CDF- TRANSPORTATION LAW

Transportation Law Outline
CHAPTER 1
1. WHAT IS CONTRACT OF TRANSPORTATION
Contract of Transportation- is when a person obligates
himself to transport persons or property from one place
to another for consideration.
Bill of lading is not indispensable for the creation of
contract of carriage. The liability of carrier as common
carrier begins with the actual delivery of goods for
transport and not merely with the formal execution of
receipt or bill of lading. Even if statute provides that
liability commences with the issuance of bill of lading,
actual delivery and acceptance are sufficient to bind the
carrier.

Passenger- one who travels in public conveyance by Written contract is not essential for the perfection of
virtue of a contract, express or implied, with the carrier contract of carriage.
as to the payment of fare, or that which is accepted as an
In cases of Aircraft – there is perfected contract to
equivalent thereof.
carry even if no tickets are issued as long as there are
2 types: meeting of minds with respect to subject matter and
consideration.
1. Carriage of passengers
2. Carriage of goods There is perfected contract of carriage when
passengers had checked-in, passed through immigration
The person who obligates himself may be a common and custom, boarded the shuttle, proceeded to the ramp
carrier or private carrier. and baggage loaded.

3. PARTIES In cases of buses, jeepney and street cars (BJS)

1. Carriage of passengers – common carriers and
passengers
2. Carriage of goods – shipper and carrier
PERFECTION
2 types of contract of carriage of passengers
(Jurisprudence)
1. Contract to carry – perfected by mere consent or
consensual, agreement to carry passenger at
some future date
Action for damages may be sustained for breach
of contract to carry as it is already a binding
contract.
2. Contract of carriage or of common carriage -
real contract, facilities of the carrier are actually
used
2 types of contract of carriage of goods
1. Contract to carry – consensual, agreement to
accept and carry goods at some future date
2. Contract of carriage – when goods are
unconditionally placed in the possession and
control of the carrier, and upon their receipt by
the carrier for transportation
Test of relationship of shipper and carrier – when
possession and control is transferred to the carrier that
nothing remains to be done by shipper.
Once BJS stops, it is in effect making a continuing offer,
which means that it is the duty of drivers to stop their
conveyances for a reasonable length of time in order to
afford the passenger an opportunity to board and enter
and they are liable for injuries suffered by boarding
passengers resulting from starting up of the carrier.
(Continuing offer rule)
Passenger deemed to accept the offer when attempts to
board thus contract is perfected.
In cases of Trains
Person must purchase ticket, present himself in the
proper place and in proper manner for transportation
with bona fide intention to use facilities.
4. COMMON CARRIER
Article 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.
- Engaged in transport of goods for hire as public
employment and not as casual occupation.
- If undertaking is for single transaction, not part
of general business or occupation, it is private
carrier.

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 1

 CDF- TRANSPORTATION LAW
5. TEST
Test in determining if a party is a common
carrier
1. Engaged in the business of carrying goods for
others as public employment, generally as
business and not as casual occupation.
2. Undertake to carry goods of the kind to which
his business is confined
3. Undertake to carry by the methods by which his
business is conducted and over his established
roads.
4. Must be for hire.
To be of public use, it must not be confined to privileged
individuals but is open to indefinite public. If use is
merely optional with the owners or public merely
incidental, it is not public use.
Moreover, as long as person holds itself to public for
transport as business, it is common carrier whether he
owns the vehicle to be used or has actually to hire one.
True Test : not the quantity or extent of the business
actually transacted or number or character of
conveyances used but whether the undertaking is part of
the activity engaged in by the carrier that he held out to
the general public as his business or occupation.
Also, it is carriage of passengers or goods, provided it has
space, for all who opt to avail themselves of its
transportation services for a fee.
6. CHARACTERISTICS
BROAD CONCEPT: It is not necessary that one be
dedicated to public use, it is only necessary that one be
impressed with public interest and whether it is a public
utility, depends upon whether or not the services
rendered by it is of public character and of public
consequence and concern.
a. Ancillary business - even if transportation of
goods was ancillary to main business, it is
considered a common carrier.
b. Limited clientele – although clientele is limited,
regularity of the activities of the carrier may
indicate that is a common carrier.
c. Means of transportation – may be by air, land, or
water.
Pipeline operators are common carriers.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Foreign vessels engaging in carriage in accordance with
RA 10668 are not common carriers.
7. EFFECT OF CHARTER PARTY
Charter party may transform a common carrier into a
private carrier. 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.
2 types of charter parties
1. Contract of affreightment –use of shipping
space on vessels leased by the owner in part or
as a whole, to carry goods for others.
May be time charter – vessel is leased to
charterer for a fixed period
Or voyage charter – vessel is leased for single
voyage.
In time and voyage charter, provides hire for the
vessel only.
Slot space charter agreement is in a nature a
contract of affreightment wherein shipper is
allowed to load his cargo for a certain specified
space.
2. Charter by demise or bareboat charter –
whole vessel is let to the charterer with the
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.
- Becomes private carrier, at least insofar as the
particular voyage covering charter-party is
concerned.
8. COMMON/PUBLICE CARRIER VS
PRIVATE/SPECIAL CARRIER
Private carrier – one who without making the activity a
vocation or without holding himself out to the public,
undertakes by special agreement in a particular instance
only, transport of goods or persons from one place to
another either gratuitously or for hire.
-ordinary diligence is required
-may validly stipulate that it is exempt from liability for
negligence of its agents or employees
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Example:
If services are available only to specific persons under
special contract of charter party with its owner.
Common carrier - 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.
-extraordinary diligence
-cannot stipulate that it is exempt from liability for
negligence of its agents or employees otherwise it is void
for being contrary to public policy.
9. COMMON CARRIER VS OTHER CONTRACTS
Towage – one vessel is hired to bring another vessel to
another place.
-exercises ordinary diligence
Arrastre – (Spanish for hauling of cargo), handling of
a cargo on a wharf or between the establishment of the
consignee or shipper and the ship’s tackle.
-nothing to do with the trade and business of navigation,
nor to the use of operation of vessels or non-maritime.
- task is not different from that of depositary or
warehouseman.
-extraordinary diligence same as that of common
carriers and warehousemen.
Stevedoring – involves the loading and unloading of
coastwise vessels calling at the port.
-handling of the cargo in the holds of the vessel between
the ship’s tackle and the holds of the vessel.
-diligence of a good father of a family
-not a common carrier as it does not transport goods or
passengers and not akin to warehouseman.
Travel Agency - not a common carrier
-only service of arranging and facilitating the booking,
ticketing and accommodation in a package tour
-contract of service and not contract of carriage
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Tramp Service and Line Service –
Line service – operation of common carrier which
publicly offers services without discrimination, has
regular ports of call/designation, fixed sailing schedules
and frequencies and published freight rates and usually
carries multiple consignments.
Tramp Service – operation of the contract carrier which
has no regular and fixed routes and schedules but
accepts cargo wherever and whenever shippers desire,
contractual or chartered by any of shippers in bulk or
break bulk cargoes.
11. GOVERNING LAWS
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.
Carriage of Goods by Sea Act (COGSA) – special law
suppletory to Civil Code
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.
Warsaw Convention – air transportation
12. NATURE OF BUSINESS
Common carriers exercise a sort of public office and have
duties to perform in which the public is interested.
-impressed with public interest and concern
13. REGISTERED OWNER RULE AND KABIT SYSTEM
RA 4136 – Land Transportation and Traffic Code
Registered owner rule – the person who is the
registered owner of a vehicle is liable for any damaged
caused by the negligent operation of the vehicle although
the same was already sold or conveyed to another
person at the time of the accident.
-the registered owner is liable to the injured party
subject to his right of recourse against the transferee or
buyer (by a third-party complaint in the same action
brought against him)
Registration is required to permit the use and operation
of the vehicle upon any public highway. The main aim of
motor vehicle registration is to identify the owner so
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that if any accidents happen, or that any danger or injury
is caused by the vehicle in public highways,
responsibility therefor can be fixed on a definite
individual, the registered owner.
Principal purposes of motor vehicles legislation:
1. Identification of the vehicle and the operator
2. Deterrent to the lax observance of the laws by
the knowledge that means of detection are
always available
The registered owner is not liable if the vehicle was
taken from his garage without his knowledge and
consent.
The registered owner rule applies even if the registered
owner leased the vehicle to another who is the actual
operator. And in order to be free from liability, the
owner-lessor should register the lease contract with the
LTO. Lease should be annotated in the Certificate of
Registration in order that there will be notice to third
parties.
Registered owner rule applies in financial lease but such
financial lease should be registered to be exempt from
liability.
Kabit System – registered owner rule applicable in kabit
system
- It is an arrangement whereby a person who has
been granted certificate of public convenience
allows other persons who own motor vehicles to
operate under his license, sometimes for a fee or
percentage of the earnings.
- Contrary to public policy
- Financial capacity is one of the primary factors
of granting certificate of public convenience so
that liabilities arising from accidents may be
duly compensated.
The policy of the law in enjoining kabit system is not so
much to penalize but to identify the persons upon whom
responsibility may be fixed in case of an accident with
the end view of protecting the riding public.
Pari delicto rule – parties to the kabit system cannot
invoke the same as against each other either to enforce
their illegal agreement or to invoke the same to escape
liability.
Land Transportation Rules
Under PSA (Public Service Act)
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Aircrafts and vessels – kabit system is also applied
Civil Aviation Authority (CAA) provides that certificate of
registration of an aircraft is conclusive evidence of
ownership except when ownership itself is at issue.
14. BOUNDARY SYSTEM
-if boundary system is implemented by the common
carrier, it cannot escape liability by claiming that the
driver is the lessee.
CHAPTER 2- OBLIGATIONS OF A COMMON CARRIER
The most basic obligation – to transport the goods or
passenger safely to the agreed destination.
Duties of a Common Carrier (ADE)
1. Accept passenger and goods without
discrimination
2. Deliver goods or bring passenger to destination
3. Deliver goods to proper person
4. Exercise extraordinary diligence
Right of passengers or shippers
1. Right against discrimination
2. Right to have his goods or be transported
without delay
3. Personal right to enforce all the obligations of
the carrier
A. Duty to Accept Goods for Transport
Common carriers are prohibited from giving
unnecessary or unreasonable preferences or advantages
to any particular kind of traffic or subjecting such to any
undue or unreasonable prejudice or discrimination.
-not absolute
XPN: there is sufficient reason for such discrimination
As to passengers, common carrier of passenger is bound
to receive for carriage, without discrimination all proper
persons who desire it and properly offer to become a
passenger.
XPN: Sufficient excuse
Valid Grounds for Non-acceptance(LIFES-DOCU)
1. Goods to be transported are dangerous objects
or substances
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2. Goods are unfit for transport
3. Acceptance for result in overloading
4. Goods are considered contrabands or illegal
goods
5. Injurious to health
6. Goods will be exposed to untoward danger
7. Goods like livestock will be exposed to
diseases
8. Strike
9. Failure to tender goods on time
Explanations:
1. Goods to be transported are dangerous objects
or substances
Carrier which is not properly equipped to transport
dangerous chemicals or explosives may validly refuse
the same.
MARINA has special permit to carry such goods and also
has requirement for transport animals, forest products,
fish, minerals which requires necessary clearance from
appropriate government agencies.
2. Goods are unfit for transport
May be by nature unfit or because of improper packaging
or defect in their containers
However, carrier may choose to transport such goods
and limit its liability by stipulation.
ARTICLE 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.
Lessening the Loss
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.
Inspection
Common carriers are entitled to fair representation of
the nature and value of the goods, with the right to rely
thereon and no obligation to inquire into the correctness
or sufficiency of such, (Saludo, Jr. vs CA) and such duty
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
arises in the event that there should be reasonable doubt
as to the veracity of such representation.
ARTICLE 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 purpose 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.
Transportation of Animals – RA 10621 or the Animal
Welfare Act
Duties to Special Classes of Passengers
PWDs and Senior Citizens shall have equal access to to
transportation services, subsidized transportation fare.
It shall also be considered discrimination to charge
higher fare or refuse to convey a passenger, his
orthopaedic devices, personal effects and merchandise
by reason of his disability.
B. Duty to Make Timely Delivery of the Goods
Deliver within agreed time and to designated consignee.
ARTICLE 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 point where he must deliver
them; and should he not do so, the damages caused by
the delay should be for his account.
Reasonable time –in the absence of a special contract
the carrier is not an insurer against delay thus absent an
agreement as to time of delivery, it must be delivered
within reasonable time.
How to determine reasonable time?
- Expected date of arrival reflected in the bill of
lading
- Also depends on the nature of goods
Consequences of Delay
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Excusable delay – suspend but not terminate the
contract and when the cause for such delay is removed,
the transport must proceed and make delivery. During
detention or delay, vessel continues to be liable as
common carrier and not as warehouseman.
Legally inexcusable delays – Effects (NIDA)
1. Carrier is still liable if natural disaster caused
the damage
2. Stipulation limiting the liability inoperative
(applies to changes to usual route)
3. Carrier liable for the damage caused by the
delay
4. Consignee may exercise his right to abandon
When abandonment is exercised, the carrier
shall pay full value of the goods as if they had
been lost or mislaid (ART 371 Code of
Commerce)
When abandonment not made, indemnification
for loss or damages cannot exceed current price
of the goods.
Right to abandon can be exercised with the
concurrence of the following: during intervening
period which must be before arrival of goods at
the place of delivery and by communicating such
abandonment in writing.
-abandonment may also be made by virtue of stipulation
or agreement between parties
PLACE OF DELIVERY
-place agreed upon by parties
TO WHOM DELIVERED
-to the consignee or any other person to whom the bill of
lading was validly transferred or negotiated
-it is no excuse for the delivery to the wrong person that
the endorsee of the bill is unknown or that he delayed
presenting the bill when such delivery is not
instrumental in causing the wrong delivery or
misleading the ship.
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.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
ARTICLE 369. If the consignee cannot be found at the
residence indicated in the bill of lading, or if he refuses to
pay the transportation charges and expenses, or if he
refuses to receive the goods, the municipal judge, where
there is none of the first instance, shall provide for their
deposit at the disposal of the shipper, this deposit
producing all the effects of delivery without prejudice to
third parties with a better right.
When there is conflict between consignee and
shipper – right of shipper to countermand the shipment
terminates when the consignee or legitimate holder of
the bill of lading appears with such bill of lading before
the carrier and makes himself party to the contract as
prior to such time, he is a stranger.
Effect of Negotiable Bill of Lading – document of title
which may be transferred to a holder for value
-transfer acquires direct obligation of the carrier from
time of such negotiation and no need to notify carrier
DELAY TO TRANSPORT PASSENGERS
-reasonable time
- if delay is caused by force majeure or fortuitous event,
passenger shall be obliged to pay fare in proportion to
the distance covered
-right to indemnity if interruption caused by captain
exclusively
- if caused by disability of a vessel and a passenger
agrees to await repairs, he may not be required to pay
any increased price of passengers but living expenses for
his own account
If own decision to disembark - no right to recover lost
profits ( Trans-Asia vs CA)
MARINA Regulation – if delay is unreasonable, the
passenger may opt to have his ticket immediately
refunded without any refund for service fee from
authorized issuing/ticketing office.
DELAYED AND UNFINISHED VOYAGE
3.1 In case the vessel cannot continue or complete her
voyage for any cause, the carrier is under obligation to
transport the passenger to his/her destination at the
expense of the carrier including free meals and lodging
before the said passenger is transported to his/her
destination. A passenger may opt to have his/her ticket
refunded in full if the cause of the unfinished voyage is
due to the negligence of the carrier, or, to an amount that
will suffice to defray transportation cost at the shortest
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possible route towards his/her destination if the cause of
the unfinished voyage is a fortuitous event.
3.2 The carrier shall provide meals, free of charge, during
meal time in case the vessel is delayed in the arrival at
the port of destination.
3.3 In case of delay in the departure at the port of origin
due to the carrier’s negligence, the carrier is also under
obligation to provide meals, free of charge, during meal
time to ticketed passengers for the particular voyage. If
the cause of the delay is a fortuitous event, the carrier is
under no obligation to serve free meals to the
passengers.
3.4 The carrier is under obligation to duly inform the
passengers of the change in sailing schedule of the
vessel(s).
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE
Common carrier is required to faithfully comply with this
obligation to deliver the goods and to ferry the
passenger to the point of destination.
Failure to exercise extraordinary diligence will result in
in the breach of obligation of the carrier through
negligence.
What is extraordinary diligence? - Art. 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.
It must prove that it used all reasonable means to
ascertain the nature and characteristics of the goods
tendered for transport and it exercised due care in
handling them.
-greatest skill and foresight and use all reasonable means
Non-delegable Duty
-duty of seaworthiness and duty of the care of the cargo
and the carrier is responsible for the acts of the master,
the crew, and all his other agents.
PRESUMPTION OF NEGLIGENCE
In case of LDD of goods or death or injuries of
passengers, common carrier is presumed to be at fault or
negligent unless he had observed the extraordinary
diligence in the vigilance thereof.
Law imposes such liability when the ff are present:
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
1. There’s a contract between carrier and
shipper/passenger
2. LDD or injury/death took place during the
existence of the contract
Such presumption is operative even if both parties
cannot establish the cause of the damage. However, the
plaintiff has to prove that damage or injury has been
sustained.
No presumption of bad faith even if there is presumption
of negligence. Bad faith must be proven by clear and
convincing evidence. However, gross negligence
amounts to bad faith and may entitle victim to award of
moral and exemplary damages.
EFFECT OF ACQUITTAL
-acquittal in criminal case immaterial to case for breach
of contract
DURATION OF DUTY IN CARRIAGE OF GOODS
Due diligence should be exercised the moment the goods
are delivered to the carrier.
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.
Art. 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.
Art. 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.
Stoppage in transitu – is the right of an unpaid seller to
resume possession of the goods at any time while the
goods are in transit.
Duty to exercise due diligence ends if the seller has made
use of such right because in legal effect, the contract of
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carriage terminates when the right is exercised. Carrier
then becomes ordinary bailee.
Maritime law jurisprudence – cargoes while being
unloaded generally remain in the custody of the carrier.
Delivery to customs authorities – goods remain to be the
responsibility of the carrier if they are still in the hands
of customs officials as in legal contemplation, in the
hands of the Government and owner cannot exercise
dominion over them.
XPN: stipulate in the bill of lading that carrier shall not
be liable for any loss while goods are in the custody of
the BOC.
COMMENCEMENT OF DUTY IN CARRIAGE OF
PASSENGERS
Train – the moment the person purchases ticket ,
presents himself in the proper place, in the proper place
and in the proper manner with bona fide intent to ride.
Duty of the common carrier to provide safety to its
passengers is not only during the course of the trip but
as long as the passenger is within its premises and where
they ought to be based in the contract.
Mere purchase of a ticket is not of itself create the
relation of carrier and passenger, but is an element in the
inception of the relation to become a passenger.
The relation of carrier and passenger commences
when one puts himself in the care of the carrier, or
directly under his control, with a bona fide intention
of becoming a passenger, and is accepted as such by
the carrier.
Therefore, although it is unnecessary that the person
claiming the privileges of a passenger shall have
purchased a ticket, such person must have a bona fide
intention to use the facilities of the carrier, possess
sufficient fare with which to pay for his passage and
present himself to the carrier for transport in the
place and manner provided.
Awaiting transportation on carrier’s premises -
assuming the status of a passenger.
Carriage by Sea
Duty commences as soon as person with bona fide
intention of taking passage takes himself in the care
of the carrier or its employees and is accepted as
passenger.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Land Transportation
In relation to continuing offer rule, the duty to exercise
due diligence required will not ordinarily terminate until
passenger has, after reaching his destination, safely
alighted from the carrier’s conveyance or had reasonable
opportunity to leave the carrier’s premises (also
reasonable time to claim baggages)
HOW IS DUTY COMPLIED WITH
1. Exercise of extraordinary diligence
2. Statutory duties
a. Article 1759. Common carriers are
liable for the death of or injuries to
passengers through the negligence or
willful 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.
b. Article 1763. A common carrier is
responsible for injuries suffered by a
passenger on account of the willful 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.
DUTY TO THIRD PERSONS
Kalaparan Bus Lines vs Coronado
- Pedestrians are also entitled to safe and
convenient use of public roads and highways
thus will be also simultaneously benefiting if the
exercise of due diligence is observed.
EFFECT OF STIPULATION OF EXTRAORDINARY
DILIGENCE
As to GOODS
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;
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(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.
As to Passengers – cannot be stipulated or posted as
notices.
Article 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.
As to Gratuitous passengers
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.
The reduction of fare does not justify any limitation of
the common carrier’s liability.
Lara vs Valencia case - private carrier has duty to
exercise ordinary diligence.
EXTRAORDINARY DILIGENCE IN CARRIER BY SEA
1. Seaworthiness
a. Adequately equipped for voyage
b. Manned with sufficient number or
competent officers and crew
Warranty of seaworthiness is implied because failing
such is a breach of its duty and because of its implied
warranty, the shipper of goods are not expected to
inquire into the vessels seaworthiness, genuineness of its
license and compliance with maritime laws.
The carrier carries the burden of proof that the vessel is
seaworthy.
Warranty under special law- under the ff;
1. Insurance Code of the Philippines
a. Reasonable fit to perform the service
and to encounter the ordinary perils of
the voyage. Warranty extends not only
to the condition of the ship but also the
competent master and crew as well as
the equipment.
2. Carriage of Goods by the Sea Act (COGSA)
a. Contemplates of the vessel to stand the
rigors of the voyage, fitness to store
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
cargos and accommodate passengers as
well as being adequately equipped and
properly manned.
3. Domestic Shipping Act
2. Cargoworthiness - sufficiently strong and
equipped to carry the particular kind of cargo
that she has contracted to carry and cargo must
be so loaded that it is safe for her to proceed to
the voyage.
It also includes proper storage.
3. Proper Manning –
Captains, masters or patrons must be Filipinos,
with legal capacity to contract and prove skill
and capacity and qualifications necessary to
command and direct the vessel
If owner desires to be captain without legal
qualification, he shall limit himself to the
financial administration of the vessel and in
trust navigation to those qualified.
4. Adequate Equipment – provision of adequate
and indispensable equipment and facilities
In cases of deck cargo, the SC pointed out that such
raises presumption of unseaworthiness, XPN:
1. It can be shown that the deck cargo will not
interfere with the proper management of the
ship.
2. Stipulation to have cargo carried on deck at
shipper’s risk is valid.
3. Cases where by the nature of the cargo, the same
cannot be accommodated or cannot fit into the
hold.
Effect of notation of damage in the bill of lading –
exercise of due diligence is required to forestall or lessen
the loss or damage.
NEGLIGENCE OF CAPTAIN AND CREW
Common carrier must exercise due diligence in the
supervision of its captain and crew.
Limited Liability Rule – liability of the shipowner may
be limited to the value of the vessel.
Page 9
 CDF- TRANSPORTATION LAW
If the negligence of the captain or crew can be traced to
the fact that they are really incompetent, LLR cannot be
invoked.
RULES ON PASSENGER SAFETY BY MARINA
1. Means of Emergency/Escape Exits
a. Two means provided in general areas
with pre-designated crew to make sure
these are unobstructed
b. Passageways cleared of obstruction
2. Handling storage and handcarried luggage
a. Must not block stairways, means of
escape, passageways, lifesaving and
firefighting equipment
b. At least 1 crew assigned for
embarkation/disembarkation
3. Storage of lifevest/lifejackets
a. Conspicuously stored capable of being
forced open and accessible
4. Closure of watertight doors, portholes, ramps
and manholes
5. Wearing of prescribed uniforms by officers and
crew – for identification
DUTY TO TAKE PROPER ROUTE – usual reasonable
commercial or customary route
XPN:
1. force majeure (Code of Commerce)
2. replenishing of fuel (jurisprudential)
Improper deviation - not following the customary route
and is a valid ground to deny insurance claim.
Transshipment- act of taking cargo out of one ship and
loading it in another.
Transhipment without legal excuse – breach of contract
and infringement of right of the shipper, thus carrier is
liable for damages caused.
DUTY TO INSPECT CARRIAGE BY SEA – carrier
ordinarily has the right to inquire as to its value and
general nature.
Where a common carrier has reasonable ground to
suspect that the goods are of a dangerous or illegal
character, the carrier has the right to know that the
character of such goods and insist to its inspection, if
reasonable and practical under the circumstances, as a
condition of receiving and transporting such goods.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Common carrier is entitled to fair representation of the
nature and value of the goods.
INSURANCE – compulsory coverage for passenger and
cargo
P200,000 for each passenger and if no insurance, the
shipowner is liable.
P50,000 for each survivor of maritime accident
If passenger disembark at such designated port not his
destination, the insurance shall be deemed suspended at
the moment the passenger leaves the ladder or
disembarking gangway and shall remain suspended
whilst on land. The coverage is restored the moment he
sets foot on the gangway or ladder.
If he stays beyond his destination without leave from
authorities, insurance shall cease at the moment anchor
is raised to commence voyage beyond his destination.
If while at sea, vessel sinks or has to be abandoned,
insurance shall remain in full force.
EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
1. Roadworthiness - vehicles should be in good
order and condition
Tire explosion are not considered fortuitous event but
follows rule on mechanical defect.
Violation of traffic rules is a failure to exercise
extraordinary diligence however, there must be proof
that there is such violation as presumption is not
applicable in this case.
DILIGENCE IN THE SELECTION AND SUPERVISION
If case is based on contract (culpa contractual) – defense
is not available
If quasi-delict – defense available
Article 1759. Common carriers are liable for the death of
or injuries to passengers through the negligence or
willful 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.
DUTY TO INSPECT
Page 10
 CDF- TRANSPORTATION LAW
Passenger should not be subjected to unsual search.
Verbal inquiry as to the nature of the baggage may be
resorted to. However, when there are sufficient
indications that the representation of the passenger
regarding the nature of the baggage may not be true, in
the interest of common safety of all, the assistance of
police may be solicited not necessary to force the
passenger to open his baggage but to conduct
investigation.
Gen Rule; common carrier not liable for injuries to
passengers from fires and explosions caused by articles
brought into by other passengers
XPN: when they are aware of the nature of the article or
had any reason to anticipate danger therefrom.
INSURANCE (Insurance Code of the Philippines)
P150,000 for accidental death
P75,000 for permanent total disability
Penalties imposed to operators if they fail to avail of such
insurance coverage (LTFRB)
CARRIAGE BY TRAIN
EXERCISE OF EXTRAORDINARY DILIGENCE
➢ Competent Employees – properly trained and
skilled
Liable for the misconduct of the employee prepetrated in
his own interest, and not in that of the employer, or
beyond the scope of employment, when the employee is
“clothed with delegated authority and charged with the
duty by the carrier, to execute his undertaking with the
passenger.”
➢ Platform must be safe – duty is present even at
the time the passenger is at the platform
➢ Maintenance of Train and Tracks – vehicle or
transportation is in good and safe condition.
Train company may also be held liable for injuries to
non-passengers.
➢ Embarking and Disembarking Passengers –
premature acceleration of the railway car
constitutes breach of duty. However,
contributory negligence may mitigate the
liability of the company.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Train operator made liable when the passenger
received injuries when the shuttle train doors
closed on him in the doorway as he attempted to
exit the train and to stop the doors from closing
on a child.
➢ Negligence in the operation of the train –
railroad company may be held liable if the
accident occurred because the train was running
at an excessive speed
➢ Passengers who fell on the train – presumed
negligence on the part of the carrier
➢ Persons and properties ran over the train – It
is not the duty of the train engineer to stop the
train every time that he sees a person on or near
the tracks.
A person who is walking on the tracks much exercise due
care in avoiding his own death or injury.
In one case, the railway company was not made liable if
the accident can be attributed wholly to the reckless
negligence of a deaf-mute, in walking on the track
without taking the necessary precautions to avoid
danger from a train approaching from behind.
➢ Damage to properties and Persons near
Railroad Tracks – railroad company must
exercise due care in preventing damage to the
properties near the tracks
➢ Absence of Safety Devices and Signs – train
operator may be held liable if it did not ensure
the safety of others through placing of crossbars,
signal lights, warning signs and other
permanent safety barriers to prevent vehicles
and pedestrians from crossing there.
➢ Speeding – excessive speed can be proof of
negligence
➢ Obligations of third persons approaching
crossings – Gen. Rule : rights and obligations
between public and railroad company at a public
crossing are mutual and exclusive.
➢ No imputed contributory negligence – this
rule that negligence of a driver is not imputable
to an occupant only applies to cases in which the
relation of a master and servant or principal and
agent does not exist between the parties or
where occupant has no right to direct or control
the driver’s action.
PASSENGER’S BAGGAGES
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 CDF- TRANSPORTATION LAW
Art. 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.
1733 to 1753 – Vigilance over goods (baggage not in
personal custody)
What is baggage? - whatever articles a passenger
usually takes with him for his own personal use, comfort
and convenience according to the habits or wants of the
particular class to which he belongs, either with
reference to his immediate necessities or to the ultimate
purpose of his journey.
LTFRB RULES :
1. Free carriage of 10 kilograms of baggage and
shall pay the corresponding freightage for
excess weight
2. If both passenger and freight, freight shall be
placed in separate compartment except package
or bundles the size which allow placement
under seats without causing inconvenience
3. If freight carried on top, shall not exceed 20 kilos
per sq m of roof area
4. PUV shall not load animals of any kind, except
fowls.
1. CHECKED-IN BAGGAGE – rules applicable
to that are being shipped are applicable to
baggage delivered to the custody of the
carrier as an incident of contract of carriage.
2. HAND-CARRIED LUGGAGE – provisions on
necessary deposits apply
• Give notice to the common
carrier or carrier’s employees,
of the effects brought by the
passenger
• Take precautions which the
common carrier or their
substitutes advised relative to
the care and vigilance to their
effects
Duty to comply to exercise extraordinary diligence and
presumption of negligence applies to hand-carried
luggage.
CHAPTER 3 – OBLIGATIONS OF THE PASSENGER AND
SHIPPER
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
1. Duty to exercise due diligence
2. Duty to disclose information relating to the
cargo
3. Payment of freight
4. Timely loading and unloading
DUTY TO EXERCISE DUE DILIGENCE
• Bound by his contractual obligation
• To pay consideration in the form of freight or
fare
• Exercise due diligence in avoiding damage or
injury
1. A person who hires a public automobile
and gives the driver directions as to the
place to which he wishes to be
conveyed, but exercises no other
control over the conduct of the driver, is
not responsible for acts of negligence of
the latter or prevented from recovering
for injuries suffered from a collision,
caused by the negligence of the
automobile driver
DUTY TO DISCLOSE INFORMATION RELATING TO
THE CARGO
2. Make proper markings in the cargo
3. It is not the duty of the carrier to ask for
a repetition of the statement nor
disbelieve it and open the box and see it
for itself
4. Shipper may be held liable for any
damage that may have been caused
solely by the dangerous nature of the
cargoes or the defect in the packaging of
the cargoes
PAYMENT OF FREIGHT
Who will pay? Shipper; consignor – primarily liable
Consignee may pay at the point of destination if parties
stipulated
5. Consignee who is supposed to pay must
do so within 24 hours from the time of
delivery
6. In case of delay, carrier may demand
the judicial sale of the goods to cover
cost of transportation and expenses
incurred
CARRIAGE OF PASSENGERS BY SEA
Page 12
 CDF- TRANSPORTATION LAW
If the vessel is not able to depart on time and the delay
is unreasonable, the passenger may opt for the ticket
refunded without refund service fee
“delayed voyage” – late departure of the vessel from its
port of origin and/or late arrival at the port of
destination
“unreasonable delay” – period of time that has lapsed
without just cause and is solely attributable to the
carrier which has prejudiced the transportation of
passengers and/or cargoes to their port of destination
A passenger, who no longer wants to use the carrier or
has actually failed to board the vessel, can refund or
revalidate the ticket subject to assessment of surcharges
Revalidation – accreditation of the ticket that is not
used and intended to be used for another voyage
CARRIER’S LIEN
Goods transported shall be especially bound to answer
for the cost of transportation and for the expenses and
fees incurred for the during conveyance until moment of
delivery
7. Right prescribes 30 days after
delivery has been made; once
prescribed, the carrier shall have no
other action than that corresponding an
ordinary creditor
TIMELY LOADING AND UNLOADING
8. Shipper must deliver the goods on the
date, time, and place agreed upon
9. Consignee must timely obtain delivery
from the carrier, otherwise he shall be
responsible for expenses of
warehousing and other expenses
arising therefrom
10. Lay days – period stipulated within
which to load and unload the cargoes
11. Demurrage - Compensation for the
detention of the vessel beyond the time
agreed on for loading and unloading
12. Essentially, a claim for damages for
failure to accept delivery
13. Liability exists only when expressly
stipulated in the contract
PERMITS
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
May be required for the transportation of certain goods
SHIPPER’S LOAD AND COUNT
• In the bill of lading, it may be stipulated that
the shipper has the sole responsibility for
the quantity, description and condition of
the cargoes shipped in container vans
• Carrier cannot be held responsible for any
discrepancy if the description in the bill of
lading is different from the actual contents
of the container
• A shipment under this arrangement is not
inspected or inventoried by the carrier
whose duty is only to transport and deliver
them in the same condition as when carrier
received and accepted them
DUTIES OF PASSENGER
1. Pay the proper fare for the transportation
2. Present himself in the proper place
3. Present himself in the proper time
4. Obligated not to bring such luggage that is in
excess of the weight and size prescribed by
regulation or contract; prohibited from
transporting prohibited materials or goods,
including animals
5. Secure the appropriate travel documents
14. Airline may be held liable if the loss of
the documents was due to the
negligence of its employees
AIR TRANSPORTATION AND PASSENGERS
Unacceptable conducts of passengers in air
transportation
(1) No person on board may interfere with
s crew member in the performance of
his or her duties
(2) Each passenger shall fasten his or her
seatbelt and keep it fastened while the
seat belt sign is lighted
(3) No person on board an aircraft shall
recklessly or negligently act or omit to
act in such manner as to endanger the
aircraft or persons and property therein
(4) No person may secrete himself or
herself nor secrete cargo on board an
aircraft
(5) No person may smoke while the no-
smoking sign is lighted
Page 13
 CDF- TRANSPORTATION LAW
(6) No person may smoke in any airplane
lavatory
(7) No person may tamper with, disable or
destroy any smoke detector installed in
any airplane lavatory
CHAPTER 4 – DEFENSES OF THE COMMON CARRIER
KINDS OF DEFENSES
Defenses may either totally bar recovery from the carrier
or may mitigate and/or limit its liability.
Defenses that may mitigate are the ff;
1. Doctrine of Contributory Negligence –
conduct on the part of the injured party,
contributing as a legal cause to the
harm he has suffered which falls below
the standard to which he is required to
conform for his own protection.
2. Avoidable Consequences Rule - Perils
the consequences of which the
passenger must assume or expect
3. Validly stipulated limitation on liability
Defenses expressly prohibited under the NCC;
1. Provision that provides that a common carrier need
not exercise any degree of diligence (as it is void)
PROXIMATE CAUSATION
- Inapplicable; injured passenger or owner of
goods need not prove causation to establish his
case. Presumption arises upon the happening of
the accident
- Only a matter of defense: absence of causal
connection
- Carrier may prove that the loss or damage
cannot be traced to any act of the said carrier
(prove the exercise of extraordinary diligence)
but the proximate and only cause of the loss is
any of the circumstances mentioned in Art 1734
NCC
DEFENSES IN THE CARRIAGE OF GOODS ARTS 1734,
1742, 1743(NOPS-DE)
(1) Flood, storm, earthquake, lightning and other
natural disaster and calamity [FORTUITOUS
EVENT]
(2) Acts of the public enemy at war, whether
international or civil
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
(3) Act or omission of the shipper or owner of the
goods
• Includes acts of pirates on high seas
(even if no declaration of a state of war)
(4) Character of the goods or defects in the
packaging or in the containers
• The common carrier must exercise due
diligence to forestall or lessen the loss
(5) Order or act of the competent authority
• Public authority must have the power to
issue the order
(6) Exercise of extraordinary diligence
EXCLUSIVITY OF DEFENSES
No other defense may be raised by the common carrier
in the carriage of goods. It is an exclusive and closed list.
DEFENSES IN THE CARRIAGE OF PASSENGERS
1. Exercise of extraordinary diligence
2. All other defences except number 4 may
be invoked as long as there is exercise
of utmost diligence.
FORTUITOUS EVENT (CASO FORTUITO)
To be a valid defense must be established to be the
proximate cause of the loss.
An event that takes place by accident and could not have
been foreseen, if can be foreseen, however is inevitable.
Fortuitous event is not limited to natural calamities; it
may involve human intervention.
Thus fortuitous event may be produced by two general
causes:
1. By nature
2. By acts of man – e.g. armed invasion, attacks of
bandits, governmental prohibition, and robbery
Requisites/Characteristics of Fortuitous Event:
(1) The cause of the unforeseen and
unexpected occurrence must be
independent of the human will
(2) It must be impossible to foresee, or if it
can be foreseen, it must be impossible
to avoid
(3) The occurrence must render it
impossible to fulfill the obligation in a
normal manner; and
(4) [Common carrier] must be free from
any participation in the aggravation of
the injury
Page 14
 CDF- TRANSPORTATION LAW
Art. 1739 NCC: In order that the common carrier may
exempted from responsibility, the natural disaster must
have been the proximate and only (SOLE) cause of the
loss. It must have exercise due diligence to prevent or
minimize loss before, during and after the occurrence
Fire – if it is caused by, for example, lightning; usually not
considered a natural disaster
Storm [usually foreseeable]
• 48-55 knots or 55-63 mph
• Strong monsoon winds not a storm
within the contemplation of the Code,
however, there may be cases when
strong winds may be unforeseeable
Hijacking – not one of the exempting causes
• To exculpate the carrier from liability
arising from hijacking, he must prove
that the hijackers acted with grave or
irresistible threat, violence, or force
Mechanical defects – not a damage or injury that is cause
by fortuitous event; whenever it appears that the
defect could have been discovered by the carrier if it
had exercised the degree of care which under the
circumstances was incumbent upon it
Tire blowouts – [generally] not fortuitous event
• Defense if exercised extraordinary
diligence
Other invalid defenses:
• Explosion
• Worm and rats
• [Sea] Water damage
• Barratry – It is an act committed by the
master or crew of the ship for some
unlawful or fraudulent purpose,
contrary to their duty to the owner.
PUBLIC ENEMY
Act of public enemy is a defense available not only under
Civil Code but also under COGSA.
Pre-supposes the [1] existence of an actual state of
war, and [2]refers to the government of a foreign
nation at war with the country to which the carrier
belongs, though not necessarily with that to which the
owner of the goods owes allegiance
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Thieves, rioters, robbers and insurrectionists – not
included
Pirates on high seas stand as exception as they are
considered enemies of all civilized nations and of human
race.
NATURE OF GOODS AND IMPROPER PACKING
- COGSA provides that the carrier shall not be
liable for:
(1) Wastage in bulk or weight or any other
loss or damage arising from inherent
defect, quality or vice of goods
(2) Insufficiency of packing
(3) Insufficiency or inadequacy of the
marks; or
(4) Latent defects not discoverable by due
diligence
Art. 1742. Carrier must exercise due diligence to
forestall or lessen the loss
“Defect” – want or absence of something necessary for
completeness or perfection
If the carrier accepts the goods knowing the fact of
improper packing of the goods upon ordinary
observation or notwithstanding such condition, it is not
relieved of liability for loss or injury resulting therefrom
Defense may fail if there is no proof that the defect in the
package already existed at the time the carrier accepted
the same. Same if carrier issued a “clean bill of lading”
ORDER OF PUBLIC AUTHORITY
Defense is NOT available if:
(1) The public authority has no authority to
issue the subject order; or
(2) If the public authority exceeded his
authority
Art. 1743: public authority has power to issue the order.
ACTS OF EMPLOYEES
Carrier is liable for the acts of its employees
1. Although such employees acted beyond
the scope of their authority or in
violation of the orders of the common
carriers
2. Liability does not cease upon proof that
they exercised all the diligence of a good
father of a family in the selection and
supervision
Page 15
 CDF- TRANSPORTATION LAW
Passenger has no duty to inquire whether employee is
acting within the scope of his authority
Ratio:
1. Carrier’s own servants are
charged with the passenger’s
safety
2. Liability is the result of the
carrier’s confiding in the
servant the performance of his
contract to safely transport the
passengers
3. As between the carrier and the
passenger, the carrier has the
power to select and remove
them
Theft by employees – carrier is liable for the damage and
harm, but not as to the crime
ACTS OF OTHER PASSENGERS AND THIRD PERSONS
Common carrier is responsible for injuries suffered by
the passenger if the former’s employees could have
prevented or stopped the act or omission through
the exercise of the diligence of a good father of a
family
ACTS OF THE SHIPPER OR THE PASSENGER
If the proximate and only cause of damage, the
common carrier is not liable.
Contributory negligence of the shipper or the
passenger– not a defense that will excuse the carrier
from liability, it will only mitigate such liability
Passenger must observe diligence of a good father to
avoid injury to himself
Carrier may be able to prove that the only cause of the
loss of the goods is any of the following:
1. Failure of the shipper to
disclose the nature of the goods
2. Improper marking or direction
as to destination; or
3. Improper loading when he
assumes such responsibility
Contributory negligence of the shipper
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Art. 1741. If the shipper or owner merely contributed to
the loss, destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages,
which however, shall be equitably reduced.
Contributory negligence of passenger
Art. 1761. The passenger must observe the diligence of a
good father of a family to avoid injury to himself.
Art. 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.
DOCTRINE OF AVOIDABLE CONSEQUENCES – even if
the carrier is responsible for the loss or injury, passenger
is required to lessen the damage or injury
ASSUMPTION OF RISK - Perils the consequences of
which the passenger must assume or expect
DOCTRINE OF LAST CLEAR CHANCE - When both
parties involved in the accident were both negligent, the
negligence of the party will not be considered the
proximate cause if the other party has the last clear
chance of avoiding the injury
Cannot be applied against a passenger
Applies in a suit between the owners and drivers of
colliding vehicles
NOTICE OF CLAIM
Notice of Claim [defense: LACK OF NOTICE OF CLAIM]
Condition precedent for an action against the carrier in
overland transportation; also applicable to
transportation by sea within the Philippines or
coastwide shipping
Art. 366 Code of Commerce: action for damages is barred
if the goods arrived in damaged condition and the
shipper files no claim within the following period:
a. Immediately if the damage is apparent;
or
b. Within 24 hours from receipt of the
merchandise if the damage is not
apparent—cannot be ascertained
merely from the outside packing of the
cargo
Page 16
 CDF- TRANSPORTATION LAW

