breach must be wanton
and deliberately injurious or the one responsible
acted fraudulently or with malice or bad faith.
Not every case of mental anguish, fright or
serious anxiety calls for the award of moral
damages.
Where in breaching the contract of carriage
the airline is not shown to have acted
fraudulently or in bad faith, liability for
damages is limited to the natural and probable
consequences of the breach of the obligation
which the parties had foreseen or could have
reasonably foreseen. In such a case the
liability does not include moral and exemplary
damages.
- bad faith should be established by clear and
convincing evidence. The settled rule is that the
law always presumes good faith such that any
person who seeks to be awarded damages due
to the acts of another has the burden of proving
that the latter acted in bad faith or with ill motive.
- TC and CA did not err in finding that petitioner
acted in bad faith in repeatedly ignoring
respondent's follow-up calls. The alleged entries
in the PIR deserve scant consideration, as these
h a v e n o t b e e n p r o p e r l y i d e n t i fi e d o r
authenticated by the airline station representative
in Budapest who initiated and inputed the said
entries.
Inattention to and lack of care for the interest
of its passengers who are entitled to its utmost
consideration, particularly as to their
convenience, amount to bad faith which
Delfin, Melicor, Matunog (D2019)
entitles the passenger to an award of moral
damages.
What the law considers as bad faith which
may furnish the ground for an award of moral
damages would be bad faith in securing the
contract and in the execution thereof, as well
as in the enforcement of its terms, or any other
kind of deceit.
Exemplary Damages
Art 2229. Exemplary or corrective damages are
imposed, by way of example or correction for the
public good, in addition to the moral, temperate,
liquidated or compensatory damages.
Art 2232. In contracts and quasi-contracts, the
court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.
Art 2233. Exemplary damages cannot be
recovered as a matter of right; the court will decide
whether or not they should be adjudicated.
MECENAS VS. COURT OF APPEALS
- In respect of the petitioners' claim for exemplary
damages, it is only necessary to refer to Article
2232 of the Civil Code:
Art 2232. In contracts and quasi-contracts, the
court may award exemplary damages if the
defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.
- Thus, whether petitioners are entitled to
exemplary damages as claimed must depend on
whether or not private respondents acted
recklessly, that is, with gross negligence.
- There is herefore, no question that the "Don
Juan" was at least as negligent as the M/T
"Tacloban City" in the events leading up to the
collision and the sinking of the "Don Juan." The
remaining question is whether the negligence on
the part of the "Don Juan" reached that level of
recklessness or gross negligence that our Civil
Code requires for the imposition of exemplary
damages.
- We believe that the behaviour of the captain of
the "Don Juan" in this instance -- playing
mahjong "before and up to the time of collision" --
constitutes behaviour that is simply unacceptable
on the part of the master of a vessel to whose
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hands the lives and welfare of at least seven
hundred fifty (750) passengers had been
entrusted.
- Exemplary damages are designed by our civil
law to permit the courts to reshape behaviour
that is socially deleterious in its consequence by
creating negative incentives or deterrents against
such behaviour. In requiring compliance with the
standard of extraordinary diligence, a standard
which is in fact that of the highest possible
degree of diligence, from common carriers and in
creating a presumption of negligence against
them, the law seeks to compel them to control
their employees, to tame their reckless instincts
and to force them to take adequate care of
human beings and their property.
Nominal, Temperate, and Liquidated
Damages
Art 2221. Nominal damages are adjudicated in
order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered by
him.
Art 2224. Temperate or moderate damages, which
are more than nominal but less than compensatory
damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its
amount can not, from the nature of the case, be
provided with certainty.
Art 2226. Liquidated damages are those agreed
upon by the parties to a contract, to be paid in
case of breach thereof.
ALITALIA VS AIC
- In the case at bar, no bad faith or otherwise
improper conduct may be ascribed to the
employees of petitioner airline; and Dr. pablos
luggage was eventually returned to her, belatedly
it is true, but without appreciable damage.
The fact is nevertheless, that some special
species of injury was caused to Dr. Pablo
because petitioner ALITALIA misplaced her
baggage and failed to deliver it to her at the
time appointed -- a breach of its contract of
carriage, to be sure -- with the result that she
was unable to read the paper and make the
scientific presentation (consisting of slides,
Delfin, Melicor, Matunog (D2019)
a u t o r a d i o g r a m s o r fi l m s , t a b l e s a n d
tabulations) that she had painstakingly labored
over, at the prestigious international
conference, to attend which she had traveled
hundreds of miles, to her chagrin and
embarrassment and the disappointment and
annoyance of the organizers.
- She is not of course, entitled to be compensated
for loss or damage to her luggage. As already
mentioned, her baggage was ultimately delivered
to her in Manila, tardily but safely. She is
however entitled to nominal damages -- which,
as the law says, is adjudicated in order that a
right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated and
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered --
and this Court agrees that the respondent Court
of Appeals correctly set the amount thereof at
P40,000.00.
As to the purely technical argument that the
award to her of such nominal damages is
precluded by her omission to include a specific
claim therefor in her complaint, it suffices to
draw attention to her general prayer, following
her plea for moral and exemplary damages
and attorney's fees, "for such other and further
just and equitable relief in the premises,"
which certainly is broad enough to
comprehend an application as well for nominal
damages.
SALUEDO VS. COURT OF APPEALS
- Because the passengers in a contract of carriage
do not contract merely for transportation they
have a right to be treated with kindness, respect,
courtesy and consideration.[68] A contract to
transport passengers is quite different in kind and
degree from any other contractual relation, and
generates a relation attended with public duty.
The operation of a common carrier is a business
affected with public interest and must be directed
to serve the comfort and convenience of
passengers,
Passnegers are human beings with human
feelings and emotions; they should not be
treated as mere numbers or statistics for
revenue.
- THe records reveal that petitioners, particularly
Maria and Saturnino Saludo, agonized for nearly
five hours, over the possibility of losing their
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mother's mortal remains, unattended to and
without any assurance from the employees of
TWA that they were doing anything about the
situation. This is not to say that petitioners were
to be regaled with extra special attention
T h e y w e r e , h o w e v e r, e n t i t l e d t o t h e
understanding and humane consideration
called for by and commensurate with the
extraordinary diligence required of common
carriers, and not the cold insensitivity to their
predicament. It is hard to believe that the
airline's counter personnel were totally
helpless about the situation. Common sense
could and should have dictated that they exert
a little extra effort in making a more extensive
inquiry, by themselves or through their
superiors, rather than just shrug off the
problem with a callous and uncaring remark
that they had no knowledge about it.
Nominal damages awarded for this
JAPAN AIRLINES VS. COURT OF APPEALS
- Private respondents were placed on the waiting
list from June 20 to June 24. To assure
themselves of a seat on an available flight, they
were compelled to stay in the airport the whole
day of June 22, 1991 and it was only at 8:00 p.m.
of the aforesaid date that they were advised that
they could be accommodated in said flight which
flew at about 9:00 a.m. the next day.
- We are not oblivious to the fact that the
cancellation of JAL flights to Manila from June 15
to June 21, 1991 caused considerable disruption
in passenger booking and reservation. In fact, it
would be unreasonable to expect, considering
NAIAs closure, that JAL flight operations would
be normal on the days affected.
Nevertheless, this does not excuse JAL from
its obligation to make the necessary
arrangements to transport private respondents
on its first available flight to Manila. After all, it
had a contract to transport private
respondents from the United States to Manila
as their final destination.
- Consequently, the award of nominal damages is
in order.
Nominal damages are adjudicated in order
that a right of a plaintiff, which has been
violated or invaded by the defendant, may be
vindicated or recognized and not for the
Delfin, Melicor, Matunog (D2019)
purpose of indemnifying any loss suffered by
him.
The court may award nominal damages in
every obligation arising from any source
enumerated in Article 1157, or in every case
where any property right has been invaded
SAVELLANO VS. NORTHWEST
Nominal damages are recoverable if no actual,
substantial or specific damages were shown to
have resulted from the breach. The amount of such
damages is addressed to the sound discretion of
the court, taking into account the relevant
circumstances.
- In the present case, we must consider that
petitioners suffered the inconveniences of having
to wake up early after a bad night and having to
miss breakfast; as well as the fact that they were
business class passengers. They paid more for
better service; thus, rushing them and making
them miss their small comforts was not a trivial
thing.
- We also consider their social and official status.
Victorino Savellano was a former mayor, regional
trial court judge and chairman of the Commission
on Elections. Virginia B. Savellano was the
president of five rural banks, and Deogracias
Savellano was then the incumbent vice governor
of Ilocos Sur.
- Proper to grant 150K as nominal damages to
each of them, in order to vindicate and recognize
their right to be notified and consulted before
their contracted stopping place was changed.
VICTORY LUNER VS. GAMMAS
- Art 1764 in relation to Article 2206 of the Civil
Code, holds the common carrier in breach of its
contract of carriage that results in the death of a
passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of
earning capacity, and (3) moral damages.
- In the present case, respondent heirs of the
deceased are entitled to indemnity for the death
of Marie Grace which under current
jurisprudence is fixed at P50,000.00
- The award of compensatory damages for the
loss of the deceaseds earning capacity should
be deleted for lack of basis.
As a rule, documentary evidence should be
presented to substantiate the claim for
damages for loss of earning capacity.
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By way of exception, damages for loss of
earning capacity may be awarded despite the
absence of documentary evidence when (1)
the deceased is self-employed earning less
than the minimum wage under current labor
laws, and judicial notice may be taken of the
fact that in the deceaseds line of work no
documentary evidence is available; or (2) the
deceased is employed as a daily wage worker
earning less than the minimum wage under
current labor laws.
- Here the trial court and the Court of Appeals
computed the award of compensatory damages
for loss of earning capacity only on the basis of
the testimony of respondent Rosalito that the
deceased was 39 years of age and a Section
Chief of the Bureau of Internal Revenue,
Tuguergarao District Office with a salary of
P83,088.00 per annum when she died
No other evidence was presented. This award
is clearly erroneous because the deceaseds
earnings does not fall within the exceptions.
- However, the fact of loss having been
established, temperate damages in the amount
of P500,000.00 should be awarded to
respondents. Under Article 2224 of the Civil
Code, temperate or moderate damages, which
are more than nominal but less than
compensatory damages, may be recovered
when the court finds that some pecuniary loss
has been suffered but its amount can not, from
the nature of the case, be proved with certainty.
Attorneys Fees and Interest
Art 2208. In the absence of stipulation, attorney's
fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has
compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution
against the plaintiff;
(4) In case of a clearly unfounded civil action or
proceeding against the plaintiff;
(5) Where the defendant acted in gross and
evident bad faith in refusing to satisfy the plaintiff's
plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of
Delfin, Melicor, Matunog (D2019)
household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's
compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
(10) When at least double judicial costs are
awarded;
(11) In any other case where the court deems it
just and equitable that attorney's fees and
expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of
litigation must be reasonable.
Art 2210. Interest may, in the discretion of the
court, be allowed upon damages awarded for
breach of contract.
Code of Commerce Provisions on
Overland Transportation
Scope of Overland Transportation
Transportation on land and small bodies of water
Nature of the Contract
Art 349. A contract of transportation by land or
water ways of any kind shall be considered
commercial:
(1) When it has for its object merchandise or any
article of commerce
(2) When, whatever its object may be, the carrier is
a merchant or is habitually engaged in
transportation by the public.
Contract of overland transportation to be
considered commercial:
(1) when it has for its object merchandise or any
article of commerce
(2) when, whatever its object may be, the carrier is
a merchant or is habitually engaged in
transportation by the public.
Effect of the Civil Code
Art 1766. In all matters not regulated by this Code,
the rights and obligations of common carriers shall
be governed by the Code of Commerce and by
special laws.
Art 2270. The following laws and regulations are
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hereby repealed:
xxx
(4) All laws which are inconsistent with this Code.
In considering the law to apply, apply the Civil Code
first. When the matter is not regulated by the Civil
Code, apply Code of Commerce and other special
laws
- Code of Commerce application is only suppletory
to the Civil Code
Bill of Lading
Definition; Subject Matter
Art 352. The bills of lading, or tickets in cases of
transportation of passengers, may be diverse,
some for persons and others for baggage; but all
of them shall bear the name of the carrier, the date
of shipment, the points of departure and arrival,
the cost, and with respect to the baggage, the
number and weight of the packages, with such
other manifestation which may be considered
necessary for their easy identification.
What is a bill of lading?
A bill of lading is a:
(a) written acknowledgement,
(b) signed by the master of the vessel or other
authorized agent of the carrier,
(c) that he has received the described goods from
the shipper
(d) to be transported on the expressed terms,
(e) to the described place of destination, and
(f) to be delivered there to the designated
consignee or parties.
Who are the parties to a bill of lading?
(1) the shipper
(2) carrier
(3) consignee although not a signatory to the
contract of carriage between the shipper and
the carrier, he becomes a party to the bill of
lading by reason of either:
(a) the relationship of agency between the
shipper and consignee
(b) the unequivocal acceptance of the bill
delivered to the consignee with full notice of
contents
Delfin, Melicor, Matunog (D2019)
(c) availment of stipulation pour atrui
(obligation owed upon it)
When is it effective?
A bill of lading usually becomes effective upon its
delivery to and acceptance by the shipper.
- The acceptance of the bill without dissent raises
the presumption that all the terms therein were
brought tot he knowledge of the shipper and
agreed to by him, and in the absence of fraud
and mistake he is estopped from thereafter
denying that he assented to such terms.
Notes:
- it is an instrument in writing signed by a carrier or
his agent, describing the freight so as to identify
it, naming the consignor, the terms of the
contract of carriage, and agreeing or directing
that the freight to be delivered to the order or
assigns of a specified person at a specified place
- it applies to ALL forms of transportation and not
merely carriage of goods by sea. (it includes the
receipts for cargo transported like freight tickets
of bus companies)
- The reason for the formal definition is because
goods were primarily transported by sea that
time.
What are the kinds of bills of lading?
(1) Clean Bill of Lading - one that does not contain
any notation indicating any defect in the goods
(2) Foul Bill of Lading - one that contains any
notation indicating any defect in the goods
(3) Spent Bill of Lading - if goods were already
delivered but the bill of lading was not returned
(4) Through Bill of Lading - one issued by a carrier
who is obliged to use the facilities of other
carriers as well as his own for the purpose of
transporting the goods; such BoL will be
honored by the second and other interested
carriers who do not issue their own
(5) On Board Bill of Lading - one in which it is
stated that the goods have been received on
board the vessel which is to carry the goods;
goods have been actually placed aboard the
ship with every reasonable expectation that it is
on its way
(6) Received for Shipment Bill of Lading - one in
which it is stated that the goods have been
received for shipment with or without specifying
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the vessel by which the goods are to be
shipped; usually used whenever there is
insufficiency of shipping space
(7) Custody Bill of Lading - the goods are already
received by the carrier, but the vessel indicated
therein has not yet arrived in the port
(8) Port Bill of Lading - vessel indicated in the bill of
lading that will transfer the goods is already in
the port.
For passengers > ticket.
For goods > bill of lading
Subject Matter of Bills of Lading:
- name of the carrier
- date of shipment
- points of departure and arrival
- the cost
- with respect to baggage:
the number and weight of the packages
such other manifestation which may be
considered necessary for their easy
identification.
Form; Contents
Art 350. The shipper as well as the carrier of
merchandise or goods may mutually demand that
a bill of lading be made, stating:
1. The name, surname and residence of the
shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the
person to whom or to whose order the goods are to
be sent or whether they are to be delivered to the
bearer of said bill.
4. The description of the goods, with a statement
of their kind, of their weight, and of the external
marks or signs of the packages in which they are
contained.
5 The cost of transportation.
6 The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the
consignee shall be made.
9.The indemnity to be paid by the carrier in case of
delay, if there should be any agreement on this
matter.
Art 351. In transportation made by railroads or
other enterprises subject to regulation rate and
time schedules, it shall be sufficient for the bills of
lading or the declaration of shipment furnished by
Delfin, Melicor, Matunog (D2019)
the shipper to refer, with respect to the cost, time,
and special conditions of the carriage to the
schedules and regulations the application of which
he requests; and if the shipper does not determine
the schedule, the carrier must apply the rate of
those which appear to be the lowest, with the
conditions inherent thereto, always including a
statement or reference to in the bill of lading which
he delivers to the shipper.
The bill of lading (upon demand of ether the carrier
of the goods or the shipper) contains the ff.
contents:
(1) The name, surname and residence of the
shipper
(2) The name, surname and residence of the
carrier.
(3) The name, surname and residence of the
person to whom or to whose order the goods
are to be sent or whether they are to be
delivered to the bearer of said bill.
(4) The description of the goods, with a statement
of their kind, of their weight, and of the external
marks or signs of the packages in which they
are contained.
(5) The cost of transportation.
(6) The date on which shipment is made.
(7) The place of delivery to the carrier.
(8) The place and the time at which delivery to the
consignee shall be made.
(9) The indemnity to be paid by the carrier in case
of delay, if there should be any agreement on
this matter
(10) schedule and regulations
Shipment Terms in the bill of lading
The shipment terms later discussed serve the ff.
functions:
(1) determine the point at which the risk of loss
passes from seller to buyer
(2) determine what performance by the seller
amounts to a tender which will put the buyer, if
he thereafter refuses to accept delivery, in
breach; and
(3) quote price
F.O.B (Free on Board) - risk passes to buyer at
FOB point (Example: FOB Manila, Manila being the
destination, means that the seller assumes the risk
until point of destination)
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F.A.S. (Free Alongside) - variant of FOB (used for
carriage by water; F.A.S. Vessel means that the
seller relinquishes the risk when the goods are
delivered alongside the vessel.
unlike FOB seller is under no obligation to see to
the loading and all that is required is delivery to the
wharf.
C.I.F. (Cost, Freight, Insurance) - indicates that
the price quoted by the seller includes the invoice
prive, plus insurance and freight. (Hence, if there is
no insurance included it will be CF)
Function
Art 353. The legal evidence of the contract
between the shipper and the carrier shall be the
bills of lading, by the contents of which the
disputes may arise regarding their execution and
performance shall be decided, no exceptions
being admissible other than those of falsity and
material error in drafting thereof.
After the contract has been complied with, the bill
of lading issued by the carrier shall be returned to
him, and by virtue of the exchange of this
certificate for the article transported, the respective
obligations and actions shall be considered
cancelled, unless in the same act the claims which
the contracting parties desire to reserve are
reduced to writing, exception being made of the
provisions of Art 366.
If in case of loss or for any other reason
whatsoever, the consignee cannot return upon
receiving the merchandise the bill of lading
subscribed by the carrier, he shall give said carrier
a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill
of lading.
Note that the bill of lading is NOT necessary for the
perfection of the contract of carriage (such is not a
formal contract).
The Bill of Lading operates as follows:
(1) receipt
(2) contract
(3) document of title that makes it a symbol of
the goods
This is also known as the three-fold nature of
the bill of lading
Delfin, Melicor, Matunog (D2019)
- the three fold nature of the bill of lading is only
applicable to carriage of goods
- when it is a ticket issued to passengers it is only
a contract.
As a receipt:
- it is a receipt for the goods shipped and a
contract to transport and deliver the same as
herein stipulated
- the bill of lading recites the date and place of
shipment the date and place of shipment,
describes the goods as to quantity, weight,
dimensions, identification marks and condition,
quality and value
As a contract:
- It stipulates the rights and obligations assumed
by the parties; it is the law between the parties
who are bound by its terms and conditions
provided they are not contrary to law, moral,
good customs, public order, and public policy.
- it names the contracting parties, which include
the consignee, fixes the route, destination, and
freight rates or charges and stipulates the rights
and obligations assumed by the parties.
- it is only binding upon the parties who make
them their assigns, and heirs
The bill of lading operates as: legal evidence of the
contract between shipper and carrier
- the contents of the bill of lading settle the
disputes which arise regarding the execution and
performance of the contract of carriage
- the only times parol evidence is admissible is:
- falsity
- material error in drafting (also refer to Rules of
Court application)
Refusal to Transport
Art 356. Carriers may refuse packages which
appear unfit for transportation; and if the carriage
is to be made by railway, and the shipment is
insisted upon, the company shall transport them,
being exempt from all responsibility if its
objections, is made to appear in the bill of lading.
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When can carriers refuse packages?
If they appear unfit for transportation.
What if the carriage is insisted upon?
The company shall transport them, being exempt
from all responsibility if its objections, is made to
appear in the bill of lading.
Doubtful Declaration of Contents
Art 357. If by reason of well-founded suspicion of
falsity in the declaration as to the contents of a
package the carrier should decide to examine it,
he shall proceed with his investigation in the
presence of witnesses, with the shipper or
consignee in attendance.
If the shipper or consignee who has to be cited
does not attend, the examination shall be made
before a notary, who shall prepare a memorandum
of the result of the investigation, for such purposes
as may be proper.
If the declaration of the shipper should be true, the
expense occasioned by the examination and that
of carefully repacking the packages shall be for
the account of the carrier and in a contrary case
for the account of the shipper.
What if the shipper has a well-founded
suspicion falsity as to the content of the
package?
Carrier may decide to examine it, but in the
presence of:
(a) witnesses AND
(b) shipper OR consignee in attendance
What if the shipper or consignee does not
attend?
The examination shall be before the notary, who
shall prepare a memorandum of the results of the
investigation.
What if the shipper turned out to be telling the
truth?
If the declaration of the shipper should be true, the
expense occasioned by the examination and that of
carefully repacking the packages shall be for the
account of the carrier
Delfin, Melicor, Matunog (D2019)
What if the shipper was dishonest?
The expense occasioned by the examination and
that of carefully repacking the packages shall be for
the account of the shipper.
No Bill of Lading
Art 354. In the absence of a bill of lading, disputes
shall be determined by the legal proofs which the
parties may present in support of their respective
claims, according to the general provisions
established in this Code for commercial contracts.
The above-quoted provision is subject to
modification that the primary governing law is the
New Civil Code.
- hence, in the absence of any bill of lading,
disputes shall be determined on the basis of the
provisions of the New Civil Code and suppletorily
by the Code of Commerce
Responsibility of Carrier
When does it commence?
Art 355. The responsibility of the carrier shall
commence from the moment he receives the
merchandise, personally or through a person
charged for the purpose, at the place indicated for
receiving them.
Article 1736. The extraordinary responsibility of
the common carrier lasts from the time the goods
are unconditionally placed in the possession of,
and received by the carrier for transportation until
the same are delivered, actually or constructively,
by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice
to the provisions of article 1738.
What is the route to be taken?
Art 359. If there is an agreement between the
shipper and the carrier as to the road over which
the conveyance is to be made, the carrier may not
change the route, unless it be by reason of force
majeure; and should he do so without this cause,
he shall be liable for all the losses which the goods
he transports may suffer from any other cause,
besides paying the su, which may have been
stipulated for such case.
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Civil Code. If the common carrier, without just
cause, delays the transportation of the goods or
changes the stipulated or usual route, the
contract limiting the common carrier's liability
cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
GR: If there is an agreement between the shipper
and carrier as to the route, carrier cannot change
the route.
Exception: force majuere;
Consequence: otherwise carrier shall be liable for
all the losses which the goods he transports may
suffer from any other cause + payment of sum
stipulated + contract limiting the liability cannot be
availed of.
Care of Goods
Art 361.The merchandise shall be transported at
the risk and venture of the shipper, if the contrary
has not been expressly stipulated.
As a consequence, all the losses and
deteriorations which the goods may suffer during
the transportation by reason of fortuitous event,
force majeure, or the inherent nature and defect of
the goods, shall be for the account and risk of the
shipper.
Proof of these accidents is incumbent upon the
carrier.
Art 362. Nevertheless, the carrier shall be liable for
the losses and damages resulting from the causes
mentioned in the preceding Article if it is proved,
as against him, that they arose through his
negligence or by reason of his having failed to take
the precautions which usage has established
among careful persons, unless the shipper has
committed fraud in the bill of lading, representing
the goods to be of a kind or quality different from
what they really were.
If, notwithstanding the precautions referred to in
this article, the goods transported run the risk of
being lost, on account of their nature or by reason
of unavoidable accident, there being no time for
their owners to dispose of them, the carrier may
proceed to sell them, placing them for this purpose
at the disposal of the judicial authority or of the
officials designated by special provisions.
Delfin, Melicor, Matunog (D2019)
Civil Code. Common carriers are responsible for
the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following
causes only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.
In all cases other than those mentioned in Nos. 1,
2, 3, 4, and 5 of the preceding article, if the goods
are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they
observed extraordinary diligence as required in
article 1733.
Delivery
Condition of Goods
Art 363. Outside of the cases mentioned in the
second paragraph of Article 361, the carrier shall
be obliged to deliver the goods shipped in the
same condition in which, according to the bill of
lading, they were found at the time they were
received, without any damage or impairment, and
failing to do so, to pay the value which those not
delivered may have at the point and at the time at
which their delivery should have been made.
If those not delivered form part of the goods
transported, the consignee may refuse to receive
the latter, when he proves that he cannot make use
of them independently of the others.
Article 364 If the effect of the damage referred to
in Article 361 is merely a diminution in the value of
the goods, the obligation of the carrier shall be
reduced to the payment of the amount which, in
the judgment of experts, constitutes such
difference in value.
Article 365 If, in consequence of the damage,
the goods are rendered useless for sale and
consumption for the purposes for which they are
properly destined, the consignee shall not be
bound to receive them, and he may have them in
the hands of the carrier, demanding of the latter
their value at the current price on that day.
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If among the damaged goods there should be
some pieces in good condition and without any
defect, the foregoing provision shall be applicable
with respect to those damaged and the consignee
shall receive those which are sound, this
segregation to be made by distinct and separate
pieces and without dividing a single object, unless
the consignee proves the impossibility of
conveniently making use of them in this form.
The same rule shall be applied to merchandise in
bales or packages, separating those parcels which
appear sound.
Article 366 Within the twenty-four hours following
the receipt of the merchandise, the claim against
the carrier for damage or average be found therein
upon opening the packages, may be made,
provided that the indications of the damage or
average which gives rise to the claim cannot be
ascertained from the outside part of such
packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim
shall be admitted against the carrier with regard to
the condition in which the goods transported were
delivered.
Article 367 If doubts and disputes should arise
between the consignee and the carrier with
respect to the condition of the goods transported
at the time their delivery to the former is made, the
goods shall be examined by experts appointed by
the parties, and, in case of disagreement, by a
third one appointed by the judicial authority, the
results to be reduced to writing; and if the
interested parties should not agree with the expert
opinion and they do not settle their differences, the
merchandise shall be deposited in a safe
warehouse by order of the judicial authority, and
they shall exercise their rights in the manner that
may be proper.
To whom delivery should be made
Article 368 The carrier must deliver to the
consignee, without any delay or obstruction, the
goods which he may have received, by the mere
fact of being named in the bill of lading to receive
them; and if he does not do so, he shall be liable
for the damages which may be caused thereby.
Delivery should be made to the consignee (as
named in the bill of lading), otherwise carrier liable
for damages.
Delfin, Melicor, Matunog (D2019)
When Should Delivery be Made
Art 370. If a period has been fixed for the delivery
of the goods, it must be made within such time,
and, for failure to do so, the carrier shall pay the
indemnity stipulated in the bill of lading, neither the
shipper nor the consignee being entitled to
anything else.
Should no indemnity have been agreed upon and
the delay exceeds the time fixed in the bill of
lading, the carrier shall be liable for the damages
which may have been caused by the delay.
Art 358. If there is no period fixed for the delivery
of the goods the carrier shall be bound to forward
them in the first shipment of the same or similar
goods which he may make to the point of delivery;
and should he not do so, the damages caused by
the delay should be for his account.
If period is fixed - deliver within the period
(consequence: carrier shall pay indemnity in bill of
lading)
If there is no period fixed - forward in the first
shipment of the same or similar goods which the
carrier makes to the point of delivery
(consequence: liable for damages)
Rights and obligations of Shipper/
Consignee
Right to Damages
Condition Imposed on Right
Art 366. Within the twenty-four hours following the
receipt of the merchandise, the claim against the
carrier for damage or average be found therein
upon opening the packages, may be made,
provided that the indications of the damage or
average which gives rise to the claim cannot be
ascertained from the outside part of such
packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim
shall be admitted against the carrier with regard to
the condition in which the goods transported were
delivered.
Art 367. If there should occur doubts and disputes
between the consignee and the carrier with regard
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to the condition of goods transported at the time of
their deliver to the former, the said goods shall be
examined by experts appointed by the parties,
and a third one, in case of disagreement,
appointed by the judicial authority, the result of the
examination being reduced to writing; and if the
persons interested should not agree to the report
of the experts and could not settle their disputes,
said judicial authority shall order the deposit of the
merchandise in a safe warehouse, and the parties
interested shall make use of their rights in the
proper manner.
When the damage of the goods is NOT
apparent, claim must be made within 24 hours.
Otherwise, after the period has elapsed, or after the
transportation charges have been paid, no claim
may be admitted against the carrier with regard to
the damage.
What if there is disagreement as to the
condition of the goods at time of delivery?
The goods shall be inspected by:
(1) experts appointed by parties
(2) third expert appointed by judicial authorities
Their findings shall be reduced to writing.
If they still disagree: judicial authority shall order
the goods deposited in a safe warehouse.
Amount of damages for loss
Art 372. The appraisement of the goods which the
carrier must pay in case of their being lost of
mislaid shall be fixed in accordance with what is
stated in the bill of lading, no proof being allowed
on the part of the shipper that there were among
the goods declared therein articles of greater value
and money.
The amount of damages shall be that fixed in
the bill of lading.
- Parol Evidence Rule applies, in that no other
proof is allowed to show grater value.
Art 1744. A stipulation between the common
carrier and the shipper or owner limiting the liability
of the former for the loss, destruction, or
deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it
be:
(1) in writing, signed by the shipper or owner
Delfin, Melicor, Matunog (D2019)
(2) supported by a valuable consideration other
than the service rendered by the common carrier;
and
(3) reasonable, just, and not contrary to public
policy
Amount of damages for reason for delay
Art 371. In cases of delay on account of the fault
of the carrier, referred to in foregoing, the
consignee may leave the goods transported in the
hands of the carrier, informing him thereof in wiring
before the arrival of the same at the point of
destination.
When this abandonment occurs, the carrier shall
satisfy the total value of the goods, as if they had
been lost or mislaid.
Should the abandonment not occur, the indemnity
for loss and damages on account of the delays
cannot exceed the current price of the goods
transported on the day and at the place where the
delivery was to have been made. The same
provisions shall be observed in all cases where
this indemnity is due.
foregoing when period has been fixed
The consignee has the right to abandon.
- If he abandons: carrier pays total value of the
goods as if they had been lost
- If he does not abandon : carrier shall pay
damages which cannot exceed the current price
of the goods on the day and place when deliver
WAS TO HAVE BEEN made.
Right to Abandon
Art 371. In cases of delay on account of the fault
of the carrier, referred to in foregoing, the
consignee may leave the goods transported in the
hands of the carrier, informing him thereof in wiring
before the arrival of the same at the point of
destination.
When this abandonment occurs, the carrier shall
satisfy the total value of the goods, as if they had
been lost or mislaid.
Should the abandonment not occur, the indemnity
for loss and damages on account of the delays
cannot exceed the current price of the goods
transported on the day and at the place where the
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delivery was to have been made. The same
provisions shall be observed in all cases where
this indemnity is due
Art 370. If a period has been fixed for the delivery
of the goods, it must be made within such time,
and, for failure to do so, the carrier shall pay the
indemnity stipulated in the bill of lading, neither the
shipper nor the consignee being entitled to
anything else.
Should no indemnity have been agreed upon and
the delay exceeds the time fixed in the bill of
lading, the carrier shall be liable for the damages
which may have been caused by the delay.
Art 365. If on account of the damage, the goods
are rendered useless for purposes of sale or
consumption in the use for which they are properly
destined, the consignee shall not be bound to
receive them, and may leave them in the hands of
the carrier, demanding payment therefor at current
market prices.
If among the goods damages there should be
some in good condition and without any defect
whatsoever, the foregoing provisions shall be
applicable with regard to the damages ones, and
the consignee shall receive those which are sound,
this separation being divided for the purpose,
unless the consignee proves the impossibility of
conveniently making use thereof in this form.
The same provision shall be applied to
merchandise in bales or packages with distinction
of the packages which appear to be sound.
Art 363. With exception of the cases, prescribed in
the second paragraph of Art 361, the carrier shall
be obliged to deliver the goods transported in the
same condition in which according to the bill of
lading, there were at the time of their receipt,
without any determinant or impairment and should
he not do so, shall be obliged to pay the value of
the goods not delivered at the point where they
should have been and at the time the delivery
should have taken place.
If part of the goods transported should be
delivered, the consignee may refuse to receive it,
when he proves that he can make use thereof
without the others.
The last paragraph above is an instance when the
consignee may abandon the goods. The other
instances are set forth inArt 365 and 371 of the
Code of Commerce.
Delfin, Melicor, Matunog (D2019)
Instances when Abandonment may be made:
(1) When only part of the goods were delivered
and consignee proves that he cannot make use
of it without the others
(2) If on account of damages the goods are
rendered useless for purposes of sale or
consumption in the use for which they are
properly destined
(3) When delay occurs
Partial delivery
- consignee must prove he may not make use of
what has been delivered without the rest
Damaged Goods
- if only part of the goods are damaged, then only
such goods may be abandoned; unless
impossiblility proved by consignee
- carrier liable for the goods at current market
prices
Delay in Delivery
- carrier liable for the total value of the goods
- consignee must communicate the abandonment
to the carrier in writing between the moment
when fault of carrier produces delay until the
moment just before the arrival of the goods at the
place of the delivery.
Right to Change Consignment
Art 360. The shipper may, without changing the
place where delivery is to be made, change the
consignment of the goods delivered to the carrier,
and the latter shall comply with his orders,
provided that at the time of making the change of
the consignee, the bill of lading subscribed by the
carrier be returned to him, if one were issued,
exchanging it for another containing the novation
of the contract.
The expenses arising from change of consignment
shall be defrayed by the shipper.
Conditions for Change:
(1) place of delivery not changed
(2) original bill of lading returned
(3) shipper incurs the expenses
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Obligation to Pay Transportation Charges - after 8 days, carrier becomes ordinary creditor
(not preferred anymore)