immediately upon the

Period prescribed may be modified by agreement of the discharge of goods
parties. Filing of Notice of Claim is Mandatory and a o If not apparent, claim must be
stipulation is more of a nature of a limitation upon the filed within 3 days from
owner’s right to recovery delivery
• Period NOT mandatory
Purpose: to give the carrier an opportunity to ascertain • Notice in writing
whether the claim is a well-founded one before the o May be endorsed upon receipt
goods leaves his hands, or before the goods have been of the goods by the person
consumed or their identity destroyed taking delivery
o Need not be given if the goods
have been subject of joint
Commencement period survey or inspection at the time
The period does not begin to run until the consignee has of their receipt
received possession of the merchandise that he may • Suit must be brought within 1 year after
exercise over it in the ordinary control pertinent to delivery of the goods or the date when
ownership. the goods should have been delivered

Delivery of the cargo by the carrier to the consignee at

the place of destination
Applicable to Coastwise Shipping
Period NOT applicable to misdelivery
Carrier may waive the requirement that there must be
notice of claim; deemed waived if the defendant [carrier]
failed to plead in its answer
Shipper may waive the claim against the carrier by
payment of the former of the transportation charges
without protest knowing that there is damage
Doubt and disputes with respect to the condition of the
goods transported shall resolved in the ff. manner;
(1) Goods shall be examined by experts
appointed by the parties
(2) In case of disagreement, by a third one
[expert] appointed by judicial authority
(3) If parties do not agree with the expert
opinion and do not settle difference, the
merchandise shall be deposited by
order of the judicial authority
NOTICE OF CLAIM In international carriage of goods
by sea
• Claim for damages must be filed with
the carrier within the following period:
o If the damage is apparent,
claim should be filed
PRESCRIPTION IN OVERLAND AND COASTWISE
SHIPPING
General rule under NCC on extinctive prescription
applies.
• No written contract: 6 years (i.e. no bill
of lading)
• Written contract: 10 years
PRESCRIPTION IN INTERNATIONAL CARRIAGE OF
GOODS
• Filed within 1 year from discharge of
goods
• Who can invoke: carrier and the ship,
even the consignee or legal holder of
the bill
• Effect of demand: period not
suspended by an extra-judicial demand
• Period does not apply to conversion or
misdelivery, only to loss of cargo
o “loss” – when it perishes, goes
out of commerce, or disappears
in such a way that its existence
is unknown, or it cannot be
recovered
o For conversion or misdelivery,
prescriptive period in the Civil
code applies
• Delay: prescriptive period is 10 Years

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 17

 CDF- TRANSPORTATION LAW
• Collision cases: 1-year period when the
goods should have been delivered
[cargo is lost]
• 1-year prescriptive period may be
extended by agreement by the parties
• Insurer who is exercising its right of
subrogation is bound by the 1-year
period
NOTICE OF CLAIM AND PRESCRIPTION IN AIR
TRANSPORTATION
under the Warsaw Convention
• Notice of claim also a condition
precedent; period of filing complaint or
claim with the carrier
o Within 3 days from the receipt
of the baggage
o Within 7 days in case of goods
o In case of delay, 14 days after
the baggage was placed at the
disposal of the passenger
• Prescriptive period
o 2 years from the date of
arrival at the destination, or
from the date the aircraft ought
to have arrived or from the
date on which the
transportation stopped
LIMITING STIPULATIONS – partial defense
Parties may expressly stipulate a fixed amount that may
be recovered by the shipper or owner
Requisites:
(1) It is reasonable and just under the
circumstances
(2) It is fairly and freely agreed upon
CHAPTER 5 – BILL OF LADING AND OTHER
FORMALITIES
Applies only to goods
Contract of carriage is not a formal contract; a bill of
lading is not necessary for the perfection of the
contract. Obligation of extraordinary diligence is present
even without the issuance of the bill of lading.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Disputes determined based on the provisions of the Civil
Code and suppletorily by the Code of Commerce
Art 354 of the Code of Commerce:
✓ In 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
LTFRB as condition for the issuance of CPC, PUB and taxi
operators shall issue tickets/ receipts, indicating the
exact amount of fare collected, and the point of
embarkation and destination.
Bill of lading defined: is a written acknowledgement,
signed by the master of the vessel or other authorized
agent of the carrier, that he has received the described
goods from the shipper, to be transported on the
expressed terms, to the described place of destination,
and to be delivered there to the designated consignee or
parties.
KINDS OF BILLS OF LADING
(1) Clean bill of Lading and Foul bill of
Lading – one that does not contain or
contains (Foul) any notation indicating
defects in the goods
(2) Spent Bill of Lading – one where the
goods were already delivered but the
bill was not returned
(3) Through bill of lading – one issued by
carrier who is obliged to use the
facilities of other carriers as well as his
own
(4) On Board Bill v. Received for Shipment
o On board bill – one in which it
is stated that the goods have
been received on board the
vessel which is to carry the
goods
o Received for shipment bill –
one in which it is states that the
goods have been received for
shipment with or without
specifying the vessel by which
the goods are shipped
(5) Custody Bill of Lading – goods are
already received by the carrier, but the
vessel indicated therein has not yet
arrived in the port
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 CDF- TRANSPORTATION LAW

(6) Port Bill of Lading – the vessel indicated • Drafted usually by the carrier and is
in the bill that will transport the goods sought to be accepted or adhered to by
is already in the port the shippers or passengers who cannot
change the contract
NATURE OF A BILL OF LADING • However, plane tickets and bills of
- : (applicable only to carriage of goods) – “triple lading are not entirely prohibited
nature” because the one who adheres to the
(1) Receipt contract is free to reject it entirely
(2) A contract • Consequently, parties cannot escape
(3) Document of title liability if the bill of lading is clear on its
face—if there is no occasion to speak of
ambiguities or obscurities whatsoever
When is the bill of lading deemed effective? Effective
upon its delivery to and acceptance by the shipper
A. Covered by the Parol Evidence Rule –
evidence of a prior or contemporaneous verbal
AS A CONTRACT
agreement is generally not admissible to vary,
Applies to tickets issued to passengers
contradict or defeat the operation of a valid
Parties: instrument
(1) Shipper
o The person who delivers the
B. Legal evidence of the contract between the
goods to the carrier for
parties
transportation
o Person who pays the
consideration or on whose C. Actionable document under the rules of court
behalf payment is made – must be properly pleaded; the genuineness
(2) Carrier and due execution of which is deemed admitted
(3) Consignee – person to whom the goods unless specifically denied under oath by the
are to be delivered. He may be a third adverse parties
person who is not actually party to the
contract of carriage.
Shipment terms
• Serve to:
When a consignee becomes a party to the contract by o Determine the point at which
reason of either: the risk of loss passes from
✓ The relationship of agency between seller to buyer
the consignee and the o Determine what performance
shipper/consignor; by the seller amounts to tender
✓ The unequivocal acceptance of the which will put the buyer, if he
bill of lading delivered to the thereafter refuses to accept
consignee, with full knowledge of its delivery, in breach
contents; or o Used for quoting the price
✓ Availment of the stipulation pour
autrui, i.e., when the consignee
They include:
demands before the carrier the
o FOB (Free on Board) – risk
fulfillment of the stipulation made by
passes to the buyer FOB point
the consignor/shipper in the
(upon delivery to the carrier)
consignee’s favor, specifically the
- FOB Point of
delivery of the goods/ cargoes shipped
Destination – seller
still assumes risk until
Contract of Adhesion the goods reach the
point of destination

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 CDF- TRANSPORTATION LAW
o FAS (Free Alongside) – carriage
by water; seller relinquished
the risk the moment the goods
are delivered alongside the
vessel
- FAS Vessel – seller is
under no obligation to
see to the loading and
all that is required is
delivery to the wharf
- FOB Vessel – seller
must see to it that the
goods are loaded, and
his responsibility does
not cease until the
loading is complete
o CIF (Cost, Insurance, Freight) –
indicates that the price quoted
by the seller includes the
invoice price plus insurance
and freight
• Incoterms (International Commercial
Terms) – parties in international sales
transactions may expressly stipulate
that the “incoterms” and their meanings
prescribed by the ISS are adopted in the
agreement
BASIC STIPULATIONS
• Overland Transportation – Arts. 350-352
of the Code of Commerce
• Maritime Commerce
o Art. 706: stipulations that must
be included in the bill of lading;
o Arts. 707-718: rules that apply
to bill of lading in the absence of
Civil Code provision
o COGSA
• Electronic Documents – RA 8792 allows
the issuance of tickets in form of
electronic document
o Chapter I Part III – rules with
respect of carriage of goods
PROHIBITED AND LIMITING STIPULATIONS
Three kinds of limiting stipulations
1. One exempting the carrier from
any and all liability for loss or
damage occasioned by its own
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
negligence (invalid for being
contrary to public policy)
2. One providing for an
unqualified limitation of such
liability to an agreed valuation
(invalid for being contrary to
public policy)
3. One limiting the liability of the
carrier to an agreed valuation
unless the shipper declares a
higher value and pays a higher
freight (Valid and enforceable)
Prohibited Stipulations – Art 1745 NCC additional
invalid stipulations in the carriage of goods
Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public
policy
✓ That the goods are transported at the risk of the
owner or shipper;
✓ That the common carrier will not be liable for
any loss, destruction, or deterioration of the
goods
✓ That the common carrier need not observe any
diligence in the custody of goods
✓ That 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
Parties cannot stipulate to totally exempt the carrier
from exercising any degree of diligence
Neither can they stipulate that the degree of diligence be
less than the diligence of a good father of a family
May stipulate that the common carrier of goods exercise
diligence less that extraordinary diligence (3 requisites)
Reduction of diligence not allowed for passenger – Art.
1757
a. That the common carrier shall not be
responsible for the acts or omission of his or
its employees
b. 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
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 CDF- TRANSPORTATION LAW

c. That the common carrier is not responsible

for the loss, destruction, or deterioration of Shewaram v. Philippine Airlines, Inc. – limiting stipulation
goods on account of the defective condition (only P100 for each ticket liability for loss or damage or
of the car, vehicle, ship, airplane or other for delay in the delivery of the checked-in baggage)
equipment used in the contract of carriage printed at the back of the ticket and very small – not
“fairly and freely given,” in addition, the passengers did
Limiting Stipulations – Arts. 1746-1750 NCC not sign the ticket
• Purpose: to protect the common carrier
1746. An agreement limiting the common carrier’s • Limiting stipulation does not remove
liability may be annulled by the shipper or owner if the duty to exercise extraordinary
the common carrier refused to carry the goods diligence in the transportation of goods
unless the former agreed to such stipulation
Art. 1752. Even when there is an agreement limiting the
1747. If the common carrier, without just cause, liability of the common carrier in the vigilance over the
delays the transportation of the goods or changes the goods, the common carrier is disputably presumed to
stipulated or usual route, the contract limiting the have been negligent in case of their loss, destruction or
common carrier’s liability cannot be availed of in deterioration
case of the loss, destruction, or deterioration of the • Suppletory: COGSA (Section 4(5))- if
goods. goods are to be shipped from a foreign
port to the Philippines
1748. An agreement limiting common carrier’s o Liability of the carrier is 500
liability for delay on account of strikes or riots is USD per package in the absence
valid. of a shipper’s declaration of a
higher value in the bill of lading
o Parties may agree on another
Carrier is still liable even if the delay is caused by strikes
maximum amount provided it
or riots—not provide an escape from liability; it merely
is not less than 500 USD
allows limitation of liability
o Carrier or the ship shall not be
responsible in any event for
1749. A Stipulation that the common carrier’s loss, damage to or in
liability is limited to the value of the goods appearing connection with the
in the bill of lading, unless the shipper or owner transportation of the goods if
declares a greater value, is binding. the nature and value thereof
has been knowingly and
Ong Tiu v. Philippine Airlines – limiting stipulation similar fraudulently misstated by the
to the case of Shewaram, court sustained the validity of shipper in the bill of lading
the stipulation because they were printed in reasonably o Package – if goods are shipped
and fairly big letters and are easily read, in addition, in cartons, each carton is
passenger was a frequent passenger of PAL and a lawyer considered a package even if
and businessman they are stored in container
vans, given the number of such
units is disclosed
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 WHEN LIMITING STIPULATIONS CANNOT BE
it is reasonable and just under the circumstance, and INVOKED
has been fairly and freely agreed upon. (1) When the agreement limiting the
common carrier’s liability is annulled by
Just and reasonable would depend on the circumstances, the shipper or owner when the common
one of which is whether the carrier has a competitor – carrier refused to carry the goods; and
Art. 1751

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 CDF- TRANSPORTATION LAW

(2) If the carrier delays in the

transportation of the goods
(3) If the carrier changes the stipulated or CHAPTER 6 – ACTIONS AND DAMAGES IN CASE OF
usual route BREACH

AS A RECEIPT

Culpa contractual – breach of contractual obligations

Issuance of a bill of lading carrier the presumption that where the passengers or shippers suffered damages
the goods were delivered to the carrier issuing the
bill, for immediate shipment; competent and prima Culpa Contractual vs Culpa Aquiliana
facie, but not conclusive, evidence of the receipt of
the goods by the carrier—as between the consignor Point of Distinction Culpa Culpa
and receiving carrier Contractual Aquiliana
1. Source of Contract Quasi-delict
Obligation
“Said to weight” clause – said weight clause 2. Liability of No liability of Solidarily
• Shipper is solely responsible for the Employee Employee liable with
there being employer
loading while the carrier is oblivious of
no privity of
the contents of the shipment; weight contract
written on the bill and on the manifest 3. Availability of Due diligence Due diligence
is based only on the declaration of the Defense in selection in selection
shipper [weight only, no details as to and and
quantity or quality of the goods] supervision of supervision
• BEFORE THE PRESUMPTION OF employee is of employee
not a defense is a defense
NEGLIGENCE CAN OPERATE, THE
under Art
SHIPPER MUST PROVE THE ALLEGED 2180
LOSS. 4. In what Liable as Liable as
o If the shipper claims that there capacity liable contracting employer
was shortage in the goods that party
were delivered, the shipper
must prove such shortage.
Concurrent Causes of Action

AS DOCUMENT OF TITLE Negligent act that breaches the contract may give rise to
liability based on contract as well as quasi delict.
Delivered to bearer, or to order of any person named in
Drivers – direct and primarily liability based on quasi-
the document
delict or delict

Negotiation: Shipowners or operator – primarily liable under Art

• Bearer: actual delivery of the
instrument
• Order: endorsement of the person
whose order the goods are deliverable
Bill of lading is a symbol of the goods covered by it;
negotiation of the bill has the effect of manual delivery as
to constitute the transferee the owner of the goods
Person to whom the bill has been duly negotiated
acquires:
• Title to the goods
• Direct obligation of the bailee to hold
possession of the goods for him
2180 The owners and managers of an establishment or
enterprise are likewise responsible for damages caused
by their employees in the service of the branches in
which the latter are employed or on the occasion of their
functions.
Concurrence with Third Persons
Negligence of 3rd person concurs with the breach, 3rd
person’s liability is based on quasi-delict.

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 CDF- TRANSPORTATION LAW
Solidary Liability – negligence of carrier’s driver and 3rd
person concurs, the liability of carrier, driver and 3rd
person is joint and several.
Alternative causes of action may be brought subject to
bar for double recovery.
Alternative compensation scheme – mandatory
insurance coverage for passengers and cargos.
Elements of Cause of Action against the Carrier
1. Right of the plaintiff
2. Obligation of the defendant
3. Acts or omissions of the defendant which
violates the right of the plaintiff
If culpa contractual – plaintiff need not allege and prove
negligence, it is only necessary to allege that there are;
contract and damages sustained. Negligence is presumed
Recoverable 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. (1107a)
Carrier’s Right of Recourse – against employee who
committed the negligent, intentional or fraudulent act.
KINDS of DAMAGES (MENTAL)
1. Moral
2. Exemplary or Corrective
3. Nominal
4. Temperate or Moderate
5. Actual
6. Liquidated
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.
Actual/Compensatory Damages
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
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. 2200. Indemnification for damages shall
comprehend not only the value of the loss suffered, but
also that of the profits which the obligee failed to obtain.
(1106)
Art. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in
cases of temporary or permanent personal
injury;
- loss of what is already possessed (daño emergente)
(2) For injury to the plaintiff's business standing or
commercial credit.
- failure to receive a benefit that would have been
pertained to him (lucro cesante)
Proof required and such rests on the plaintiff
Determination of amount of liability – in accordance with
that declared in the bill of lading, shipper not being
allowed to present proof that goods declared therein
were articles of greater value and money.
Valuation is based on their value at the time of
destruction.
Damages in case of personal injury – all medical
expenses as well as other reasonable expenses that he
incurred to treat.
Damages in case of death – amount spent during wake
and funeral but expenses after burial not compensable.
Art. 2206. The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand
pesos (now P50,000), 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;
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 CDF- TRANSPORTATION LAW
(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.
Loss of earning capacity – established by documentary
proof.
XPN:
1. Self-employed earning less than minimum wage
2. Daily wage earner earning less than minimum
wage
Attorney’s fees (Is the exception to the general rule)
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 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;
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
(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.
**attorney’s fees may be awarded in action for breach of
contract of carriage
INTERESTS
- 6% per annum when claim for damages is not
based on obligation from loan or forbearance as
in contract of carriage
MORAL DAMAGES
- Physical suffering, mental anguish, fright,
besmirched reputation, wounded feelings, moral
shock
- May be recovered if it is the proximate result of
defendant’s wrongful act or omission
- Not awarded to punish defendant but to
compensate the victim or heirs
- General Rule: no moral damages may be
awarded where breach of contract is not
malicious, xpn contractual negligence or gross
negligence
Requisites (FIPA)
1. There must be an injury
2. Act or omission factually established
3. Act or omission is the proximate cause of the
injury
4. Predicated on cases stated in Art 2219
SPECIFIC CASES WHEN RECOVERABLE
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;
Page 24
 CDF- TRANSPORTATION LAW
(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.
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.
Factors to Consider (PAHO)
1. Extent of humiliation
2. Extent of pain or suffering
3. Official, political, social and financial standing
4. Age of the claimant
NOMINAL DAMAGES –left to the discretion of the court
-award is justified in the absence of competent proof as
to the specific amount of actual damages, thus proof of
damages not material
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. 2222. 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.
Art. 2223. The adjudication of nominal damages shall
preclude further contest upon the right involved and all
accessory questions, as between the parties to the suit,
or their respective heirs and assigns.
TEMPERATE OR MODERATE DAMAGES – definite
proof of pecuniary loss cannot be offered although court
is convinced that there has been such loss.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
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. 2225. Temperate damages must be reasonable
under the circumstances.
LIQUIDATED DAMAGES – those agreed upon by parties
to a contract, to be paid in case of breach thereof.
Ordinarily, the court cannot change such amount.
Art. 2227. Liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably reduced if they
are iniquitous or unconscionable.
EXEMPLARY OR CORRECTIVE DAMAGES
Requisites (EMB)
1. Imposed by way of example
2. Cannot be recovered as matter of right
3. Must be accompanied by bad faith or done with
wanton, fraudulent, oppressive or malevolent
manner
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.
Art. 2234. While the amount of the exemplary damages
need not be proved, the plaintiff must show that he is
entitled to moral, temperate or compensatory damages
before the court may consider the question of whether
or not exemplary damages should be awarded. In case
liquidated damages have been agreed upon, although no
proof of loss is necessary in order that such liquidated
damages may be recovered, nevertheless, before the
court may consider the question of granting exemplary
in addition to the liquidated damages, the plaintiff must
show that he would be entitled to moral, temperate or
compensatory damages were it not for the stipulation for
liquidated damages.
Art. 2235. A stipulation whereby exemplary damages
are renounced in advance shall be null and void.
Page 25
 CDF- TRANSPORTATION LAW

PART II – AVIATION LAW ▪ EXCEPTION: Foreign-owned or

registered aircraft may be
CHAPTER 7 – THE AIRCRAFT AND CIVIL AVIATION registered if utilized by
members of aero clubs
organized for recreation, sport
or the development of flying
APPLICABLE LAWS:
skills as a prerequisite to any
✓ New Civil Code provisions on Common Carriers aeronautical activities of such
✓ Civil Aviation Authority Act of 2008 RA 9497 clubs within the Philippines
✓ Civil Aviation Regulations issued by Civil airspace
Aviation Authority of the Philippines (CAAP) ▪ Certificate shall be conclusive
✓ RA 776 – economic regulation of air evidence of nationality for
transportation international purposes, but not
✓ Regulations issued by the Civil Aeronautics in any proceeding under the
Board laws of the Republic of the
✓ Treaties and conventions Philippines
o Warsaw Conventions – liabilities of the o Sec. 45 Application for Aircraft
carriers in international transportation Registration
by air o Sec. 46 Issuance of Certificate of
o Chicago Convention Dec. 7, 1944 – Registration
aircraft have the nationality of the State o Sec. 47 Nationality – Philippine
in which they are registered nationality
DEFINITION OF TERMS o Sec. 48 Revocation – for any causes
which renders the aircraft ineligible for
Aeronautics or aviation – science or art of flight registration
Civil aviation – operation of any civil aircraft for the o Sec. 54 Previously Unrecorded
purpose of general aviation operations, aerial work or Ownership
commercial air transport operations
Aircraft State of registry – state on whose register the aircraft is
– Any machine that can derive support in the entered
atmosphere from the reactions of the air other
than the reactions of the air against the earth’s CAAP – sole authority to register aircraft and liens,
surface mortgages or other interests in aircraft or aircraft engine
– Refers only to civil aircraft under the Civil
Aviation Act Requirements for eligibility for registration:
(1) The aircraft is owned by or leased to a
REGISTRATION OF AIRCRAFT citizen or citizens of the Philippines or
corporations or associations organized
Philippine aircraft – aircraft registered in the Philippines under the laws of the Philippines at
in accordance with the requirements of the Civil least 60% of whose capital is owned
Aviation Authority Act of 2008 (CAAA) by Filipino citizens; and
(2) The aircraft is not registered under
Chicago convention: “an aircraft cannot be validly the laws of any foreign country
registered in more than one State, but its registration
may be changed from one State to another “RP” – nationality mark for Philippine registered aircraft

Aircraft registration provisions of the CAAA
o Sec. 43 Establishment of Registry
o Sec. 44 Eligibility for Registration
▪ At least 60% capital is owned
by Filipino citizens
The certificate of registration is conclusive evidence of
ownership, except when such ownership is, or may be, at
issue.
RECORDING OF CONVEYANCES

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 CDF- TRANSPORTATION LAW
✓ Sec. 49 Conveyance to be Recorded
o Conveyance made or executed, which
affects the title to, or interest in, any
aircraft of Philippine registry, or any
portion thereof shall be valid only
against the person by whom the
conveyance is made or executed, his
heirs, assignees, executors,
administrators, devisees, or successors
in interest, and any person having
actual notice thereof
o Every such conveyance recorded in the
Authority shall be valid against all
persons, taking effect from the date of
its record in the books of the Authority,
and not from the date of its execution
✓ Sec. 50 Form of Conveyance
▪ Requirements for the
registration of documents
▪ Conveyance to be recorded
shall also state:
(a) The interest in the
aircraft of the person
by whom such
conveyance is made or
executed or, in the case
of a contract of
conditional sale, the
interest of the vendor;
and
(b) The interest
transferred by the
conveyance
✓ Sec. 51 Establishment of System of Recording
✓ Sec. 52 Method of Recording – record
conveyances delivered to it in the order of their
receipt, indexed to show:
(a) The identifying description of
the aircraft
(b) The names of the parties to the
conveyance
(c) The date of the instrument and
the date and time it is recorded
(d) The interest in the aircraft
transferred by the conveyance
(e) If such conveyance is made as
security for indebtedness, the
amount and date of maturity of
such indebtedness; and
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
(f) All particular estates,
mortgages, liens, leases, orders
and other encumbrances and
all decrees, instruments,
attachments or entries affecting
aircraft and other matters
properly determined under this
Act
✓ Sec. 53 Validity before Filing – no document
affecting the title to or any interest in such
registered aircraft, etc. shall be valid except as
between the parties thereto, unless the
document is registered
MARINE INSURANCE – Insurance over aircrafts falls
within the coverage of Marine Insurance under the
Insurance Code.
AIR TRANSPORTATION IN GENERAL
“Air commerce or commercial transport operation” –
refers to and includes:
o scheduled or non-scheduled air
transport services for pay or hire,
o the navigation of aircraft in furtherance
of a business,
o the navigation of aircraft from one place
to another for operation in the conduct
of business, or an aircraft operation
involving the transport of passengers,
cargo or mail for renumeration or hire
a. Domestic air commerce – commerce within the
limits of the Philippine territory
b. Domestic air transport – transportation within
the limits of the Philippine territory
c. Foreign air transport – air transportation
between the Philippines and any place outside it
or wholly outside the Philippines
d. International commercial air transport –
carriage by aircraft of persons or property for
renumeration or hire or the carriage of mail
between any two or more countries
PERSONS INVOLVED IN AIR TRANSPORTATION
Those regulated by CAAP
(1) Air carrier or operator – person who
undertakes, whether directly or indirectly, or by
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 CDF- TRANSPORTATION LAW

a lease or any other arrangements, to engage in CHARTER OF AIRCRAFT

air transportation services or air commerce
- May be Philippine Air Carrier or Foreign Air Regulated by CAB
Carrier
Charter flight or charter trip
(2) Philippine air carrier – air carrier who is a
- Air transportation performed by an air carrier
citizen of the Philippines
where the entire capacity of one or more
(3) Foreign air carrier or foreign operator – any
aircraft, or less than the entire capacity of an
operator, not being a Philippine air operator,
aircraft, has been engaged for the movement of
which undertakes, whether directly or indirectly
persons or their personal baggage or for the
or by lease or any other arrangement, to engage
movement of property on time, mileage or trip
in commercial air transport operations within
basis by:
borders or airspace of the Philippines, whether
(1) A person for his own use;
on a schedule or charter basis
(2) A representative (or representative
(4) Airman
acting jointly) of a group for the use of
o Any individual who engages, as the
such group; or
person in command or as a pilot,
(3) An airfreight forwarded holding a
mechanic, aeronautical engineer, flight
currently effective permit
radio operator or member of the crew,
Classifications:
in the navigation of aircraft while under
(1) On Route Charter – service performed by an air
way and
carrier between points which said carrier is
o Any individual who is directly in charge
authorized to provide service pursuant to its
of inspection, maintenance, overhauling
certificate of public convenience and necessity
or repair of aircraft, aircraft engine,
or foreign carrier permit
propellers, or appliances and
(2) Pro-rata Charter – a charter the cost of which is
o Individual who serves in the capacity of
divided among the passengers transported
aircraft dispatcher or air traffic control
(3) Single Entity Charter – charter the cost of
operator
which is borne by the charterer and not by
individual passengers, directly or indirectly
CAB – regulates persons and entities that are involved in (4) Mixed Charter – charter the cost of which is
the economic aspects of air transportation. borne, or pursuant to a contract may be borne,
partly by the charter participants and partly by
Airline companies the charterer
(1) General Sales Agent – sells or offers for sale
any air transportation or negotiates for or holds SOVEREIGNTY AND AIR FREEDOMS
himself by solicitation, advertisement, or
otherwise as one who sells, provides, furnishes, CHICAGO Convention – recognizes that every
contracts or arranges for, such air contracting State has complete and exclusive sovereignty
transportation over the airspace above its territory. Thus, consent is
(2) Cargo Sales Agent - …air transportation of necessary for the other States to operate within the
cargo territory of another.
(3) Air Freight Forwarders – any indirect air
carrier Requires that the two governments shall have negotiated
(4) Off-line Carrier – any foreign carrier not a bilateral treaty between them that will define the air
certificated by the Board, but who maintains traffic rights each grant to the other during the life of the
office or who has designated or appointed treaty
agents or employees in the Philippines, who
sells or offers for sale any air transportation…. Air Services Agreement – resulting agreement
(5) Air Taxi Operator – air carrier utilizing small
aircraft for charter trip and/or individual Air traffic rights – Freedom of the Air
service transportation within the territory