Art 374. The consignee to whom the remittance

may have been made cannot defer the payment of Obligation to return bill of lading
the expenses and transportation charges on the
goods that they received after 24 hours have
Art 353(2). After the contract has been complied
elapsed from the time of delivery; and in case of
with, the bill of lading issued by the carrier shall be
delay in making this payment, the carrier may
returned to him, and by virtue of the exchange of
request the judicial sale of the goods he
this certificate for the article transported, the
transported for a sufficient amount to cover the
respective obligations and actions shall be
transportation charges and the expenses incurred.
considered cancelled, unless in the same act the

claims which the contracting parties desire to

Art 375. The goods transported shall be
reserve are reduced to writing, exception being
specifically obligation to answer for the
made of the provisions of Art 366.
transportation charges and for the expenses and
fees caused by the same during their
transportation and until the time of their delivery. Art 366 - refers to situation where a claim made

against carrier due to damage or average upon

This special right shall be limited to 8 days after
the delivery has been made, and after said
prescription, the carrier shall have no further right
of action than that corresponding to an ordinary
creditor.
opening of the packages within 24 hours.
Effect of Return:
respective obligations and actions shall be
considered cancelled

Exception:
Art 376. The preference of the carrier to the
payment of what is due him for the transportation (1) in the same act the claims which the
and expenses of the goods delivered to the contracting parties desire to reserve are
consignee shall not be affected by the bankruptcy reduced to writing
of the latter, provided the action is brought within 8
days mentioned in the foregoing article
Applicability of Provisions
Art 2241(9). With reference to specific movable
property the debtor, the following claims or liens
Art 379. The provisions contained in Article 349, et
shall be preferred:
seq., shall also be understood as relating to
(9) Credits for transportation, upon the goods
persons, who although they do not personally
carried, for the price of the contract and incidental
effect the transportation of the commercial goods,
expenses, until their delivery and for 30 days
contract to do so through others, either as
thereafter.
contracts for a special and fixed transaction or as
freight and transportation agents.
Consignee:
- cannot defer payment of expenses and In either case, they shall be subrogated to the
place of the carriers with regard to the obligations
transportation after 24 hours from delivery and liability of the latter, as well as with regard to
their rights.
Effect of delay in payment:
- carrier may request the judicial sale of the goods
he transported for a sufficient amount to cover Admiralty and Maritime Commerce
the transportation charges and the expenses
incurred. Concept of Admiraly; Jurisdiction
- goods are to answer for the transportation
Maritime Law - system of laws which relates to the
charges and for the expenses and fees caused
affairs and business of the sea, to ships, their
by the same during their transportation and until
crews and navigation, and to marine conveyance of
the time of their delivery.
- this special right lasts 8 days after delivery persons and property

has been made

corpus or rules, concepts, and legal practices
governing certain collaterally important concerns of
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the business of carrying goods and passengers by
water
Notes:
- the term admiralty and maritime are synonym
- Civil Code is still the primary law while the Code
of Commerce and other special laws apply only
suppletorily
Jurisdiction
MTC - Actions in admiralty and maritime jurisdiction
where the demand or claim does not exceed
P300,000 or, in Metro manila, P400,000
RTC - Actions in admiralty and maritime jurisdiction
where the demand or claim exceeds P300,000 or,
in Metro manila, P400,000
INTERNATIONAL HARVESTER VS. ARAGON
- Whether or not a contract is maritime depends
not on the place where the contract is made and
is to be executed, making the locality the test, but
on the subject-matter of the contract, making
the true criterion a maritime service or a maritime
transaction.
The contention of respondent Yaras & Company
that admiralty jurisdiction is not involved herein
because the contract in question was made upon
land and to be terminated upon land, merely
reflects the English rule which had long been
rejected in the United States. It is now settled in
the latter country that "the jurisdiction of admiralty
in matters of contract depends upon the subject-
matter, i. e., the nature and character of the
contract, and that the English rule which
conceded jurisdiction (with few exceptions) only
to contracts made upon and to be performed
upon navigable waters, is inadmissible, the true
criterion being that the contract has reference to
maritime service or maritime transaction."
Vessels
Meaning
LOPEZ VS. DURUELO
- The word "vessel" (Spanish, "buque," "nave"),
used in the section referred to was not intended
to include all ships, craft or floating structures of
every kind without limitation, and the provisions
Delfin, Melicor, Matunog (D2019)
of that section should not be held to include
minor craft engaged only in river and bay traffic.
- Other vessels of minor nature not engaged in
maritime commerce, such as river boats and
those carrying passengers from ship to shore,
must be governed, as to their liability to
passengers, by the provisions of the Civil Code
or other appropriate special provisions of law.
When the mercantile codes speak of vessels, they
refer solely and exclusively to merchant ships, as
they do not include war ships, and furthermore,
they almost always refer to craft which are not
accessory to another as is the case of launches,
lifeboats, etc. Moreover, the mercantile laws, "in
making use of the words ship, vessel, boat,
embarkation, etc., refer exclusively to those which
are engaged in the transportation of passengers
and freight from one port to another or from one
place to another;
Nature and Acquisition
Art 712. Ownership is acquired by occupation and
by intellectual creation.
Ownership and other real rights over property are
acquired and transmitted by law, by donation, by
testate and intestate succession, and in
consequence of certain contracts, by tradition.
They may also be acquired by means of
prescription.
Registration;Certificates issued:
Distinctions
RA 9295, Sec 10. Jurisdiction; Power; and Duties
of MARINA. - The MARINA shall have the power
and authority to:
(1) Register vessels
Signification of Registration of
Transactions Affecting Vessels
ARROYO VS. YU
- Mortgages on vessels, although not recorded,
are good as between the parties. But as against
creditors of the mortgagor, an unrecorded
mortgage is invalid
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On the matter of constructive registration
- His Honor states that the fact that the mortgage
was not registered in the office of the collector of
customs of Iloilo until March, 5, 1929, was
because of the doubts entertained by the
collector relative to the applicability of Act No.
3324 to a mortgage executed in 1918 in favor of
a Chinese subject.
- This uncontradicted fact must be taken as curing
the bank's defective title. That the collector of
customs did not perform his duty was no fault of
the bank. Constructive registration of the
mortgage must, therefore, be accepted.
RUBISO VS. RIVERA
- The requisite of registration in the registry, of the
purchase of a vessel, is necessary and
indispensable in order that the purchaser's rights
may be maintained against a claim filed by a
third person. Such registration is required both by
the Code of Commerce and by Act No. 1900.
- Purchaser at public auction, Fausto Rubiso, who
was careful to record his acquisition, opportunely
and on a prior date, has, according to the law, a
better right than the defendant Rivera who
subsequently recorded his purchase. The latter is
a third person, who was directly affected by the
registration which the plaintiff made of his
acquisition.
Persons Participating in Maritime
Commerce
Shipowners and Shipagents
Art 586. The shipowner and the ship agent shall
be civilly liable for the acts of the captain and for
the obligations contracted by the latter to repair,
equip, and provision the vessel, provided the
creditor proves that the amount claimed was
invested for the benefit of the same. By ship agent
is understood the person entrusted with
provisioning or representing the vessel in the port
in which it may be found.
Art 587. The ship agent shall also be civilly liable
for the indemnities in favor of third persons which
may arise from the conduct of the captain in the
care of the goods which he loaded on the vessel;
Delfin, Melicor, Matunog (D2019)
but he may exempt himself therefrom by
abandoning the vessel with all her equipments and
the freight it may have earned during the voyage.
Art 588. Neither the shipowner nor the ship agent
shall be liable for the obligations contracted by the
captain, if the latter exceeds the powers and
privileges pertaining to him by reason of his
position or conferred upon him by the former.
Nevertheless, if the amounts claimed were
invested for the benefit of the vessel, the
responsibility therefor shall devolve upon its owner
or agent.
Art 589. If two or more persons should be part
owners of a merchant vessel, a partnership shall
be presumed as established by the co-owners.
This partnership shall be governed by the
resolutions of the majority of the members.
If the part owners should not be more than two, the
disagreement of views, if any, shall be decided by
the vote of the member having the largest interest.
If the interests are equal, it should be decided by
lot. The person having the smallest share in the
ownership shall have one vote; and proportionately
the other part owners as many votes as they have
parts equal to the smallest one.
A vessel may not be detained, attached or levied
upon in execution in its entirety, for the private
debts of a part owner, but the proceedings shall be
limited to the interest which the debtor may have in
the vessel, without interfering with the navigation.
Art 590. The co-owners of a vessel shall be civilly
liable in the proportion of their interests in the
common fund, for the results of the acts of the
captain, referred to in Article 587.Each co-owner
may exempt himself from this liability by the
abandonment, before a notary, of the part of the
vessel belonging to him.
Art 591. All the part owners shall be liable, in
proportion to their respective ownership, for the
expenses for repairing the vessel, and for other
expenses which are incurred by virtue of are
solution of the majority.
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They shall likewise be liable in the same proportion
for the expenses for the maintenance, equipment,
and provisioning of the vessel, necessary for
navigation.
Art 592. The resolution of the majority with regard
to the repair, equipment, and provisioning of the
vessel in the port of departure shall bind the
minority, unless the minority members renounce
their interests, which must be acquired by the
other co-owners, after a judicial appraisement of
the value of the portion or portions assigned.
The resolutions of the majority relating to the
dissolution of the partnership and sale of the
vessel shall also be binding on the minority.
The sale of the vessel must be made at public
auction, subject to the provisions of the law of
civilprocedure, unless the co-owners unanimously
agree otherwise, saying always the right of
repurchase and redemption provided for in Article
575.
Art 593. The owners of a vessel shall have
preference in her charter over other persons,
under the same conditions and price. If two or
more of them should claim this right, the one
having the greater interest shall be preferred; and
should they have equal interests, the matter shall
be decided by lot.
Art 594. The co-owners shall elect the manager
who is to represent them in the capacity of ship
agent.
The appointment of director or ship agent shall be
revocable at the will of the members.
Art 595. The ship agent, whether he is at the same
time the owner of the vessel, or a manager for an
owner or for an association of co-owners, must
have the capacity to trade and must be recorded
in the merchant's registry of the province.
The ship agent shall represent the ownership of the
vessel, and may, in his own name and in such
capacity, take judicial and extrajudicial steps in
matters relating to commerce.
Delfin, Melicor, Matunog (D2019)
Art 596. The ship agent may discharge the duties
of captain of the vessel, subject in every case to
the provision of Article 609
If two or more co-owners apply for the position of
captain, the disagreement shall be decided by a
vote of the members; and if the vote should result
in a tie, it shall be decided in favor of the co-owner
having the larger interest in the vessel.
If the interests of the applicants should be equal,
and there should be a tie, the matter shall be
decidedby lot.
Art 597. The ship agent shall designate and come
to terms with the captain, and shall contract in the
name of the owners, who shall be bound in all that
refer to repairs, details of equipment, armament,
provisions of food and fuel, and freight of the
vessel, and, in general, in all that relate to the
requirements of navigation.
Art 598. The ship agent may not order a new
voyage, or make contracts for a new charter, or
insure the vessel, without the authorization of its
owner or resolution of the majority of the co-
owners, unless these powers were granted him in
the certificate of his appointment.
If he insures the vessel without authorization
therefore, he shall be subsidiarily liable for the
solvency of the insurer.
Art 599. The ship agent managing for an
association shall render to his associates an
account of the results of each voyage of the
vessel, without prejudice to always having the
books and correspondence relating to the vessel
and to its voyages at their disposal.
Art 600. After the account of the managing agent
has been approved by a relative majority, the co-
owners shall pay the expenses in proportion to
their interest, without prejudice to the civil or
criminal actions which the minority may deem fit to
institute afterwards.
In order to enforce the payment, the managing
agent shall be entitled to an executory action
("accion ejecutiva"), which shall be instituted by
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virtue of a resolution of the majority, and without
further proceedings than the acknowledgment of
the signatures of the persons who voted for the
resolution.
Art 601. Should there be any profits, the co-owners
may demand of the managing agent the amount
corresponding to their interests by means of an
executory action ("accion ejecutiva"), without any
other requisite than the acknowledgment of the
signatures on the instrument approving the
account.
Art 602. The ship agent shall indemnify the captain
for all the expenses he may have incurred with
funds of his own or of others, for the benefit of the
vessel.
Art 603. Before the vessel sets out to sea the ship
agent may at his discretion discharge the captain
and members of the crew whose contracts are not
for a definite period or voyage, paying them the
salaries earned according to their contracts, and
without any indemnity whatsoever, unless there is
an express and specific agreement in respect
thereto.
Art 604. If the captain or any other member of the
crew should be discharged during the voyage,
they shall receive their salary until they return to
the port where the contract was made, unless
there should be just cause for the discharge, all in
accordance with Article 636 and following of this
Code.
Art 605. If the contracts of the captain and
members of the crew with the ship agent should be
for a definite period or voyage, they may not be
discharged until after the fulfillment of their
contracts, except by reason of insubordination in
s e r i o u s m a t t e r s , ro b b e r y, t h e f t , h a b i t u a l
drunkenness, or damage caused to the vessel or
to its cargo through malice or manifest or proven
negligence.
Delfin, Melicor, Matunog (D2019)
Art 606. If the captain should be a co-owner of the
vessel, he may not be discharged unless the ship
agent returns to him the amount of his interest
therein, which, in the absence of agreement
between the parties, shall be appraised by experts
appointed in the manner established in the law of
civil procedure.
Art 607. If the captain who is a co-owner should
have obtained the command of the vessel by virtue
of a special agreement contained in the articles of
association, he may not be deprived of his office
except for the causes mentioned in Article 605.
Art 608. In case of the voluntary sale of the vessel,
all contracts between the ship agent and the
captain shall terminate, reserving to the latter his
right to the indemnity which may pertain to him,
according to the agreements made with the ship
agent.
The vessel sold shall remain subject to the security
of the payment of said indemnity if, after the action
against the vendor has been instituted, the latter is
found to be insolvent.
Art 618. The captain shall be civilly liable to the
ship agent, and the latter to the third persons who
may have made contracts with the former:
1. For all the damages suffered by the vessel and
its cargo by reason of want of skill or negligence
on his part. If a misdemeanor or crime has been
committed, he shall be liable in accordance with
the Penal Code.
2. For all the thefts committed by the crew,
reserving his right of action against the guilty
parties.
3. For the losses, fines, and confiscations imposed
an account of violation of customs, police, health,
and navigation laws and regulations.
4. For the losses and damages caused by mutinies
on board the vessel or by reason of faults
committed by the crew in the service and defense
of the same, if he does not prove that he made
timely use of all his authority to prevent or avoid
them.
5. For those caused by the misuse of the powers
and the non-fulfillment of the obligations pertaining
to him in accordance with Articles 610 and 612.
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6. For those arising by reason of his going out of
his course or taking a course which he should not
have taken without sufficient cause, in the opinion
of the officers of the vessel, at a meeting with the
shippers or supercargoes who may be on board.
No exceptions whatsoever shall exempt him from
this obligation.
7. For those arising by reason of his voluntarily
entering a port other than that of his destination,
outside of the cases or without the formalities
referred to in Article 612.
8. For those arising by reason of non-observance
of the provisions contained in the regulations on
situation of lights and maneuvers for the purpose
of preventing collisions.
STANDARD OIL VS. CASTELO
Who is the person, or persons, who are liable to
make good this loss, and what are the conditions
under which the action can be maintained?
- That the owner of the ship is a person to whom
the plaintiff in this case may immediately look for
reimbursement to the extent above stated is
deducible not only from the general doctrines of
admiralty jurisprudence but from the provisions of
the Code of Commerce applicable to the case.
- It is universally recognized that the captain is
primarily the representative of the owner; and
article 586 of the Code of Commerce expressly
declares that both the owner of the vessel and
the naviero, or charterer, shall be civily liable for
the acts of the master.
the captain is required to take the necessary
steps to effect the adjustment, liquidation, and
distribution of the general average. In the case
before us the captain of the vessel did not take
those steps; and we are of the opinion that the
failure of the captain to take those steps gave
rise to a liability for which the owner of the ship
must answer.
Responsibilities and Liabilities
Yu Con v. Ipil
DOCTRINE: In maritime commerce, the shippers
and passengers in making contracts with the
captain do so through the confidence they have in
the shipowner who appointed him; they presume
that the owner made a most careful investigation
before appointing him, and, above all, they
Delfin, Melicor, Matunog (D2019)
themselves are unable to make such an
investigation. Hence, it is only proper for the ship
owner to be made liable for the negligence of the
captain and its crew.
Manila Steamship v. Abdulhaman
DOCTRINE: Under Art. 827, Code of Commerce,
in case of collision between two vessels imputable
to both of them, each vessel shall suffer her own
damage and both shall be solidarily liable for
damages occasioned to their cargoes.
Shipowners and ship agents are civilly liable for
the acts of the captain (Code of Commerce, Article
586) and for indemnities due the third persons
(Article 587); so that injured parties may look for
reimbursement to the owner of the ship, it being
universally recognized that the ship master or the
captain is primarily the representative of the owner.
This direct liability exists, not only in case of
breached contracts, but also in cases of tortious
negligence.
[ W i n g K e e C o m p r a d o r i n g C o . v. B a r k
Mononhaela]
Wing Kee sought to recover from Admiral Line, as
agent for Bark Monongahela on account of the
goods it sold and delivered to Bark Mononhaela.
DOCTRINE: Generally, when agents buy goods in
their own names, but on account of the principal,
the seller has the option to resort to either for
payment, unless:
(1) he trusted the agent exclusively; or
(2) by the usage and understanding of the
business the agent only is held; or
(3) unless the special circumstances of the case
show that only the agent was intended to be
bound and seller knew it or chargeable with
knowledge of it.
Nevertheless, pursuant to Article 568 of the Code
of Commerce, an agent for a vessel could avoid
responsibility, by giving up its agency when
threatened with suit to enforce the obligations of
third parties.
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Art. 568. The owner of a vessel and the agent shall be
civilly liable for acts of the captain and for obligations
contracted by the latter to repair, equip, and provision
the vessel, provided the creditor proves that the amount
claimed was invested therein. By agent is understood
the person intrusted with the provisioning of a vessel, or
who represents her in the port in which she happens to
be.
[National Development Company v. CA]
DOCTRINE: Art. 826 to 839 of the Code of
Commerce, provides that the shipowner or carrier,
is not exempt from liability for damages arising
from collision due to the fault or negligence of the
captain. Primary liability is imposed on the
shipowner or carrier in recognition of the
universally accepted doctrine that the shipmaster
or captain is merely the representative of the owner
who has the actual or constructive control over the
conduct of the voyage. (Reiteration of Manila
Steamship Case Doctrine)
Doctrine of Limited Liability
What is the doctrine of limited liability?
The doctrine of limited liability (or real and
hypothecary doctrine) provides that the shipowner
or agents liability is merely co-extensive with his
interest in the vessel such that a total loss thereof
results in its extinction. No vessel, no liability
expresses in a nutshell the limited liability rule.
The limited liability doctrine in this jurisdiction is
found in the following provisions: Arts. 587, 590
and 837.
Art. 587. The ship agent shall also be civilly liable
for the indemnities in favor of third persons which
may arise from the conduct of the captain in the
care of the goods which he loaded on the vessel;
but he may exempt himself therefrom by
abandoning the vessel with all her equipments and
the freight it may have earned during the voyage.
Art. 590. The co-owners of the vessel shall be
civilly liable in the proportion of their interests in the
common fund for the results of the acts of the
captain referred to in Art. 587.
4. When the shipowner is guilty of fault or
Each co-owner may exempt himself from this
liability by the abandonment, before a notary, of
the part of the vessel belonging to him.
Delfin, Melicor, Matunog (D2019)
Art. 837. The civil liability incurred by shipowners
in the case prescribed in this section, shall be
understood as limited to value of the vessel with all
its appurtenances and freightage served during
the voyage.
Notes:
- These articles intend to limit liability of the
shipowner or agent to value of the vessel, its
appurtenances and freightage earned in the
voyage, provided that the owner or agent
abandons the vessel.
- When the vessel is totally lost in which case
there is no vessel to abandon, abandonment is
not required. Because of such total loss the
liability of the shipowner or agent for damages is
extinguished.
- Nonetheless, there are exceptional
circumstances where the ship agent could still
be held answerable despite abandonment of
vessel, as where the loss or injury was due to
the fault of shipowner or captain.
- The right of abandonment of vessels, as a legal
limitation of a ship owners liability, does not
apply where the injury was occasioned by the
shipowners own fault. The latter may be held
liable for injuries to passengers notwithstanding
the exclusively real and hypothecary nature of
maritime law if fault can be attributed to
shipowner (Aboitiz Shipping v. General
Assurance Corp.).
What are the exceptions to the doctrine of
limited liability?
1. Repairs and provisioning of the vessel before
the loss of the vessel; (Art. 586)
2. Insurance proceeds. If vessel is insured,
proceeds will go to the persons entitled to
claim from the shipowner (Vasquez v. CA)
3. Wo r k m e n s C o m p e n s a t i o n c a s e s , n o w
Employees Compensation (Abueg v. San
Diego)
negligence; (Aboitiz Shipping v. General
Accident Fire and Life Assurance Corp.) Note:
But if the captain is the one who is guilty,
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doctrine may still be invoked, hence,
abandonment is still an option.
5. Private carrier; or
6. Voyage is not maritime in character.
Yangco v. Laserna
S.S. Negros capsized killing several passengers.
Their heirs filed cases against petitioner, owner.
Petitioner sought to abandon the vessel to
respondents, together with all its equipment.
DOCTRINE: Art. 587, Code of Commerce accords
a shipowner or agent the right of abandonment,
and thus his liability is confined to only what he is
entitled to abandon (i.e. vessel, its equipment, and
freight it may have earned during voyage).
The article appears to deal only with limited liability
of shipowners or agents for damages arising from
the captains misconduct in the care of goods the
vessel carries, but this is mere deficiency of
language and does not indicate the true extent of
such liability. Notwithstanding the language of the
provision, the benefit of limited liability, applies in
all cases wherein the shipowner or agent may
properly be held liable for the negligent or illicit
acts of the captain.
If the vessel together with its freight and money
earned during the voyage are abandoned, the
agent's liability to third persons for tortious acts of
the captain in the care of the goods is
extinguished.
Abueg v. San Diego
DOCTRINE: The Code of Commerce provisions to
the effect that total loss of the vessel and its freight
will extinguish the liability of the shipowner does
NOT preclude injured parties from claiming
compensation from the Workmen's Compensation
Act. It is not the liability for damage or loss of the
cargo or injury to, or death of, a passenger by the
misconduct of the captain or master; but a liability
created by statute to compensate employees and
laborers in cases of injury inflicted upon them,
while engaged in the performance of their work, or
the heirs and dependents of laborers and
employees in the event of death caused by their
employment. Such compensation has nothing to
Delfin, Melicor, Matunog (D2019)
do with the provisions of the Code of Commerce
regarding maritime commerce.
Aboitiz Shipping v. General Accident Fire and
Life Assurance Corp.
DOCTRINE: As a general rule, a ship owners
liability is merely co-extensive with his interest in
the vessel, except where actual fault is attributable
to the shipowner. Thus, as an exception to the
limited liability doctrine, a shipowner or ship agent
may be held liable for damages when sinking of
the vessel is attributable to the actual fault or
negligence of the shipowner or its failure to ensure
the seaworthiness of the vessel.
Specific Rights and Prerogatives
Art. 575. Co-owners of vessels shall have the right
of repurchase and redemption in sales made to
strangers, but they may exercise the same only
within the nine days following the inscription of the
sale in the registry, and by depositing the price at
the same time.
Art. 593. The owners of a vessel shall have
preference in her charter over other persons,
under the same conditions and price. If two or
more of them should claim this right, the one
having the greater interest shall be preferred; and
should they have equal interests, the matter shall
be decided by lot.
Art. 594. The co-owners shall elect the manager
who is to represent them in the capacity of ship
agent.
The appointment of director or ship agent shall be
revocable at the will of the members.
Art. 596. The ship agent may discharge the duties
of captain of the vessel, subject in every case to
the provision of Article 609.
If two or more co-owners apply for the position of
captain, the disagreement shall be decided by a
vote of the members; and if the vote should result
in a tie, it shall be decided in favor of the co-owner
having the larger interest in the vessel.
If the interests of the applicants should be equal,
and there should be a tie, the matter shall be
decided by lot.
Art. 601. Should there be any profits, the co-
owners may demand of the managing agent the
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amount corresponding to their interests by means
of an executory action ("accion ejecutiva), without
any other requisite than the acknowledgment of the
signatures on the instrument approving the
account.
What are the rights of the following parties?
Co-owners of vessels:
1. Right to repurchase and redeem sales made to
strangers
2. Right to elect the manager to represent them
as ship agent
3. Right to demand of the managing agent the
profits corresponding to their interest by
executory action
Owners:
1. Preference in his charter over other persons,
under the same conditions and price.
Captains and Master
Qualifications and Licensing
Art. 609. Captains, masters or patrons of vessels
must be Filipinos, have legal capacity to contract
in accordance with this code, and prove the skill,
capacity, and qualifications necessary to
command and direct the vessel, as established by
marine or navigation laws, ordinances, or
regulations, and must not be disqualified
according to the same for the discharge of the
duties of the position.
If the owner of a vessel desires to be the captain
thereof, without having the legal qualifications
therefor, he shall limit himself to the financial
administration of the vessel, and shall intrust the
navigation to a person possessing the
qualifications required by said ordinances and
regulations.
What are the qualifications of captains, masters
or patrons of vessels?
1. Must be Filipinos
2. Must have capacity to contract
3. Must prove capacity and qualifications
necessary to command and direct the vessel
4. Must not be disqualified for the discharge of
the duties of such position
Delfin, Melicor, Matunog (D2019)
What if the owner of the vessel wants to be
captain without having legal qualifications?
He shall limit himself to the financial administration
of the vessel and shall intrust the navigation to a
person possessing the qualifications
RA 9295, Sec. 9. Safety Standards. - All vessels
operate by domestic ship operators shall at all
times be in seaworthy condition properly equipped
with adequate life-saving, communication, safety
and other equipment operated and maintained in
accordance with the standards set by MARINA,
and manned by duly licensed and competent
vessel crew.
The MARINA shall have the power to inspect
vessels and all equipment on board to ensure
compliance with safety standards.
RA 10635, Sec. 3. MARINA as the Single
Maritime Administration. - MARINA, created
under P. D. No. 474, as amended, shall be the
single maritime administration mandated to
implement and enforce the 1978 International
Convention on Standards of Training, Certification
and Watch keeping for Seafarers. It shall carry out
an effective regulatory framework conducive to the
efficiency, transparency and competitiveness of
the Philippine seafaring industry.
RA 10635, Sec. 4. Powers and Functions of
MARINA. - In addition to the mandate of the
MARINA under Presidential Decree No. 474, as
amended, and in order to carry out the provisions
of this Act, the MARINA shall exercise the following
powers and functions:
(a) Act as the single, central maritime
administration for all purposes relating to
compliance with the STCW Convention.
(b) Administer and ensure effective
implementation of the STCW Convention;
including all inter national conventions or
agreements implementing or applying the same,
as well as international maritime safety conventions
or agreements that it seeks to promote compliance
with.
(c) Assume all powers and functions of the
Professional Regulation Commission (PRC), the
Commission on Higher Education (CHED), the
Technical Education and Skills Development
Authority (TESDA), Department of Health (DOH)
a n d t h e N a t i o n a l Te l e c o m m u n i c a t i o n s
Commission (NTC) relative to issuance,
validation, verification, correction, revocation
or cancellation of certificates of competency,
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endorsement, proficiency and documentary
evidence required of all seafarers and all such
other matters pertaining to the implementation of
the STCW Convention, subject to the following:
(1) MARINA shall ensure that the examination,
licensing and certification system for marine
deck and engine officers are in accordance with
the requirements prescribed under the STCW
Convention. All powers, duties and functions of
PRC on the examination, licensing and certification
system for marine deck and engine officers as
provided in RA No. 8544, or the "Philippine
Merchant Marine Officers Act of 1998", shall be
exercised by MARINA. The compensation and
allowances of the Board of Marine Deck Officers
and Marine Engine Officers under Article TV,
Section 8 of Republic Act No. 8544 shall, however,
be comparable to the compensation and
allowances being received by the chairpersons
and members of other existing regulatory boards
under the PRC and as provided in the General
Appropriations Act.
(2) The MARINA shall adopt rules and
regulations, in accordance with the STCW
Convention, governing able-bodied deck and
engine ratings including:
(i) Monitoring and verification of compliance with
the standards of ratings;
(ii) Harmonization of the procedures for periodic
evaluation, assessment and monitoring activities
undertaken by accredited institutions with
registered programs for ratings; and
(iii) Issuance of certificates of proficiency to
ratings.
(3) MARINA shall ensure that all legal,
administrative measures relative to the
issuance of certificates of competency of
GMDSS radio operators are in accordance with
the STCW Convention. For this purpose, the
MARINA shall assess, revalidate and issue
GMDSS radio operators certificate in accordance
with the provisions under the STCW Convention.
(4) MARINA shall ensure that all maritime
education, including the curricula and training
programs, are structured and delivered in
accordance with written programs, methods and
media of delivery, procedures, and course
materials compliant with international standards
as prescribed under STCW Convention. For this
purpose, the MARINA shall:
(i) Chair the Technical Panel on Maritime Education
(TPME) of the CHED; the TPME shall among
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others, formulate, review and recommend to the
CHED en banc all policies, standards, and
guidelines for maritime education, including
curricula, facilities and guidelines;
(ii) Monitor and verify, in coordination with the
CHED, compliance with the policies, standards,
and guidelines of maritime education in the
conduct of maritime education and training
programs;-
(iii) Review and harmonize the procedures for
periodic evaluation, assessment and monitoring of
all maritime education and training institutions in
accordance with the standards of the CHED and
other recognized international organizations;
(iv) Develop, formulate and recommend for
implementation, strict quality assurance
mechanisms and relevant typology for maritime
education programs and institutions;
(v) Recommend to the CHED en banc the closure/
phase-out of substandard maritime education
institutions, in accordance with the rules and
regulations, as well as recommend alternative
schemes or options for the affected maritime
educational institution;
(vi) Maintain an updated list of compliant and
phased-out maritime education and training
programs, publish such lists in appropriate media,
and provide the public with a clear understanding
of the consequences of enrolling in a phased-out
program;
(5) The MARINA shall coordinate with the DOH to
ensure that the medical standards established
to ascertain the medical fitness of seafarers are
in accordance with the international
conventions/treaties and existing laws. For this
purpose, MARINA shall:
(i) Ensure that the medical examinations and
issuance of medical certificates by the DOH
accredited hospitals, medical clinics, and
laboratories, including medical practitioners are in
accordance with the standards prescribed by the
STCW Convention; and
(ii) Ensure that medical certificates are issued by a
duly-qualified medical practitioner recognized by
and accredited with the DOH, and for this purpose,
a register of recognized medical practitioners shall
be maintained and made available to seafarers,
shipping companies and State parties to the STCW
Convention.
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What is MARINA?
- MARINA was created under P. D. No. 474.
- It is the single maritime administration mandated
to implement and enforce the 1978 International
C o n v e n t i o n o n S t a n d a rd s o f Tr a i n i n g ,
Certification and Watch keeping for Seafarers.
- It carries out an effective regulatory framework
conducive to the efficiency, transparency and
competitiveness of the Philippine seafaring
industry.
What are its powers? (Main)
1. A c t a s t h e s i n g l e , c e n t r a l m a r i t i m e
administration for purposes relating to
compliance with the STCW Convention.
2. Administer and ensure effective implementation
of the STCW Convention
3. Assume all powers and functions of PRC,
CHED, TESDA, DOH, and NTC relative to all
such matters pertaining to implementation of
STCW Convention.
Powers and Duties
Art. 610. The following powers shall be inherent in
the position of captain, master or patron of a
vessel:
1. To appoint or make contracts with the crew in
the absence of the ship agent, and to propose said
crew, should said agent be present; but the ship
agent may not employ any member against the
captain's express refusal.
2. To command the crew and direct the vessel to
the port of its destination, in accordance with the
instructions he may have received from the ship
agent.
3. To impose, in accordance with the contracts and
with the laws and regulations of the merchant
marine, and when on board the vessel,
correctional punishment upon those who fail to
comply with his orders or are wanting in discipline,
holding a preliminary hearing on the crimes
committed on board the vessel on the seas, which
crimes shall be turned over to the authorities
having jurisdiction over the same at the first port
touched.
4. To make contracts for the charter of the vessel in
the absence of the ship agent or of its consignee,
acting in accordance with the instructions received
and protecting the interests of the owner with
utmost care.
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5. To adopt all proper measures to keep the vessel
well supplied and equipped, purchasing all that
may be necessary for the purpose, provided there
is no time to request instruction from the ship
agent.
6. To order, in similar urgent cases while on a
voyage, the repairs on the hull and engines of the
vessel and in its rigging and equipment, which are
absolutely necessary to enable it to continue and
finish its voyage; but if he should arrive at a point
where there is a consignee of the vessel, he shall
act in concurrence with the latter.
What are the powers inherent in the position of
the captain, master, or patron of a vessel?
1. To appoint (or make contracts with) the crew in
the absence of ship agent, and propose said
crew, should said agent be present;
2. To command the crew and direct the vessel to
the port of destination, in accordance with
instructions he received from the ship agent.
3. To impose correctional punishment on those
who fail to comply with his orders or lack
discipline
4. To make contracts for the charter of the vessel
in the absence of the ship agent or of its
consignee
5. To adopt all proper measures to keep the
vessel well supplied and equipped
6. To order the repairs on the hull and engines of
the vessel and in its rigging and equipment,
which are absolutely necessary to enable it to
continue and finish its voyage
Art. 611. In order to comply with the obligations