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 28

 CDF- TRANSPORTATION LAW
Freedoms enumerated by the International Civil Aviation
Organization (ICAO):
(1) First Freedom of the Air
• The right or privilege, in
respect of scheduled
international air services,
granted by one State to another
State or States to fly across the
territory without landing.
(2) Second Freedom of the Air
• …to land in its territory for
non-traffic purposes
(3) Third Freedom of the Air
• …to put down, in the
territory of the first State,
traffic coming from the home
State of the carrier. [fly in?]
• (Kuwait Airways Corp. v.
Philippine Airlines) The
privilege to put down
passengers, mail and cargo
taken on in the territory of the
State whose nationality the
aircraft possesses.
(4) Fourth Freedom of the Air
• …to take on, in the territory
of the first State, traffic
destined for the home State
of the carrier [fly out]
• (Kuwait) The privilege to put
down passengers, mail and
cargo destined for the territory
of the State whose nationality
the aircraft possesses.
(5) Fifth Freedom of the Air
• …to put down and take on, in
the territory of the first State,
traffic coming from or
destined to a third State
• (Kuwait) The right to carry
passengers from one’s own
country to a second country,
and from that country to a third
country
(6) Sixth Freedom of the Air
• The right or privilege, in
respect to scheduled
international air services, of
transporting, via the home
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
State of the carrier, traffic
moving between two other
States.
(7) Seventh Freedom of the Air
• …of transporting traffic
between the territory of the
granting State and any third
State with no requirement to
include on such operation
any point in the territory of
the recipient State, i.e., the
service need not connect to
or be an extension of any
service to/from the home
State of the carrier.
(8) Eighth Freedom of the Air
• The right or privilege, in
respect of scheduled
international air services, of
transporting cabotage traffic
between two points in the
territory of the granting State
on a service which originates or
terminates in the home country
of the foreign carrier or outside
the territory of the granting
State (“consecutive
cabotage”)
(9) Ninth Freedom of the Air
• The right or privilege of
transporting cabotage traffic of
the granting State on a service
performed entirely within the
territory of the granting State
(“stand alone cabotage”)
** cabotage traffic – the transport
of goods or passengers between
two points in the same country by
an aircraft registered in another
country
CAB has the indispensable authority to compel local
air carriers to comply with government determined
policies, even at the expense of economic rights; it has
ample power under its organizing charter, to compel an
airline, in proper cases, to terminate whatever
commercial agreements the carrier may have
(1) Sec. 10 RA 776. CAB is granted “general
supervision and regulation of, and
jurisdiction and control over, air
carriers as well as their property,
Page 29
 CDF- TRANSPORTATION LAW
property rights, equipment, facilities
and franchise.”
(2) Sec. 4(c). Mandates that the Board of
CAB consider in the exercise of its
functions “the regulation of air
transportation in such manner as to
recognize and preserve the inherent
advantages of, assure the highest
degree of safety in, and foster sound
economic condition in, such
transportation, and to improve the
relations between, and coordinate
transportation by air carriers.
Cabotage – two types: Consecutive Cabotage and Stand
Alone Cabotage (as defined above)
(1) Philippines has not granted a right of
cabotage
CHAPTER 8- OBLIGATIONS OF CARRIER IN AIR
TRANSPORT
EXTRAORDINARY DILIGENCE IN THE AIR
TRANSPORTATION
1. To make sure that the aircraft is airworthy
• Aircrafts are fit to transport goods and
passengers
• Aircraft must be in a condition that it
must be able to withstand the rigors of
the flight
Sec. 3 CAA: an aircraft, its engines, propellers, and
other components and accessories, are of proper
design and construction being consistent with
accepted engineering practice and in accordance
with aerodynamic laws and aircraft science.
2. That the vessel has a competent captain and
crew, and
3. That the captain and his crew exercised
extraordinary diligence in operating the aircraft
TARRIF SYSTEM
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Tariff is a rule or condition of air travel that regulates
and binds the airline and passengers. They are provided
for in the tickets that are binding although they are in a
nature of contracts of adhesion
CARE OF BAGGAGE
Air carriers are made liable in the following cases:
(1) The baggages of their passengers were
either damages or its contents were lost
or stolen
(2) The baggages were transported or
diverted to another place
(3) In case of off-loading of baggage
(4) When there was delay in the delivery of
the baggage; or
(5) If the baggage is lost altogether
Carry-on Baggage – Part 8 of the Civil Aviation
Regulations
(a) Adequately and securely stowed
(b) At least one crew member has verified
that each article of baggage has been
properly stowed in overhead racks or in
approved locations aft of the bulkhead
(c) Not stowed on location that would
cause location to be loaded beyond its
maximum placard mass limitation
Carriage of cargo in passenger compartments
(a) No person in allowed except as
prescribed by the Authority
(b) Cargo may be carried; requirements:
(8)
(c) Not be towed in toilets
(d) Cargo, including carry-on baggage – Not
be stowed against bulkheads or dividers
in passenger compartments that are
incapable of restraining articles and
unless they carry placard specifying the
greatest mass that may be placed there,
provided that: (4)
(e) Cargo, including carry-on baggage, may
be carried anywhere in the passenger
compartment of a small aircraft
• If it is carries in an approved
cargo rack, bin, or
compartment installed in or on
the aircraft
• If it is secured by a approved
means, or
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 CDF- TRANSPORTATION LAW
• Of it is carried in accordance
with each of the following: (8)
DUTY TO PASSENGER
Breach of contract – “failure without legal reason to
comply with the terms of a contract.” “failure, without
legal excuse, to perform any promise which forms the
whole or part of the contract.”
o Physical injuries to Passengers
o Downgrading and upgrading of
Passengers
o Delay and diversion of Flight
o Rude treatment
o Over-booking
o Cancellation due to Engine Malfunction
Denied boarding passengers
o General rule: air carrier is duty bound
to accept and board a passenger with
confirmed tickets if the passenger
presents himself on time in the airline
counter in the airport
o An operator may deny transportation if
a passenger
(1) Refuses to comply with the
instructions regarding exit
seating restrictions prescribed
by the CAAP; or
(2) Has handicap that can be
physically accommodated only
by an exit row seat
An air carrier will not be liable if the passenger failed to
present himself on time in the airport counter
▪ The burden of proving that the
passenger is a “no-show” rests
with the carrier.
Applicable rule when a passenger is denied boarding due
to honest mistakes: Economic Regulation No.7 – apply
to every Philippines and foreign air carrier with respect
to the following:
(1) Flights or portion of flights
within the territory of the
Philippines;
(2) Flights or portion of flights
from the territory of the
Philippines operated by a
domestic or foreign carrier;
(3) Denied boarding for reasons
other than no-show or
cancellations of booking
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
voluntarily made by the
passengers;
(4) Delayed flights; and
(5) Cancelled flights
✓ Honest Mistakes – the Economic Regulation is
designed to cover only honest mistakes on the
part of the carriers and excludes deliberate and
willful acts of non-accommodation. The carrier
would still be liable independent of the reason
for the denial of the boarding of a passenger if
the carrier’s officer or employee was guilt of
rude or uncalled for conduct and the passenger
was the victim of ill treatment.
✓ Overbooking – oversold flight
✓ Priority rules – For the purpose of determining
which passenger holding confirmed reserved
space shall be denied boarding on an oversold
flight:
1. Thru passengers over originating
passengers
2. Connecting confirmed passengers
3. Originating confirmed passengers
4. Passengers with conditional
reservation tickets
5. Chance passengers
Sec. 2 of ER No.7: definition of terms
▪ Cancellation – act of calling off
a flight with the uncertainty of
knowing when such flight will
happen
▪ Conditional reservation ticket
▪ Confirmed reserved space
▪ Delay – act of deferring the
flight to a later time
▪ Fare
▪ Regular fare
▪ Promotional fare
▪ Scheduled domestic carrier
▪ Scheduled foreign carrier
▪ Stop-over – deliberate
interruption of a journey by the
passenger, agreed to in advance
by the carrier, at a point
between the place of departure
and the place of destination
▪ Value of the first remaining
flight coupon – the applicable
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 CDF- TRANSPORTATION LAW
one-way fare, including any
surcharge, less any applicable
discount on the sector where
boarding is denied.
Other rules concerning denied-boarding passengers in
ER No.7
Sec. 5. Procedure for Denied Boarding
(a) Call attention of
passengers who would
voluntarily surrender
their confirmed
reserved spaces
(b) Such passengers
should be offered
benefits in exchange
for the same; and
(c) In case number of
seats is still
insufficient, the carrier
may then deny
passengers from
boarding, and it must
compensate such
passengers
No passenger shall be
denied from boarding for 2
consecutive times, on the
same day except in
circumstance set forth in
Sec.10.
Sec. 6. Cancellation – carrier should provide passengers
with the written or published statement of the case
Sec.7. Amount of Compensation for Denied Boarding
– including surcharges, of the remaining sector
paid to passengers:
✓ Holding confirmed reserved space and
✓ Who have presented themselves for carriage at
the proper time and place and complied with the
carrier’s check-in and reconfirmation
procedures and
✓ Who are acceptable for carriage under the
carrier’s tariff
✓ If compensation accepted, it shall constitute
liquidated damages
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
✓ In addition, passenger shall have priority
booking for the next available flight
✓ Also applies to passengers holding promotional
fares
Sec.8. Rights of passengers in case of cancellation for
causes attributable to the carrier
Air carrier shall provide the following
✓ Refreshment or meals
✓ Hotel accommodation
✓ Transportation from the airport to the hotel
✓ Free communication; and
✓ First aid medicine, if necessary bill
✓ In case passenger opts not to fly the ticket,
Reimbursement of the value of any fare, including taxes,
surcharges, of the sector cancelled; and
If both sectors are cancelled, the carrier shall reimburse
the total value of the fare, taxes and surcharges
Sec.9. Right of the passengers in case of delay
Delay for more than 2 hours:
✓ Refreshments or meals
✓ Free communication
✓ First aid medicine
✓ Flight deferred until the next day:
✓ Refreshments or meals
✓ Hotel accommodation
✓ Free communication
✓ If passenger opts not to fly the remaining sector,
reimbursement of the value of any fare,
not flown
Sec. 10. Exceptions to Eligibility.
Carrier shall be exempt from liability to pay denied
boarding compensation under the following instances:
✓ The flight for which the passenger holds
confirmed reserved space in unable to
accommodate him because
✓ Government requisition of space
✓ Substitute of equipment of lesser capacity when
required by operational, safety and/or security
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 CDF- TRANSPORTATION LAW
reasons, and other causes beyond the control of
the carrier
✓ The carrier arranges for comparable air
transportation, or for other transportation
accepted (i.e. used) by the passenger, which at
the time either of such arrangement is made, is
scheduled to arrive at the place of passenger’s
next stop-over, (or, if none, at the place of his
destination) not later than 3 hours in case of
domestic flight or not later than 4 hours In case
of international flights, from the scheduled time
of arrival of the flight on which he was denied
boarding or accommodation;
The carrier shall be exempt from liability for delay
and cancellation under the following instances:
(a) When due to
operational, safety
and/or security
reasons, force majeure,
weather, strikes, or
other causes beyond
the control of the air
carrier
(b) Fault is attributable to
the passenger
Sec.11. written explanation and tender of payment
Sec.12. written report on denied boarding,
cancellation and delay
o Economic Regulation No.9: Bill of rights
of air passengers – rights:
***DOTC-DTI Joint Administration Order No. 1: “air
carrier ticket constitutes a contract of carriage
between the air carrier and a passenger” – [correct
outline]
▪ Right to be provided with
accurate information before
purchase
▪ Right to receive the full value of
the service purchased
▪ Right to compensation
Inspection of aircraft and cargo – RA 6235 prohibits acts
inimical to civil aviation
(1) Aircraft companies which operate as public
utilities or operators of aircraft which are for
hire are authorized to open and investigate
suspicious packages and cargoes in the presence
of the owner or shipper, or his authorized
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
representatives if present…if the latter refuses,
the airline or air carrier is authorized to refuse
the loading thereof.
(2) Every airline ticket shall contain: “holder hereof
and his hand-carried luggage(s) are subject to
search for and seizure or, prohibited materials
and substances. A holder who refuses to be
searched shall not be allowed to board the
aircraft and such condition shall constitute a
part of the contract between the passenger and
the air carrier.”
• The Director General of CAAP is also authorized
to detain civil aircraft if:
1. The aircraft may not be airworthy; or
2. The airman may not be qualified or
physically or mentally capable for the
flight; or
3. The operation would cause imminent
danger to persons or property on the
ground
• The carrier is not deemed to have exercised
extraordinary diligence if it did not exercise its
duty to inspect as mandated by RA 6235 [duty to
inspect]
o Secs. 1 to 4
o Sec.5
▪ Explosive – any substance,
either solid or liquid, mixture r
single compound, which by
chemical reaction liberates
heat and gas at high speed and
causes tremendous pressure
resulting in explosion
▪ Flammable – any substance or
material that is highly
combustible and self-igniting
by chemical reaction
▪ Corrosive – any substance or
material, either liquid, solid or
gaseous, which through
chemical reaction wears away,
impairs or consumes any object
▪ Poisonous – any substance or
materials, except medical drug,
either liquid, solid or gaseous,
which through chemical
reactions kills, injures or
impairs a living organism or
person
• Dangerous goods ICAO
o Dangerous goods – articles or
substances which are capable of posing
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 CDF- TRANSPORTATION LAW
a risk to health, safety, property, or the
environment and which are shown in
the list of technical ICAO Instructions
o Nine classes:
1. Explosives
2. Gases
3. Flammable liquids
4. Flammable solids
5. Oxidizing substances and
organic peroxides
6. Toxic and infectious substances
7. Radioactive
8. Corrosive substances
9. Miscellaneous dangerous
substances and articles
CHAPTER 9- WARSAW CONVENTION
“The Convention for the Unification of Certain Rules
Relating to International Transportation by Air” October
12, 1929; Ratified in the Philippines November 9, 1950;
took effect on February 7, 1951
Amended by the Haque Protocol on September 28,
1955; Philippines acceded on November 30, 1966; took
effect February 7, 1951
Later amended by the Guatemala (1971) and Montreal
(1975) Protocols but the Philippines has not yet acceded
BINDING EFFECT
o Applies to all international
transportation of persons, baggage or
goods performed by an aircraft
gratuitously or for hire
o Applies with respect to delayed, lost
and damaged baggage
PURPOSES
o Designed to protect and promote the
international airline industry
o SC: to provide uniformity if rules
governing claims arising from
international air travel; thus, it
precludes a passenger from maintaining
an action for personal injury damages
under local law when his or her claim
does not satisfy the conditions of
liability under the Convention
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
CONSTITUTIONALITY
SC: “the treaty…was a joint legislative-
o
executive act. The presumption is that it
was first carefully studied and
determined to be constitutional before
it was adopted and given force of law in
the country.”
o SC rejected the claim that the doctrine
of rebus sic stantibus applies. At the time
the Warsaw Convention was drafted,
the airline industry was still in its
infancy. However, that circumstance
alone is not sufficient justification for
the rejection of the treaty at this time.
COVERAGE – applies to international air carriage
Carrier is liable for damage in international air transport
in the following instances:
Art. 17. sustained in the event of the death or
wounding of a passenger or any other bodily injury
suffered by a passenger if the accident which cased the
damage so sustained took place on board the aircraft
or in the course if any operations of embarking or
disembarking.
This liability does not arise if a passenger’s injury results
from his own internal reaction to the usual, normal, and
expected operation of the aircraft.
Art. 18. (1) sustained in the event of the destruction
or loss of, or of damage to, any checked baggage, or any
goods, if the occurrence which caused the damage so
sustained took place during the transportation by air.
(2) the transportation by air…shall comprise the period
during which the baggage or goods are in the charge
of the carrier, whether in the airport or on board an
aircraft, or, in the case of a landing outside an airport, in
any place whatsoever.
(3) the period of transportation by air shall not extend to
any transportation by land, by sea, or by river performed
outside an airport. If, however, such transportation takes
place in the performance of a contract for transportation
by air, for the purpose of loading, delivery, or
transshipment, any damage is presumed, subject proof to
the contrary, to have been the result of an event which
took place during the transportation by air.
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 CDF- TRANSPORTATION LAW
Art. 19. Occasioned by delay in the transportation by air
of passenger, baggage, or goods.
Actions for damages, however founded, can only be
brought subject to conditions and limits set out therein.
Limitations:
Art. 22. (1) In the transportation of passengers, the
liability of the carrier for each passenger shall be limited
to the sum of 125,000 francs….Nevertheless, by special
contract, the carrier and the passenger may agree to a
higher limit of liability;
(2) In the transportation of checked baggage or of goods,
the liability of the carrier shall be 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 of 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 the
sum is greater than the actual value to the consignor at
delivery;
In case of loss, damage or delay of part of the registered
baggage or cargo, or of an object contained therein, the
weight to be taken into consideration…shall be only the
total weight of the package or packages concerned.
Nevertheless, when the loss, damages or delay…affects
the value of other packages covered by the same baggage
check or the same air way bill, the total weight of the
package/s shall also be taken into consideration
(3) As regards objects of which the passenger takes
charge himself, the liability of the carrier shall be limited
to 5,000 francs per passenger;
Limits prescribed…shall not prevent the court from
awarding, in accordance with its own law, in addition,
the whole or part of the court costs and of other
expenses of litigation incurred by the plaintiff.
MEANING OF INTERNATIONAL TRANSPORTATION
(1) The place of departure and the place of
destination are within the territories of
two contracting countries regardless of
whether or not there was a break in the
transportation or transshipment;
(2) The place of departure and the place of
destination are within the territory of a
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
single contracting country if there is an
agreed stopping place within a territory
subject to the sovereignty, mandate or
authority of another power, even
though the power is not a party to the
Convention.
PERIOD COVERED BY INTERNATIONAL
TRANSPORTATION
Period during which the baggage or goods are in charge
of the carrier, whether in an airport or on board an
aircraft, or, in the case of a landing outside an airport, in
any place whatsoever.
WHEN INTERNATIONAL CARRIER IS LIABLE
: if the passenger’s injury was inflicted:
(1) On board the aircraft or
(2) In the course of any of the operation of
embarking or
(3) In the course of disembarking or
(4) When there was or because of delay
(5) With respect to baggage or goods that
are checked-in, …if damage (a) occurred
during air transportation or (b) when
there is delay.
LIMIT OF LIABILITY
Warsaw Convention
✓ Injuries to passengers - 250, 000 francs
✓ Registered baggages and cargoes – 250 francs/
kg
✓ To objects the passenger takes charge of himself
– 5000 francs/passenger
Sec. 15 ER No.9 of CAB – based on Montreal Agreement
– rules on the limit liability for death or bodily injury to a
passenger
The limit of liability for each passenger for death,
wounding or other bodily injury shall be the sum of
$75,000, inclusive of legal fees and costs. Provided, in
case of a claim brought in a state where a provision is
made for a separate award for legal fees and costs, the
limit shall be the sum of $58,000, exclusive of legal fees
and costs. For domestic flights,…the same to be given in
Peso denominations.
The liability under such limit is independent of the
negligence of the carrier.
Page 35
 CDF- TRANSPORTATION LAW
Tariff limitations – (British Airways vs. CA) an air carrier
is not liable for the loss of baggage in an amount in
excess of the limits specified in the tariff….
Defenses against limit on liability – limit on liability is
not applicable in case of: (WWAGE)
(1) Willful misconduct
(2) Gross negligence
(3) Absence of baggage check
(4) If there was waiver of the part
of the carrier, and
(5) If the carrier is estopped from
invoking the provision on limit
of liability
TORT LIABILITY
o Complaint for quasi-delict can still be
filed even if filing is beyond the
prescriptive period provided for under
the Convention so long as it is within
the prescriptive period of 4 years
under the Civil Code
o Allegation of tort do not bring the case
outside the ambit of the Warsaw
Convention.
VENUE OF ACTION
2. Art. 28 (1). The plaintiff must bring the action
for damages before:
(1) The court where the carrier is
domiciled;
(2) The court where the carrier has its
principal place of business;
(3) The court where the carrier has an
establishment which the contract has
been made; or
(4) The court of the place of destination
Jurisdictional in character – dual concept: jurisdiction in
the international sense must be established in
accordance with Art. 28(1) of the Warsaw Convention,
following which jurisdiction of a particular court must be
established pursuant to the applicable domestic law.
NOTICE OF CLAIM OR COMPLAINT - Article 26
(1) Receipt by the person entitled to the
delivery of baggage or goods without
complaint shall be prima facie evidence
that the same have been delivered in
good condition and in accordance with
the document of transportation
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
(2) In case of damage, the person entitled to
delivery must complain to the carrier
forthwith after the discovery of the
damage, and, at least, within 3 days
from the receipt in case of baggage
and 7 days from the date of receipt in
the case of goods. In case of delay, the
complaint must be made at least
within 14 days from the date on which
the baggage or goods have been placed
at his disposal.
(3) Every complaint must be made in
writing upon the document of
transportation or by separate notice in
writing dispatched within the times
aforesaid. [condition precedent]
(4) Failing complaint within times
aforesaid, no action shall lie against the
carrier, save in case of fraud on his part.
▪ When period for giving
notice of claim not
applicable:
o If there is fraud on the
part of the carrier
o In addition, the failure
on the part of the
passenger to file notice
of claim within the
prescribed period is
also excused if such
delay can be
attributed to the acts
or omissions of the
carrier.
PRESCRIPTION - Article 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.
2. The method of calculating the period of
limitation shall be determined by the
law of the Court seised of the case.
Forecloses the application of our own rules on
interruption of prescriptive periods. Art. 29 (2), was
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 CDF- TRANSPORTATION LAW
intended only to let local laws determine whether an
action had been commenced within the two-year period,
and within our jurisdiction, an action shall be deemed
commenced upon the filing of a complaint.
The two-year prescriptive period does not apply if the
cause of action is based on quasi-delict.
SUCCESSIVE CARRIERS
Transportation to be performed by several successive
carriers shall be deemed, for the purposes of this
Convention, to be one undivided transportation, if it
has been regarded by the parties as a single operation,
whether it has been agreed upon under the form of a
single contract or a series of contracts, and it shall not
lose its international character merely because one
contract or series of contracts is to be performed entirely
within the territory subject of the sovereignty,
suzerainty, mandate of authority of the same high
contracting party.
Liability of agent – liable for its own negligent acts or
omission in the performance of its duties.
FORMALITIES
o Section 1 Passenger Ticket
o Section 2 Baggage Check
o Section 3 Air Waybill
o Effects of non-compliance – may result
in non-application of the limit of
liability (a defense in PAL vs. CA)
Airway bill – prima facie evidence of the conclusion of
the contract, of the receipt of the goods and of the
conditions of transportation.
PART III- MARITIME LAW
CHAPTER 10 – GENERAL CONCEPTS
Maritime Law – system of laws which “particularly
relates to the affairs and business of the sea, to ships,
their crews and navigation, and to marine conveyance of
persons and property”.
- Corpus of rules, concepts and legal practices
governing certain centrally important concerns
of the business of carrying goods and
passengers by water.
- Synonymous with admiralty law
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
- System of law which particularly relates to
marine commerce and navigation, to business
transacted at sea or relating to navigation, to
ships and shipping, to seamen, to transportation
of persons by sea and to marine affairs
generally.
Laws governing
1. Civil Code – primary law
2. Suppletory laws
a. Maritime Commerce of the Code of
Commerce
b. Salvage Law
c. Carriage of Goods by Sea (COGSA)
d. Ship Mortgage Decree of 1978
e. Other special laws
3. Treaties and Conventions –generally accepted
principles of international law as part of the law
of the land
a. UNCLOS
b. IMO (International Maritime
Organization)
c. SOLAS
d. Tonnage Convention
e. Treaties not acceded to by the
Philippines but are respected and/or
followed by Philippine vessels because
they form part of international customs
e.g. COLREGS
REAL AND HYPOTHECARY NATURE
-this nature distinguishes maritime law from civil law
and even that of mercantile law
As evidence of “real” nature of the maritime law we have:
1. The limitation of liability of the agents to the
actual value of the vessel and freight money
2. The right to retain the cargo and the embargo
and detention of the vessel even in cases where
the ordinary civil law would not allow more
than a personal action against the debtor or
person liable.
-simply means that the liability of the carrier in
connection with losses related to maritime contracts is
confined to the vessel, which is hypothecated for such
obligations or which stands as the guaranty for their
settlement.
LIMITED LIABILITY RULE: No Vessel, No Liability
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 CDF- TRANSPORTATION LAW
The shipowner’s or agent’s liability is merely coextensive
with his interest in the vessel such that a total loss
thereof results in its extinction.
Total destruction of the vessel extinguishes maritime
liens because there is no longer any res to which it can
attach.
Rationale of real and hypothecary nature of
maritime law: To offset against adverse conditions and
to encourage shipbuilding and maritime commerce, it
was deemed necessary to confine the liability of the
owner or agent arising from the operation of a ship to
the vessel, equipment, and freight, or insurance if any.
Coverage of Limited Liability
The related articles 837, 578 and 590 of the Code of
Commerce cover only: 1. Liability to third persons, 2.
Acts of the captain and 3. Collision (Aboititz Shipping
Corp vs General Accident Fire and Life Assurance Corp)
In Articles 578 – carrier cannot invoke Arts 1733 and
1735 of the NCC as it contains no provision regulating
liability of shipowners or agents in the event of total loss
or destruction of the vessel thus Code of Commerce
governs.
If the vessel is co-owned, the limited liability to third
persons shall be satisfied by the co-owners in
accordance with the ff;
Art. 590. The co-owners of a vessel shall be civilly
liable, in the proportion of their contribution to the
common fund, for the results of the acts of the
captain, referred to in Art. 587.
Each part-owner may exempt himself from this
liability by the abandonment before a notary of the
part of the vessel belonging to him.
SHIPOWNER ENTITLED TO LIMITED LIABILITY
-it is the owner of the vessel who is entitled to the benefit
of limited liability and is the very person for whom the
limited liability has been conceived to protect.
Example: bareboat or demise charter – charterer cannot
invoke Limited Liability rule against the shipowner who
has dominion over the vessel. The charterer or sub-
charterer whose rights cannot rise above of the ship
owner.
EXCEPTIONS TO LIMITED LIABILITY RULE
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
1. Where injury or death of passenger is due
either to the fault of the ship owner or to the
concurring negligence of the ship owner and
the captain
Examples:
• failure to maintain seaworthiness of
the vessel can be ascribed to shipowner
alone or concurrently with the captain.
• Carrying of passengers more than it
was allowed to carry
• Excessive amount of cargo
• Authorizing the voyage
notwithstanding its knowledge of
typhoon is tantamount to negligence
• Collision is imputable to both vessels,
each vessel shall suffer her own
damages and both solidarily liable for
the damages occasioned to their
cargoes
Burden of proof rests on ship owners or carrier and
failure to overcome such presumption of negligence,
limited liability rule cannot be invoked.
2. Where vessel is insured/ Insurance Claims
• Limited liability rule applies to paying
insurer when it exercises its right of
subrogation against the shipowner.
• Cause of action of insurer is same as
that of shipper, thus insurer is subject
to defences available to the shipowner
as if it were the shipper who directly
sued the ship owner.
3. Workmen’s compensation claims
• The liability is created by the statute to
compensate employees and laborers in
cases of injury received or inflicted by
them in the performance of their work
or employment, or to theirs in case of
death.
• Governed by the Labor Code thus
employer is not liable but the ECC
4. Jurisprudence - repairs of the vessel completed
before its loss (Government of the Philippines vs
Maritime)
ABANDONMENT
-Abandonment of the vessel, its appurtenances and
freightage is indispensable requirement before ship
owner can enjoy the benefits of limited liability rule.
As held in Philippine Shipping Company vs Garcia, the SC
held that in case of collisions, abandonment of the vessel,
is necessary to limit the liability of the shipwoner to the
Page 38
 CDF- TRANSPORTATION LAW
extent of the value of the vessel, its appurtenances and
freightage.
The only instance where such abandonment is
dispensed with is when the vessel is entirely lost. Thus
obligation is thereby extinguished.
PROCEDURE FOR ENFORCEMENT
• (Aboitiz Shipping Corporation vs General
Accident Fire and Life Assurance Corp Ltd) – SC
held that the rights of parties to claim against the
agent or owner of the vessel may be compared to
those creditors against an insolvent corporation
whose assets are not enough to satisfy the totality
of claims against it.
• Recovery is limited to what is left in the name of
the corporation.
• Remaining value of accessible assets in cases of
lost vessel are the insurance proceeds and
pending freightage for the particular voyage.
• No claimant can be given precedence over the
others by the simple expedience of having filed
or completed its action earlier than the rest.
• Execution of judgment in earlier completed
cases, even those final and executor, must be
stayed pending completion of cases occasioned
by the subject sinking.
• Total proceeds of insurance and pending
freightage should be deposited in trust.
PROTESTS
Definition: it is a written statement of the master of the
vessel or any authorized officer, attested by proper
officer or notary, to the effect that damages have been
suffered by the ship.
It is required under Code of Commerce in the ff cases:
(CASH)
1. When vessel makes an arrival under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane
or the captain believes that the cargo has
suffered damages or averages
4. Maritime collisions.
When to file? Within 24 hours after a collision
How? Circumstances of the collision are declared or
made known to competent authority
Where? At the point of accident or first port of arrival in
the Philippines or the Philippine consul in a foreign
country.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
ADMIRALTY JURISDICTIONS
BP 129
(3) In all actions in admiralty and maritime
jurisdiction where he demand or claim exceeds
Three hundred thousand pesos (P300,000.00)
or , in Metro Manila, where such demand or
claim exceeds Four hundred thousand pesos
(400,000.00);
Two tests used to determine whether a case involving a
contract comes within the admiralty and maritime
jurisdiction of the court:
1. Locational (English Rule)
2. Subject matter (American Rule)
SC adopted the American Rule and held that whether the
contract is maritime depends not on the place where the
contract is made or executed, making the locality a test,
but on the subject matter of the contract, making the true
criterion a maritime service or a maritime transaction.
FORGEITURE DUE TO SMUGGLING
Tariff and Customs Code
1. Vessel is used “unlawfully in the importation or
exportation of articles into or from” the
Philippines
2. Articles are imported to or exported from “any
Philippine port or place, except a port of entry”,
or
3. If the vessel has a capacity less than 30 tons and
is “used in the importation of articles into any
Philippine Port or any place other than a port of
the Sulu Sea, where importation in such vessel
may be authorized by the Commissioner, with
the approval of the department head.”
MARINE POLLUTION DECREE
It is declared a national policy to prevent and control the
pollution of seas by the dumping of wastes and other
matter which create hazards to human health, harm
living resources and marine life, damage amenities, or
interfere with the legitimate uses of the sea within the
territorial jurisdiction of the Philippines.
Prohibited acts (see Marine Pollution Decree)
Exceptions:
Page 39
 CDF- TRANSPORTATION LAW

In cases of emergency imperiling life or property, or

unavoidable accident, collision, or stranding or in any
cases which constitute danger to human life or property CHAPTER 11- VESSELS
or a real threat to vessels, aircraft, platforms, or other
man-made structure, or if damping appears to be the
only way of averting the threat and if there is probability
that the damage consequent upon such dumping will be Definition: Under PD 474 - for the purposes of applying
less than would otherwise occur, and except as the laws and regulations implemented by the Maritime
otherwise permitted by regulations prescribed by the Industry Authority
National Pollution Control Commission or the Philippine
Coast Guard.
Any barge, lighter, bulk carrier, passenger ship, freighter,
tanker, container ship, fishing boats, or other artificial
Definitions: (see Marine Pollution Decree) contrivance utilizing any source of motive power,
designed, used or capable of being used as a means of
POLLUTION INSURANCE transportation operating either as a common carrier,
including fishing vessels covered under PD 43.
The liability of the ship owners and operators of ships
plying domestic trade are required under MARINA XPN:
Memo Circular No. 1, S 2009 to secure insurance to
insurance coverage for pollution liability. 1.Those owned and/or operated by the
AFP and by foreign governments for
The following ships are not covered:
military purposes, and
2. Bancas, sailboats and other waterborne
1. Government-owned ships not engaged in
commerce contrivance of less than 3GT and not
2. Non-motorized wooden hulled ships motorized.
3. Yatchs and pleasure crafts Domestic Shipping Development Act of 2004: Ship =
Vessel
MARINA Memo Circular Nos. 18-19 and 09-21 – ● Any kind, class or type of craft or
domestic operators are required to secure insurance artificial contrivance capable of floating
coverage for maritime accidents. in water, designed to be used, or
capable of being used as a means of
water transportation in the domestic
trade for the carriage of passengers or
Persons Amount of Risk Insured
cargo, or both, utilizing its own motive
Covered Coverage Against/Nature of
Compensation power or that of another.
Passengers P200,000 per Death - SC in Yu Con v. Ipil: Every kind of craft by
passenger whatever particular or technical name it may
Unmanifested P200,000 per Death now be known or which nautical advancement
Passengers passenger may give it in the future.
Survivors * P50,000 Survivorship - SC in Lopez v. Duruelo:
Coverage/Monetary
● Art. 835 Code of Commerce dealing with
Assistance
collision, vessels contemplated are sea-
Surviving *P50,000 per Monetary
Passengers passenger Assistance going vessels—merchant vessels and
marine shipping; vessels as are run by
*over and above the medical and hospitalization masters having special training, with
expenses and reasonable incidental expenses elaborate apparatus of crew and
equipment; vessels which are licensed
WRECK RECOVERY AND POLLUTION LIABILITY to engage in maritime commerce, or
commerce by sea, whether in foreign or
-separate requirement and is generally secured from a coastwise trade.
P&I Mutual Club which refers to group of shipowners ● Other vessels of a minor nature not
and bareboat charterers grouped together by becoming engaged in maritime commerce, such as
members of a Protection and Indemnity Mutual
river boats and those carrying
Association.