mentioned in the preceding article, the captain,
when he has no funds and does not expect to
receive any from the ship agent, shall obtain the
same in the successive order stated below:
1. By requesting said funds from the consignee
of the vessel or correspondents of the ship agent.
2. By applying to the consignees of the cargo or
to those interested therein.
3. By drawing on the ship agent.
4. By borrowing the amount required by means
of a loan on bottomry.
5. By selling a sufficient amount of the cargo to
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cover the sum absolutely indispensable for
repair of the vessel and to enable it to continue its
voyage.
In these two last cases he must apply to the
judicial authority of the port, if in the Philippines,
and to the consul of the Republic of the Philippines
if in a foreign country, and where there is none, to
the local authority, proceeding in accordance with
the provisions of Article 583, and with provisions of
the law of civil procedure.
Art. 612. The following obligations shall be
inherent in the office of captain:
1. To have on board before starting on a voyage a
detailed inventory of the hull, engines, rigging,
spare-masts, tackle, and other equipment of the
vessel; the royal or the navigation certificate;
the roll of the persons who make up the crew of
the vessel, and the contracts entered into with
them; the lists of passengers; bill of health; the
certificate of the registry proving the ownership
of the vessel and all the obligations which
encumber the same up to that date; charter
parties or authenticated copies thereof; invoices
or manifests of cargo, and memorandum of the
visit or inspection by experts, should it have
been made at the port of departure.
2. To have a copy of this code on board.
3. To have three folioed and stamped books,
placing at the beginning of each one a
memorandum of the number of folios it contains,
signed by the maritime authority, and in his
absence by competent authority.
In the first book, which shall be called "log book,"
he shall enter day by day the condition of the
atmosphere, the prevailing winds, courses taken,
rigging carried, power of the engines used in
navigation, the distances covered, the maneuvers
executed, and other incidents of navigation; he
shall also enter the damage suffered by the vessel
in her hull, engines, rigging, and tackle, no matter
what its cause may be, as well as the impairment
and damage suffered by cargo, and the effect and
importance of the jettison, should there be any;
and in cases of serious decisions which require the
advice or a meeting of the officers of the vessel, or
even of the crew and passengers, he shall record
the decisions adopted. For the information
indicated he shall make use of the binnacle book
and of the steam of engine book kept by the
engineer.
In the second book called the "accounting book,"
he shall record all the amounts collected and paid
Delfin, Melicor, Matunog (D2019)
for the account of the vessel, entering the source
of collection and amounts spent for provisions,
repairs, acquisitions of equipment or goods, fuel,
food, outfits, wages, and other expenses of
whatever nature they may be. He shall furthermore
enter a list of all the members of the crew, stating
their domiciles, their wages and salaries, and the
amounts they may have received on account,
directly or by delivery to their families.
In the third book, called "freight book," he shall
record the loading and discharge of all the goods,
stating their marks and packages, names of the
shippers and of the consignees, ports of loading
and unloading, and the freightage they give. In this
same book he shall record the names and places
of sailing of the passengers, the number of
packages in their baggage, and the price of
passage.
4. Before receiving cargo, to make with the officers
of the crew and two experts, if required by the
shippers and passengers, an examination of the
vessel, in order to ascertain whether it is water-
tight, with the rigging and engines in good
condition, and with the equipment required for
g o o d n a v i g a t i o n , p re s e r v i n g u n d e r h i s
responsibility a certificate of memorandum of his
inspection, signed by all those who may have
taken part therein.
The experts shall be appointed, one by the captain
of the vessel and another by those who request its
examination, and in case of disagreement a third
shall be appointed by the marine authority of the
port or by the authority, exercising his functions.
5. To remain constantly on board the vessel
with the crew while the cargo is being taken on
board and to carefully watch the stowage
thereof; not to consent to the loading of any
merchandise or matter of a dangerous
character, such as inflammable or explosive
substances, without precautions which are
recommended for their packing, handling and
isolation; not to permit the carriage on deck of any
cargo which by reason of its arrangement, volume,
or weight makes the work of the sailors difficult,
and which might endanger the safety of the vessel;
and if, on account of the nature of the
merchandise, the special character of the
shipment, and principally the favorable season in
which it is undertaken, merchandise may be
carried on deck, he must hear the opinion of the
officers of the vessel and have the consent of the
shippers and of the ship agent.
6. To demand a pilot at the expense of the
vessel whenever required by the navigation,
and principally when he has to enter a port, canal,
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or river, or has to take a roadstead or anchoring
place with which neither he nor the officers and
crew are acquainted.
7. To be on deck on reaching land and to take
command on entering and leaving ports,
canals, roadsteads, and rivers, unless there is a
pilot on board discharging his duties. He shall
not spend the night away from the vessel except
for serious causes or by reason of official business.
8. To present himself, when making a port in
distress, to the maritime authority if in
Philippines and to the consul of the Republic of
the Philippines if in a foreign country, before twenty
four hours have elapsed, and to make a
statement of the name registry, and port of
departure of the vessel, of its cargo, and the
cause of arrival which declaration shall be visaed
by the authority or the consul, if after examining the
same it is found to be acceptable, giving the
captain the proper certificate proving his arrival in
distress and the reasons therefor. In the absence
of the maritime authority or of the consul, the
declaration must be made before the local
authority.
9. To take the necessary steps before the
competent authority in order to record in the
certificate of the vessel in the registry of
vessels the obligations he may contract in
accordance with Article 583.
10. To place under good care and custody all
the papers and belongings of any members of
the crew who might die on the vessel, drawing
up a detailed inventory, in the presence of
passengers, or, in their absence, of members of
the crew as witnesses.
11. To conduct himself according to the rules
and precepts contained in the instructions of
the ship agent, being liable for all that which he
may do in violation thereof.
12. To inform the ship agent from the port at
which the vessel arrives, of the reason of his
arrival, taking advantage of the semaphore,
telegraph, mail, etc., as the case may be; to notify
him of the cargo he may have received, stating the
names and domiciles of the shippers, freightage
earned, and amounts borrowed on bottomry loan;
to advise him of his departure, and of any
operation and date which may be of interest to
him.
13. To observe the rules with respect to situation,
lights and maneuvers in order to avoid collisions.
14. To remain on board, in case the vessel is in
Delfin, Melicor, Matunog (D2019)
danger, until all hope to save it is lost, and
before abandoning it, to hear the officers of the
crew, abiding by the decision of the majority;
and if the boats are to be taken to, he shall take
with him, before anything else, the books and
papers, and then the articles of most value, being
obliged to prove, in case of the loss of the books
and papers, that he did all he could to save them.
15. In case of wreck, to make the proper protest
in due form at the first port of arrival, before
competent authority or the Philippine consul,
within twenty-four hours, specifying therein all
the incidents of the wreck, in accordance with
subdivision 8 of this article.
16. To comply with the obligations imposed by
the laws and regulations on navigation,
customs, health, and others.
Art. 622. If while on voyage, the captain should
learn of the appearance of privateers or men of
war against his flag, he shall be obliged to make
the nearest neutral port, inform his agent or
shippers, and await an occasion to sail under
convoy, or until the danger is over or he has
received express orders from the ship agent or the
shippers.
Art. 624. A captain whose vessel has gone
through a hurricane or who believes that the
cargo has suffered damages or averages, shall
make a protest thereon before the competent
authority at the first port he touches, within
twenty-four hours following his arrival and shall
ratify it within the same period when he arrives at
his destination, immediately proceeding with the
proof of the facts, and he may not open the
hatches until after this has been done.
The captain shall proceed in the same manner, if,
the vessel having been wrecked; he is saved alone
or with part of his crew, in which case he shall
appear before the nearest authority, and make a
sworn statement of facts. xxx
Art. 625. The captain, under his personal
responsibility as soon as he arrives at the port of
destination, should get the necessary
permission from the health and customs
officers, and perform other formalities required by
regulations of the administration, delivering the
cargo without any defalcation, to the consignee,
and in a proper case, the vessel, rigging, and
freightage to the ship agent. xxx
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What are the obligations of the captain?
1. BEFORE VOYAGE: To have the following on
board:
- detailed inventory of the hull, engines,
rigging, and other equipment of the vessel;
- the royal or the navigation certificate;
- the roll of the persons who make up the
crew of vessel, and the contracts entered
into with them;
- the lists of passengers;
- bill of health;
- the certificate of the registry proving
ownership of the vessel and all obligations
which encumber the same up to that date;
- charter parties or authenticated copies
thereof;
- invoices or manifests of cargo, and
- memorandum of visit or inspection by
experts, if made at the port of departure.
2. To have a copy of this code on board.
3. To have three folioed and stamped books:
- Log Book
- Accounting Book
- Freight Book
4. BEFORE RECEIVING CARGO: to make if
required by shippers and passengers an
examination of the vessel to ascertain its
condition, preserving the certificate of
memorandum of his inspection
5. To remain constantly on board the vessel with
the crew while the cargo is being taken on
board and to carefully watch the stowage
thereof;
6. Not to consent to loading any merchandise of a
dangerous character without precautions;
7. Not to permit the carriage on deck of any cargo
which by reason of its arrangement, volume, or
weight makes the work of the sailors difficult,
and which might endanger the safety of the
vessel;
8. To demand a pilot at the expense of the vessel
whenever required by the navigation;
9. To be on deck on reaching land and to take
command on entering and leaving ports,
canals, roadsteads, and rivers, unless there is
a pilot on board discharging his duties.
10. To present himself, when making a port in
distress, to the maritime authority if in
Philippines and to the consul if in a foreign
country, before twenty four hours have elapsed,
Delfin, Melicor, Matunog (D2019)
and to make a statement of the name registry,
and port of departure of the vessel, of its
cargo, and the cause of arrival;
11. To take necessary steps to record in the
certificate in the registry of vessels the
obligations he may contract in accordance with
Article 583;
12. To place under good care and custody all the
papers and belongings of any members of the
crew who might die on the vessel;
13. To conduct himself according to the rules and
precepts contained in the instructions of ship
agent;
14. To inform the ship agent from the port at which
the vessel arrives, of the reason of his arrival;
15. To observe the rules in order to avoid collisions;
16. To remain on board, if the vessel is in danger,
until all hope to save it is lost and before
abandoning it, to hear the officers of the crew,
abiding by the decision of the majority
17. In case of wreck, to make the proper protest in
due form at the first port of arrival, before the
competent authority within twenty-four hours
18. To comply with the obligations imposed by
laws and regulations on navigation, customs,
health, etc.
19. If while on voyage, the captain learns of the
appearance of privateers or men of war against
his flag, to make the nearest neutral port,
inform his agent or shippers, and await until the
danger is over or he has received express
orders from the ship agent or the shippers (Art.
622).
20. To make a protest before competent authority if
the vessel has gone through a hurricane or
believes that the cargo has suffered damages
or averages (Art. 624).
21. To get the necessary permission from the
health and customs officers, and perform other
formalities required as soon as he arrives at the
port of destination (Art. 625).
Inter Orient v. NLRC
DOCTRINE: A master or a captain is one who has
command of a vessel. A captain commonly
performs three (3) distinct roles:
(1) general agent of the shipowner;
(2) commander and technical director of vessel;
and
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(3) representative of the country under whose flag
he navigates.
The captain has control of all departments of
service in the vessel, and reasonable discretion as
to its navigation. It is the right and duty of the
captain, in the exercise of sound discretion and in
good faith, to do all things with respect to the
vessel and its equipment and conduct of the
voyage which are reasonably necessary for the
protection and preservation of the interests under
his charge, whether those be of the shipowners,
charterers, cargo owners or of underwriters. It is a
basic principle of admiralty law that in navigating a
merchantman, the master must be left free to
exercise his own best judgment.
Prohibited Acts and Transactions
Art. 613. A captain who navigates for freight in
common or on shares may not make any
separate transaction for his own account; and
should he do so, the profit which may accrue shall
belong to the other persons interested, and the
losses shall be borne by him exclusively.
Art. 614. A captain who, having made an
agreement to make a voyage, fails to perform
his undertaking, without prevented by fortuitous
accident or force majeure, shall indemnify for all
the losses which he may cause without prejudice
to the criminal penalties which may be proper.
Art. 615. Without consent of the agent, the
captain cannot have himself substituted by
another person; and should he do so, besides
being liable for all the acts of the substitute and
bound to the indemnities mentioned in the
foregoing articles, the captain as well as the
substitute may be discharged by the ship agent.
Art. 617. The captain may not contract loans on
respondentia secured by the cargo; and should
he do so, the contracts shall be void.
Neither may he borrow money on bottomry for
his own transactions, except on the portion of the
vessel he owns, provided no money has been
previously borrowed on the whole vessel, and
there does not exist any other kind of lien or
obligation chargeable against the vessel. If he may
do so, he must state what interest he has in the
vessel.
In case of violation of this article, the principal,
Delfin, Melicor, Matunog (D2019)
interest, and costs shall be for the personal
account of the captain, and the ship agent may
furthermore discharge him.
Art. 621. A captain who borrows money on the hull,
engine, rigging or tackle of the vessel, or pledges
or sells merchandise or provisions outside of the
cases and without the formalities prescribed in this
Code, shall be liable for the principal, interests,
and costs, and shall indemnify for the damages he
may cause.
He who commits fraud in his accounts shall pay
the amount defrauded and shall be subject to
provisions of the Penal Code.
Art. 583. If while on a voyage the captain should
find it necessary to contract one or more of the
obligations mentioned in subdivisions 8 and 9 of
Article 580, he shall apply to the judge or court if
he is in Philippine territory, and otherwise to the
consul of the Republic of the Philippines, should
there be one, and, in his absence, to the judge or
court or proper local authority, presenting the
certificate of the registration sheet treated of in
Article 612 and the instruments proving the
obligation contracted.
The judge or court, the consul, or the local
authority, as the case may be, in view of the result
of the proceedings instituted, shall make a
temporary memorandum of their result in the
certificate, in order that it may be recorded in the
registry when the vessel returns to the port of its
registry, or so that it can be admitted as a legal
and preferred obligation in case of sale before its
return, by reason of the sale of the vessel on
account of a declaration of unseaworthiness.
The omission of this formality shall make the
captain personally liable for credits prejudiced on
his account.
What is a captain prohibited from doing?
1. A captain who navigates for freight in common
or on shares may not make any separate
transaction for his own account;
EFFECT: should he do so, profit which may
accrue shall belong to other persons
interested, and losses shall be borne by him
exclusively.
2. Without consent of the agent, the captain
cannot have himself substituted by another
person;
EFFECT: Should he do so, besides being
liable for all acts of the substitute and bound
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to indemnities mentioned, the captain as well
as the substitute may be discharged by the
ship agent.
3. C a p t a i n m a y n o t c o n t r a c t l o a n s o n
respondentia secured by the cargo;
EFFECT: Contracts shall be void.
4. Neither may he borrow money on bottomry for
his own transactions, except on the portion of
vessel he owns;
EFFECT: In case of violation, principal,
interest, and costs shall be for the personal
account of the captain, and ship agent may
discharge him.
What does the captain have to do if he should
find it necessary to contract one or more
obligations in Art. 580, Subdivisions 8 and 9?
He shall apply to the judge or court if he is in
Philippine territory, and otherwise to the consul of
the Philippines, should there be one presenting the
certificate of the registration sheet in Article 612
and the instruments proving the obligation
contracted.
What is the effect of his failure to comply with
such requirement?
The omission of this formality shall make the
captain personally liable for credits prejudiced on
his account.
Other Officers and Crew
Contracts and Formalities
Art. 634. The captain may make up the crew of his
vessel with such number of men as he may
consider proper, and in the absence of Filipino
sailors, he may take on foreigners residing in
the country, the number thereof not to exceed
one-fifth of the crew. If in foreign ports the
captain should not find a sufficient number of
Filipino sailors, he may complete the crew with
foreigners, with the consent of the consul or marine
authorities.
The agreement which the captain may make with
the members of the crew and others who go to
make up the complement of the vessel, to which
reference is made in Article 612, must be reduced
to writing in the account book, without the
intervention of a notary public or clerk of court
("escribano"), signed by the parties thereto and
visaed by the marine authority if they be executed
Delfin, Melicor, Matunog (D2019)
in Philippine territory or by the consuls or consular
agents of the Republic of the Philippines if
executed abroad, stating therein all the obligations
which each one contracts and all the rights he
acquires said authorities taking care that these
obligations and rights are recorded in a clear and
definite manner which give no room for doubts or
claims.
The captain shall take care to read to them the
articles of this Code which concern them,
stating in said document that they were read.
If the book contains the requisites in Art. 612, and
there should not appear any signs of alterations in
its entries, it shall be admitted as evidence in
questions which may arise between the captain
and the crew with respect to the agreements
contained therein and the amounts paid on
account of the same.
Every member of the crew may demand of the
captain a copy, signed by the latter, of the
agreement and of liquidation of his wages, as they
appear in the book.
How many men can be chosen by the captain to
be part of his crew?
The captain may make up the crew of his vessel
with such number of men as he may consider
proper.
Can the captain get foreigners as part of his
crew?
Yes. In the absence of Filipino sailors, he may take
on foreigners residing in the country, the number of
which not to exceed 1/5 of the crew.
What if in foreign ports, the captain should not
find a sufficient number of Filipino sailors?
He may complete the crew with foreigners, with the
consent of the consul or marine authorities.
Duties and Liabilities
Art. 635. A seaman who has been contracted to
serve on a vessel may not rescind his contract
or fail to comply therewith except by reason of
a legitimate impediment which may have
happened to him.
Neither may he transfer from service of one
vessel to another without obtaining the written
permission of the captain of the vessel on which
he may be.
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If, without obtaining said permission, the seaman
who has signed for one vessel should sign for
another one, the second contract shall be void,
and the captain may choose between forcing him
to fulfill the service to which he first bound himself,
or at his expense to look for a person to substitute
him.
Furthermore, he shall lose the wages earned on
his first contract, to the benefit of the vessel for
which he had signed.
A captain who, knowing that a seaman is in the
service of another vessel, should have made a
new agreement with him without having required of
him the permission referred to in the preceding
paragraphs, shall be subsidiarily responsible to the
captain of the vessel to which the seaman first
belonged, for that part of the indemnity, referred to
in the third paragraph of this article, which the
seaman may not be able to pay.
Rights
Art. 636. If there is no fixed period for which a
seaman has been contracted he may not be
discharged until the end of the return voyage to
the port where he enlisted.
Art. 637. Neither may the captain discharge a
seaman during the time of his contract EXCEPT
for just cause, the following being considered as
such:
1. The perpetration of a crime which disturbs order
on the vessel.
2. Repeated insubordination, want of discipline, or
non-fulfillment of the service.
3. Repeated incapacity and negligence in the
fulfillment of the service he should render.
4. Habitual drunkenness.
5. Any occurrence which incapacitates the seaman
to perform the work entrusted to him, with the
exception of that provided in Article 644.
6. Desertion.
The captain may, however, before getting out on a
voyage and without giving any reason, refuse to
permit a seaman whom he may have engaged to
go on board, and leave him on land, in which case
he will be obliged to pay him his wages as if he
had rendered services.
Delfin, Melicor, Matunog (D2019)
This indemnity shall be paid from the funds of the
vessel if the captain should have acted for reasons
of prudence and in the interest of the safety and
good services of the farmer. Should this not be the
case, it shall be paid by the captain personally.
After the voyage has begun, during the same, and
until the conclusion thereof, the captain may not
abandon any member of his crew on land or on
sea, unless, by reason of some crime, his
imprisonment and delivery to the competent
authority in the first port touched should be proper,
a matter obligatory for the captain.
Art. 638. If, after the crew has been engaged, the
voyage is revoked by the will of the ship agent
or of the charterers before or after the vessel
has put to sea, or if the vessel is for the same
reason given a destination different from that
fixed in agreement with crew, the latter shall be
indemnified on account of the rescission of
contract, according to the cases follows:
1. If revocation of voyage should be decided
upon before the departure of the vessel from
the port, each sailor engaged shall be given one
month's salary, besides what may be due him, in
accordance with his contract, for the services
rendered to the vessel up to the date of the
revocation.
2. If the agreement should have been for a fixed
amount for the whole voyage, that which may be
due for said month and days shall be determined
in proportion to the approximate number of days
the voyage should have lasted, in the judgment of
experts, in the manner established in the law of
Civil Procedure; and if the proposed voyage
should be of such short duration that it is
calculated at approximately one month, the
indemnity shall be fixed for fifteen days,
discounting in all cases the sums advanced.
3. If revocation should take place after the
vessel has been put to sea, the seamen engaged
for a fixed amount for the voyage shall receive in
full the salary which may have been offered them
as if the voyage had terminated; and those
engaged by the month shall receive the amount
corresponding to the time they might have been on
board and to the time they may require to arrive at
the port of destination, the captain being obliged,
furthermore, to pay the seamen in both cases, the
passage to the said port or to the port of sailing of
the vessel, as may be convenient for them.
4. If the ship agent or the charterers of the
vessel should give it a destination different
from that fixed in the agreement, and the
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members of the crew should not agree thereto,
they shall be given by way of indemnity half the
amount fixed in case No. 1, besides what may be
owed them for the part of the monthly wages
corresponding to the days which have elapsed
from the date of their agreements.
If they accept the change, and the voyage, on
account of the greater distance or of other
reasons, should give rise to increase of wages,
the latter shall be adjusted privately or through
amicable arbitrators in case of disagreement. Even
though the voyage should be shortened to a
nearer point, this shall not give rise to a reduction
in the wages agreed upon.
If the revocation or change of the voyage
should come from the shippers or charterers,
the agent shall have a right to demand of them the
indemnity which may be justly due.
Art. 639. If the revocation of the voyage should
arise from a just cause independent of the will
of the ship agent and charterers, and the vessel
should not have left the port, the members of the
crew shall have no other right than to collect the
wages earned up to the day on which the
revocation took place.
Art. 640. The following shall be just causes for the
revocation of the voyage.
1. A declaration of war or interdiction of commerce
with the power to whose territory the vessel was
bound.
2. The blockade of the port of its destination, or the
breaking out of an epidemic after the agreement.
3. The prohibition to receive in said port the goods
which make up the cargo of the vessel.
4. The detention or embargo of the same by order
of the government, or for any other reason
independent of the will of the ship agent.
5. The inability of the vessel to navigate.
Art. 641. If, after a voyage has been begun, any of
the first three causes mentioned in the foregoing
article should occur, the sailors shall be paid at the
port which the captain may deem advisable to
make for the benefit of the vessel and cargo,
according to the time they may have served
thereon; but if the vessel is to continue its voyage,
the captain and the crew may mutually demand
the enforcement of the contract.
In case of the occurrence of the fourth cause, the
Delfin, Melicor, Matunog (D2019)
crew shall continue to be paid half wages, if the
agreement is by month; but if the detention should
exceed three months, the contract shall be
rescinded and the crew shall be paid what they
should have earned according to the contract if
the voyage had been concluded. And if the
agreement should be for a fixed sum for the
voyage, the contract must be complied within the
terms agreed upon.
In the fifth case, the crew shall have no other right
than to collect the wages earned; but if the
disability of the vessel should have been caused
by the negligence or lack of skill of the captain,
engineer, or sailing mate, they shall indemnify the
crew for the damages suffered, always without
prejudice to the criminal liability which may be
proper.
Art. 642. If the crew have been engaged on
shares, they shall not be entitled, by reason of the
revocation, delay, or greater extension of the
voyage, to anything but the proportionate part of
the indemnity which way be paid into the common
funds of the vessel by the persons liable for said
occurrences.
Art. 643. If the vessel and her cargo should be
totally lost, by reason of capture or wreck, all rights
shall be extinguished, both as regards the crew to
demand any wages whatsoever, and as regards
the ship agent to recover the advances made.
If a portion of the vessel or of the cargo, or of both,
should be saved, the crew engaged on wages,
including the captain, shall retain their rights on the
salvage, so far as they go, on the remainder of the
vessel as well as on the amount of the freightage of
the cargo saved; but sailors who are engaged on
shares shall not have any right whatsoever on the
salvage of the hull, but only on the portion of the
freightage saved. If they should have worked to
recover the remainder of the shipwrecked vessel
they shall be given from the amount of the salvage
an award in proportion of the efforts made and to
the risks, encountered in order to accomplish the
salvage.
Art. 644. A seaman who falls sick shall not lose his
right to wages during the voyage, unless the
sickness is the result of his own fault. At any rate,
the costs of the attendance and cure shall be
defrayed from the common funds, in the form of a
loan.
If the sickness should come from an injury
received in the service or defense of the vessel,
the seaman shall be attended and cured at the
expense of the common funds deducting, before
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anything else, from the proceeds of the freightage
the cost of the attendance and cure.
Art. 645. If a seaman should die during the
voyage, his heirs will be given the wages earned
and not received according to his contract and the
cause of his death, namely
If he died a natural death and was engaged on
wages, that which may have been earned up to
the date of his death shall be paid.
If the contract was for a fixed sum for the whole
voyage, half the amount earned shall be paid if the
seamen died on the voyage out, and the whole
amount if he died on the return voyage.
And if the contract was on shares and death
occurred after the voyage was begun, the heirs
shall be paid the entire portion due the seaman;
but if the latter died before the departure of the
vessel from the port, the heirs shall not be entitled
to claim anything.
If death occurred in the defense of the vessel,
the seaman shall be considered as living, and his
heirs shall be paid, at the end of the voyage, the
full amount of wages or the integral part of the
profits which may be due him as to others of his
class.
In the same manner, the seaman captured while
defending the vessel shall be considered present
so as to enjoy the same benefits as the rest; but
should he have been captured on account of
carelessness or other accident not related to the
service, he shall only receive the wages due up to
the day of his capture.
Art. 646. The vessel with her engines, rigging,
equipment, and freightage shall he liable for the
wages earned by the crew engaged per month or
for the trip, the liquidation and payment to take
place between one voyage and the other.
After a new voyage has been undertaken, credits
of such kind pertaining to the preceding voyage
shall lose their right of preference.
Art. 647. The officers and the crew of the vessel
shall be free from all obligations if they deem it
proper, in the following cases:
1. If, before beginning the voyage, the captain
attempts to change it, or a naval war with the
power to which the vessel was destined occurs.
2. If a disease should break out and be officially
declared an epidemic in the port of destination.
Delfin, Melicor, Matunog (D2019)
3. If the vessel should change owner or captain.
JUST CAUSES FOR DISCHARGE OF SEAMAN
VS. JUST CAUSES FOR REVOCATION OF
VOYAGE
What are deemed JUST CAUSES for the
discharge of a seaman during the existence of
his contract?
1. Perpetration of crime disturbing order on the
vessel;
2. Repeated insubordination, want of discipline,
non-fulfillment of the service;
3. Repeated incapacity and negligence in
fulfillment of the service he should render;
4. Habitual drunkenness;
5. Any occurrence which incapacitates the
seaman to perform work entrusted to him, with
the exception of that provided in Article 644;
6. Desertion
What are deemed JUST CAUSES for the
revocation of the voyage?
1. A declaration of war or interdiction of
commerce with power to whose territory the
vessel was bound.
2. Blockade of the port of its destination, or the
breaking out of an epidemic after the
agreement.
3. The prohibition to receive in said port the
goods which make up the cargo of the vessel.
4. Detention or embargo of the same by order of
the government, or for any other reason
independent of the will of the ship agent.
5. The inability of the vessel to navigate.
When are officers and the crew of the vessel
free from all obligations if they deem it proper?
1. If, before beginning voyage, the captain
attempts to change it, or a naval war with the
power to which the vessel was destined
occurs.
2. If a disease should break out and be officially
declared an epidemic in the port of destination.
3. If the vessel should change owner or captain.
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Supercargoes
Art. 649. Supercargoes shall discharge on board
the vessel administrative duties which the ship
agent or the shippers may have assigned to
them; they shall keep an account and record of
their transactions in a book which shall have the
same conditions and requisites as required for the
accounting book of the captain, and they shall
respect the latter in his capacity as chief of the
vessel.
The powers and responsibilities of the captain
shall cease, when there is a supercargo, with
regard to that part of the administration
legitimately conferred upon the latter, but shall
continue in force for all acts which are inseparable
from his authority and office.
Art. 650. All the provisions contained in the second
section of Title III, Book II, with regard to capacity,
manner of making contracts, and liabilities of
factors, shall be applicable to supercargoes.
Art. 651. Supercargoes may not, without special
authorization or agreement, make any
transaction for their own account during
voyage, with exception of the ventures which, in
accordance with the custom of the port of
destination, they are permitted to do.
Neither shall they be permitted to invest in the
return trip more than the profits from the
ventures, unless there is an express authorization
from the principals.
What is a supercargo?
A supercargo is a person employed on board a
vessel by the owner of the cargo carried on the
ship.
What are the duties of a supercargo?
- Discharge on board the vessel administrative
duties which the ship agent or shippers may
have assigned to them;
- K e e p a n a c c o u n t a n d re c o rd o f t h e i r
transactions in a book.
- Obtain the powers and responsibilities of the
captain with regard to that part of administration
legitimately conferred upon the him.
What is a supercargo prohibited from doing?
Delfin, Melicor, Matunog (D2019)
- May not, without special authorization or
agreement, make any transaction for their own
account during voyage.
- May NOT invest in the return trip more than the
profits from the ventures, unless there is an
express authorization from the principals.
Accidents and Damages in Maritime
Commerce
Averages
Nature and Kinds
Art. 806. For the purposes of this code the
following shall be considered averages:
1. All extraordinary or accidental expenses which
may be incurred during the voyage in order to
preserve the vessel, the cargo, or both.
2. Any damages or deteriorations which the vessel
may suffer from the time it puts to sea from the port
of departure until it casts anchor in the port of
destination, and those suffered by the
merchandise from the time they are loaded in the
port of shipment until they are unloaded in the port
of their consignment.
Art. 807. The petty and ordinary expenses incident
to navigation, such as those of pilotage of coasts
and ports, those of lighterage and towage,
anchorage, inspection, health, quarantine,
lazaretto, and other so-called port expenses, costs
of barges and unloading until the merchandise is
placed on the wharf, and any other usual
expenses of navigation, shall be considered
ordinary expenses to be defrayed by the
shipowner, unless there is an express agreement
to the contrary.
Art. 808. Averages shall be:
1. Simple or particular.
2. General or gross.
What is an average?
Average is loss or damage, less than total, to
maritime property (ship or its cargo) caused by
perils of the sea.
It comprises of the following:
1. All extraordinary or accidental expenses which
may be incurred during the voyage in order to
preserve the vessel, the cargo, or both.
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2. Any damages or deteriorations which the

vessel may suffer from the time it puts to sea
from the port of departure until it casts anchor
in the port of destination, and those suffered by
the merchandise from the time they are loaded
in the port of shipment until they are unloaded
in the port of their consignment.
What are the types of averages?
1. Simple or particular
2. General or gross
8. The loss inflicted upon the vessel or cargo by
reason of an impact or collision with another, if it is
accidental and unavoidable.
If the accident should occur through the fault or
negligence of the captain, the latter shall be liable
for all the losses caused.
9. Any loss suffered by the cargo through the fault,
negligence, or barratry of the captain or of the
crew, without prejudice to the right of the owner to
recover the corresponding indemnity from the
captain, the vessel, and the freightage.

Simple or Particular
Effects
Definition 810. The owner of the goods which gave rise to the
expense or suffered the damage shall bear the
Art. 809. As a general rule, simple or particular
simple or particular averages.
averages shall include all the expenses and
damages caused to the vessel or to her cargo
which have not inured to the common benefit
Gross or General
and profit of all the persons interested in the
vessel and her cargo, and especially the
following: Definition

Art. 811. As a general rule, general or gross

1. The losses suffered by the cargo from the time
averages shall include all the damages and
of its embarkation until it is unloaded, either on
expenses which are deliberately caused in
account of inherent defect of the goods or by
order to save the vessel, its cargo, or both at
reason of an accident of the sea or force majeure,
the same time, from a real and known risk, and
and the expenses incurred to avoid and repair the
particularly the following:
same.

1. The goods or cash invested in the redemption of

2. The losses and expenses suffered by the vessel
the vessel or of the cargo captured by enemies,
in its hull, rigging, arms, and equipment, for the
privateers, or pirates, and the provisions, wages,
same causes and reasons, from the time it puts to
and expenses of the vessel detained during the
sea from the port of departure until it anchors and
time the settlement or redemption is being made.
lands in the port of destination.

2. The goods jettisoned to lighten the vessel,

3. The losses suffered by the merchandise loaded
whether they belong to the cargo, to the vessel, or
on deck, except in coastwise navigation, if the
to the crew, and the damage suffered through said
marine ordinances allow it.
act by the goods which are kept on board.

4. The wages and victuals of the crew when the
3. The cables and masts which are cut or rendered
vessel is detained or embargoed by legitimate
useless, the anchors and the chains which are
order or force majeure, if the charter has been
abandoned, in order to save the cargo, the vessel,
contracted for a fixed sum for the voyage.
or both.

5. The necessary expenses on arrival at a port, in
4. The expenses of removing or transferring a
order to make repairs or secure provisions.
portion of the cargo in order to lighten the vessel

and place it in condition to enter a port or

6. The lowest value of the goods sold by the
roadstead, and the damage resulting therefrom to
captain in arrivals under stress for the payment of
goods removed or transferred.
provisions and in order to save the crew, or to meet

any other need of the vessel, against which the
5. The damage suffered by the goods of the cargo
proper amount shall be charged.
by the opening made in the vessel in order to drain

it and prevent its sinking.