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 40

 CDF- TRANSPORTATION LAW

passengers from ship to shore, must be
governed, as to their liability to
passengers, by the Civil Code or other
appropriate special provisions of law.
OTHER VESSELS
Builders of vessels may employ the materials and follow,
with respect to their construction and rigging, the
systems most suitable to their interests. Shipowners and
seamen shall be subject to what the laws and regulations
of the public administration on navigation, customs,
health, safety of vessels, and other similar matters.

MARINA MC No. 05 S-2009 govern operation of International Convention on Load Lines 1966 –
motorized bancas that are traditionally built watercraft, provides for uniform rules with respect to the limits to
predominantly wooden-hulled and propelled which ships on international voyages may be loaded
mechanically, with or without outrigger having regard to the need of safeguarding life and
property at sea.
Required the registration of all motorized bancas and
International Convention on Tonnage Measurement
boat builders.
of Ships, 1969 – provides rules for the determination of
tonnage of ships engaged in international voyages.
Even carriage through boats and other small vessels may
partake the nature of a common carrier and are Gross tonnage – measure of overall size of the ship
governed by:
● Civil Code provisions on common Net tonnage – measure of the useful capacity of the ship
carrier
● Provisions of the Code of Commerce VESSEL AS PERSONAL PROPERTY
that apply to common carriers in
Art. 416 of the Civil Code and Art. 585 of the Code of
general
Commerce
Art. 585 - For all purposes of law not modified or
KINDS OF VESSELS (SOLAS 1974)
restricted by the provisions of this Code, vessels shall
1) A passenger ship is a ship which carrier more continue to be considered as personal property.
than 12 passengers
[implication] Mortgage on a vessel is in nature a chattel
2) A cargo ship is any ship which is not a
mortgage (Philippine Refining Company v. Jarque); record
passenger ship
of document affecting title to a vessel must be entered in
3) A tanker is a cargo ship constructed or adapted
the record of the Collector of Customs at the port of
for the carriage in bulk of inquiry cargoes of an
entry.
inflammable nature.
4) A fishing vessel is a vessel used for catching
Indicates that there are rules that are applicable to
fish, whales, seals, walrus or other living
Common Carriers which are similar to the rules that
resources of the sea
apply to real estate.
5) A nuclear ship is a ship provided with a nuclear
power
Under Article 573 of the Code of Commerce, transfer
6) “New ship” means a ship the keel of which is
of the vessel should be in writing and must be recorded
laid or which is at a similar stage of construction
in the appropriate registry.
on or after the date of coming into force of the
SOLAS 1974
ACQUISITION
7) “Existing ship” means a ship which is not a new
ship.
Vessels may be acquired or transferred by any means
recognized by law. Thus, vessels may be sold, donated
CONSTRUCTION, EQUIPMENT AND MANNING
and may be even be acquired by prescription.
Subject to the rules issued by MARINA, Coast Guard and
pertinent conventions like SOLAS 1974. By Article 712 – SOLTID-P

Art. 574 Code of Commerce Theory of Mode and Title

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 41

 CDF- TRANSPORTATION LAW

Ownership is acquired by another only if mode and title 1. Person who claims ownership must be
concurs in possession;
2. Possession must be for a period of 3
Mode years; and
• Specific cause which gives rise to them, as the 3. Possession must be in good faith
result of the presence of a special condition of ○ Presupposes possession in the
thing, of the aptitude of things and intent of concept of an owner
persons, and of compliance with the conditions ○ Co-owner, lessee, usufructuary,
established by law. trustee cannot be possessors in
good faith if they are in
• The proximate cause of the acquisition possession as such.

Title If the possessor is in bad faith, the acquisitive

prescription is extraordinary and the prescriptive period
• The juridical justification for the acquisition or a is 10 years
transfer of ownership or other real right
SALE
• The remote cause of the acquisition
In contract of sale, the mode of transferring title or
Vessels under the jurisdiction of the MIA can be ownership is tradition or delivery.
transferred only with the approval of the
administrative agency. In addition, after the approval, it Article 1477, NCC – ownership of thing sold, transferred
is required that the buyer, within 15 days from the to the vendee only upon actual or constructive
approval, secure a new Certificate of Philippine Registry delivery thereof.
and Certificate of Ownership However, it must be registered with MARINA to affect
third persons.
Must appear in a written instrument and inscribed in the
registry of vessels to produce any effect with respect to
third persons. Voluntary sale
of vessel Sale of vessel includes:
PRESCRIPTION ▪ Art. 576 - rigging, masts, stores and
engine of a steamer
Art. 573 Code of Commerce - Merchant vessel appurtenant thereto, which
constitute property which may be acquired and at the time belongs to the
transferred by any of the means recognized by law. The vendor
acquisition must appear in writing, which shall not Not considered included:
produce any effect to third person if not inscribed in the - arms, munitions of war,
registry of vessels. provisions and fuel
Vendor deliver to the purchaser a
certified copy of the record sheet of
Ownership also acquired by possession on good faith,
the vessel in the registry up to the
continued for 3 years, with a just title duly recorded.
date of the sale
In absence of any of these requisites, continuous ▪ Art. 577 If alienation of the vessel should be
possession for 10 years shall be necessary in order to made:
acquire ownership. ▪ While on its voyage
o Freightage of last
A captain may not acquire by prescription the vessel of cargo shall pertain
to the purchaser
which he is in command.
o Payment of crew
and other persons of
complement by the
Requisites to acquire ownership through ordinary purchaser
prescription:
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 42
 CDF- TRANSPORTATION LAW

▪ After the vessel has arrived the proceeding on behalf of

at the port of destination whoever may be concerned
o Freightage shall ▪ Art. 579 Sale at public auction
pertain to the Owner is ▪ After damage to the vessel
vendor constrained and
o Payment of crew, to sell the ▪ The impossibility of her
etc. by the vendor vessel being repaired, in order to
o Unless the contrary because continue the voyage had
is stipulated in repairs been shown
either case thereof are Subject to following rules (5)
▪ Art. 578 If no longer
(par. 1) ▪ Vessel being on voyage or possible
Sale of foreign port
vessel in a ▪ Owner/s voluntarily alienate
foreign port it CO-OWNER’S RIGHTS
▪ Either to Filipinos or to
foreigners domiciled in the If the vessel is sold to third persons, the co-owner is
Formal and capital or in a port of another given the right of redemption within 9 days following
registration country the inscription of the sale in the registry, and by
requiremen Bill of sale
depositing the price at the same time.
ts in order ▪ Executed before the consul
that a sale of RP at the port where
of a vessel voyage terminates
on voyage ▪ Inscribed in the registry of NATIONALITY OF VESSELS
or in a the consulate to effect third
foreign port persons Vessels that are duly registered in the Philippines are
becomes ▪ Consulate forward copy of considered Philippine Flag vessels
effective as the instrument of purchase
against and sale to the registry of Part VII of the UNCLOS sections 91 to 94 (pages 458-61)
third vessel where vessel is
persons inscribed and registered
▪ Art. 578 In every case of alienation, statement: Salient points of UNCLOS provisions:
(par. 2) ▪ Whether the vendor receives
its price in whole or in part, • Ships have the nationality of the State on whose
or flag they are entitled to fly.
▪ Whether he preserves in
whole or in part any claim on • There must exist a genuine link between the
vessel State and the ship
If sale made to a Filipino, fact shall be • Ships shall sail under the flag of one State only
stated in the certificate of navigation except in cases provided for in treaties or in
Vessel is UNCLOS, shall be subject to its exclusive
rendered jurisdiction
useless for The captain shall apply to • A ship may not change its flag during voyage
navigation ▪ The competent judge on or while in a port of call except in cases of real
▪ Art. 578 court of the port of arrival, transfer of ownership or change of registry.
(par. 3) should it be in the
Philippines; • Ships that sail flag of 2 or more States, using
▪ The consul of the RP should them according to convenience, may not claim
there be one if in a foreign any of the nationalities in question with respect
country, or to any other State, and may be assimilated to a
▪ The judge or court or to the ship without nationality.
local authority [in the foreign
country] RIGHTS UNDER THE TARRIF AND CUSTOMS CODE
The consul or the judge or court shall
order an examination of the vessel be Sec. 810. Basic privileges conferred by registration:
made ○ Right to engage in the Philippines
▪ Art. 578 Consignee or the insurer, or
coastwise trade
(par. 4) representative available
▪ Must be cited to take part on

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 43

 CDF- TRANSPORTATION LAW
○ Entitled to the protection of the
authorities and the flag of the
Philippines in all ports and on the high
seas, and
○ Secures the same privilege and
subjects to the same disabilities as
pertaining to foreign-built vessels
transferred abroad to citizens of the
Philippines
Registration is also required for shipping enterprises
engaged in overseas shipping to benefit under the
Philippine Overseas Shipping Development Act RA 7471
Section 8: Registration and Deletion of Vessels
All vessels owned by Philippine shipping enterprises and
availing the incentives under the act shall be registered
under the Philippine flag.
Vessel can only be deleted from the Philippines registry
after the MARINA has determines that:
• No other Philippine shipping enterprise is
interested in acquiring the vessel; or
• The vessel has to be scrapped
FLAGS OF CONVENIENCE
[General Rule:] Art. 92 UNCLOS. There must be genuine
link between the State and the ship to confer nationality
over the ship.
[Exception:] flag of convenience – instance when
countries may allow registration of vessels belonging to
nationals of other countries
When there is no genuine link between the State and
the ship, and the registration is just a matter of
convenience.
Reflected in either the absence or minimal regulation
of the registered vessel by the country
Philippines NOT a “Flag of Convenience” country
REGISTRATION OF VESSELS
Through the Maritime Industry Authority (MIA)
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
o Person who is the registered owner is
presumed to be the owner of the
vessel
o Sale or transfer of the vessel is not
binding on third persons unless the
same is registered
With respect to rights of 2 purchasers – the first to
register his acquisition of the vessel is one entitled to
enjoy the protection of the law, which considers him
absolute owner of the same.
REGISTER OF PHILIPPINE VESSELS
MARINA MC No. 2013-02 Jan. 18, 2013 – applicable to
all types of ships operating in the Philippine waters
regardless of size and utilization, whether with or
without power, including those below 3 GT, motorized or
non-motorized. Except: (WIFP)
1. Warships and naval ships;
2. Ships of the Philippine Coast Guard;
3. All ships of foreign registry
temporarily used in the Philippine
waters; and,
4. Inflatable boats used for rescue made
of either a single or more rubber tubing.
General provisions:
1. All ships of domestic ownership must
be properly registered and issued a
Certificate of Philippine Registry
(CPR) and Certificate of Ownership
(CO)
2. Ships acquired by bareboat charter
shall be issued a CPR co-terminus with
the period of the charter
3. Ships acquired through importation or
bareboat chartering may be issued
Provisional CPR valid for a maximum of
3 months or co-terminus with the
approved Authority to Import (AI), to
facilitate delivery.
4. A registry of ships shall be maintained
and kept open to free inspection
5. Registered ships may be deleted under
any circumstance enumerated in Sec. IV
of the Circular, and issued a Certificate
of Deletion
6. Any change or correction in the entries
of the CPR or CO shall require
reissuance of the certificates
7. All owners/ operators or charterers of
registered ships shall be required to
Page 44
 CDF- TRANSPORTATION LAW
pay annual tonnage fee, except those
of fishing vessels and non-motorized
ships below 3 GT
8. Any ship which has been
involved/used for smuggling or
carriage/ transport of illegal drugs
will NOT be issued CPR and CO
Other important terms
o Domestic Ownership – ownership
vested to citizens of the Philippines or
corporations, cooperative, or
associations organized under Phil laws
at least 60% of the capital stock is
owned wholly by Filipinos.
o Homeport – port where ship is
registered
o Port of Registry – port in the Phil
where the ship’s record of registry is
kept and maintained.
o Ship of Registration – documentation
and authorization of a ship to sail under
Phil flag
o Domestic Trade – carriage between 2
or more ports and places in the Phil
o Overseas Trade – transport of
goods/passengers and or vessel
operations outside the Phil including
those calls at Phil ports from foreign
ports and vice versa.
A new CPR and/or CO shall be re-issued under the
following circumstances:
1. Lost and damaged Certificates
2. Change of Ownership
3. Change of Homeport
4. Change of Engine
5. Change of Ship’s name
6. Change of Business name and/or
company address
7. Change of Ship’s particulars
8. Change of Trading Area
9. Change of Type of Ship
10. No more space for annotation of
mortgage
11. Corrections of Entry in the CPR/ CO
12. Ship alteration
SHIP’S MANIFEST
A declaration of the entire cargo
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Bill of lading – declaration of the specific cargo rather
than the entire cargo.
Rules as provided by MARINA MC No.13 s-2009: (TDA-
33)
1. The total number of passengers on
board shall not exceed the total number
of passengers allowed for each ship.
2. All passengers on board the ship shall
be duly manifested as reflected in the
Passenger Manifest
3. Manifest or passenger list should be
prepared and made available before
the ship leaves the port
4. Children 3 years and above shall be
counted as adult passengers and shall
be assigned seats
5. Children below 3yo shall be carried by
an adult at all times.
LOGBOOK
Official record of a ship’s voyage which its captain is
obligated by law to keep wherein he;
• records the decisions he has adopted
• a summary of the performance of the
vessel,
• and other daily activities
Evidence; legally binding and exception to the hearsay
rule, except when genuineness of an entry or
authenticity of the copy is at issue.
SAFETY REGULATIONS
Among others include:
• Measure to control overcrowding/overloading
and scalping of tickets
• Implementation of at least 10 minute film on
Safety measures
• Wearing of lifejackets during boarding and/or
prior to departure by all passengers in Open
Deck accommodations
• Implementation of voice tapes on Safety
Measures
• Regulation on dangerous and hazardous cargoes
• Installation of ship safety equipments
• Life jackets and lifebouys
Monitoring of compliance with rules by MARINA with
coordination of Philippine Coast Guard
MARINA shall have the power to inspect vessels and all
equipment on board
Page 45
 CDF- TRANSPORTATION LAW

CABOTAGE (right of cabotage)

The right of foreign vessels to engage in coastwide

shipping, that is, to provide service from one place
within the Philippines to another place in the Philippines

Governing rule: Secs. 810, 902,1009of the Tariffs and

Customs Code, and Secs. 5,6, and 7 of Domestic Shipping
Development of 2004

Right is provided under the Foreign Ships Co-Loading

Act RA 10668, July 21, 2015
o Foreign ships carrying imported
cargoes and cargoes are allowed to dock
in multiple ports in the country subject
to compliance with the clearance
requirement.

Foreign carrier is not public carrier and not a common

carrier.

REPAIR OF VESSELS

Ship repairers are liable to the ship owner for any

damage that was caused to the vessel while the same is
undergoing repairs. However, both ship repairer and
shipowner will shoulder the loss if they are equally
negligent.

With respect to the liability of the ship repairer, the

parties may validly agree to limit the repairer’s liability.
However, the validity of the limit liability would depend
upon the circumstance (i.e. when it is unconscionable)