7. The victuals and wages of the crew while the

vessel is in quarantine.
6. The expenses caused in order to float a vessel

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intentionally stranded for the purpose of saying it.
7. The damage caused to the vessel which had to
be opened, scuttled or broken in order to save the
cargo.
8. The expenses for the treatment and subsistence
of the members of the crew who may have been
wounded or crippled in defending or saying the
vessel.
9. The wages of any member of the crew held as
hostage by enemies, privateers, or pirates, and the
necessary expenses which he may incur in his
imprisonment, until he is returned to the vessel or
to his domicile, should he prefer it.
10. The wages and victuals of the crew of a vessel
chartered by the month, during the time that it is
embargoed or detained by force majeure or by
order of the government, or in order to repair the
damage caused for the common benefit.
11. The depreciation resulting in the value of the
goods sold at arrival under stress in order to repair
the vessel by reason of gross average.
12. The expenses of the liquidation of the average.
Art. 817. If in lightening a vessel on account of a
storm, in order to facilitate its entry into a port
or roadstead, part of the cargo should be
transferred to lighters or barges and be lost, the
owner of said part shall be entitled to indemnity, as
if the loss had originated from a gross average, the
amount thereof being distributed between the
vessel and cargo from which it came.
If, on the contrary, the merchandise transferred
should be saved and the vessel should be lost, no
liability may be demanded of the salvage.
Art. 818. If, as a necessary measure to extinguish
a fire in a port, roadstead, creek, or bay, it
should be decided to sink a vessel, this loss
shall be considered gross average, to which the
vessels saved shall contribute.
Essential Requisites
Art. 813. In order to incur the expenses and cause
the damages corresponding to gross average,
there must be a resolution of the captain, adopted
after deliberation with the sailing mate and other
officers of the vessel, and after hearing the
persons interested in the cargo who may be
present.
If the latter shall object, and the captain and
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officers or a majority of them, or the captain, if
opposed to the majority, should consider certain
measures necessary, they may be executed under
his responsibility, without prejudice to the right of
the shippers to proceed against the captain before
the competent judge or court, if they can prove
that he acted with malice, lack of skill, or
negligence.
If the persons interested in the cargo, being on
board the vessel, have not been heard, they shall
not contribute to the gross average, their share
being chargeable against the captain, unless the
urgency of the case should be such that the time
necessary for previous deliberations was wanting.
Art. 814. The resolution adopted to cause the
damages which constitute general average must
necessarily be entered in the log book, stating the
motives and reasons for the dissent, should there
be any, and the irresistible and urgent causes
which impelled the captain if he acted of his own
accord.
In the first case the minutes shall be signed by all
the persons present who could do so before taking
action, if possible; and if not, at the first
opportunity. In the second case, it shall be signed
by the captain and by the officers of the vessel.
In the minutes, and after the resolution, shall be
stated in detail all the goods jettisoned, and
mention shall be made of the injuries caused to
those kept on board. The captain shall be obliged
to deliver one copy of these minutes to the
maritime judicial authority of the first port he may
make, within twenty four hours after his arrival, and
to ratify it immediately under oath.
Art. 860. If, notwithstanding the jettison of
merchandise, breakage of masts, ropes, and
equipment, the vessel shall be lost running the
same risk, no contribution whatsoever by jettison of
gross average shall be proper.
The owners of the goods saved shall not be liable
for the indemnification of those jettisoned, lost, or
damaged.
Magsaysay Inc. v. Agan
DOCTRINE: Averages are classified into simple or
particular and general or gross. Generally
speaking, simple or particular averages include all
expenses and damages caused to the vessel or
cargo which have not inured to the common
benefit, and are, therefore, to be borne only by the
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owner of the property which gave rise to same;
while general or gross averages include all the
damages and expenses which are deliberately
caused in order to save the vessel, its cargo, or
both at the same time, from a real and known risk.
Being for the common benefit, gross averages are
to be borne by the owners of the articles saved.
It is the deliverance from an immediate, impending
peril, by a common sacrifice, that constitutes the
essence of general average.
In order that the expenses incurred by the ship
owner in refloating its vessel come within the
concept of the general average, the following
requisites must concur:
1. First, there must be a common danger. This
means, that both the ship and the cargo, after it
has been loaded, are subject to the same
danger, whether during the voyage, or in the
port of loading or unloading; that the danger
arises from the accidents of the sea,
dispositions of the authority, or faults of men,
provided that the circumstances producing the
peril should be ascertained and imminent or
may rationally be said to be certain and
imminent. This last requirement exclude
measures undertaken against a distant peril.
2. Second, that for the common safety, part of the
vessel or of the cargo or both is sacrificed
deliberately.
3. Third, that from the expenses or damages
caused follows the successful saving of the
vessel and cargo.
4. Fourth, that the expenses or damages should
have been incurred or inflicted after taking
proper legal steps and authority.
Effects
812. In order to satisfy the amount of the gross or
general averages, all the persons having an
interest in the vessel and cargo therein at the time
of the occurrence of the average shall contribute.
Jettison
Art. 815. The captain shall direct the jettison, and
shall order the goods cast overboard in the
following order:
Delfin, Melicor, Matunog (D2019)
1. Those which are on deck, beginning with those
which embarrass the maneuver or damage of the
vessel, preferring, if possible, the heaviest ones
with the least utility and value.
2. Those which are below the upper deck, always
beginning with those of the greatest weight and
smallest value, to the amount and number
absolutely indispensable.
Art. 816. In order that the goods jettisoned may be
included in the gross average and the owners
thereof be entitled to indemnity, it shall be
necessary insofar as the cargo is concerned that
their existence on board be proven by means of
the bill of lading; and with regard to those
belonging to the vessel, by means of the inventory
prepared before the departure in accordance with
the first paragraph of Article 812.
Jason Clauses
York-Antwerp Rules, Rule D. Rights to
contribution in general average shall not be
affected, though the event which gave rise to the
sacrifice or expenditure may have been due to the
fault of one of the parties to the common maritime
adventure, but this shall not prejudice any
remedies or defences which may be open against
or to that party in respect of such fault.
What is a Jason Clause?
It is Protective clause inserted into a Charter-Party
or Bill of Lading which provides that the shipowner
is entitled to recover in general average even when
the loss is caused by negligent navigation.
Arrival Under Stress
Causes
Art. 819. If during the voyage the captain should
believe that the vessel can not continue the trip
to the port of destination on account of the lack
of provisions, well-founded fear of seizure,
privateers, or pirates, or by reason of any accident
of the sea disabling it to navigate, he shall
assemble the officers and shall summon the
persons interested in the cargo who may be
present, and who may attend the meeting without
the right to vote; and if, after examining
circumstances of the case, the reason should
be considered well-founded, the arrival at the
nearest and most convenient port shall be
agreed upon, drafting and entering the proper
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minutes, which shall be signed by all, in the log
book.
The captain shall have the deciding vote, and
the persons interested in the cargo, may make the
objections and protests they may deem proper,
which shall be entered in the minutes in order that
they may make use thereof in the manner they may
consider advisable.
Art. 820. An arrival shall not be considered
lawful in the following cases:
1. If the lack of provisions should arise from the
failure to take the necessary provisions for the
voyage according to usage and customs, or if
they should have been rendered useless or lost
through bad stowage or negligence in their care.
2. If the risk of enemies, privateers, or pirates
should not have been well known, manifest, and
based on positive and provable facts.
3. If the defect of the vessel should have arisen
from the fact that it was not repaired, rigged,
equipped, and prepared in a manner suitable
for the voyage, or from some erroneous order of
the captain.
4. When malice, negligence, want of foresight,
or lack of skill on the part of the captain exists in
the act causing the damage.
Formalities
Art. 822. If in order to make repairs to the vessel or
because there is danger that the cargo may suffer
damage, it should be necessary to unload, the
captain must request authorization from the
competent judge or court for the removal, and
carry it out with the knowledge of the person
interested in the cargo, or his representative,
should there be any.
In a foreign port, it shall be the duty, of the
Philippine Consul, where there is one, to give the
authorization.
In the first case, the expenses shall be for the
account of the ship agent or owner, and in the
second, they shall be chargeable against the
owners of the merchandise for whose benefit the
act was performed.
If the unloading should take place for both
reasons, the expenses shall be divided
proportionately between the value of the vessel
and that of the cargo.
Delfin, Melicor, Matunog (D2019)
Art. 612, Paragraph 8. The following obligations
shall be inherent in the office of captain:
xxx
8. To present himself, when making a port in
distress, to the maritime authority if in the
Philippines and to the consul of the Republic of the
Philippines if in a foreign country, before twenty
four hours have elapsed, and to make a statement
of the name registry, and port of departure of the
vessel, of its cargo, and the cause of arrival which
declaration shall be visaed by the authority or the
consul, if after examining the same it is found to be
acceptable, giving the captain the proper
certificate proving his arrival in distress and the
reasons therefor. In the absence of the maritime
authority or of the consul, the declaration must be
made before the local authority. xxx
Expenses
Art. 821. The expenses of an arrival under stress
shall always be for the account of the shipowner
or agent, but they shall not be liable for the
damages which may be caused the shippers by
reason of the arrival provided the latter is
legitimate.
Otherwise, the ship agent and the captain shall
be jointly liable.
Art. 822. If in order to make repairs to the vessel or
because there is danger that the cargo may suffer
damage, it should be necessary to unload, the
captain must request authorization from the
competent judge or court for the removal, and
carry it out with the knowledge of the person
interested in the cargo, or his representative,
should there be any.
In a foreign port, it shall be the duty, of the
Philippine Consul, where there is one, to give the
authorization.
In the first case, the expenses shall be for the
account of the ship agent or owner, and in the
second, they shall be chargeable against the
owners of the merchandise for whose benefit
the act was performed.
If the unloading should take place for both
reasons, the expenses shall be divided
proportionately between the value of the vessel
and that of the cargo.
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Responsibility of Captain
Art. 823. The custody and preservation of the
cargo which has been unloaded shall be
intrusted to the captain, who shall be responsible
for the same, except in cases of force majeure.
Art. 824. If the entire cargo or part thereof
should appear to be damaged, or there should
be imminent danger of its being damaged, the
captain may request of the competent judge or
court, or of the consul in a proper case, the sale
of all or of part of the former, and the person
taking cognizance of the matter shall authorize it,
after an examination and declaration of experts,
advertisements, and other formalities required by
the case, and an entry in the book, in accordance
with the provisions of Article 624.
The captain shall, in a proper case, justify the
legality of his conduct, under the penalty of
answering to the shipper for the price the
merchandise would have brought if they had
arrived in good condition at the port of destination.
Art. 825. The captain shall be responsible for the
damages caused by his delay, if after the cause
of the arrival under stress has ceased, he
should not continue the voyage.
If the cause of arrival should have been the fear of
enemies, privateers, or pirates, a deliberation and
resolution in a meeting of the officers of the vessel
and persons interested in the cargo who may be
present, in accordance with the provisions
contained in Article 819, shall precede the
departure.
Collisions: Classes and Effects
Collision as applied to Maritime Commerce, an
impact or sudden contact of a vessel with another
whether both are in motion or one stationary
- Not necessary for one to be liable for his vessel
to have hit another
- A shipowner or ship agent may be made liable
even if his vessel didnt actually collide with
another vessel (Art 831)
Fortuitous
CODE OF COMMERCE
Art 830. If a vessel should collide with another,
through fortuitous event or force majeure, each
Delfin, Melicor, Matunog (D2019)
vessel and its cargo shall bear its own damages.
Art 832. If by reason of a storm or other cause of
force majeure, a vessel which is properly anchored
and moored should collide with those nearby,
causing them damages, the injury occasioned
shall be considered as particular average of the
vessel run into.
Culpable
CODE OF COMMERCE
Art 826. If a vessel should collide with another,
through the fault, negligence or lack of skill of the
captain, sailing mate, or any other member of the
complement, the owner of the vessel at fault shall
indemnify the losses and damages suffered, after
an expert appraisal.
Art 827. If the collision is imputable to both
vessels, each one shall suffer its own damages,
and both shall be solidarily responsible for the
losses and damages occasioned to their cargoes.
Art 831. If a vessel should be forced by a 3rd
vessel to collide with another, the owner of the third
vessel shall indemnify the losses and damages
caused, the captain thereof being civilly liable to
said owner.
Inscrutable Fault
CODE OF COMMERCE
Art 828. The provisions of the preceding article are
applicable to the use in which it cannot be
determined which of the two vessels has caused
the collision.
URRUTIA & CO. VS BACO RIVER PLANTATION
Doctrine: The steamers greater facility of
maneuvering over a sail vessel means it has the
greater ability to avoid collisions. Therefore, as a
general rule, when meeting a sailing vessel,
whether close hauled or with the wind free, the sail
vessel has a right to keep her course, and it is the
duty of the steamer to adopt precautions as will
avoid the sail vessel.
SC: Those managing the steamer were guilty of
gross negligence; and so they could recover
nothing. The steamer was brought into such close
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proximity to the sail vessel that a collision was
apparently inevitable.
GOVERNMENT VS PHILIPPINE STEAMSHIP CO.
Where both vessels are to blame, both shall be
solidarily responsible for the damage occasioned to
their cargoes.
SMITH BELL AND COMPANY VS CA
When 2 power-driven vessels are meeting end on,
or nearly end on, so as to involve the risk of
collision, each shall alter her course to starboard
(right side), so that each may pass on the port (left
side) side of the other.
Shipwrecks
CODE OF COMMERCE
Art 840. The losses and deteriorations suffered by
a vessel and her cargo by reason of shipwreck or
stranding shall be individually for the account of
the owners, the part which may be saved
belonging to them in the same proportion.
Art 841. If the wreck or stranding should be
caused by the malice, negligence, or lack of skill
of the captain, or because the vessel put to sea
was insufficiently repaired and equipped, the ship
agent or the shippers may demand indemnity of
the captain for the damages caused to the vessel
or to the cargo by the accident, in accordance with
the provisions contained in Articles 610, 612, 614,
and 621.
Art 842. The goods saved from the wreck shall be
specially bound for the payment of the expenses
of the respective salvage, and the amount thereof
must be paid by the owners of the former before
they are delivered to them, and with preference
over any other obligation if the merchandise should
be sold.
Art 843. If several vessels sail under convoy, and
any of them should be wrecked, the cargo saved
shall be distributed among the rest in proportion to
the amount which each one is able to take.
If any captain should refuse, without sufficient
cause, to receive what may correspond to him, the
captain of the wrecked vessel shall enter a protest
against him, before two sea officials, of the losses
and damages resulting therefrom, ratifying the
protest within twenty-four hours after arrival at the
first port, and including it in the proceedings he
must institute in accordance with the provisions
contained in Article 612.
Delfin, Melicor, Matunog (D2019)
If it is not possible to transfer to the other vessels
the entire cargo of the vessel wrecked, the goods
of the highest value and smallest volume shall be
saved first, the designation thereof to be made by
the captain with the concurrence of the officers of
his vessel.
ARTICLE 612. The following obligations are
inherent in the officeofcaptain:
1.To have on board before starting on a voyage a
detailed inventory of the hull, engines, rigging,
tackle, stores, and other equipmentsofthe vessel;
the navigation certificate; the roll of the persons
who make up the crew of the vessel, and the
contracts entered into with the crew; the list of
p a s s e n g e r s ; t h e h e a l t h c e r t i fi c a t e ; t h e
c e r t i fi c a t e o f t h e r e g i s t r y p r o v i n g t h e
ownership of the vessel, and all the obligations
which encumber the same up to that date; the
charters or authenticated copies thereof; the
invoices or manifest of the cargo, and the
instrumentofthe expert visit or inspection, should
it have been made at the portofdeparture.
2.To have a copyofthisCodeon board.
3. To have three folioed and stamped books,
placing at the beginningofeach one a noteofthe
numberoffolios it contains, signed by the maritime
official, and in his absence by the competent
authority.
In the first book, which shall be called "log book,"
he shall enter every day the condition of the
atmosphere, the prevailing winds, the course
sailed, the rigging carried, the horsepower of the
engines, the distance covered, the maneuvers
executed, and other incidents of navigation. He
shall also enter the damage suffered by the vessel
in her hull, engines, rigging, and tackle, no matter
what is its cause, as well as the imperfections and
averages of the cargo, and the effects and
consequence of the jettison, should there be any;
and in casesofgrave resolutions which require the
advice or a meetingofthe officersofthe vessel, or
even of the passengers and crew, he shall record
the decision adopted. For the informations
indicated he shall make useofthe binnacle book,
and of the steam or engine book kept by the
engineer.
In the second book, called the "accounting book,"
he shall enter all the amounts collected and paid
for the account of the vessel, entering specifically
article by article, the sourcesofthe collection, and
the amounts invested in provisions, repairs,
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acquisitionofrigging or goods, fuel, outfits, wages,
and all other expenses. He shall furthermore enter
therein a listofall the membersofthe crew, stating
their domiciles, their wages and salaries, and the
amounts they may have received on account,
either directly or by delivery to their families.
In the third book, called "freight book," he shall
record the entry and exit of all the goods, stating
their marks and packages, names of the shippers
and of the consignees, ports of loading and
unloading, and the freight earned. In the same
book he shall record the names and
places of sailing of the passengers and the
number of packages of which their baggage
consists, and the priceofthe passage.
4. To make, before receiving the freight, with the
officers of the crew, and the two experts, if
required by the shippers and passengers, an
examination of the vessel, in order to ascertain
whether she is watertight, and whether the rigging
and engines are in good condition; and if she has
the equipment required for good navigation,
preserving a certificateofthe memorandumofthis
inspection, signed by all the persons who may
have taken part therein, under their liability.
The experts shall be appointed one by the
captain of the vessel and the other one by the
persons who request the examination, and in
caseofdisagreement a third shall be appointed by
the marine authorityofthe port.
5. To remain constantly on board the vessel with
the crew during the time the freight is taken on
board and carefully watch the stowage thereof; not
to consent to any merchandise or goods of a
dangerous character to be taken on, such as
inflammable or explosive substances, without the
precautions which are recommended for their
packing, management and isolation; not to permit
that any freight be carried on deck which by
reasonofits disposition, volume, or weight makes
the work of the sailors difficult, and which might
endanger the safety of the vessel; and if, on
account of the nature of the merchandise, the
special character of the shipment, and principally
the favorable season it takes place, he allows
merchandise to be carried on deck, he must hear
the opinion of the officers of the vessel, and have
the consentofthe shippers andofthe agent.
6.To demand a pilot at the expenseofthe vessel
whenever required by navigation, and principally
when a port, canal, or river, or a roadstead or
anchoring place is to be entered with which neither
he, the officers nor the crew are acquainted.
7.To be on deck at the timeofsighting land and to
Delfin, Melicor, Matunog (D2019)
take command on entering and leaving ports,
canals, roadsteads, and rivers, unless there is a
pilot on board discharging his duties. He shall not
spend the night away from the vessel except for
serious causes or by reasonofofficial business.
8. To present himself, when making a port in
distress, to the maritime authority if in Spain*and
to the Spanish * consul if in a foreign country,
before twenty-four hours have elapsed, and make
a s t a t e m e n t o f t h e n a m e , re g i s t r y, a n d
port of departure of the vessel, of its cargo, and
reason of arrival, which declaration shall be vised
by the authority or by the consul if after examining
the same it is found to be acceptable, giving the
captain the proper certificate in order to show his
arrival under stress and the reasons therefor. In the
absence of marine officials or of the consul, the
declaration must be made before the local
authority.
9. To take the steps necessary before the
competent authority in order to enter in the
certificateofthe Commercial Registryofthe vessel
the obligations which he may contract in
accordance with Article 583.
10.To put in a safe place and keep all the papers
and belongings of any members of the crew who
might die on the vessel, drawing up a detailed
inventory, in the presence of passengers as
witnesses, and, in their
absence,ofmembersofthe crew.
11.To conduct himself according to the rules and
precepts contained in the instructionsofthe agent,
being liable for all that he may do in violation
thereof.
12. To give an account to the agent from the port
where the vessel arrives, of the reason thereof,
taking advantage of the semaphore, telegraph,
mail, etc., according to the cases; notify him the
freight he may have received, stating the name
and domicile of the shippers, freight earned, and
amounts borrowed on bottomry bond, advise
himofhis departure, and give him any information
and data which may beofinterest.
13. To observe the rules on the situation of lights
and evolutions to prevent collisions.
14. To remain on board in case of danger to the
vessel, until all hope to save her is lost, and before
abandoning her to hear the officers of the crew,
abiding by the decision of the majority; and if he
should have to take a boat he shall take with him,
before anything else, the books and papers, and
then the articles of most value, being obliged to
prove in caseofthe lossofthe books and papers
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that he did all he could to save them.
15. In case of wreck he shall make the proper
protest in due form at the first port reached, before
the competent authority or the Spanish * consul,
within twenty-four hours, stating therein all the
incidents of the wreck, in accordance with case
8ofthis article.
16.To comply with the obligations imposed by the
laws and rulesofnavigation, customs, health, and
others.
Salvage Law (Act No. 2616)
Section 1. When in case of shipwreck, the vessel
or its cargo shall be beyond the control of the
crew, or shall have been abandoned by them, and
picked up and conveyed to a safe place by other
persons, the latter shall be entitled to a reward for
the salvage.
Those who, not being included in the above
paragraph, assist in saving a vessel or its cargo
from shipwreck, shall be entitled to a like reward.
Sec. 2. If the captain of the vessel, or the person
acting in his stead, is present, no one shall take
from the sea, or from the shores or coast
merchandise or effects proceeding from a
shipwreck or proceed to the salvage of the vessel,
without the consent of such captain or person
acting in his stead.
Sec. 3. He who shall save or pick up a vessel or
merchandise at sea, in the absence of the captain
of the vessel, owner, or a representative of either of
them, they being unknown, shall convey and
deliver such vessel or merchandise, as soon as
possible, to the Collector of Customs, if the port
has a collector, and otherwise to the provincial
treasurer or municipal mayor.
Sec. 4. After the salvage is accomplished, the
owner or his representative shall have a right to the
delivery of the vessel or things saved, provided
that he pays, or gives a bond to secure, the
expenses and the proper reward.
The amount and sufficiency of the bond, in the
absence of agreement, shall be determined by the
Collector of Customs or by the Judge of the Court
of First Instance of the province in which the things
saved may be found.
Sec. 5. The Collector of Customs, provincial
treasurer, or municipal mayor, to whom a salvage is
reported, shall order:
Delfin, Melicor, Matunog (D2019)
a. That the things saved be safeguard and
inventoried.
b. The sale at public auction of the things saved
which may be in danger of immediate loss or of
those whose conservation is evidently prejudicial
to the interests of the owner, when no objection is
made to such sale.
c. The advertisement within the thirty days
subsequent to the salvage, in one of the local
newspapers or in the nearest newspaper
published, of all the details of the disaster, with a
statement of the mark and number of the effects
requesting all interested persons to make their
claims.
Sec. 6. If, while the vessel or things saved are at
the disposition of the authorities, the owner or his
representative shall claim them, such authorities
shall order their delivery to such owner or his
representative, provided that there is no
controversy over their value, and a bond is given
by the owner or his representative to secure the
payment of the expenses and the proper reward.
Otherwise, the delivery shall nor be made until the
matter is decided by the Court of First Instance of
the province.
Sec. 7. No claim being presented in the three
months subsequent to the publication of the
advertisement prescribed in sub-section (c) of
Section five, the things save shall be sold at public
auction, and their proceeds, after deducting the
expenses and the proper reward shall be
deposited in the insular treasury. If three years
shall pass without anyone claiming it, one-half of
the deposit shall be adjudged to him who saved
the things, and the other half to the insular
government.
Sec. 8. The following shall have no right to a
reward for salvage or assistance:
a. The crew of the vessel shipwrecked or which
was in danger of shipwreck;
b. He who shall have commenced the salvage in
spite of opposition of the captain or his
representative; and
c. He who shall have failed to comply with the
provisions of Section three.
Sec. 9. If, during the danger, an agreement is
entered into concerning the amount of the reward
for salvage or assistance, its validity may be
impugned because it is excessive, and it may be
required to be reduced to an amount proportionate
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to the circumstances.
Sec. 10. In a case coming under the last
preceding section, as well as in the absence of an
agreement, the reward for salvage or assistance
shall be fixed by the Court of First Instance of the
province where the things salvaged are found,
taking into account principally the expenditures
made to recover or save the vessel or the cargo or
both, the zeal demonstrated, the time employed,
the services rendered, the excessive express
occasioned the number of persons who aided, the
danger to which they and their vessels were
exposed as well as that which menaced the things
recovered or salvaged, and the value of such
things after deducting the expenses.
Sec. 11. From the proceeds of the sale of the
things saved shall be deducted, first, the expenses
of their custody, conservation, advertisement, and
auction, as well as whatever taxes or duties they
should pay for their entrance; then there shall be
deducted the expenses of salvage; and from the
net amount remaining shall be taken the reward for
the salvage or assistance which shall not exceed
fifty per cent of such amount remaining.
Sec. 12. If in the salvage or in the rendering of
assistance different persons shall have intervened
the reward shall be divided between them in
proportion to the services which each one may
have rendered, and, in case of doubt, in equal
parts.
Those who, in order to save persons, shall have
been exposed to the same dangers shall also have
a right to participation in the reward.
Sec. 13. If a vessel or its cargo shall have been
assisted or saved, entirely or partially, by another
vessel, the reward for salvage or for assistance
shall be divided between the owner, the captain,
and the remainder of the crew of the latter vessel,
so as to give the owner a half, the captain a fourth,
and all the remainder of the crew the other fourth of
the reward, in proportion to their respective
salaries, in the absence of an agreement to the
contrary. The express of salvage, as well as the
reward for salvage or assistance, shall be a charge
on the things salvaged on their value.
Notes:
Key Elements of Salvage:
1. Act/service rendered
2. Goods rescued
3. Compensation
4. Derelict
Delfin, Melicor, Matunog (D2019)
ERLANGER & GALINGER VS SWEDISH EAST ASIATIC CO.
The relief of property from an impending peril of the
sea, by the voluntary exertions of those who are
under no legal obligation to render assistance, and
the consequent, ultimate safety of the property,
constitute a case of salvage.
ATLANTIC, GULF & PACIFIC COMP. VS UCHIDA KISEN
KAISHA
In fixing the reward for salvage, the following
should be considered:
- expenditures made to recover or save the vessel
or the cargo or both
- demonstrated zeal
- time employed
- rendered services
- excessive expenses incurred
- no. of persons who aided
- level of exposure to danger and;
- whatever menaced the things recovered or
salvaged and the value of the said things after
deducting the expenses
BARRIOS VS GO THONG
According to the Salvage Law, those who assist in
saving a vessel or its cargo from shipwreck, shall
be entitled to a reward (salvage). Salvage has been
defined as the compensation allowed to persons by
whose assistance a ship or her cargo has been
saved, in whole or in part, from impending peril on
the sea, or in recovering such property from actual
loss, as in case of shipwreck, derelict, or recapture.
Three elements are necessary to a valid salvage
claim, namely, (1) a marine peril, (2) service
voluntarily rendered when not required as an
existing duty or from a special contract, and (3)
success in whole or in part, or that the service
rendered contributed to such success.
In this case, there was no marine peril.
However, it can be considered as a quasi-contract
of towage created in the spirit of the new Civil Code
for in consenting to plaintiff's offer to tow the vessel,
defendant impliedly entered into a juridical relation
of towage with the owner of the vessel MV Henry I.
Only the owner of the towing vessel, to the
exclusion of the crew of the said vessel, may be
entitled to remuneration.
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Special Contracts of Maritime Commerce
Charter Parties
Definition
Charter Party a contract by virtue of which the
owner or the agent of the vessel binds himself to
transport merchandise or persons for a fixed price.
It is also a lease of the whole or a portion of the
vessel for the transportation of goods or persons
from one port to another.
Kinds
PLANTERS PRODUCTS VS CA
A "charter-party" is defined as a contract by which
an entire ship, or some principal part thereof, is let
by the owner to another person for a specified time
or use; a contract of affreightment by which the
owner of a ship or other vessel lets the whole or a
part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in
consideration of the payment of freight;
Two Types
(a) contract of affreightment which involves the use
of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for
others; and,
(b) charter by demise or bareboat charter, by the
terms of which the whole vessel is let to the
charterer with a transfer to him of its entire
command and possession and consequent
control over its navigation, including the master
and the crew, who are his servants.
Contract of affreightment may either be time
charter, wherein the vessel is leased to the
charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single
voyage.
In both cases, the charter-party provides for the
hire of vessel only, either for a determinate period
of time or for a single or consecutive voyage, the
shipowner to supply the ship's stores, pay for the
wages of the master and the crew, and defray the
expenses for the maintenance of the ship.
Delfin, Melicor, Matunog (D2019)
COASTWISE LIGHTERAGE CORP VS CA
Under the demise or bareboat charter of the
vessel, the charterer will generally be regarded as
the owner for the voyage or service stipulated. The
charterer mans the vessel with his own people and
becomes the ownerpro hac vice, subject to liability
to others for damages caused by negligence. To
create a demise, the owner of a vessel must
completely and exclusively relinquish possession,
command and navigation thereof to the
charterer, anything short of such a complete
transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all.
On the other hand a contract of affreightment is
one in which the owner of the vessel leases part or
all of its space to haul goods for others. It is a
contract for special service to be rendered by the
owner of the vessel and under such contract the
general owner retains the possession, command
and navigation of the ship, the charterer or freighter
merely having use of the space in the vessel in
return for his payment of the charter hire. An owner
who retains possession of the ship though the hold
is the property of the charterer, remains liable as
carrier and must answer for any breach of duty as
to the care, loading and unloading of the cargo
Although a charter party may transform a common
carrier into a private one, the same is not true in a
contract of affreightment [because of the
differences between the two]. Pursuant to the
ruling in the Puromines case, Coastwise
Lighterage, by the contract of affreightment, was
not converted into a private carrier, but remained a
common carrier and was still liable as such.
CALTEX PHILIPPINES VS SULPICIO LINES
The charter party agreement did not convert the
common carrier into a private carrier. The parties
entered into a voyage charter, which retains the
character of the vessel as a common carrier. It is
imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or
portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in
the case of a time-charter or voyage charter. It is
only when the charter includes both the vessel and
its crew, as in a bareboat or demise that a common
carrier becomes private, at least insofar as the
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particular voyage covering the charter-party is
concerned. Indubitably, a ship-owner in a time or
voyage charter retains possession and control of
the ship, although her holds may, for the moment,
be the property of the charterer. A common carrier
is a person or corporation whose regular business
is to carry passengers or property for all persons
who may choose to employ and to remunerate him.
16 MT Vector fits the definition of a common carrier
under Article 1732 of the Civil Code.
The public must of necessity rely on the care and
skill of common carriers in the vigilance over the
goods and safety of the passengers, especially
because with the modern development of science
and invention, transportation has become more
rapid, more complicated and somehow more
hazardous. For these reasons, a passenger or a
shipper of goods is under no obligation to conduct
an inspection of the ship and its crew, the carrier
being obliged by law to impliedly warrant its
seaworthiness.
Loans on Bottomry and Respondentia
Defintions
Loan on bottomry is a contract in the nature of a
mortgage, by which the shipowner borrows money
for the use, equipment or repair of the vessel, and
for a definite term, pledges the ship (or its keel and
bottom) as a security for its repayment.
If the ship is lost in the course of a voyage, or
during the limited time, by any of the
perils enumerated in the contract, then the lender
shall also lose his money.
Loan on respondentia is one made on the goods
laden on board the ship, and which are to be sold
or exchanged in the course of the voyage the
borrowers personal responsibility being deemed
the principal security for the performance of the
contract, which is called respondentia.
Even though the ship perishes, the lender must be
paid his principal and interest, provided that the
goods are saved.
Character of Loan
Delfin, Melicor, Matunog (D2019)
CODE OF COMMERCE
Art 719. A loan in which under any condition
whatever, the repayment of the sum loaned and of
the premium stipulated depends upon the safe
arrival in port of the goods on which it is made, or
of the price they may receive in case of accident,
shall be considered a loan on bottomry or
respondentia.
Bill of Lading
Contents
CODE OF COMMERCE
Art 706. The captain of the vessel and the shipper
shall have the obligation of drawing up the bill of
lading in which shall be stated:
1. The name, registry, and tonnage of the vessel.
2. The name of the captain and his domicile.
3. The port of loading and that of unloading.
4. The name of the shipper.
5. The name of the consignee, if the bill of lading is
issued in the name of a specified person.
6. The quantity, quality, number of packages and
marks of the merchandise.
7. The freightage and the primage stipulated.
The bill of lading may be issued to bearer, to
order, or in the name of a specified person, and
must be signed within twenty-four hours after
the cargo has been received on board, the
shipper being entitled to demand the unloading
at the expense of the captain should the latter
not sign it, and, in every case, the losses and
damages suffered thereby.
Art 707. Four true copies of the original bill of
lading shall be made, and all of them shall be
signed by the captain and the shipper. Of these,
the shipper shall keep one and send another to the
consignee; the captain shall take two, one for
himself and another for the ship agent.
There may also be drawn up as many copies of the
bill of lading as may be considered necessary by
the person interested; but when they are issued to
order or to bearer, they shall be stated in all the
copies, be they the first four or the subsequent
ones, the destination of each one, stating whether
it is for the agent, for the captain, for the shipper, or
for the consignee. If the copy sent to the latter
should have a duplicate, this circumstance and the
fact that it is not valid except in default of the first
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one must be stated therein.
Art 713. If before the delivery of the cargo a new
bill of lading should be demanded of the captain,
on the allegation that the failure to present the
previous ones is due to their loss or to any other
just cause, he shall be obliged to issue it, provided
that security for the value of the cargo is given to
his satisfaction, but without changing the
consignment, and stating therein the
circumstances prescribed in the last paragraph of
Article 707, under penalty, should he not so state,
of being held liable for said cargo if improperly
delivered through his fault.
Art 714. If before the vessel puts to sea the captain
should die or should cease to hold his position
through any cause, the shippers shall have the
right to demand of the new captain the ratification
of the first bills of lading, and the latter must do so,
provided that all the copies previously issued be
presented or returned to him, and it should appear
from all examination of the cargo that they are
correct.
The expenses arising from the examination of the
cargo shall be defrayed by the ship agent, without
prejudice to the right of action of the latter against
the first captain if he ceased to be such through
his own fault. Should said examination not be
made, it shall be understood that the new captain
accepts the cargo as it appears from the bills of
lading issued.
Probative Value
CODE OF COMMERCE
Art 709. A bill of lading drawn up in accordance
with the provisions of this title shall be proof as
between all those interested in the cargo and
between the latter and the insurers, proof to the
contrary being reserved for the latter.
Art 710. If the bills of lading do not agree, and no
change or erasure can be observed in any of
them, those possessed by the shipper or
consignee signed by the captain shall be proof
against the captain or ship agent in favor of the
consignee or shipper; and those possessed by the
captain or ship agent signed by the shipper shall
be proof against the shipper or consignee in favor
of the captain or ship agent.
Delfin, Melicor, Matunog (D2019)
Notes:
In Art 709, the bill of lading properly drawn is proof
between all the parties of their agreements.
In Art 710, it governs the case where the bills of
lading dont agree and no charge or erasure can be
observed in either of them.
When theres a conflict in the provisions of the
charter party and the bill of lading, even if both
seem to be unaltered, the contents of the bill of
lading prevail.
MAGELLAN MANUFACTURING MARKETING CORP VS CA
It is a long standing jurisprudential rule that a bill of
lading operates both as a receipt and as a contract.
It is a receipt for the goods shipped and a contract
to transport and deliver the same as therein
stipulated.
As a contract, it names the parties, which includes
the consignee, fixes the route, destination, and
freight rates or charges, and stipulates the rights
and obligations assumed by the parties. Being a
contract, it is the law between the parties who are
bound by its terms and conditions provided that
these are not contrary to law, morals, good
customs, public order and public policy. A bill of
lading usually becomes effective upon its delivery
to and acceptance by the shipper. It is presumed
that the stipulations of the bill were, in the absence
of fraud, concealment or improper conduct, known
to the shipper, and he is generally bound by his
acceptance whether he reads the bill or not.
Notes:
A bill of lading operates both as a:
1. receipt for the goods shipped which contains
date, place of shipment, goods description,
conditions, quality and value
2. contract to transport and deliver the goods as
stipulated, which contains parties names, fixed
route, destination and freight charges, rights
and obligations assumed by the parties.
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Passenger on Sea Voyage
Nature of Contracts
CODE OF COMMERCE
Article 695. The right to passage, if issued to a
specified person, cannot be transferred without the
consent of the captain or of the consignee.
Obligations of Passengers
CODE OF COMMERCE
Article 693. If the passage price has not been
agreed upon, the judge or court shall summarily fix
it, after a declaration of experts.
Article 699. If the contract is rescinded, before or
after the commencement of the voyage, the
captain shall have a right to claim payment of what
he may have furnished the passengers.
Article 704. The captain, in order to collect the
passage-money and expenses of sustenance, may
retain the goods belonging to the passenger, and
in case of the sale of the same he shall be given
preference over other creditors acting the same
way as in the collection of freightage
Article 694. Should the passenger not arrive on
board at the time fixed, or should leave the vessel
without permission from the captain when the latter
is ready to leave the port, the captain may
continue the voyage and demand the full passage
price.
Article 700. In all matters pertaining to the
preservation of order and discipline on board the
vessel passengers shall be subject to the orders of
the captain, without any distinction whatsoever.
Rights of Passengers
CODE OF COMMERCE
Article 697. If before the voyage is begun it is
suspended through the exclusive fault of the
captain or ship agent, the passengers shall have
the right to a refund of their fares and to recover
losses and damages; but if the suspension is due
to fortuitous events, or to force majeure, or to any
other cause independent of the captain or ship
agent, the passengers shall only be entitled to the
return of the fare.
Delfin, Melicor, Matunog (D2019)
Article 698. In case a voyage already begun
should be interrupted, the passengers shall be
obliged to pay the fare in proportion to the
distance covered, without right to recover for
losses and damages if the interruption is due to
fortuitous event or to force majeure, but with a right
to indemnity if the interruption should have been
caused by the captain exclusively. If the
interruption should be caused by the disability of
the vessel, and a passenger should agree to await
the repairs, he may not be required to pay any
increased price of passage, but his living
expenses during the stay shall be for his own
account.
In case of delay in the departure of the vessel, the
passengers have the right to remain on board and
to be furnished with food for the account of the
vessel unless the delay is due to fortuitous events
or to force majeure. If the delay should exceed ten
days, passengers requesting the same shall be
entitled to the return of the fare; and if it is due
exclusively to the fault of the captain or ship agent,
they may also demand indemnity for losses and
damages.
A vessel exclusively devoted to the transportation
of passengers must take them directly to the port
or ports of destination, no matter what the number
of passengers may be, making all the stops
indicated in its itinerary.
SWEET LINES VS CA
In case of interruption of a voyage already begun,
the passengers shall only be obliged to pay the fare
in proportion to the distance covered, without right
to recover damages if the interruption is due to
fortuitous event or force majeure, but with a right to
indemnity, if the interruption should have been
caused by the captain exclusively.
TRANS-ASIA SHIPPING VS CA
Art 698 must be read together with Art 2199, 2200,
2201 and 2208 in relation to Art 21 of the Civil
Code. IN doing so, there was no delay on Trans-
Asia and therefore Arroyo is not entitled to actual
damages.
As to the rights and duties of the parties strictly
arising out of such delay, Art 698 specifically
provides for such a situation. The article applies
suppletorily pursuant to Art 1766 of the Civil Code.
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Transportation Law Reviewer Delfin, Melicor, Matunog (D2019)

Carriage of Goods by Sea Act

(c) The term "goods" includes goods, wares,
merchandise, and ar ticles of ever y kind
IN ACT TO DECLARE THAT PUBLIC ACT
whatsoever, except live animals and cargo which
NUMBERED FIVE HUNDRED AND TWENTY-ONE,
by the contract of carriage is stated as being
KNOWN AS "CARRIAGE OF GOODS BY SEA
carried on deck and is so carried.
ACT," ENACTED BY THE SEVENTY-FOURTH

CONGRESS OF THE UNITED STATES, BE
(d) The term "ship" means any vessel used for the
ACCEPTED, AS IT IS HEREBY ACCEPTED BY THE
carriage of goods by sea.
NATIONAL ASSEMBLY

(e) The term "carriage of goods" covers the period

Be it enacted by the National Assembly of the
from the time when the goods are loaded on to the
Philippines:
time when they are discharged from the ship.

Section 1. That the provisions of Public Act
RISKS
Numbered Five hundred and twenty-one of the

Seventy-fourth Congress of the United States,
Section 2. Subject to the provisions of section 6,
approved on April sixteenth, nineteen hundred and
under every contract of carriage of goods by sea,
thirty-six, be accepted, as it is hereby accepted to
the carrier in relation to the loading handling,
be made applicable to all contracts for the
stowage, carriage, custody, care, and discharge of
carriage of goods by sea to and from Philippine
such goods, shall be subject to the responsibilities
ports in foreign trade:Provided, That nothing in
and liabilities and entitled to the rights and
the Act shall be construed as repealing any
immunities hereinafter set forth.
existing provision of the Code of Commerce

which is now in force, or as limiting its
RESPONSIBILITIES AND LIABILITIES
application.

Section 3. (1) The carrier shall be bound, before

Section 2. This Act shall take effect upon its
and at the beginning of the voyage, to exercise
approval.
due diligence to

Approved: October 22,1936.
(a) Make the ship seaworthy;

An Act Relating to the Carriage of Goods by
(b) Properly man, equip, and supply the ship;
Sea.

(c) Make the holds, refrigerating and cooling

Be it enacted by the Senate and House of
chambers, and all other parts of the ship in which
Representatives of the United States of America in
goods are carried, fit and safe for their reception
Congress assembled, That every bill of landing or
carriage and preservation.
similar document of title which is evidence of a

contract for the carriage of goods by sea to or from
(2) The carrier shall properly and carefully load,
ports of the United States, in foreign trade, shall
handle, stow, carry, keep, care for, and discharge
have effect subject to the provisions of the Act.
the goods carried.

TITLE I
(3) After receiving the goods into his charge the

carrier, or the master or agent of the carrier, shall,

Section 1.When used in this Act
on demand of the shipper, issue to the shipper a

bill of lading showing among other things

(a) The term "carrier" includes the owner or the

charterer who enters into a contract of carriage
(a) The leading marks necessary for identification
with a shipper.
of the goods as the same are furnished in writing

by the shipper before the loading of such goods

(b) The term "contract of carriage" applies only to
starts, provided such marks are stamped or
contracts of carriage covered by a bill of lading or
otherwise shown clearly upon the goods if
any similar document of title, insofar as such
uncovered, or on the cases or coverings in which
document relates to the carriage of goods by sea,
such goods are contained, in such a manner as
including any bill of lading or any similar document
should ordinarily remain legible until the end of the
as aforesaid issued under or pursuant to a charter
voyage.
party from the moment at which such bill of lading

or similar document of title regulates the relations
(b) Either the number of packages or pieces, or
between a carrier and a holder of the same.
the quantity or weight, as the case may be, as
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furnished in writing by the shipper.
(c) The apparent order and condition of the goods:
Provided, That no carrier, master, or agent of the
carrier, shall be bound to state or show in the bill of
lading any marks, number, quantity, or weight
which he has reasonable ground for suspecting
not accurately to represent the goods actually
received, or which he has had no reasonable
means of checking.
(4) Such a bill of lading shall be prima facie
evidence of the receipt by the carrier of the goods
as therein described in accordance with
paragraphs (3) (a), (b), and (c) of this section:
Provided, That nothing in this Act shall be
construed as repealing or limiting the application
of any part of the Act, as amended, entitled "An
Act relating to bills of lading in interstate and
foreign commerce," approved August 29, 1916 (U.
S. C. title 49, secs. 81-124), commonly known as
the "Pomerene Bills of Lading Act."
(5) The shipper shall be deemed to have
guaranteed to the carrier the accuracy at the time
of shipment of the marks, number, quantity, and
weight, as furnished by him; and the shipper shall
indemnify the carrier against all loss damages, and
expenses arising or resulting from inaccuracies in
such particulars. The right of the carrier to such
indemnity shall in no way limit his responsibility
and liability under the contract of carriage or to any
person other than the shipper.
-IMPORTANT! PRESCRIPTIVE PERIOD FOR
LOSS/DAMAGE-
(6) Unless notice of loss or damage and the
general nature of such loss or damage be given in
writing to the carrier or his agent at the port of
discharge before or at the time of the removal of
the goods into the custody of the person entitled to
delivery thereof under the contract of carriage,
such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in
the bill of lading. If the loss or damage is not
apparent, the notice must be given within three
days of the delivery.
Said notice of loss or damage maybe endorsed
upon the receipt for the goods given by the person
taking delivery thereof.
The notice in writing need not be given if the state
of the goods has at the time of their receipt been
the subject of joint survey or inspection.
In any event the carrier and the ship shall be
discharged from all liability in respect of loss or
damage unless suit is brought within one year
after delivery of the goods or the date when the
Delfin, Melicor, Matunog (D2019)
goods should have been delivered: Provided,
That if a notice of loss or damage, either
apparent or concealed, is not given as provided
for in this section, that fact shall not affect or
prejudice the right of the shipper to bring suit
within one year after the delivery of the goods
or the date when the goods should have been
delivered.
In the case of any actual or apprehended loss or
damage the carrier and the receiver shall give all
reasonable facilities to each other for inspecting
and tallying the goods.
(7) After the goods are loaded the bill of lading to
be issued by the carrier, master, or agent of the
carrier to the shipper shall, if the shipper so
demands, be a "shipped" bill of lading Provided,
That if the shipper shall have previously taken up
any document of title to such goods, he shall
surrender the same as against the issue of the
"shipped" bill of lading, but at the option of the
carrier such document of title may be noted at the
port of shipment by the carrier, master, or agent
with name or name the names of the ship or ships
upon which the goods have been shipped and the
date or dates of shipment, and when so noted the
same shall for the purpose of this section be
deemed to constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a
contract of carriage relieving the carrier or the ship
from liability for loss or damage to or in connection
with the goods, arising from negligence, fault, or
failure in the duties and obligations provided in this
section, or lessening such liability otherwise than
as provided in this Act, shall be null and void and
of no effect. A benefit of insurance in favor of the
carrier, or similar clause, shall be deemed to be a
clause relieving the carrier from liability.
RIGHTS AND IMMUNITIES
Section 4.(1) Neither the carrier nor the ship shall
be liable for loss or damage arising or resulting
from unseaworthiness unless caused by want of
due diligence on the part of the carrier to make the
ship seaworthy, and to secure that the ship is
properly manned, equipped, and supplied, and to
make to the holds, refrigerating and cool
chambers, and all other parts of the ship in which
goods are carried fit and safe for their reception,
carriage, and preservation in accordance with the
provisions of paragraph (1) of section 3. Whenever
loss or damage has resulted from
unseaworthiness, the burden of proving the
exercise of due diligence shall be on the carrier or
other persons claiming exemption under the
section.
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Transportation Law Reviewer
(2) Neither the carrier nor the ship shall be
responsible for loss or damage arising or resulting
from
(a) Act, neglect, or default of the master, mariner,
pilot, or the servants of the carrier in the navigation
or in the management of the ship;
(b) Fire, unless caused by the actual fault or privity
of the carrier;
(c) Perils, dangers, and accidents of the sea or
other navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people,
or seizure under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the
goods, his agent or representative;
(j) Strikes or lockouts or stoppage or restraint of
labor from whatever cause, whether partial or
general; Provided, That nothing herein contained
shall be construed to relieve a carrier from
responsibility for the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at
sea;
(m) Wastage in bulk or weight or any other loss or
damage arising from inherent defect, quality, or
vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due
diligence; and
(q) Any other cause arising without the actual fault
and privity of the carrier and without the fault or
neglect of the agents or servants of the carrier, but
the burden of proof shall be on the person claiming
the benefit of this exception to show that neither
the actual fault or privity of the carrier nor the fault
or neglect of the agents or servants of the carrier
contributed to the loss or damage.
(3) The shipper shall not be responsible for loss or
damage sustained by the carrier or the ship arising
from any cause without the act, fault, or neglect of
the shipper, his agents, or servants.
(4) Any deviation in saving or attempting to save
life or property at sea, or any reasonable deviation
shall not be deemed to be an infringement or
breach of this Act or of the contract of carriage,
and the carrier shall not be liable for any loss or
damage resulting therefrom: Provided, however,
That if the deviation is for the purpose of loading
cargo or unloading cargo or passengers it shall,
prima facie, be regarded as unreasonable.
Delfin, Melicor, Matunog (D2019)
-LIMITING PROVISION!-
(5) Neither the carrier nor the ship shall in any
event be or become liable for any loss or
damage to or in connection with the
transportation of goods in an amount
exceeding $500 per package lawful money of
the United States, or in case of goods not
shipped in packages, per customary freight
unit, or the equivalent of that sum in other
currency, unless the nature and value of such
goods have been declared by the shipper
before shipment and inserted in the bill of
lading. This declaration, if embodied in the bill
of lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.
By agreement between the carrier, master, or
agent of the carrier, and the shipper another
maximum amount than that mentioned in this
paragraph may be fixed: Provided, That such
maximum shall not be less than the figure
above named. In no event shall the carrier be
liable for more than the amount of damage
actually sustained.
Neither the carrier nor the ship shall be
responsible in any event for loss or damage to
or in connection with the transportation of the
goods if the nature or value thereof has been
knowingly and fraudulently misstated by the
shipper in the bill of lading.
(6) Goods of an inflammable, explosive, or
dangerous nature to the shipment whereof the
carrier, master or agent of the carrier, has not
consented with knowledge of their nature and
character, may at any time before discharge be
landed at any place or destroyed or rendered
innocuous by the carrier without compensation,
and the shipper of such goods shall be liable for
all damages and expenses directly or indirectly
arising out of or resulting from such shipment. If
any such goods shipped with such knowledge and
consent shall become a danger to the ship or
cargo, they may in like manner be landed at any
place, or destroyed or rendered innocuous by the
carrier without liability on the part of the carrier
except to general average, if any.
SURRENDER OF RIGHTS AND IMMUNITIES AND
INCREASE OF RESPONSIBILITIES AND
LIABILITIES -WAIVER ALLOWED-
Section 5. A carrier shall be at liberty to
surrender in whole or in part all or any of his
rights and immunities or to increase any of his
responsibilities and liabilities under this Act,
provided such surrender or increase shall be
embodied in the bill of lading issued to the
shipper.
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The provisions of this Act shall not be applicable to
charter parties; but if bills of lading are issued in
the case of a ship under charter party, they shall
comply with the terms of this Act. Nothing in this
Act shall be held to prevent the insertion in a bill of
lading of any lawful provision regarding general
average.
SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of the
preceding sections, a carrier, master or agent of
the carrier, and a shipper shall, in regard to any
particular goods be at liberty to enter into any
agreement in any terms as to the responsibility and
liability of the carrier for such goods, and as to the
rights and immunities of the carrier in respect of
such goods, or his obligation as to seaworthiness
(so far as the stipulation regarding seaworthiness
is not contrary to public policy), or the care or
diligence of his servants or agents in regard to the
loading, handling stowage, carriage, custody,
care, and discharge of the goods carried by sea:
Provided, That in this case no bill of lading has
been or shall be issued and that the terms agreed
shall be embodied in a receipt which shall be a
non-negotiable document and shall be marked as
such.
Any agreement so entered into shall have full legal
effect:Provided, That this section shall not apply to
ordinary commercial shipments made in the
ordinary course of trade but only to other
shipments where the character or condition of the
property to be carried or the circumstances, terms,
and conditions under which the carriage is to be
performed are such as reasonably to justify a
special agreement.
Section 7. Nothing contained in this Act shall
prevent a carrier or a shipper from entering into
any agreement, stipulation, condition, reservation,
or exemption as to the responsibility and liability of
the carrier or the ship for the loss or damage to or
in connection with the custody and care and
handling of goods prior to the loading on and
subsequent to the discharge from the ship on
which the goods are carried by sea.
Section 8. The provisions of this Act shall not
affect the rights and obligations of the carrier
under the provisions of the Shipping Act, 1916, or
under the provisions of section 4281 to 4289,
inclusive, of the Revised Statutes of the United
States, or of any amendments thereto; or under the
provisions of any other enactment for the time
being in force relating to the limitation of the liability
of the owners of seagoing vessels.
Delfin, Melicor, Matunog (D2019)
TITLE II
Section 9. Nothing contained in this Act shall be
construed as permitting a common carrier by
water to discriminate between competing shippers
similarly place in time and circumstances, either
(a) with respect to the right to demand and receive
bills of lading subject to the provisions of this Act;
or (b) when issuing such bills of lading, either in
the surrender of any of the carrier's rights and
immunities or in the increase of any of the carrier's
responsibilities and liabilities pursuant to section 6,
title I, of this Act or (c) in any other way prohibited
by the Shipping Act, 1916, s amended.
Section 10.Section 25 of the Interstate Commerce
Act is hereby amended by adding the following
proviso at the end of paragraph 4 thereof:
"Provided, however, That insofar as any bill of
lading authorized hereunder relates to the carriage
of goods by sea, such bill of lading shall be
subject to the provisions of the Carriage of Goods
by Sea Act.
Section 11.Where under the customs of any trade
the weight of any bulk cargo inserted in the bill of
lading is a weight ascertained or accepted by a
third party other than the carrier or the shipper, and
the fact that the weight is so ascertained or
accepted is stated in the bill of lading, then,
notwithstanding any thing in this Act, the bill of
lading shall not be deemed to be prima facie
evidence against the carrier of the receipt of goods
of the weight so inserted in the bill of lading, and
the accuracy thereof at the time of shipment shall
not be deemed to have been guaranteed by the
shipper.
Section 12.Nothing in this Act shall be construed
as superseding any part of the Act entitled "An act
relating to navigation of vessels, bills of lading, and
to certain obligations, duties, and rights in
connection with the carriage of property,"
approved February 13,1893, or of any other law
which would be applicable in the absence of this
Act, insofar as they relate to the duties,
responsibilities, and liabilities of the ship or carrier
prior to the time when the goods are loaded on or
after the time they are discharged from the ship.
Section 13.This Act shall apply to all contracts for
carriage of goods by sea to or from ports of the
United States in foreign trade. As used in this Act
the term "United States" includes its districts,
territories, and possessions: Provided, however,
That the Philippine legislature may by law exclude
its application to transportation to or from ports of
the Philippine Islands. The term "foreign trade"
means the transportation of goods between the
ports of the United States and ports of foreign
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countries. Nothing in this Act shall be held to apply
to contracts for carriage of goods by sea between
any port of the United States or its possessions,
and any other port of the United States or its
possession: Provided, however, That any bill of
lading or similar document of title which is
evidence of a contract for the carriage of goods by
sea between such ports, containing an express
statement that it shall be subject to the provisions
of this Act, shall be subjected hereto as fully as if
subject hereto as fully as if subject hereto by the
express provisions of this Act: Provided, further,
That every bill of lading or similar document of title
which is evidence of a contract for the carriage of
goods by sea from ports of the United States, in
foreign trade, shall contain a statement that it shall
have effect subject to the provisions of this Act.
Section 14.Upon the certification of the Secretary
of Commerce that the foreign commerce of the
United States in its competition with that of foreign
nations is prejudiced the provisions, or any of
them, of Title I of this Act, or by the laws of any
foreign country or countries relating to the carriage
of goods by sea, the President of the United
States, may, from time to time, by proclamation,
suspend any or all provisions of Title I of this Act
for such periods of time or indefinitely as may be
designated in the proclamation. The President may
at any time rescind such suspension of Title I
hereof, and any provisions thereof which may have
been suspended shall thereby be reinstated and
again apply to contracts thereafter made for the
carriage of goods by sea. Any proclamation of
suspension or rescission of any such suspension
shall take effect on a date named therein, which
date shall be not less than ten days from the issue
of the proclamation.
Any contract for the carriage of goods by sea,
subject to the provisions of this Act, effective
during any period when title I hereof, or any part
thereof, is suspended, shall be subject to all
provisions of law now or hereafter applicable to
that part of Title I which may have thus been
suspended.
Section 15. This Act shall take effect ninety days
after the date of its approval; but nothing in this Act
shall apply during a period not to exceed one year
following its approval to any contract for the
carriage of goods by sea, made before the date on
which this Act is approved, nor to any bill of lading
or similar document of title issued, whether before
or after such date of approval in pursuance of any
such contract as aforesaid.
Section 16.This Act may be cited as the "Carriage
of Goods by Sea Act."
Delfin, Melicor, Matunog (D2019)
Notes:
History
- COGSA was originally passed by the Congress
of the US on April 16, 1936
- The Philippine Congress later adopted the Act on
October 22, 1936 through Commonwealth Act
No. 65
Applicability:
- NCC took effect on Aug 30, 1950 and it is the
primary law on carriage of goods by the sea
- Art 1753 NCC the law of the country to which
the goods are to be transported shall govern the
liability of the common carrier for their loss,
destruction or deterioration
- NCC is the primary law on goods transported
from a foreign port to the Philippines
- COGSA remains to be the suppletory law for
INTERNATIONAL SHIPPING
- Goods goods, wares, merchandise, and
articles of every kind whatsoever. Doesnt include
live animals and cargo which by the contract of
carriage is stated as being carried on the deck
and is so carried.
Notice of Claim and Prescriptive Period
- The notice of claim must be made within 3 days
from delivery if the damage is not apparent. The
same period is not mandatory
- But the prescriptive period of 1 year from delivery
for the filing of the case is a condition precedent
or mandatory
- The 1 year prescriptive period DOES NOT
A P P LY t o c a s e s o f M I S D E L I V E RY O R
CONVERSION
- (Ang vs American Steamship) As defined in the
Civil Code and as applied to Section 3(6), par 4
of the COGSA, loss contemplates merely 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 existence is unknown or
they cannot be recovered. It does not include a
situation where there was indeed delivery but
delivery to the wrong person or a misdelivery.
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Limiting Provision
- The COGSA contains a provision that allows the
shipper to recover only $500 per package unless
there is a special declaration if the real value of
the goods is declared
- The declaration made by the shipper stating an
amount bigger than $500 per package will make
the carrier liable for such bigger amount but only
if the amount so declared is the real value of the
goods
- While the declaration in the bill of lading shall be
prima facie evidence of the value of the goods,
the carrier may be allowed to prove the real
value which may be less than the declared
amount
EASTERN SHIPPING VS IAC
Held that under similar circumstance "that the law
of the country to which the goods are to be
transported governs the liability of the common
carrier in case of their loss, destruction or
deterioration" (Article 1753, Civil Code).
Thus, the rule was specifically laid down that for
cargoes transported from Japan to the Philippines,
the liability of the carrier is governed primarily by
the Civil Code and in all matters not regulated by
said Code, the rights and obligations of common
carrier shall be governed by the Code of commerce
and by laws (Article 1766, Civil Code).
Hence, the Carriage of Goods by Sea Act, a special
law, is merely suppletory to the provision of the
Civil Code.
ANG VS AMERICAN STEAMSHIP AGENCIES
No definition of loss in the COGSA, so must
resort to the Civil Code.
COGSA Sec 3(6) par (4)s loss contemplates
merely 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 such that their existence is unknown
or they cannot be recovered. It does not include a
situation concerning misdelivery.
FH STEVENS VS NORDEUTSCHER
In support of its contention, F. H. Stevens invokes
Article 1155 of the Civil Code:
The prescription of actions is interrupted when they
filed before the court, when there is a written
Delfin, Melicor, Matunog (D2019)
extrajudicial command by the creditors, and when
there is any written acknowledged judgment of the
debt by the debtor.
The dismissal of the case has to be reversed, also
in view of the provisions section 49 of Act No. 190
or the Carriage of Goods by Sea Act, which says:
- If, in an action commenced, in due time, a
judgment for the plaintiff be reversed, or if the
plaintiff fail otherwise than upon the merits, and
the time limited for the commencement of such
action has, at the date of such reversal or failure,
expired, the plaintiff, or, if he die and the cause of
action survive, his representatives may
commence a new action within one year after
such date, and this provision shall apply to any
claim asserted in any pleading by a defendant.
AIR TRANSPORTATION
International Air Transportation
- Warsaw Convention, formally called The
Convention for the Unification of Certain Rules
Relating to International Transportation by Air
- Ratified by the Philippines on Nov 9, 1950 and
took effect on Feb 7, 1951
- Amended by the Hague Protocol and later on by
the Guatemala and Montreal Protocols in 1971
and 1975 respectively
- While we acceded to the Hague Protocol
amendment, we have yet acceded to the later 2
protocols
Binding Effect
- The Philippines is a party to the Warsaw
Convention hence it has the force and effect of
law in this country
- It applies to all international transportation of
persons, baggage or goods performed by an
aircraft gratuitously or for hire
- One of the objectives of the convention is to
regulate in a uniform manner the conditions of
international transportation by air
- Sec 14.2 of CAB Economic Regulation No. 9
provides that for international flights, the relevant
convention shall apply with respect to delayed,
lost and damaged baggage, meaning, the
Warsaw Convention
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Purposes
gratuitous carriage by aircraft performed by an air
- The Warsaw Convention was designed to protect
transport undertaking.
and promote the international airline industry that
was at the time of the drafting of the treaty, still in
Notes:
its infancy.
Applicability
The transportation must be:
Constitutionality
1. International transportation
2. Air Transportation
SANTOS VS NORTHWEST
3. Carriage of passengers, baggage or goods
The SC in this case relied on the presumption of
constitutionality in rejecting the challenge on the
I n t e r n a t i o n a l Tr a n s p o r t a t i o n T h e r e i s
constitutionality of the Warsaw Convention. The
international transportation within the contemplation
Court explained that the treaty which is the subject
of the Warsaw Convention when:
matter of this petition was a joint legislative-
(1) The place of departure and the place of
executive act. the presumption is that it was first
destination are within the territories of two
carefully studied and determined to be
contracting countries regardless of whether or
constitutional before it was adopted and given force
not there was a break in the transportation or
of law in this country.
transshipment;
(2) The place of departure and the place of
The SC also rejected the claim that the doctrine of
destination are within the territory of a single
rebus sic stantibus applies. It was argued that the
contracting country if there is an agreed
conditions prevailing at the time the WC was
stopping place within a territory subject to the
drafted allegedly already ceased to exist. The Court
sovereignty, mandate or authority of another
relied on the following ruling when rejecting that
power, even though the power is not a party to
argument: The Warsaw drafters wished to create a
the Convention.
system of liability rules that would cover all the
hazards of air travel The Warsaw delegates knew
Period Covered by International Transportation
that, in the years to come, civil aviation would
- International transportation by air under the WC
change in ways that they could not foresee. They
means the period during which the baggage or
wished to design a system of air law that would be
goods are in the charge of the carrier, whether in
both durable and flexible enough to keep pace with
an airport or on board an aircraft, or in the case
the changes The ever-changing needs of the
of a landing outside an airport, in any place
system of civil aviation can be served within the
whatsoever.
framework they created.
- It doesnt cover any transportation by land, by
sea, or by river performed outside an airport
Its true that at the time the Warsaw Convention
- If transportation takes place in the performance
was drafted, the airline industry was still at its
of a contract for transportation by air, for the
infancy. However, that circumstance alone is not
purpose of loading, delivery or transshipment,
sufficient justification for the rejection of the treaty
any damage is presumed, subject to proof to the
at this time. The changes recited by petitioner were,
contrary, to have been the result of an event
realistically, not entirely unforeseen although they
which took place during the transportation by air.
were expected in a general sense only.