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 46

 CDF- TRANSPORTATION LAW
CHAPTER 12- SHIP MORTGAGE AND MARITIME LIENS
Applicable Laws and Rules
✓ PD 1521 (Ship Mortgage Decree of 1978) –
Mortgage and other encumbrances over vessels
✓ MARINA MC No. 100 – implements
annotation/cancellation of mortgage and
transfer of rights and other encumbrances of
vessels as provided in PD 1521 and Sec 12 of EO
125
PD 1521 prevail with respect to preferred mortgage over
the New Civil Code and Code of Commerce
SHIP MORTGAGE DECREE SALIENT POINTS
Section 2. Who may Constitute a Ship Mortgage.
Any citizen of the Philippines, or any association or
corporation organized under the laws of the
Philippines, at least sixty percent of the capital of which
is owned by citizens of the Philippines may, for the
purpose of financing the construction, acquisition,
purchase of vessels or initial operation of vessels, freely
constitute a mortgage or any other lien or encumbrance
on his or its vessels and its equipment with any bank or
other financial institutions, domestic or foreign.
Purpose:
• financing the construction, acquisition, purchase
of vessels or initial operation of vessels
• Purpose is important in determining the
presence of preference
Section 3. Mortgage of Vessel of Domestic Ownership;
records.
(a) No mortgage, which at the time such mortgage is
made includes a vessel of domestic ownership, or any
portion thereof, as the whole or any part of the property
mortgaged, shall be valid, in respect to such vessel,
against any person other than the mortgagor, his
heir or assign, and a person having actual notice
thereof, until such mortgage is recorded
Section 4. Preferred Mortgages
(a) A valid mortgage which at the time it is made
includes the whole of any vessel of domestic
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
ownership shall have, in respect to such vessel
and as of the date of recordation, the preferred
status given by the provisions of Section 17
hereof, if
1. The mortgage is recorded as provided
in Section 3 hereof;
2. An affidavit is filed with the record of
such mortgage to the effect that the
mortgage is made in good faith and
without any design to hinder, delay, or
defraud any existing or future creditor
of the mortgagor or any lien or of the
mortgaged vessel;
3. The mortgage does not stipulate that
the mortgagee waives the preferred
status thereof;
Formal Requirements:
Ship mortgage must be recorded or registered,
otherwise it is void except as to the parties or their heirs
and assigns or persons with actual notice.
• the ship mortgage shall be considered preferred
mortgage or shall have preferred status only if
the ff requirements under Sec. 4 are complied.
1. Mortgage is recorded
2. An affidavit is filed with the
record of such mortgage to the
effect that the mortgage is
made in good faith and without
any design to hinder, delay, or
defraud any existing or future
creditor of the mortgagor or
any lien or of the mortgaged
vessel;
3. The mortgage does not
stipulate that the mortgagee
waives the preferred status
thereof;
• The affidavit of good faith that is required for
the preferred status of the mortgage is not
peculiar to ship mortgage. This is likewise
required for Chattel Mortgage under which the
mortgage is not valid as to third persons in the
absence of AFFIDAVIT OF GOOD FAITH.
• Additional requirements
1. Mortgage should cover the whole of the
ship
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 CDF- TRANSPORTATION LAW
2. Vessel must be of domestic ownership
Section 5. Certified Copies of Mortgage; exhibition.
The Coast Guard District or Station Commander upon the
recording of a preferred mortgage shall deliver two
certified copies thereof to the mortgagor who shall place,
and use due diligence to retain, one copy on board the
mortgaged vessel notice of which shall be posted in a
conspicuous place thereat and cause such copy and the
documents of the vessel to be exhibited by the master to
any person having business with the vessel, which give
rise to a maritime lien upon the vessel or to the sale,
conveyance, or mortgage thereof. The master of the
vessel shall upon the request of any such person, exhibit
to him the documents of the vessel placed on board
thereof. The requirement of this Section that a copy of a
preferred mortgage be placed and retained on board the
mortgaged vessel shall not apply in the case of a
mortgaged vessel which is not self-propelled (including
but not limited to, barges, scors, lighters, and car floats).
If the master of the vessel willfully fails to exhibit the
documents of the vessel or the copy of any preferred
mortgage thereof, the Philippine Coast Guard may
suspend or cancel the master's license.
Section 6. Prior and Subsequent Maritime Liens on
Mortgaged Vessel.
The mortgagor (1) shall, upon request of the mortgagee,
disclose in writing to him prior to the execution of any
preferred mortgage, the existence of any maritime lien,
prior mortgage, or other obligation or liability upon the
vessel to be mortgaged, that is known to the mortgagor,
and
(2) without the consent of the mortgagee, shall not
incur, after the execution of such mortgage and
before the mortgagee has had a reasonable time in
which to record the mortgage and have indorsements in
respect thereto made upon the documents of the vessel,
any contractual obligation creating a lien upon the vessel
other than a lien for wages of stevedores when employed
directly by the owner, operator, master, ship's husband,
or agent of the vessel, for wages of the crew of the vessel,
for general average, or for salvage, including contract
salvage, in respect to the vessel, tonnage dues and all
other charges (not to exceed P20,000) of the Philippine
Government in respect to the vessel.
Section 7. Record of Notice of Claim of Lien on
Mortgaged Vessel; discharge of lien
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
(a) The Coast Guard District or Station
Commander of the port of documentation shall,
upon the request of any person, record notice of
his claim of a lien upon a vessel covered by a
preferred mortgage, together with the nature,
date of creation, and amount of the lien, and the
name and address of the person. Any person
who has caused notice of his claim of lien to be
so recorded shall, upon a discharge in whole or
in part of the indebtedness, forthwith file with
the Coast Guard District or Station Commander a
certificate of such discharge. The Coast Guard
District or Station Commander shall thereupon
record the certificate.
(b) The mortgagor upon a discharge in whole or
in part of the mortgage indebtedness, shall
forthwith file with the Coast Guard District or
Station Commander for the port of
documentation of the vessel, a certificate of such
discharge duly executed by the mortgagee. Such
Coast Guard District or Station Commander shall
there upon record the certificate. In case of a
vessel covered by a preferred mortgage, the
Coast Guard District or Station Commander at
the port of documentation shall endorse upon
the documents of the vessel, or direct the Coast
Guard District or Station Commander at any port
in which the vessel is found, to so endorse, the
fact of such discharge.
Section 8. Conditions Precedent to Record; interest on
Preferred Mortgage
(a) No mortgage shall be recorded unless it
states the interest of the mortgagor in the vessel,
and the interest so mortgaged.
(b) No mortgage, notice of claim of lien, or
certificate of discharge thereof, shall be
recorded unless previously acknowledged
before the Coast Guard District or Station
Commander of the port of documentation or a
notary public or other officer authorized by a
law of the Philippines to take acknowledgment
of deeds or before a Philippine consul or
consular agent.
(c) In case of a change in the port of
documentation of a vessel of the Philippines, no
mortgage shall be recorded at the new port of
documentation unless there is furnished to the
Coast Guard District or Station Commander of
such port, together with the copy of the
mortgage to be recorded, a certified copy of the
record of the vessel at the former port of
documentation furnished by the Coast Guard
District or Station Commander of such port. The
Page 48
 CDF- TRANSPORTATION LAW
Coast Guard District or Station Commander at
the new port of documentation is authorized
and directed to record such certified copy.
Section 10. Lien of preferred Mortgage; foreclosure;
jurisdiction; procedure
A preferred mortgage shall constitute a lien upon the
mortgaged vessel in the amount of the outstanding
mortgage indebtedness secured by such vessel.
Upon the default of any term or condition of the
mortgage such lien may be enforced by the mortgagee
by suit in remaining admiralty, wherein the vessel
itself may be made a partly defendant and be
arrested in the manner as provided in Section 11
hereof.
Original jurisdiction of all such suits is granted to the
Court of First Instance of the Philippines exclusively. In
addition to any notice by publication, actual notice of
commencement of any such suit shall direct, to (1) the
master, other ranking officer, or caretaker of the vessel,
and (2) any person who has recorded a notice of claim of
an undischarged lien upon the vessel, as provided in
Section 7 hereof, unless after search by the mortgage
satisfactory to the court, such mortgagor, master, other
ranking officer, caretaker, or claimant is not found within
the Philippines. Failure to give notice to any such person,
as required by this Section, shall be liable to such person
for damages in the amount of his interest in the vessel
terminated by the suit.
Meaning of Preferred Mortgage and Maritime Lien
A preferred mortgage shall constitute a lien upon the
mortgaged vessel in the amount of the outstanding
mortgage indebtedness secured by such vessel.
• The preference is not absolute because there are
other claims that prevail over the ship mortgage
as enumerated in Sec 17.
Maritime Lien – privileged claim on a vessel for some
service rendered to it to facilitate its use in navigation. It
is a special priority right in a ship given to a creditor by
law as security for a debt or claim subsisting from the
moment the debt arises with right to have the ship sold
and debt paid out of the proceeds.
• In the Philippines, it is akin to mortgage lien that
in spite of transfer of ownership,the lien is not
extinguished.
• It is inseparable from the vessel and until
discharged, it follows the vessel.
• It is in a nature and character of a proceeding a
quasi in rem.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Section 11. Arrest of Vessels
Upon the filing of the petition for the judicial
foreclosure of a Preferred Ship Mortgage, or
immediately thereafter, the applicant may
• apply ex-parte for an order for the arrest of
the mortgaged vessel or vessels and the
judge shall immediately issue the same,
• provided that it is made to appear by
affidavit of the applicant, or of some other
person who personally knows the facts that
a default in the mortgage has occurred and
that applicant files a bond executed to the
adverse party in an amount to be fixed by
the judge, not exceeding the applicant's
claim, conditioned that the latter will pay all
the costs which may be adjudged to the
adverse party and all damages which he
may sustain by reason of such arrest, if the
court shall finally adjudge that the applicant
was not entitled thereto.
Section 12. Discharge of Order of Arrest; Counterbond
At any time after an order of arrest has been granted, the
party whose vessel or vessels had been arrested, or the
person appearing in his behalf, may, upon reasonable
notice to the applicant, apply to the judge who granted
the order, or to the judge of the court in which the action
is pending, for an order discharging the order of
arrest. That judge shall order the discharge of the arrest
if a cash deposit is made, or counterbond executed to the
creditor is filed, on behalf of the adverse party, with the
clerk or judge of the court where the application is made
in an amount double the value of the claim to secure the
payment of any judgment that the creditor may recover
in the action.
Section 13. Discharge of Order of Arrest for Improper or
Irregular Issuance
The party whose vessel/s has been arrested may also, at
any time either before or after the release of the arrested
vessel, or before any arrest or seizure has been effected,
upon reasonable notice to the creditor, apply to the
judge who granted the order, or to the judge of the court
in which the action is pending, for an order to discharge
the order of arrest or seizure on the ground that the
same improperly or irregularly issued. After hearing, the
judge shall order the discharge of the order of arrest or
seizure if it appears that it was improperly or irregularly
issued and the defect is not cured forthwith.
Section 14. Extrajudicial Foreclosure
Page 49
 CDF- TRANSPORTATION LAW
The provisions of the Chattel Mortgage Law on the
remedy of extra-judicial foreclosure of mortgages in so
far as they are not inconsistent herewith shall still
apply.
Section 17. Preferred Maritime Lien, Priorities, Other
Liens
(a) Upon the sale of any mortgaged vessel in any extra-
judicial sale or by order of a district court of the
Philippines in any suit in rem in admiralty for the
enforcement of a preferred mortgage lien thereon, all
pre-existing claims in the vessel, including any
possessory common-law lien of which a lien or is
deprived under the provisions of Section 16 of this
Decree, shall be held terminated and shall thereafter
attach in like amount and in accordance with the
priorities established herein to the proceeds of the sale.
The preferred mortgage lien shall have priority over
all claims against the vessel, except the following claims
in the order stated:
(1) expenses and fees allowed and costs taxed by the
court and taxes due to the Government;
(2) crew's wages;
(3) general average;
(4) salvage; including contract salvage;
(5) maritime liens arising prior in time to the recording
of the preferred mortgage;
(6) damages arising out of tort; and
(7) preferred mortgage registered prior in time.
(b) If the proceeds of the sale should not be sufficient to
pay all creditors included in one number or grade
The residue shall be divided among them pro rata.
All credits not paid, whether fully or partially shall
subsist as ordinary credits enforceable by personal
action against the debtor.
The record of judicial sale or sale by public auction shall
be recorded in the Record of Transfers and
Encumbrances of Vessels in the port of documentation.
Explanation for Sec 17
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
• The above enumerated claims are therefore
maritime liens that attaches to the vessel and
notice of their existence is not necessary.
• Claims are not based on possession
• PD 1521 in the order of preference in the
satisfaction of claims against vessels prevails
over the concurrence and preference of credits
in the New Civil Code
• Statute of Frauds is inapplicable as this maritime
lien is based on law (PD 1521) and not to any
contract or agreement
EXECUTORY CONTRACT DOCTRINE – a lien does not
attach for breach of executor contract even though the
contract is the type which normally gives rise to a lien.
Liability arises in admiralty for breach of contract but if
the parties have performed his obligation, his remedy
against the other is only for breach in an action in
personam.
Example: there is no lien in favour of a person who has
not yet delivered supplies to the vessel even if there is
already a valid contract.
PRESCRIPTION AND LACHES – enforcement of
maritime lien imposed by special law prescribes in 10
years. (Art. 1144 of the NCC)
Laches may also lie if there was unreasonable delay on
the part of the claimant in asserting his rights.
Section 18. Suit in Personam in Admiralty on Default
(a) Upon the default of any term or condition
of a preferred mortgage upon a vessel, the
mortgagee may, in addition to all other remedies
granted by this Decree, bring suit in personal in
admiralty in a district court of the Philippines,
against the mortgagor for the amount of the
outstanding mortgage indebtedness secured by
such vessel or any deficiency in the full payment
thereof.
Section 21. Maritime Lien for Necessaries; persons
entitled to such lien
Any person furnishing repairs, supplies, towage, use of
dry dock or marine railway, or other necessaries to any
vessel, whether foreign or domestic, upon the order of
the owner of such vessel, or of a person authorized by
the owner, shall have a maritime lien on the vessel,
which may be enforced by suit in rem, and it shall be
necessary to allege or prove that credit was given to the
vessel.
Explanation for Sec 21
Page 50
 CDF- TRANSPORTATION LAW
• The maritime liens that are superior to the
preferred mortgage includes maritime liens for
necessaries
Requirements for a maritime lien for necessaries which
in enforceable by suit in rem; (BCCO)
1. The necessaries must have been furnished to
and for the benefit of the vessel;
2. The necessaries must have been necessary for
the continuation of the voyage of the vessel.
3. The credit must have been extended to the
vessel
4. The necessaries must be ordered by persons
authorized to contract in behalf of the vessel
Section 22. Persons Authorized to Procure Repairs,
Supplies, and Necessaries
The following persons shall be presumed to
have authority from the owner to procure
repairs, supplies, towage, use of dry dock or
marine railway, and other necessaries for the
vessel: The managing owner, ship's husband,
master or any person to whom the management
of the vessel at the port of supply is entrusted.
No person tortuously or unlawfully in
possession or charge of a vessel shall have
authority to bind the vessel.
Persons presumed to have authority from owner;
1. Managing owner
2. Ship’s husband
3. Master
4. Any person to whom the management of the
vessel at the port of supply is entrusted
• No person tortuously and unlawfully in
possession or charge of the vessel shall have the
authority to bind the vessel
Section 23. Notice to Person Furnishing Repairs,
Supplies, and Necessaries
The officers and agents of a vessel specified in Section 22
of this Decree shall be taken to include such officers and
agents when appointed by a character, by an owner pro
hac vice, or by an agreed purchaser in possession of the
vessel; but nothing in this Decree shall be construed to
confer a lien when the furnisher know, or by exercise of
reasonable diligence could have ascertained, that
because of the terms of a charter party, agreement for
sale of the vessel, or for any other reason, the person
ordering the repairs, supplies, or other necessaries was
without authority to bind the vessel therefor.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
• No lien is conferred when the furnisher know, or
by exercise of reasonable diligence could
ascertain that the person ordering the repairs,
supplies, etc was without authority to bind the
vessel
• As long as the expense on the vessel is
indispensable to its maintenance and navigation,
it may properly be treated as maritime lien for
necessaries
Maritime Tort – civil wrongs committed on navigable
waters
Any conduct which is tortuous under general law and
which is connected with the ship or its uses creates a
maritime lien.
It includes: collision claims and personal injury claims.
Salvage Lien – either ex contractu or imposed by Act
2616, is given preference because of the benefit
conferred in preserving the value of the vessel and cargo
Subrogation – a third person who satisfies the
obligation to an original maritime lienor may claim from
the debtor because the third person is subrogated to the
rights of the maritime lienor over the vessel.
It is the transfer of all the rights of the creditor to the
third person, who substitutes him in all his rights.
When proceeds not sufficient - If the proceeds of the
sale should not be sufficient to pay all creditors included
in one number or grade, the residue shall be divided
among them pro rata. All credits not paid, whether fully
or partially shall subsist as ordinary credits enforceable
by personal action against the debtor.
Section 24. Waiver of Right to Lien
Nothing in this Decree shall be construed to prevent the
furnisher of repairs, supplies, towage, use of dry dock or
marine railway, or other necessaries, or the mortgagee,
from waiving his right to a lien, or in the case of a
preferred mortgage lien, to the preferred status of such
lien, at any time by agreement or otherwise.
WAIVER OF LIEN – furnishers of repairs, supplies,
towage etc are not prevented from waiving their right to
a lein or in case of preferred mortgage lien, to the
preferred status of such lien, at any time by agreement
or otherwise.
Section 25. Existing Mortgages Not Affected; exception
This Decree shall not apply
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 CDF- TRANSPORTATION LAW
(1) to any existing mortgage, or
(2) to any mortgage hereafter placed at any vessel under
an existing mortgage, so long as such existing mortgage
remains undischarged. The Decree shall, however, apply
to mortgages executed pursuant to Presidential Decree
No. 214, provided, that no vested rights of third parties
are affected thereby.
Section 27. Port of Documentation
Whenever in the Ship Mortgage Decree of 1978 the
words "port of documentation" are used, they shall be
deemed to mean the port of registry of the vessel.
TESTS TO DETERMINE PRESENCE OF LIEN
1. Crescent Petroleum Ltd vs M/V Lok
Maheshwari –on issue WON such lien exists or
WON the court has or will exercise jurisdiction -
law of the country where the supplies were
furnished which must be pleaded and proved.
2. Lauritzen vs Larsen- multiple contact test (in
the absence of Congressional directive), the ff
factors are considered:
a. Place of the wrongful act
b. Law of the flag
c. Allegiance or domicile of the injured
d. Allegiance of defendant shipowner
e. Place of contract
f. Inaccessibility of forum
g. Law of the forum
*factors are applicable not only to personal injury claims
arising under the Jones Act but to all matters arising
under law in general.
3. Factors provided in Restatement (Second) of
Conflicts of Law - In the absence of an effective
choice of law by the parties, the forum contracts
to be considered are;
a. place of contracting
b. place of negotiation of contract
c. place of performance
d. location of subject matter of contract
e. domicile, residence, nationality, place of
incorporation and place of business of
the parties
MARINA RULES : See MARINA MC No. 100
Mortgage with Non- maritime Property – mortgage
shall not be held a preferred mortgage unless the
mortgage provides for the separate discharge of such
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
property by the payment of specified portion of the
mortgage indebtedness. The property whose separate
discharge must be provided for is the non-maritime
property.
• If preferred mortgage so provides for separate
discharge, the amount of the portion of such
payment shall be endorsed upon the documents
of the vessel.
• These rules do not apply to mortgage over
“vessel and her feight” as freight in this situation
is considered part of the vessel for such purpose.
• It is more advisable to take separate mortgages
on the maritime and non-maritime property.
Fleet mortgage – mortgage on two or more vessels.
Mortgage may provide for separate discharge of
each vessel by payment of a portion of indebtedness.
• In case such mortgage does not provide for
separate discharge of a vessel, mortgage
may nonetheless be a preferred mortgage
• If no such separate discharge and vessel is
sold upon court order in suit in rem in
admiralty, court shall determine portion of
mortgage indebtedness increased by 20%
which is in the opinion of the court;
a. Approximate value of all the vessels
covered by the mortgage
b. Upon payment of which, the vessel shall
be discharged
Arrest and foreclosure
• Upon default of mortgagor
• In a suit in admiralty
• Upon filing of petition for foreclosure
• Court will order arrest upon ex parte application
supported by affidavit of person who knows of
the facts
• Filing of bond
Foreclosure is an alternative remedy. Another remedy is
specific performance in a suit in personam in admiralty.
Page 52
 CDF- TRANSPORTATION LAW
CHAPTER 13 – PERSONS WHO TAKE PART IN
MARITIME COMMERCE
Liability of Ship Owners and Ship Agents
• The shipowner “propietario” (owner of the
vessel) is the person primarily liable for
damages sustained in the operation of vessel
• Shipowner is civilly liable for the acts of the
captain and he can only escape from his civil
liability by abandoning his property in the ship
and any freight that he may have earned in the
voyage
• “Naviero” – term used in the Code of Commerce
o Construed to include the shipowner,
ship agent and even the charterer who
is considered as owner pro hac vice
o Must be understood to refer to the
person undertaking the voyage
Ship Agent
• The person entrusted with provisioning of the
vessel, or who represents her in the port in
which she happens to be
• Jointly and severally liable with the owner
Extent of liability
• The joint and several liability applies to both for
breach of contract and extra-contractual
obligation such as tort
• Liability subject to limited liability rule
o Article 586
▪ Shipowner and ship agent shall
be civilly liable for the acts of
the captain and for the
obligations contracted by the
latter
▪ Provided that the creditor
proves that the amount claimed
was invested for the benefit of
the vessel
▪ Ship agent is the person
entrusted with provisioning or
representing the vessel in the
port it may be found
o Article 587
▪ The ship agent shall also be
civilly liable for the indemnities
in favor of third person which
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
may arise from the conduct of
the captain in the care of the
goods which he loaded on the
vessel
▪ But the ship agent may exempt
himself by abandoning the
vessel with all her equipment
and the freight it may have
earned during the voyage
• Liability of shipowners – justification:
o If the shipowner derives profits from
the results of the choice of the captain
and the crew, when the choice turns out
successful, it is also just that he should
suffer the consequences of an
unsuccessful appointment
o Partidas – he who enjoys the benefits
derived from a thing must likewise
suffer the losses that ensue therefrom
When the Captain acts in excess of Authority
• The shipowner and ship agent are liable in
certain cases even if the captain has exceeded
his authority if the proceeds of an obligation
redounded to the benefit of the vessel
• Article 588
o 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
o Nevertheless, if the amounts claimed
were invested for the benefit of the
vessel, the owner or agent shall be
responsible
Liability for Extra-Contractual Obligations
• Art. 587 imposes obligation in favor of third
persons directly on the shipowner and the ship
agent; the latter are liable for the tortuous acts
of his agent
• The shipowner and ship agent, in turn, can make
the captain liable for his negligence under Arts.
612 and 618 of the Code of Commerce
• If the cause of action is quasi-delict under Art,
2176 of the NCC, there is vicarious liability on
the part of the shipowner under Art, 2180 NCC.
Page 53
 CDF- TRANSPORTATION LAW
The liability is direct and primary, and solidary
with the employee.
o While negligence if the employee must
be established, there instantly arises a
presumption that there was negligence
on the part of the master or employer in
the selection and supervision of the
employee
o The shipowner-employer can escape
liability if he can prove that he
exercised due diligence in the selection
and supervision of the employee
Part Owners
• Rights of co-owners of vessels are provided for
under Arts. 589 to 594:
o Article 589. Partnership shall be
presumed established by the co-owners
▪ Governed by the resolutions of
the majority
▪ If only 2 part-owners,
disagreements shall be decided
by member having the largest
interest. If interests are equal, it
should be decided by lot
▪ Person having smallest share
has 1 vote; others have number
of votes as they have parts
equal to smallest vote [total
share ÷ smallest share = no. of
votes]
▪ Vessel may not be detained,
attached or levied upon
execution in its entirety for the
private debts of a part owner,
but limited to the interest of the
latter on the vessel, without
interfering with the navigation
o Art. 590. Civil liability in proportion to
their interest; each may exempt himself
from liability by abandoning the part
belonging to him before a notary
o Art. 591
▪ All part owners shall be
proportionally liable for
expenses for repairs and other
expenses incurred by virtue if a
resolution of the majority;
▪ Likewise, proportionally liable
for expenses for the
maintenance, equipment, and
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
provisioning of the vessel,
necessary for navigation
o Art. 592. Resolution of the majority
shall bind the minority
▪ With regard to the repair,
equipment, and provisioning of
the vessel in the port of
departure, unless the minority
members renounce their
interests
▪ Relating to dissolution of the
partnership and sale of the
vessel
• Sale at public auction,
unless co-owners
unanimously agree
otherwise
• Right or repurchase
and redemption
o Art. 593. Co-owners shall have
preference in her charter, under same
conditions and price
▪ If two or more claim this right,
the one having greater interest
is preferred
▪ If they have equal interests,
matter decided by lot
o Art. 594. Co-owners shall elect
manager who is their ship agent;
appointment is revocable at will of the
members
Powers and Functions of Ship Agent
Whether acting agent of the owner of the vessel or as
agent of the charterer, ship agent is liable as long as he is
the one that provisions of represents the vessel.
Effect if ordinary agent only
-an agent is not a ship agent if its only function is limited
to informing the consignee of the arrival of the vessel in
order for the latter to immediately take possession of the
cargoes.
-not an agent if he has no hand in the provisioning of the
vessel thus NCC governs, making him personally liable to
whom he contracts.
Powers:
• Article 596. Ship agent may discharge the
duties of the captain, subject to the
qualifications provided under Art. 609
• Art. 597. Ship agent shall
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 CDF- TRANSPORTATION LAW
o Designate and come to terms with the
captain, and
o Contract in the name of the owners,
who shall be bound in all that relate to
the requirements of navigation
• Art. 598. Limitation on Power
o Unless these are granted in the
certificate of appointment, or
authorized by its owner or by the
resolution of the majority co-owners,
ship agent may not: [OMI]
▪ Order a new voyage, or
▪ Make contracts for a new
charter, or
▪ Insure the vessel
o If he insures vessel without
authorization, he shall be subsidiarily
liable for the solvency of the insurer
• Art. 599. Duty to Account
o The results of each voyage
o Without prejudice to always having the
books and correspondence relating to
the vessel and its voyages at their
disposal
• Reimbursement and Liabilities
o Art. 600
▪ After the account of the
managing agent has been
approved, the co-owners shall
pay in proportion to their
interest
▪ In order to enforce payment,
the managing agent is entitled
to an executory action (“accion
ejecutiva”)
o Art. 601
▪ Should there be any profits, co-
owners may demand of the
managing agent their
proportional share of the
amount by means of an
executory action
o Art. 602. Ship agent shall indemnify the
captain for all expenses incurred with
his funds or that of others, for the
benefit of the vessel
Discharge of Captain and Crew
• Discharge of the captain and crew is subject to
the provisions of the Labor Code for those
employed for domestic transportation and
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
commerce, and the rules promulgated by POEA
for seamen hired for overseas employment
• (Arts. 603, 604) If contracts of the captain and
crew are not for definite period or voyage, their
discharge is at the discretion of the ship agent
• (Art. 605) If the contracts should be for definite
period or voyage, they may be discharged only
after the fulfillment of their contracts, except by
reason of: [THIRD]
o Insubordination in serious matters
o Robbery
o Theft,
o Habitual drunkenness, or
o Damage caused to the vessel or to its
cargo through malice or manifest or
proven negligence
• If the captain is a co-owner of the vessel
o He may not be discharged unless the
ship agent returns to him the amount of
his interest on the vessel (Art. 606)
o If he obtained 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
causes in Art. 605 (Art. 607)
• (Art. 608) In case of voluntary sale of the vessel
o All contract between the ship agent and
the captain shall terminate
o Right to indemnity reserved to the
captain
o If the vendor becomes insolvent, vessel
sold shall remain subject to the security
of the payment of indemnity
Captains and Masters of Vessels
• In Yu Con v, Gilcerio Ipil, et al., SC quoted Spanish
commentaries explaining that the name of
captain or master is given, according to the kind
of vessel, to the person in charge of it
o Captain – those who govern vessels that
navigate the high seas, or ships of large
dimensions and importance, although
they are engaged in the coastwide trade
o Masters – those who command smaller
ships engaged exclusively in the
coastwide trade
• Terms are synonymously used in the Code of
Commerce
• Definition under MARINA,
o Master – person having command of the
ship, domestic and international trade
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 CDF- TRANSPORTATION LAW
o Boat captain – person authorized by the
MARINA to act as officer and/or in
command of a boat/ship or has
qualification/license to act as such
Qualifications
• Art. 609. Captains, masters or patrons of vessels
must be
o Filipinos,
o Have legal capacity to contract,
o Prove the skill, capacity, and
qualifications necessary to command
and direct the vessel, as established by
marine or navigation laws, ordinances,
or regulations
o Must not be disqualified according the
same (laws, etc.) for the discharge of the
duties of the position
o If owner desires to be the captain but
has no legal qualifications, he is limited
to the financial administration of the
vessel
Powers and Functions
• (Inter-Orient Maritime Enterprise, Inc., et al. v.
CA)
o Captain of a vessel is a confidential and
managerial employee; one who has
command of a vessel
Three distinct roles:
1. He is a general agent of the shipowner;
Has authority to sign bills of lading, carry goods aboard
and deal with the freight earned, agree upon rates and
decide whether to take cargo
Has legal authority to enter into contracts with respect
to the vessel and the trading of the vessel, subject to
applicable limitations
2. He is commander and technical director of the vessel;
and (analogous to a CEO), the most important role
Operation and preservation of the vessel during its
voyage and the protection of the passengers (if any) and
crew and cargo
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
3. He is a representative of the country under whose flag
he navigates
• Powers and obligations, and procedure for their
exercise under the Code of Commerce
o Art. 610. Inherent powers
1. To appoint and make contracts
with crew in absence of the
ship agent, and to propose crew
should agent be present; ship
agent may not employ crew
against the captain’s express
refusal
2. To command the crew and
direct the vessel
3. To impose correctional
punishment, holding a
preliminary hearing on crimes
committed on board the vessel
on the seas
4. To make contracts for the
charter of the vessel in the
absence of the ship agent or its
consignee
5. To adopt all proper measures
to keep the vessel well supplied
and equipped
6. To repairs on the hull and
engines of the vessel and in its
rigging and equipment in
urgent cases while in a voyage
o Art. 611. In order to comply with his
obligations, if the captain has no funds
or does not expect to receive any, he
shall obtain the fund in the successive
order below:
1. By requesting said funds
2. By applying to the consignee of
the cargo or those interested
therein
3. By drawing on the ship agent
4. By borrowing by means of a
loan on bottomry (must apply)
5. By selling a sufficient amount
of the cargo (must apply)
o Art. 612. Inherent obligations (16)
Discretion of Captain or Master
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 CDF- TRANSPORTATION LAW
• To decide what the safety of the ship and of its
crew and cargo specifically requires on a
stipulated ocean voyage
• 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 the voyage which are
reasonable necessary for the protection and
preservation of the interests under his charge,
whether those be of the shipowners, charterers,
cargo owners or of underwriters
• Compaignie de Commerce v. Hamburg
Liability of Captains and Masters
• Art. 618. The captain shall be civilly liable to the
ship agent, and the ship agent to the third
persons who may have made contracts with the
captain (8 instances)
• Art. 619. Unless, contrary has been agreed upon,
that captain shall be liable for the cargo
o From the time of it is delivered to him at
the dock or afloat alongside the vessel
at the port of loading
o Until he delivers it on shore or on the
discharge wharf at the port of unloading
• Art. 620. Captain shall not be liable
o Damages caused to the vessel or to the
cargo by force majeure
o Obligations he may have contracted for
the repair, equipment, and provisioning
of the vessel, unless he expressly bound
himself personally or signed the bill of
exchange or promissory note in his
name
• Art. 621.
o A captain who borrows money on the
hull, engine, rigging or tackle [h.e.r.t] of
the vessel, or pledged or sells
merchandise or provisions outside the
cases and without formalities
prescribed under this code shall be
liable for the principal, interest, and
costs and shall indemnify for the
damages caused
o He who commits fraud in his account
shall
1. Pay the defrauded amount and
2. Subject to the provisions of the
Penal Code
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Pilotage – process of directing or conducting the
movement of a ship
Pilot
- In maritime law, a person duly qualified, and
licensed, to conduct a vessel into or out of ports,
or in certain waters
- In broad terms, includes both:
1. Those whose duty is to guide vessels
into or out of ports, or in particular
waters, and
2. Those entrusted with the navigation of
vessels on the high seas
• Person taken on board at a particular place for
the purpose of conducting a ship through a river,
road or channel, or from a port
• Compulsory pilotage is being implemented in
the Port of Manila (Sec. 8, Art. III of Philippine
Ports Authority Administrative Order No. 0385,
47)
• Sec. 11. Liability for damage:
o Harbor Pilot providing the service to a
vessel shall be responsible for the
damage caused to a vessel or to life and
property at ports due to his negligence
or fault
o He can only be absolved from liability if
the accident is caused by force majeure
or natural calamities provided he has
exercised prudence and extra diligence
to prevent or minimize damage
• Sec. 32. Duties and responsibilities:
o Pilot responsible for the direction of a
vessel from the time he assumes his
work as a pilot thereof until he leaves it
anchored or berthed safely; Provided,
however, his responsibility shall cease at
the moment the Master neglects or
refuses to carry out his order
Master and Pilot
• Duties of a pilot in relation to the master in Far
Eastern Shipping Co. v. CA
o The pilot supersedes the master for the
time being in the command and
navigation of the ship, and his orders
must be obeyed in all matters
connected with her navigation
o Pilot becomes the master pro hac vice
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 CDF- TRANSPORTATION LAW
o However, the master may and should
interfere when the pilot is obviously
incompetent or physically incapacitated
(i.e. intoxicated). It is his duty to refuse
to permit the pilot to act
o If the master does not observe that a
compulsory pilot is incompetent or
physically incompetent, the master is
justified in relying on the pilot, but not
blindly
o The master is still in command of the
vessel, except so far as her navigation is
concerned, and must cause the ordinary
work of the vessel to be properly
carried on and the usual precaution
taken
▪ Exercise reasonable care and
vigilance commensurate with
the circumstances
Shipowner and Pilot
• In general, pilot is personally liable for damages
caused by whose own negligence or default to
the owners of the vessel, and to third parties for
damages sustained in a collision
• Maritime tort – negligence of the pilot in the
performance of duty
• In case of collision, the colliding vessel is prima
facie responsible, hence, the burden of proof is
upon party claiming benefit of the exemption of
liability. It must be shown affirmatively that the
pilot is at fault, that there is no fault on the part
of the officers and the crew, which might have
been conducive to the damage
• However, the fact that the law compelled the
master to take the pilot does not exonerate the
vessel from liability
o It must be shown affirmatively that the
pilot was at fault, and not fault on the
part of the officers and crew
o The parties who suffer are entitled to
remedy against the vessel, and are not
under necessity to look for the pilot
o The owners of the vessel are
responsible to the injured party for the
acts of the pilot, and they must be left to
recover the amount against the pilot
Pilot and his Association
• The fact that the pilot is a member of an
association does not make the latter jointly and
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
severally liable because there is no employer-
employee relationship
• Association exercise no control over the pilot
once they take the helm of the vessel
• They are also not partnerships because the
members donot function as agents for the
association or for each other
• Associations are not liable for negligently
assuring the competence of their members; as
professional associations, they made no
guarantee of the professional conduct of their
members to the general public
Other Code of Commerce Provisions on Captains
• Art. 613. Captain who navigates for freight in
common or on shares may not make any
separate transaction for his own account; should
he do so, profits belong to the other persons
interested, bear losses exclusively
• Art. 614. A captain who fails to perform his
undertaking shall indemnify for all losses he
may cause without prejudice to criminal
penalties
• Art. 615. Captain cannot have himself
substituted without consent of the agent. He
shall be liable for all acts of the substitute, and
the agent may discharge them
• Art. 616. If provisions and fuel consumed before
arriving, captain shall order arrival at nearest
port to get supply, or compel persons having
such provisions to deliver for the common
consumption, paying the price thereof.
• Art. 617. Loans on respondentia contracted by
the captain 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 loan on bottomry previously
contracted on the vessel and any other kind of
lien or obligation against the vessel. In case of
violation, principal, interest, and costs shall be
for his personal account, and ship agent may
discharge him
• Art. 622. Should the captain learn of the
presence or privateers or men of war against his
flag, he is obliged to make the nearest neutral
port, inform his agent or shippers, and wait to
sail under convoy, until danger is over, or
receive express orders
• Art. 623. If he should be attacked or cargos
forcibly taken, captain shall make an entry in his
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 CDF- TRANSPORTATION LAW

freight book and prove the fact before a 10. Paramedics

competent court at the first port he touches. He 11. Major Patron
shall be exempt from liability after the force 12. Minor Patron
majeure has been proved 13. Boat Captain
• Art. 624. A captain whose vessel has gone 14. Marine Diesel Mechanic
through a hurricane or who believes that the 15. Electrician
cargo has suffered damages or averages, shall 16. Ratings – crew member other that the
make a protest before a competent authority at master or an officer
the first port he touches, within 24-hours
following his arrival and ratify it. Regulation of Merchant Marine Profession
• Same manner with ship wreck, make sworn
statement together with saved crew, verified by • Governed by special laws and pertinent rules
the competent authority or consul. issued by MARINA and the Board of Marine
• Art. 625. As soon as captain arrives at the port of Deck Officers
destination, he should get necessary permission • Philippines Merchant Marine Officers Act of
and perform other required formalities, and 1998
deliver cargo without defalcation. o Sec. 4. Definitions
(a) Practice of Merchant Marine
Profession – profession
Officers and Crew of Vessels requiring the application of
fundamental and known
• Complement of a vessel shall be understood as principles of navigation,
all the persons on board…; but it shall not seamanship and engineering to
include the passengers or the persons whom the the peculiar condition and
vessel is transporting requirements of on board
• “Seafarer” as defined under RA 10635 – any management, operation anf
person who is employed, engaged or works in maintenance of main
onboard ships, whether or not such ships are propulsion and auxiliary
engaged in domestic or overseas trade. Under engines, stability and trim of
MARINA MC No. 137, they are: vessel and cargo handling
1. Master – person having command of the o [others if required]
ship
2. Deck officer
3. Chief Engineer – senior licensed marine Minimum Safe Manning
engineer responsible for mechanical
and electrical installations of the ship • Officers manning the merchant vessel shall have
4. Engineer Officer all the qualifications imposed by the Philippines
5. Radio Officer Marine Merchant Act and other special laws or
6. Ratings man – member of the ship’s regulations
crew other than the master or officer • It is also required that there is sufficient number
• MARINA MC No. 148 specifies officers for of officers and crew that are serving in the
domestic trade: vessel
1. Officer – member of crew other than the • Philippines subscribes to the rules provided for
master in the Convention on Standard of Training,
2. Master Certification and Watchkeeping of Seafarers
3. Chief Mate – next in rank to master 1978 (STCW ’78), as implemented in MARINA
4. Deck Officer STCW Administration Act of 2014
5. Chief Engineer Officer • Certificates issued by MARINAA
6. Second Engineer Officer o Certificate of Competency
7. Engineer Officer o Certificate of Endorsement
8. Medical Practitioner o Certificate of Proficiency
9. Radio Offices