Liabilities Under the Convention

When Applicable

WARSAW CONVENTION
WARSAW CONVENTION

Art 17. The carrier is liable for damage sustained

Art. 1(1) This Convention applies to all international
in the event of the death or wounding of a
carriage of persons, luggage or goods performed
passenger or any other bodily injury suffered
by aircraft for reward. It applies equally to
by a passenger, if the accident which caused the
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Transportation Law Reviewer
damage so sustained took place on board the
aircraft or in the course of any of the operations of
embarking or disembarking.
Art 18. 1. The carrier is liable for damage
sustained in the event of the destruction or loss
of, or of damage to, any registered luggage or
any goods, if the occurrence which caused the
damage so sustained took place during the
carriage by air.
2. The carriage by air within the meaning of the
preceding paragraph comprises the period
during which the luggage or goods are in
charge of the carrier, whether in an aerodrome
or on board an aircraft, or, in the case of a
landing outside an aerodrome, in any place
whatsoever.
3. The period of the carriage by air does not
extend to any carriage by land, by sea or by
river performed outside an aerodrome. If,
however, such a carriage takes place in the
performance of a contract for carriage by air, for
the purpose of loading, delivery or transshipment,
any damage is presumed, subject to proof to the
contrary, to have been the result of an event which
took place during the carriage by air.
Art 19. The carrier is liable for damage occasioned
by delay in the carriage by air of passengers,
luggage or goods.
Notes:
When International Carrier is Liable If the
passengers injury was inflicted:
1. On board the aircraft
2. In the course of any of the operations of
embarking
3. In the course of disembarking
4. When there was or because of delay
With respect to baggage or goods that are checked
in, the carrier is liable if damage occurred during air
transportation or when there is delay.
NORTHWEST VS CUENCA
The argument was that [Articles 17, 18 and 19]
provide that an air carrier is liable only in the event
of death or a passenger or injury suffered by him,
or of destruction or loss of or damage to any
checked baggage or any goods or of delay in the
transportation by air of passengers, baggage or
goods.
Delfin, Melicor, Matunog (D2019)
The SC said no. The provisions merely declare the
carrier liable for damages in the enumerated cases
if the conditions therein specified are present.
Neither the provisions nor others in the WC
regulate or exclude liability for other breaches of
contract by the carrier.
(For example, absolute refusal in bad faith to
comply with a contract of carriage the carrier is
still liable)
ALITALIA VS IAC
The Convention does not thus operate as an
exclusive enumeration of the instances of an
airline's liability, or as an absolute limit of the extent
of that liability.
The Convention's provisions, in short, do not
"regulate or exclude liability for other breaches of
contract by the carrier" 26 or misconduct of its
officers and employees, or for some particular or
exceptional type of damage. Otherwise, "an air
carrier would be exempt from any liability for
damages in the event of its absolute refusal, in bad
faith, to comply with a contract of carriage, which is
absurd."
Warsaw Convention 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. Thus, an air carrier was sentenced to
pay not only compensatory but also moral and
exemplary damages, and attorney's fees, for
instance, where its employees rudely put a
passenger holding a first-class ticket in the tourist
or economy section, or ousted a brown Asiatic from
the plane to give his seat to a white man, 31 or
gave the seat of a passenger with a confirmed
reservation to another, or subjected a passenger to
extremely rude, even barbaric treatment, as by
calling him a monkey."
xxx
In the instant case No bad faith or otherwise
improper conduct may be ascribed to the
employees of petitioner airline; and Dr. Pablo's
luggage was eventually returned to her, belatedly, it
is true, but without appreciable damage.
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Transportation Law Reviewer
DESPITE THIS, special species of injury was
caused to Dr. Pablo because petitioner ALITALIA
misplaced her baggage and failed to deliver it to
her at the time appointed a breach of its contract
of carriage, to be sure with the result that she
was unable to read the paper and make the
scientific presentation (consisting of slides,
autoradiograms or films, tables and tabulations)
that she had painstakingly labored over, at the
prestigious international conference, to attend
which she had traveled hundreds of miles, to her
chagrin and embarrassment and the
disappointment and annoyance of the organizers.
Certainly, the compensation for the injury suffered
by Dr. Pablo cannot under the circumstances be
restricted to that prescribed by the Warsaw
Convention for delay in the transport of baggage.
Limitations on Liability
WARSAW CONVENTION
Art 22.
1. In the carriage of passengers the liability of the
carrier for each passenger is limited to the sum of
125,000 francs. Where, in accordance with the law
of the Court seized of the case, damages may be
awarded in the form of periodical payments, the
equivalent capital value of the said payments shall
not exceed 125,000 francs. Nevertheless, by
special contract, the carrier and the passenger
may agree to a higher limit of liability
2. In the carriage of registered luggage and of
goods, the liability of the carrier is limited to a sum
of 250 francs per kilogram, unless the consignor
has made, at the time when the package was
handed over to the carrier, a special declaration of
the value at delivery and has paid a
supplementary sum if the case so requires. In that
case the carrier will be liable to pay a sum not
exceeding the declared sum, unless he proves
that that sum is greater than the actual value to the
consignor at delivery.
3. As regards objects of which the passenger
takes charge himself the liability of the carrier is
limited to 5,000 francs per passenger.
4. The limits prescribed in this Article shall not
prevent the court from awarding, in accordance
with its own law, in addition, the whole or part of
Delfin, Melicor, Matunog (D2019)
the court costs and of the other expenses of the
litigation incurred by the plaintiff. The foregoing
provision shall not apply
5. The sums mentioned above shall be deemed to
refer to the French franc consisting of 65
milligrams gold of millesimal fineness 900. These
sums may be converted into any national currency
in round figures. Conversion of the sums into
national currencies other than gold shall, in case of
judicial proceedings, be made according to the
gold value of such currencies at the date of
judgment.
Notes:
Limitations on Liability
1. Per Passenger: $100,000, unless there is a
special agreement to a higher limit
2. Per KG of checked-in luggage: $20, unless
there is a special declaration and a payment of
a supplementary sum
3. Hand-carried baggage per passenger: $1,000
4. Goods to be shipped per KG: $20, unless there
is a special declaration of value and payment of
a supplementary sum by consignor
PAN AM VS IAC
Parties may stipulate a limit on the air carriers
liability subject to the declaration of a higher value
and payment of additional charges.
When Limitations Unavailable
WARSAW CONVENTION
Art 3.
1. For the carriage of passengers the carrier must
deliver a passenger ticket which shall contain the
following particulars:
a. the place and date of issue;
b. the place of departure and of destination;
c. the agreed stopping places, provided that the
carrier may reserve the right to alter the stopping
places in case of necessity, and that if he
exercises that right, the alteration shall not have
the effect of depriving the carriage of its
international character;
d. the name and address of the carrier or carriers;
e. a statement that the carriage is subject to the
rules relating to liability established by this
Convention.
2. The absence, irregularity or loss of the
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Transportation Law Reviewer
passenger ticket does not affect the existence or
the validity of the contract of carriage, which shall
none the less be subject to the rules of this
Convention. Nevertheless, if the carrier accepts a
passenger without a passenger ticket having been
delivered he shall not be entitled to avail himself of
those provisions of this Convention which exclude
or limit his liability.
Art 25.
1. The carrier shall not be entitled to avail himself
of the provisions of this Convention which exclude
or limit his liability, if the damage is caused by his
wilful misconduct or by such default on his part as,
in accordance with the law of the Court seized of
the case, is considered to be equivalent to wilful
misconduct.
Similarly the carrier shall not be entitled to avail
himself of the said provisions, if the damage is
caused as aforesaid by any agent of the carrier
acting within the scope of his employment.
Notes:
When Limits Unavailable:
1. Any stipulation relieving the carrier from liability
or fixing a lower limit shall be null and void
2. Damage caused by willful misconduct or default
on the carriers part
3. Damage caused by any agent of the carrier
acting within the scope of employment
4. When carrier allowed the passenger to board
without a ticket
5. If the carrier is estopped from invoking the
provision on limit of liability
TWA VS CA
SC awarded Vinluan moral and exemplary
damages because he was discriminated against
and humiliated when his first class-seat was
downgraded to economy class, even after he
confirmed his reservation twice.
Conditions on the Imposition of Liability
WARSAW CONVENTION
Art 26.
1. Receipt by the person entitled to delivery of
luggage or goods without complaint is prima facie
evidence that the same have been delivered in
Delfin, Melicor, Matunog (D2019)
good condition and in accordance with the
document of carriage.
2. In the case of damage, the person entitled to
delivery must complain to the carrier forthwith after
the discovery of the damage, and, at the latest,
within three days from the date of receipt in the
case of luggage and seven days from the date of
receipt in the case of goods. In the case of delay
the complaint must be made at the latest within
fourteen days from the date on which the luggage
or goods have been placed at his disposal.
3. Every complaint must be made in writing upon
the document of carriage or by separate notice in
writing despatched within the times aforesaid.
4. Failing complaint within the times aforesaid, no
action shall lie against the carrier, save in the case
of fraud on his part.
Art 28.
1. An action for damages must be brought, at the
option of the plaintiff, in the territory of one of the
High Contracting Parties, either before the Court
having jurisdiction where the carrier is ordinarily
resident, or has his principal place of business, or
has an establishment by which the contract has
been made or before the Court having jurisdiction
at the place of destination.
2. Questions of procedure shall be governed by
the law of the Court seized of the case.
Art 29.
1. The right to damages shall be extinguished if an
action is not brought within two years, reckoned
from the date of arrival at the destination, or from
the date on which the aircraft ought to have
arrived, or from the date on which the carriage
stopped.
The method of calculating the period of limitation
shall be determined by the law of the Court seised
of the case.
SANTOS VS NORTHWEST
Venue of Action
Under Art 28(1) of the WC, the plaintiff must bring
the action for damages before:
6. the court where the carrier is domiciled
7. the court where the carrier has its principal
place of business
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Transportation Law Reviewer
8. t h e c o u r t w h e r e t h e c a r r i e r h a s a n
establishment by which he contract has been
made
9. the court of the place of destination
Art 28(1) of the WC is jurisdictional in character.
LUNA VS CA
Failure to file a claim with the common carrier as
mandated by the provisions of the WC should not
be a ground for the summary dismissal of the
complaints because the PR may still be held liable
for breach of other relevant laws which may provide
a different period or procedure for filing a claim.
Luna also argued that Art 25 of the WC operates to
exclude the other provisions of the WC if the
damage is caused by the common carriers willful
misconduct. SC says that this is wrong because Art
25 only refers to the monetary ceiling on damages
found in Art 22 should damage be caused by the
carriers willful misconduct. Hence, only the
provisions of Art 22 limiting the carriers liability and
imposing a monetary ceiling in case of willful
misconduct on its part is the provisions that the
carrier may not invoke.
LHUILLIER VS BRITISH AIRWAYS
The filing of the case in proper venues provided for
under Art 28(1) of the WC is still required even if
there are allegations of tortious conduct committed
against an airline passenger during the course of
the international carriage. Allegations of tort do not
bring the case outside the ambit of the Warsaw
Convention.
PAL VS SAVILLO
Present case involves a special species of injury
resulting from the failure of PAL and/or Singapore
Airlines to transport private respondent from
Singapore to Jakarta the profound distress, fear,
anxiety and humiliation that private respondent
experienced when, despitePALsearlier assurance
that Singapore Airlines confirmed his passage, he
was prevented from boarding the plane and he
faced the daunting possibility that he would be
stranded in Singapore Airport because the PAL
office was already closed.
Delfin, Melicor, Matunog (D2019)
UNITED AIRLINES VS UY
The court distinguished between (1) damage to a
passengers baggage and (2) the humiliation
suffered from the employees. 1 is covered by the
WC, which prescribes in 2 years. 2 is covered by
the law on torts in the NCC, and it prescribes in 4
years.
Notes:
Notice of Claim or Complaint
- must be written
- the complaint is a condition precedent. Without
the complaint, the action is barred except in case
of fraud on the part of the carrier
The complaint must be made within:
If damage to luggage 3 days from receipt
If damage to goods 7 days from receipt
If delay to luggage or goods 14 days from
receipt
Prescriptive Periods:
- The action must be filed within 2 years from:
Date of arrival at destination
Date of expected arrival
Date which the transportation stopped
Passenger Rights
Joint DOTC-DTI AO 01-12
Subject: Providing for a Bill of Rights for Air
Passengers and Carrier Obligations
1.Right to be Provided with Accurate
Information Before Purchase
a.Right to full, fair, and clear disclosure of the
services offered and all the terms and conditions of
the contract of carriage
b.Right to clear and non-misleading
advertisements of, and important reminders
regarding fares
c.Right against misleading and fraudulent sales
promotion practices
2.Right to Receive the Full Value of the Service
Purchased
a.Right to transportation and baggage conveyance
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b.Right to be processed for check-in

c.Right to sufficient processing time

d.Right to board aircraft for the purpose of flight

3.Right to Compensation

a.Right to compensation and amenities in case of

cancellation of flight

b.Right to compensation and amenities in case of

flight delay

c.Right to compensation for delayed, lost, and

damaged baggage

d.Right to compensation in case of death or bodily

injury of a passenger

e.Right to immediate payment of compensation

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