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 59

 CDF- TRANSPORTATION LAW
Security of Tenure
• Matters concerning dismissal and disciplinary
action of officers and crew of merchant vessels
in domestic trade or coastwide shipping must be
in accordance with the Labor Code
• For those working in foreign vessels involved in
overseas shipping, there must be compliance
with applicable laws on overseas employment
and regulations issued by the POEA
• Seafarers deployed overseas are considered
contractual employees
• Applicable special laws: Migrant Workers and
Overseas Filipino Act of 1995, also POEA RR
Governing the Recruitment and Employment of
Seafarers May 23, 2003
• POEA Standard Employment Contract for
Seamen – imposes standard contract provision
including:
o Termination of Employment
o Repatriation
o Termination due to Shipwreck
o Termination due to vessel sale, lay-up
or Discontinuance of Voyage
o Termination due to Unseaworthiness
Other Officers and Crew Under the Code of
Commerce
• Sailing Mate/Chief Mate – second chief of the
vessel; second in command
Chief Mate as defined – deck officer next in rank to
the master whom the command of the ship will fall
in the event of the incapacity of the captain
-also a managerial employee because he performs
functions of an executive officer next in command to
the captain and in the performance of such
functions, he is vested with powers or prerogatives
to lay down and execute management functions.
• Second Mate and Marine Engineer
• Crew
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. If the sickness should come from injury
received in the service or defense of the vessel, the
seaman shall be attended and cured at the expense of
common funds.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Art. 645
-if seaman should die during voyage, his heirs will be
given the wages earned and not received according to his
contract and cause of deaths
• Supercargoes – are persons who oversees cargo
and its sale, keeps account and record
transactions. The powers and responsibilities of
captains 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.
CHAPTER 14- CHARTER PARTIES
CHAPTER 14 Charter Parties
- Taken from Carta Partita – “Divided document”
o Refers to the ancient practice of writing
out the terms and conditions of the
contract in duplicate on one piece of
parchment and then dividing it down
the middle thus providing each party a
copy
- In the early days of commerce, charterers, with
less cost but with convenience, simply leased
ships from the shipowners for the conveyance of
their goods from one point of destination to
another, or of their own person in order to
transact commerce in far-away places.
- Today, still prevailing. MARINA Memo Circular
No. 182-s2003, allows the registration of
merchant vessels under certain conditions even
If they are only on a bareboat charter.
Definition
- (Caltex (Phil.) Inc. v. Sulpicio Lines, Inc. etc.) a
contract whereby an entire ship, or some
principal part of the ship, is let by the owner
thereof to a merchant or other person for a
specified time or use for thee conveyance of
goods, in consideration of the payment of
freight.
- Often referred to as “mercantile lease”
- It may also involve the transportation of persons
from one port to another
Different Kinds of Charter Parties
1. Bareboat Charter or Demise Charter
o Shipowner leases to the charterer the
whole vessel, transferring to the latter
the entire command, possession and
consequent control over the vessel’s
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 CDF- TRANSPORTATION LAW
navigation, including the master and the
crew.
o Charterer gains possession of the vessel
“bare” hence the bareboat
o Charterer assumes the customary rights
and liabilities of the shipowner in
relation to third persons. Thus, he
becomes the owner pro hac vice of the
vessel since he mans the vessel with his
own set of master and crew, effectively
becoming the owner for the voyage or
service stipulated, subject to any
liability for damages arising from
negligence
2. Contract of Affreightment
o Subdivision:
i. Time Charter – vessel is leased
for a fixed period of time
ii. Voyage Charter – vessel is
leased for a single or particular
voyage
o Charterer hires the vessel only, with the
shipowner providing for the provisions
of the ship, wages of the master and
crew, and the expenses for the
maintenance of the vessel
Effect of Charter on Character of Carrier
General Rule: character of common carrier as such is not
affected by the charter party if the same is a contract of
affreightment
• In the case of a time-charter or voyage charter, 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
• In the case of bareboat or demise charter, when
the charter includes both the vessel and its crew,
a common carrier becomes private
Persons who May Make Charter
GR: owner or owners of the vessel
Broker may also intervene in the execution of the charter
between the principals.
(in case of discrepancy between copy of the broker and
the parties, that of the broker’s would prevail if the same
should have been kept in accordance with the law,)
1. Charterer – by himself, may sub-charter the
entire vessel to a third person but only when
there is no prohibition in the original charter.
The subcharterer, where entered into, is an
independent contract by itself involving only
the chartererer and the subcharterer and
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
therefore does not give rise to any
contractual relation between general owner
and subcharterer.
2. Part Owners – enjoy preference in the charter
of the vessel over other persons who offer equal
conditions and freight
3. Ship Agent – NOT allowed to make contracts for
new charter unless he is properly or duly
authorized by the owner, or by virtues of an
authority given by a resolution of the majority of
the co-owners,
4. Captain or Master – with inherent power to
enter into valid and binding charter parties, BUT
ONLY in the event of the absence of the ship
agent or consignee, AND ONLY if he acts in
accordance with the instruction of the agent or
owner and protects the latter’s interest.
o Validity of the charter is not affected if
the captain or master who executed the
charter violated the order or
instructions of the agent or owner. The
agent or owner shall have a right of
action to recover damages against the
captain or master.
Requisites of a Valid Charter Party
- Governed by the general principles of ordinary
contracts; parties are free to stipulate upon the
terms and conditions provided that they are bot
contrary to law or public policy
- Requisites:
(1) Consent of the contracting parties
(2) An existing vessel which should be
placed at the disposition of the shipper
(3) Freight; and
(4) Compliance with the formal requisites
prescribed under Art. 652 of the Code of
Commerce which include that the
charter party must be:
(a) In writing
(b) Drawn in duplicate, and
(c) Signed by the parties, and when
either does not know how or is
not able to do so, by two
witnesses at his request
(d) The charter party shall contain:
1. Kind, name, tonnage of
the vessel
2. Her flag and port of
registry
3. Name, surname, and
domicile of the captain
4. Name, surname, and
domicile of the ship
agent, if the latter
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 CDF- TRANSPORTATION LAW
should make the
charter party
5. Name, surname, and
domicile of the
charterer, or that of the
person for whose
account he makes the
contract
6. Port of loading and
unloading
7. Capacity, number of
tons or weight, or
measurement which
they respectively bind
themselves to load and
transport, or whether
the charter party is
total
8. Freight to be paid,
stating whether is it to
be a fixed amount for
the voyage or so much
per month, of for the
space to be occupied,
or for the weight or
measurement of the
goods making up the
cargo, or in any
manner agreed upon
9. Amount of primage to
be paid the captain
o Payment for
the use of the
equipment
belonging to
the captain
10. Lay days and extra lay
days to be allowed and
the demurrage for each
of them to be paid
- If executed with the intervention of a broker
who certifies to the authenticity of the
signatures of the parties as having been signed Port of Unloading
in his presence, the charter contract would
constitute full evidence in court
Primage - payment for the use of equipment belonging
to the captain
Freight
- Parties may fix the manner or form in which the
charter price or money shall be satisfied
- Accrual of Freightage
• According to the conditions stipulated
in the contract Demurrage
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
• If there is no stipulation, or there is but
ambiguous, the rules shall be that
(a) The freight shall begin to run
from the day of loading on the
vessel
(b) In charter with fixed period, the
freight shall begin upon the
very day; and
(c) If the freight is charged
according to weight, the
payment thereof shall be made
according to the gross weight,
including the weight of the
containers
- Cases when freightage is not due
• The following are not obliged to pay
freightage under the Code of Commerce
(a) Jettisoned goods that are
considered general average
loss
(b) Merchandise that are lost
because of shipwreck or
stranding, and
(c) Goods that are lost due to
seizure by pirates or enemies
- When payment is not excused
• Merchandise sold by the captain to pay
for the necessary repairs to the hull,
machinery or equipment, or for
unavoidable and urgent needs
• If merchandise suffer deterioration or
diminutions on account of inherent
defects or bad quality and condition of
the packaging, or because of fortuitous
event
- Increase in weight
• The natural increase in weight or size of
the merchandise shall accrue to the
benefit od the owner, and shall pay the
proper freightage fixed in the contract
for the same
- Where the cargoes will be unloaded stipulated
in the Charter Party
- However, parties may also provide that the
charterer is given the option of discharge at one
or more ports within a geographic range
• “Safe-ports clause” – Shipowner may
protect himself whereby he reserves
the right to decline to risk his vessel in
an unsafe port
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- A sum of money due by express contract for the
detention of the vessel in loading or unloading,
beyond the time allowed for that purpose in the
charter party
- “Lay days” – time for loading and unloading
- If no stipulation on the lay days, the usage if the
port where these acts take place shall be
observed
- If no lay day is provided, it is understood that
the charterer will unload and discharge the
cargoes within a reasonable time or with
reasonable diligence
- Computation of lay days
• Unless the contrary intention appears in
the charter party, the stipulated lay
days do not begin to run against the
consignee until the vessel has arrived at
berth or other usual and customary
place of loading or unloading, and in in
actual readiness to discharge its cargo
in accordance with its legal obligation
- Deadfreight – where the chartere failed to
occupy the leased portion of the vessel, he may
be made liable by the shipowner for the
“deadfreight” that occurred
Rights and Obligations of the Charter Parties (page
572)
• Shipowner of Captain
(1) to (8)
• Charterer
(1) to (4)
• Liability of Charterer to Shipowner in case of
Bareboat Charter (Dela Torre v. CA)
o The charterer may be made liable under
Arts. 1665 and 1667 of the Civil Code
because the charterer or lessee under
the bareboat charter is contract-bound
to return the thing leased and was liable
for the deterioration or loss of the same
o The sub-charterer or sub-lessee in
liable under Art. 1651. The sub-
charterer, although not privy to the
contract between the charterer and the
owner, remained bound to preserve the
chartered vessel for the owner
o The person who had been entrusted
when it was dry-docked for repairs was
made under Art. 1189 because before
the vessel could be returned, it was lost
due to the negligence of the sub-charter
to whim charterer chose to sub-charter
or sub-let the vessel
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Replacement of Vessel
- The shipowner may replace the chartered vessel
in the following instances:
(1) If, after receiving a part of the freight,
should not find sufficient to make up at
least 3/5 of the amount which the
vessel may hold, at the price he may
have fixed, he may substitute for the
transportation another vessel inspected
and declared suitable for the same
voyage. The expenses of the transfer
and the increase in the price of the
charter, should there be any, being for
the ship owner’s account
▪ After 3/5 of the vessel has been
loaded. The person for whom
she is chartered may not,
without the consent of the
charterers or shippers,
substitute the vessel
designated in the charter party.
The shipowner makes himself
liable for all losses and
damages occurring during the
voyage of the cargo od those
who did not consent to the
change.
(2) Substitution with consent of the
charters or shippers
Effect of Bill of Lading
- If issued by the shipowner to the charterer, the
charter party still governs their rights and the
bill of lading may be used as proof of receipt of
goods
- As between parties:
▪ Bill of lading is proof of receipt of goods
▪ Terms and conditions of the contract
are in the charter party
- Bill does not operate as a new contract or
modify the charter party; it does not constitute a
contract between the vessel and consignee, and
neither the consignee nor his endorsee is bound
by the charter party
- If bill of lading is a negotiable document of title
(together with charter party), it is binding in
favor of a subsequent holder for value. As to this
third person, there is no contract but the bill of
lading
- If cargo should be received without the charter
party having been signed, the contract shall be
understood as what appears in the bill of lading
- In a bareboat charter, the bills of lading are
issued just as they would be if the ship were
under the hand of her general owner, the
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personal liability, however, is that of the demise
charterer
Freight
- The charterer must pay the shipowner the
amount agreed upon
- Goods loaded shall be liable in the first place for
the freight and expenses thereof during 30 days,
to be counted from the date of their delivery or
deposit
Lien on cargoes
- The cargo shall be especially liable for the
payment of:
(1) The freightage
(2) Expenses and duties arising
therefrom, which must be
reimbursed by the shipper
(3) For the part of the general
average which may correspond
to it
▪ It shall not be legal for the captain to
delay unloading on account of suspicion
that this obligation may not be complied
with. The judge or court, at the instance
of the captain, may order the deposit of
the merchandise until he has been paid
in full
▪ The law allows the sales of the cargo
subject to the right of third persons who
received the goods without malice and
for valuable consideration
▪ The court may also order the deposit of
the goods if
(1) The consignee refuses to
receive the goods and
(2) The consignee cannot be found
CHAPTER 15- LOANS ON BOTTOMRY AND
RESPONDENTIA
- Code of Hammurabi
Definitions and Concept
Bottomry
- A contract whereby the owner of a ship borrows
for the use, equipment or repair of the vessel, for
a definite term. And pledges the ship (or the keel
or bottom of the ship pars pro toto) as security
with the stipulation that if the ship is lost during
the voyage or during the limited time on account
of perils enumerated, the lender shall lose his
money
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Loan on respondentia
- Where the goods, or some part thereof, are
hypothecated as security for a loan, the
repayment of which is dependent upon
maritime risks
- Usual form: Bond
- It is the borrower’s personal responsibility
which is deemed to be the principal security for
the performance of the contract, hence the term
respondentia
Distinguished from simple loan
BOTTOMRY OR SIMPLE LOAN
RESPONDENTIA
The rate of interest is not The rate of interest must
subject to the Usury Law not exceed the ceiling
fixed by the Usury Law
There must be necessarily a There need not be such
marine risk, the existence of risks involved
which must be duly
established
It must be executed in Formal requisites
accordance with the form regarding contracts in
and manner required in the general would apply
Code of Commerce
It must be recorded in the No registration is
registry of vessels to bind required
third persons
Preference is extended to The first lender, as a
the last lender if there be general rule, enjoys
several lenders preference over
subsequent ones
• When Simple Loan applies
o If the lender should prove that he
loaned an amount which is larger than
the value of the object liable for the
bottomry loan due to fraudulent means
employed by the borrower, the loan
shall be valid only for the amount at
which the object is appraised by
experts, and the surplus principal shall
be repaid as if it were a simple loan,
with legal interest
o If the full amount of the loan is not used
for the cargo, or given on the goods if all
of them could not have been loaded, the
balance will be considered as simple
loan which should be returned prior to
the commencement of the voyage
o If the effects on which the money is
taken not be subjected to any risk, the
contract will be regarded as a simple
loan.
Authority to Constitute Loan on Bottomry
Loan on Bottomry:
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• Shipowner. In case he is only a part owner,
bottomry shall be limited only to the extent of
his interest in the vessel
• Ship captain who is a part owner, to the extent
of his interest
• Ship captain, although he has no interest, may
enter into a loan on account of extreme
necessity, in order to comply with the
obligations under Arts. 583 and 611 of the Code
of Commerce
Loan on Respondentia
• Cargo Owner
• Captain may NOT contract, and if he does, such
loan would be void, and the principal, interest
and costs of the contract shall be chargeable to
his private account, and he may even be
discharged as a ship captain by the shipowner
Forms of the Loans
• In whichever of these forms:
(1) By means of public instrument
(2) By means of a policy signed by the
contracting parties and the broker taking
part therein
▪ Policy must conform to the registry
of the broker who took part therein
(3) By means of a private instrument
▪ The acknowledgement of the
signature shall be required
• Entered in the certificate of registry of vessel
and recorded in the registry of vessel
• Contract made during the voyage shall be
governed by the provisions Art. 583 and 611
and shall be effective with regard to third
person from the date of their execution, if they
should be recorded before the lapse of 8 days
from the date of arrival. If the 8 days elapsed
without having been recorded, the contract shall
produce effect with regard to third person, from
the day of their inscription.
• Contracts which are not reduced to writing shall
not give rise to judicial action.
• Furthermore, the contract must contain:
o A statement of the kind, name and
registry of vessel
o The name, surname and domicile of the
captain
o The names, surnames and domiciles of
the person giving and the person
receiving the loan
o The amount of the loan and the
premium stipulated
o The time for repayment
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
o The objects pledged to secure
repayment; and
o The voyage during which the risk is to
run
Consequences of Loss of Effects of the Loan
• Lender loses the right to institute the action
which would pertain to him if effects be the lost
(1) due to an accident of the sea during the
time,
(2) on the occasion of the voyage which has
been designated in the contract
(3) and it is proven the cargo was on board
• Lender retains such right of action if the loss
was caused by
o the inherent defect of the thing or
o through the fault or malice of the
borrower or
o through barratry on the part of the
captain or
o if it was caused by damages suffered by
the vessel as a consequence of being
engaged in a contraband or
o if it arose from having loaded goods on
a vessel different from that designated
in the contract, unless the change was
due to force majeure
• The lenders shall suffer in proportion to their
respective interest, the general average which
may take place in the things upon which the
loans were made. In particular averages, if there
is no agreement between the parties, the lender
is obligated to contribute in proportion to his
respective interest, should it not belong to the
kind of risk excepted in Art. 731
• If shipwrecked, the amount for the payment of
the loan shall be reduced to the proceeds of the
effects which have been saved but only after
deducting the cost of the salvage. If the loan
should be on the vessel or any of her parts, the
freight earned during the voyage for which the
loan was contracted shall also be liable for its
payment, as far as it may reach.
• If the same vessel or cargo should be the object
of a loan and marine insurance, the value of
what may be saved, in case of shipwreck, shall
be divided between the lender and the insurer,
taking into consideration the principal with
respect to the loan and without prejudice to the
right of preference of other creditors
Preference (Art. 730 of the Code of Commerce)
• Loans made during the voyage shall have
preference over those made before the clearing
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of the vessel, and they shall be graduated in the
inverse order of their dates
• Loans for the last voyage shall have preference
over prior ones
o On the theory that were it not for the
last lender, prior lenders would not
have benefited from the preservation of
the security
• Should several loans have been made at the
same port of arrival under stress ad for the same
purpose, all of them shall be paid pro rata
**Loans may be constituted jointly or separately:
1. On the hull of the vessel;
2. On the rigging;
3. On the equipment, provision, and fuel;
4. On the engine, if the vessel is a steamer
• Loan constituted on all four, the
freightage earned during the voyage
shall also be included in the liability for
the loan
5. On the merchandise loaded
• All which constitute the same shall be
subject to repayment
• If only on a particular object of the
vessel or of the cargo, only the object
concretely and specifically mentioned
shall be liable
CHAPTER 16- AVERAGES
Rhodian Law, Codex Justinian
Averages in General
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 and deterioration which the vessel
may suffer, from the time it outs 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.
Classification:
• General of gross average
• Simple or particular average
Simple Average
- Include all expenses and damages
caused to the vessel or to her cargo
which have not inured to the common
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
benefit and profit of all person
interested in the vessel and her cargo
- If the damage caused is not a general
average
• By whom borne:
o The owner of the goods that suffered
the damage bears the loss; consistent
with the maxim res perit domino
o However, if the vessel or goods are
hypothecated by a loan on bottomry or
respondentia, the lender shall also bear
the loss in proportion to his interest
• Examples: Art. 809 of the Code of Commerce
(page 607)
General Average – Jason Clause
- 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 real and known
risk
• Requisites:
(1) There must be a common danger
(Common Danger)
(2) That for the common safety, part of the
vessel or of the cargo or both is
sacrificed deliberately (Deliberate
Sacrifice)
(3) That from the expenses or damages
caused follows the successful saving of
the vessel and cargo, and (Successful
Sacrifice)
(4) That the expenses or damages should
have been incurred or inflicted after
taking proper legal steps and authority
(Compliance with Legal Steps)
• Common Danger
o 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
▪ It is the safety of the property,
and not of the voyage, which
constituted the true foundation
of the general average
▪ Vessel and cargo must be saved
from a common danger (not a
general average if only the
vessel in in danger)
o That the danger arises from the
accidents of the sea, dispositions of
authority, or faults of men, provided
that the circumstances producing the
peril should be ascertained and
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imminent or may rationally be said to
certain and imminent.
o No general average if there is no danger
at all. There is no common danger if the
measure was undertaken against a
distant peril. Even if there is a common
peril, the same may not justify a
voluntary sacrifice if he same can be
easily be avoided by the ship without
sacrifice.
o Law on averages does not apply in
collision cases where the same was
caused by the negligence of the captains
of the colliding vessels and the cargoes
were not jettisoned to save some of the
cargoes and the vessel.
• Deliberate Sacrifice
o There must be a voluntary sacrifice of a
part for the benefit of the whole
o There can also be general average even
if the sacrifice was not made during the
voyage in at least two cases:
(1) Where the sinking of a vessel is
necessary to extinguish a fire
ina port. Roadstead, creek or
bay; and
(2) Where the cargo is transferred
to lighten the ship on account
of a storm to facilitate entry
into a port
o The loss can no longer be considered a
general average if the thing was
inevitably lost (previously carried away
or are effectively lost by accident)
• Successful Sacrifice
o No general contribution can be
demanded if the vessel and other cargo
sought to be saved were in fact not
saved (Art. 860)
o However, after the vessel have been
saved from the risk which give rise to
the jettison, it should be lost through
another accident taking place during
the voyage, the goods saved and
existing from the first risk shall
continue to be liable to contribution by
reason of the gross average according to
their value in the condition in which
they may be found, deducting the
expenses incurred in saving them. (Art.
861)
• Compliance with Legal Steps (Arts. 813 to 815)
o There must be a resolution of the
captain, adopted after deliberation with
the sailing mate and other officers in the
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
vessel, and after hearing the person
interested in the cargo who may be
present.
▪ If the measure is opposed but
executed by the captain, the
shippers have the right to
proceed against the captain
before a competent judge of
court, if they can prove that he
acted in malice, lack of skill, or
negligence
▪ If persons interested in the
cargo who are on board the
vessel, have not been heard,
they shall not contribute to the
gross average, their share being
chargeable to the captain,
unless there is urgency of the
case
o The resolution adopted must be
entered in the log book, stating the
(1) Motives and reasons for the
dissent, should there be any,
and
▪ The minutes must be
signed by all persons
present before the
taking of the action, if
possible, or at the first
opportunity
(2) The irresistible and urgent
causes which impelled the
captain if he acted of his own
accord
▪ Signed by the captain
and by the officers of
the vessel
o In the minutes, and after the resolution,
shall be stated in detail all the goods
jettisoned, and mention the injuries
cause to those kept on board
o 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 24 hours after
his arrival, and to ratify it immediately
under oath
Order of Jettison
(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
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smallest value, to the amount and number
absolutely indispensable.
Examples of General Average: Art. 811 (page 616-7)
Who Bears General Average – all person having an
interest in the vessel and cargo therein at the time of the
occurrence of the average (Art. 812)
• By those who benefited from the sacrifice – the
shipowner and the owners of the cargoes that
were saved
• Insurers of the vessel or cargoes that were saved
o In proportion to the contribution
attaching to his policy value where the
said value is less than the contributing
value of the thing insured (Sec. 166)
o When a person is insured under a
marine insurance has a demand against
others for contribution, he may claim
the whole loss from the insurer,
subrogating him to his own right to
contribution…. (Sec. 167)
• Lenders on bottomry or respondentia
o In proportion to their respective
interest, the general average which may
take place in the goods on which the
loan is made
Who Is Entitled to Indemnity: Owners of the goods which
were sacrificed
The following goods, even if sacrificed, are not covered:
(1) Goods carried on deck unless the rule, special
law or customs of the place allow the same;
▪ Rule is no longer absolute
▪ (Standard Oil Company v. Castelo)
Jettison of deck cargo, according to the
custom of trade, by steam vessels
navigating coastwide and inland waters,
are entitled to contribution as a general
average loss
▪ Gasoline/ petroleum shall be carried on
deck having regard to its inflammable
nature
(2) Goods that are not recorded in the books or
records of the vessel; and
(3) Fuel for the vessel if there is more than
sufficient for the voyage
Effect of Negligence
• Common carriers cannot limit their liability for
injury or loss of goods when such injury or loss
was caused by its own negligence
• The issue of negligence must first be addressed
before the proper provision of the Code of
Commerce in the extent of liability may be
applied
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Apportionment
• Distributed pro rata among the goods which are
to cover the same
• Mechanics: “The value of each of the
contributing interest is multiplied by a fraction
which has as its numerator the sum of the
general average expenses and has its
denominator the sum of the contributing
values.”
Proof and Liquidation of Average: Arts. 846 to 869 of
the Code of Commerce (below are selected provisions
only; pages 623-30)
• According to the agreement between those
interested in the proof and liquidation of
averages
• In absence of agreements, the following rules
shall be observed:
1. The proof of average shall take place in
the port where the repairs are made,
should any be necessary, or in the port
of unloading
2. The liquidation shall be made in the
port of unloading, if it is a Philippine
port
3. If the average occurred outside the
jurisdictional waters of the Philippines,
or the cargo has been sold in a foreign
port by reason of an arrival under
stress, the liquidation shall be made in
the port of arrival
4. If the average has occurred near the
port of destination, so that said port can
be made, the proceedings in Rules 1 and
2 shall be held there.
• Claims for averages shall not be admitted if they
do not exceed 5% of the interest which the
claimant may have in the vessel or in the cargo if
it be gross average, and 1% of the goods
damaged if particular average, deducting in both
cases the expenses of appraisal, unless there is
an agreement to the contrary
• [etc]
York-Antwerp Rules
• Parties may, by stipulation in the carter party or
any written agreement, agree that the York-
Antwerp shall be applied
• It may also be used to solve controversies where
no provision in the Code of Commerce is in point
because said rules embody the custom of
maritime states
• [read book pages 633-42)
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CHAPTER 17-COLLISIONS
Definition: An impact or sudden contact of a moving
body with an obstruction in its line of motion, whether
both bodies are in motion or one stationary and the
other, no matter which, in motion
- In maritime commerce, an impact or sudden
contact of vessel with another whether both
are in motion or one stationary.
- “allision” – if one vessel is moving while the
other is stationary
- A shipowner or ship agent may be made liable
even if his vessel did not actually collide with
another vessel, such as when it forced a vessel to
hit another.
Zones in Collision
• First: All the time up to the moment when the
risk of collision may be said to have begun.
Within this zone, no rule is applicable because
none is necessary.
• Second: Time between the moment when the
risk of collision begins and the moment when it
has become a practical certainty. The burden is
on the vessel required to keep away and avoid
the danger
• Third: Time of actual contact
o Period in which error in extremis
occurs. The vessel which has forced the
privileged vessel into danger is
responsible even if the privileged vessel
has committed an error within that
zone (A. Urutia & Co. v. Baco River
Plantation Co.)
Applicable Law
• Liability not governed by quasi-delict
• The Code of Commerce Art. 826 to 839 which
deal exclusively with collision of vessels
• International Regulations for Preventing
Collisions at Sea (COLREG) – the existing
international agreement with respect to
collision in high seas
▪ Formulated by the
International Maritime
Consultative Organization (now
IMO)
▪ Not yet acceded to by the
Philippines but the rules are
being used by most of our
trading partners, so that
personnel of Philippine vessels
are compelled to follow them
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
o Rule 7: Every vessel shall use all
available means appropriate to the
prevailing circumstances and
conditions to determine if risk of
collision exists. If there is any doubt,
such risk shall be deemed to exist.
o Rule 8: Any action taken to avoid a
collision shall, if the circumstances of
the case admit, be positive, made in
ample time and with due regard to the
observance of good seamanship. Other
rules:
(1) Any alteration of course or
speed to avoid collision, shall, if
the circumstances of the case
admit, be large enough to be
readily apparent to another
vessel observing visually or by
radar; a succession of small
alterations of course or speed
should be avoided;
(2) If there is sufficient sea room,
alteration of course alone may
be the most effective action to
avoid a close-quarters situation
provided that it is made in good
time, if substantial and does not
result in another close-quarters
situation.
(3) Action taken to avoid collision
with another vessel shall be
such as to result in passing at a
safe distance. The effectiveness
of the action shall be carefully
checked until another vessel is
final past and clear; and
(4) If necessary to avoid collision
or allow more time to access
the situation, a vessel shall
slacken her speed or to take all
way off by stopping or
reversion her means of
propulsion.
Rules of Liability
• Liability is still based on negligence [although
not governed by quasi-delict]; the courts are
called upon to determine the negligence of the
persons involved in order to impose liability.
• Art. 829. In cases above mentioned the civil
action of the owner against the person
causing the injury as well as the criminal
liabilities, which may be proper, are
reserved.
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 CDF- TRANSPORTATION LAW
• Negligence: if a reasonable man with the same
expertise would have done what the party in
question did under the same circumstances.
Contributory Negligence and Last Clear Chance NOT
applicable
• Under Art. 827, each must suffer its own damage
if both of them are negligent.
• Proof that the plaintiff was negligent will bar
recovery from the defendant in collision cases
even if the plaintiff’s negligence can be classified
as mere contributory
Specific Rules under the Code of Commerce
• One Vessel at Fault
o If a vessel should collide with another,
through or the fault, negligence, or lack
of skill of the captain, sailing mate, or
any other member of the competent, the
owner of the vessel at fault shall
indemnify the losses and damages
suffered after an expert appraisal. (Art.
826)
• Both Vessels at Fault
o If the collision is imputable to both
vessels, each one shall suffer its own
damage, and both shall be solidarily
responsible for all losses and damage
occasioned to their cargoes. (Art. 827)
o When one vessel was totally lost and
was therefore subject to the doctrine of
limited liability, the burden of
responding to the loss fell on the owner
of the other ship.
• Party at fault cannot be determined
(Inscrutable Fault)
o Each party shall also bear his own
damage in cases in which it cannot be
determined which of the two vessels
has caused the collision. They are also
solidarily responsible for the losses
and damages occasioned to their
cargoes. (Art. 828)
• Cause is Fortuitous Event
o If a vessel should collide with another,
through fortuitous event or force
majeure, each vessel and its cargo shall
bear its own damages. (Art. 832)
o If, by reason of a storm or other force
majeure, a vessel which is properly
anchored and moored should collide
with vessels nearby, causing the latter
vessels damages, the injury occasioned
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
shall be considered as particular
average of the vessel run into. (Art. 832)
o A finding that collision was the result of
inevitable accident is not to be lightly
arrived at, and the burden of proof is
heavily upon the party asserting the
defense to affirmatively establish that
the accident could not have been
prevented by use of that degree of
reasonable care and attention which the
situation demanded and there was no
intervening act of negligence on its part.
• Third person at Fault
o If a vessel should be forced by a third
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 (Art. 831)
Sinking on the way to Port
• A vessel which, upon being run into, sinks
immediately, as well as the which, having been
obliged to make a port to repair the damages
caused by the collision, is lost during the voyage
or is obliged to be stranded in order to be saved
shall be presumed as lost by reason of collision.
(Art. 833)
Presence of Pilots
• Art. 834. If the vessels colliding with each other
should have pilots on board discharging their
duties at the time of collision, their presence
shall not exempt the captains from the liabilities
they incur, but the latter shall have the right to
be indemnified by the pilots, without prejudice
to the criminal liability which the latter may
incur.
Extent of Liability
• Art. 838. When the value of the vessel and her
appurtenances should not be sufficient to cover
all the liabilities, the indemnity due by reason of
the death or injury of persons shall have
preference.
Collision in Foreign Waters
• Art. 839. If the collision should take place
between Philippine vessels in foreign waters, or
if having taken place in the open seas, and the
vessels should make a foreign port, the Consul of
the Republic of the Philippines in said port shall
hold a summary investigation of the accident,
forwarding the proceedings to the Secretary if
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 CDF- TRANSPORTATION LAW
the Department id Foreign Affairs for
continuation and conclusion.
Protest Mandatory
• Collision is one of the cases when protest is
necessary
• Art. 835. The action for the recovery of losses
and damages arising from collisions cannot be
admitted if a protest or declaration is not
presented within 24 hours before the competent
authority of the point where collision took place,
or that of the first port of arrival of the vessel, if
in Philippine territory, and to the consul of the
RP if it occurred in a foreign country.
o Applies only to ships and sea-going
vessels
o Does not apply to small boats engaged
in river and bay traffic and inland
navigation
• Art. 836. With respect to damages caused to
persons or to the cargo, the absence of protest
may not prejudice the person interested who
were not in board or were not in a condition to
make known their wishes.
o Non-filing of the protest is excused in at
least two cases, namely:
(1) The persons interested who
were not on board or
(2) Persons interested were not in
a condition to make known
their wishes
• Mandatory
o Protest is a pre-requisite to the bringing
of an action for damages
Limited Liability Rule
• Art. 837. The civil liability incurred by the
shipowners in the case prescribed in this
section, sha;; be understood as limited to the
value of the vessel with all its appurtenances
and freightage earned during the voyage.
• It is understood that abandonment is also
necessary in order to benefit from limited
liability
Doctrine of Inscrutable Fault – if it cannot be
determined which of the two vessels was at fault
resulting in the collision, each of them should bear their
own damages.
CHAPTER 18- ARRIVAL UNDER STRESS AND
SHIPWRECKS
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Arrival Under Stress
• (Art. 819) the arrival of a vessel at the
nearest and most convenient port which was
decided upon after determining that there is
well-founded fear of seizure, privateers, or
pirates or by reason of any accident of the
sea disabling it to navigate.
• Steps to be taken in the determination of the
propriety of an arrival under stress: (Art. 819)
a) The captain should determine during
the voyage if here is well founded fear
of seizure, privateers, and other valid
grounds;
b) The captain shall then assemble the
officers;
c) The captain shall summon the persons
interested in the cargo who may be
present and who may attend but
without right to vote;
d) The officers shall determine ad agree if
there is well founded reason after
examining the circumstances. The
captain shall have the deciding vote;
e) The agreement shall be drafted, and the
proper minutes shall be signed and
entered in the log book;
f) Objections and protests shall likewise
be entered in the minutes.
• Protest to be made by the captain (see previous;
Art. 612, Par. 8)
• When arrival under stress is IMPROPER (Art.
820)
(1) If the lack of provisions should arise
from the failure to take the necessary
provisions for the voyage according to
usage and custom, 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.
• Expenses
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 CDF- TRANSPORTATION LAW
o If proper: the shipowner and the ship
agent will only be liable for the
expenses for the same arrival
o If improper: the shipowner and the
ship agent shall be liable for the same
expenses and , in addition, they shall be
solidarily liable for damages caused to
the cargoes by such arrival under stress
• Unloading of cargoes to make repairs
(1) In order to make repairs to the
vessel or
• Expenses shall be for
the account of the ship
agent or owner
(2) Because there is danger that
the cargo may suffer damage
• Chargeable against the
owners of the
merchandise for whose
benefit the act was
performed
(3) If unloading should take place
for both reasons, the expenses
shall be divided
proportionately between the
value of the vessel and that of
the cargo
o (Art. 822) Captain must request
authorization from the competent judge
or court for the removal of the cargo
and carry it out with the knowledge of
the person interested in the cargo, or
his representative, should there be any.
If in a foreign port, authorization from
the Philippine Consul.
• Custody of Cargo
o Art. 823. The custody and preservation
of the cargo which has been unloaded
shall be entrusted to the captain, who
shall be responsible for the same,
except in cases of force majeure.
o If the 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 proper cases, the sale of all or
of part of the former….
o The captain shall justify the legality of
his conduct, under penalty of answering
to the shipper for the price the
merchandise would have brought if
they had arrived ingood condition at the
port of destination.
• Liability of Captain
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
o (Art. 825) the captain shall be
responsible for damages caused by his
delay, if after the cause of the arrival
under stress has ceased, he should not
continue the voyage.
o 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 shall precede the
departure
Shipwrecks
• Demolition or shattering of a vessel caused
by her driving ashore or on rocks and shoals
in the mid-seas, or by the violence of winds
and waves in tempests
Code of Commerce Provisions
Art. 840 – Losses and deterioration suffered by a vessel
and her cargo by reason of shipwreck or standing shall
be individually for the account of owners proportionally
Art. 841- if the wreck or stranding be caused by the
malice, negligence or lack of skill of the captain because
the vessel was put to sea insufficiently repaired or
equipped – ship agent/owner may demand indemnity
from captain
Art. 842- goods saved from wreck – bound for payment
of their respective salvage and paid by owners before
goods are delivered to them
Art. 843 – if several vessels sail under convoy and any
should be wrecked, cargo saved should be distributed
among the rest in proportion to amount each can take.
If any captain should refuse without sufficient cause,
captain of wrecked vessel shall enter protest against him
If not possible to transfer to other vessels the entire
cargo, the goods of highest value and smallest volume
should be first.
Art. 844 – Captain who take goods saved from wreck
shall continue its course and on the port of arrival, shall
deposit the same with judicial intervention, at the
disposal of legitimate owners.
In case of change course, he can unload him at port
which they were consigned but may not do so in times of
war or when port is difficult and dangerous to make.
Owners of cargo shall defray expenses as well as
freightage.
Art. 845- if there should there be no person interested in
the cargo, competent judge or court may order sale of
the same or when its preservation is dangerous or in 1
year when owner not possible to ascertain.
Protest – necessary in shipwrecks
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 CDF- TRANSPORTATION LAW
How done?
1. due form
2. port of first arrival
3. before competent authority or the Philippine consul
4. within 24 hours
5. specify the incidents of the wreck
Other provisions:
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 crew to demand wages
whatsoever and as regards the ship agent to recover the
advances made.
If portions of vessel or cargo be saved or both, crew and
captain shall retain their rights on the salvage.
Charter parties
Art. 661 – neither merchandise lost by reason of
shipwreck or stranding or seizure by pirates or enemies
shall pay freightage and if such is paid in advance, should
be returned unless contrary agreement provides.
Loan
Art. 734- in shipwreck, amount liable for payment of loan
shall be reduced to proceeds of goods saved after
deducting salvage cost
Art. 735 – if same vessel or cargo should be object of loan
or respondentia and marine insurance, value of what
may be saved be divided between lender and insurer in
proportion to their interest.
CHAPTER 19- SALVAGE
Governed by Salvage Law – Act No. 2616
Definition: service by which one person renders to the
owner of the ship or goods, by his own labor, preserving
the goods or the ship which the owner or those
entrusted with the care of them have either abandoned
in distress at sea, or are unable to protect and secure.
Rationale:
- Founded on equity of remunerating private and
individual services performed in saving, in
whole or in part, a ship or its cargo from
impending peril or recovering them after their
actual loss.
- Compensation for actual services and is dictated
by public policy to encourage the hardy and
adventurous mariner to engage in laborious and
sometimes dangerous enterprise withdrawing
him from embezzlement and dishonesty
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Kinds of Salvage Services
1. voluntary – compensation dependent upon
success
2. rendered upon contract for a per diem or per
horam wage – payable at all events
3. under a contract for a compensation payable only
in case of success
Claim for Valid Salvage
Three elements must be established:
1. There must be a marine peril
2. Service voluntarily rendered and is not
required as an existing duty or from a
special contract
3. There must be success in whole or in
part or that the service rendered
contributed to such success.
4. Vessel is shipwrecked beyond the
control of the crew or shall have been
abandoned
Persons not entitled to salvage compensation
The salvor must have no relation, contractual or
otherwise, upon the ship in distress.
Under Section 8 of Salvage Law the ff. have no right:
1. Crew of the vessel shipwrecked or which was in
danger of shipwreck
2. He who shall have commenced the salvage in
spite the opposition of the captain or his
representatives
3. He who shall have failed to comply with
provisions of Section 3 – did not deliver vessel
or cargo to proper authorities
Derelict required
Vessel sought to be salvaged is shipwrecked beyond the
control of the crew or shall have been abandoned, is
present when the vessel is considered derelict.
Derelict – a ship or her cargo which is abandoned and
deserted at sea by those who were in charge of it,
without any hope of recovering it (sine spe recuperandi),
or without any intention of returning to it (sine animo
revertendi)
-to be adjudged derelict is to ascertain the intention and
expectation of those in charge of it when they quitted it
Jetsam and Flotsam
Jetsam, Flotsam and Ligan are, unless abandoned, still
the property of their original owners.
Jetsam- goods thrown off a ship which was in danger
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 CDF- TRANSPORTATION LAW
Flotsam- goods floated off the ship while ship was in
danger or when it sank
Ligan – goods left at sea on the wreck or tied to a bouy so
that they can be recovered later
Basis of entitlement to salvage reward
-not to be too liberal nor too stingy
- should constitute sufficient compensation for the outlay
and efforts of the salvor
Limit of Salvage Fee
In the absence of agreement or agreement is impugned,
the RTC shall fix the reward for salvage
a. Limit is 50% of the net amount of
the proceeds of the sale of the
things saved
b. In case of public auction, net
amount determined by deducting
expenses of
i. Custody
ii. Conservation
iii. Advertisement
iv. Auction
v. Whatever taxes and duties
they should pay for their
entrance
vi. Expense of salvage
Quantum Meruit not applicable
Compensation as salvage should not be viewed by
admiralty courts merely as pay on the principle of
quantum meruit or as a remuneration pro opera et
labore
-the amount should be liberal enough to cover expenses
and to give an extra sum as a reward for the services
rendered
-there is no fixed rule for salvage allowance, rests on the
sound discretion of the court
Circumstances to consider
1. Principally expenditures made to recover or
save the cargo or vessel or both
2. Zeal demonstrated, the time employed, services
rendered
3. Excessive express occasioned the number of
persons who aided
4. The danger to which they and their vessels were
exposed as that which menaced the things
recovered or salvaged
5. Value of such things after deducting the
expenses
Rights and Obligations of Salvors and Owners
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Salvor – entitled to compensation for services rendered
and has lien upon the property salvaged whereby he is
not bound to part with the possession of the vessel
salvaged or the cargo saved until he is paid his due
compensation
-has the right of possession of the derelict for purposes
of salvage claim
-bound to preserve the property in good faith and bring
to safety for owner’s use
-in the absence of ship owner, captain or representative,
shall deliver or convey the vessel or goods to proper
authority
Owner – does not renounce his right to the property, no
presumption of intention to abandon.
-what he abandons temporarily is his right of
possession,which is transferred to the salvor who is
bound to preserve the property in good faith and bring
to safety for owner’s use.
-has right to the delivery of the cargo or vessel provided
he pays or gives bond to secure expenses and proper
reward
-if owner does not claim within 3 months after
publication, the things be sold at public auction and
proceeds deposited to National Treasury after deducting
expenses and salvor’s reward
-if lapse of 3 years without any claim thereon, salvor
entitled half of deposit as his reward, other half to the
government
-owner also entitle to salvage reward for the use of his
vessel in rendering salvage services
-reward not only due to owner but also to captain and
crew
Maritime Lien
A salvor, has an interest in the property; called a lien, but
it never goes, in the absence of contract expressly made,
upon the idea of debt due from the owner to the salvor
but upon the principle that the services creates a
property in the thing saved.
-to all intents and purposes, a joint owner and if the
property is lost must bear his share like the other co-
owners.
CHAPTER 20- CARRIAGE OF GOODS BY SEA
CA No. 65 – October 22, 1936
Applicable to International Shipping to the
Philippines
NCC primary law on carriage of goods by sea.
COGSA – suppletory law – for international shipping
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 CDF- TRANSPORTATION LAW
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 LDD”
Goods defined: Goods, wares, merchandise, and articles
of every kind whatsoever, except live animals and cargo
which by the contract of carriage is stated as being
carried on deck and is so carried.
Parties
1. Carrier – not limited to shipowner, also
includes charterer
2. Shipper
Duties of Carrier
- Required by NCC to exercise extraordinary
diligence in the performance of its duties
- COGSA provisions:
Section 3. (1) The carrier shall be bound, before and at
the beginning of the voyage, to exercise due diligence to
— Article 1734. Common carriers are responsible for the
- (a) Make the ship seaworthy;
- (b) Properly man, equip, and supply the ship;
- (c) Make the holds, refrigerating and cooling
chambers, and all other parts of the ship in
which goods are carried, fit and safe for their
reception carriage and preservation.
**obligation to provide a seaworthy vessel at the
beginning of the voyage
(2) The carrier shall properly and carefully load, handle,
stow, carry, keep, care for, and discharge the goods
carried. **obligation to use of due care with respect to
cargo
Document of Title Required
Contracts of carriage of goods covered by COGSA are
evidenced by the Bill of Lading.
The term "contract of carriage" applies only to contracts
of carriage covered by a bill of lading or any similar
document of title, insofar as such document relates to the
carriage of goods by sea, including any bill of lading or
any similar document as aforesaid issued under or
pursuant to a charter party from the moment at which
such bill of lading or similar document of title regulates
the relations between a carrier and a holder of the same.
Bill of Lading shall be the prima facie evidence of the
receipt by the carrier of the goods as therein described.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Notice of Claim and Prescriptive Period
3 days from delivery – if damage not apparent (period
however is not mandatory)
Prescriptive period – 1 year from delivery for the filing of
the case is a condition precedent or mandatory
-does not apply in cases of of misdelivery or conversion
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.
Defenses and Immunities
Under NCC – carrier will not be liable only if it can
present proof that the unseaworthiness was exclusively
cause by any of the circumstances specified in Article
1734 of the NCC.
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.
Section 4(1) of COGSA provides for defences and
immunities but some are no longer applicable as they are
subjected to amendatory provisions of the NCC.
NCC provisions in common carrier are legally
controlling.
Immunities under COGSA which are also contemplated in
the NCC thus applicable:
(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;
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 CDF- TRANSPORTATION LAW
(d) Act of God;
(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.
**a catch all provision in favour of the carrier but the
burden of proof rests on the carrier.
In cases of deviation, general rule is that it is breach of
contract of carriage.
COGSA provides for exception:
(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.
Waiver
-shipowner and the ship agent may waive the benefit any
of the defences in its favour provided not only under
COGSA but also under other laws.
Sec 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.
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.
Limiting Provisions
US$500 – amount recoverable by the shipper per
package unless there is a special declaration unless the
real value of the goods is declared
Declaration in the Bill of Lading – prima facie evidence of
the value of goods, the carrier may be allowed to prove
real value which may be less than the declared amount.
Right to Discharge Dangerous Cargo
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Covers goods that are dangerous, inflammable or are
explosives subject to the condition that the carrier did
not give its consent to the carriage of cargoes of such
nature.
PART IV – PUBLIC UTILITIES
2 aspects:
1. private– touches it patrons and its employees
2. public- touches all other members of the community in
which it operates
- subject to all those duties and responsibilities under
which every citizens lies
The essential feature of the public use is that it is not
confined to privilege individuals, but is open to indefinite
public
In determining whether a use is public, look not only to
the character of the business to be done, but also to the
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.
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.
In very real sense, a public utility is engaged in public
service – providing basic commodities and services
indispensable to the interest of the general public.
CHAPTER 21 – PUBLIC SERVICE REGULATIONS
Jurisprudential definition:
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.
The term implies public use and service.
In another case the SC explained that “public utilities are
privately owned and operated businesses whose
services are essential to the general public.
Elements:
1. The person must own, operate, manage or
control in the Philippines public services which
may include distribution of goods or rendering
of services to the public.
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 CDF- TRANSPORTATION LAW
2. The ownership, operation, management and
control (oomc) must be for hire or
compensation
3. The oomc must be done for general business
purposes
Characteristics:
1. not required that it be permanent as it may be
“permanent, occasional, or accidental”
2. business may be with general or limited clientele
General Business Purpose
• The means by which a party habitually or
regularly earns a livelihood of some gain
• Profit is the purpose, or livelihood is the motive
• Occupies time, attention, and labor of men for
the purpose of livelihood or profit
Not a Public Utility by Law
Laws may expressly acknowledge that a particularly is
not a public utility.
RA No. 9136 (EPIRA) or Electric Power Reform Act of
2001 – power generators such as independent are not
considered public utilities and hence, no franchise is
necessary.
In an obiter under Luzon Stevedoring Co., Inc vs PSC - SC
observed that the legislature may not declare a company
or enterprise to be a public utility when it is not
inherently such and the contrary is also true.
-specific provisions in law that states that an entity is not
a public utility is not binding on the SC.
-there are certain provisions of the Constitution that
expressly apply to public utilities, like the provision
limiting foreign ownership of public utilities under
Section 11, Article XII of the Constitution
-the re-classification of a business that is originally
regarded as public utility into an entity that is not a
public utility through a concession agreement or any
contract with a government instrumentality, is not
binding on the Courts and may be declared
unconstitutional.
Constitutional Provisions (Article XII of the 1987
Constitution) – National Economy and Patrimony
Constitutional Limitations
1. No franchise, certificate, or any other form of
authorization for the operation of the public
utility shall be granted except to citizens of the
Philippines or to corporations or associations
organized under the laws of the Philippines at
least 60 per centum of whose capital is owned
by such citizens.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
2. No franchise, certificate, or authorization shall
be exclusive in character
3. No franchise, certificate, or authorization shall
be longer than a period of 50 years.
4. A franchise or right shall be granted only under
the condition that it shall be subject to
amendment, alteration, or repeal by Congress
when the common good so requires.
5. The State shall encourage equity participation in
public utilities by the general public.
6. The participation of foreign investors in the
governing body of any public utility enterprise
shall be limited to their proportionate share in
its capital.
7. All the executive and managing officers of such
corporation or association must be citizens of
the Philippines.
8. 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.
9. The State may, in the interest of national welfare
or defense, upon payment of just compensation,
transfer public ownership utilities and other
private enterprises to be operated by the
Government.
10. The State shall regulate or prohibit monopolies
when the public interest so requires.
11. Combinations in restraint of trade or unfair
competition are not allowed.
Regulatory Agencies
PSC powers now distributed among these agencies:
1. Department of Transportation
2. Land Transportation Franchising and
Regulatory Board
3. Land Transportation Office
4. Maritime Industry Authority
5. Philippine Coast Guard
6. National Telecommunications Commission
7. Energy Regulatory Commission
8. National Water Resources Council
9. Civil Aeronautics Board
10. Civil Aviation Authority of the Philippines
11. Philippine Ports Authority
12. Local Water Utilities Administration
13. Toll Regulatory Board
Bases of Regulation of Public Utilities
Police power justifies the regulation of public utilities.
• Whenever private property is used for a public
purpose and is affected with public interest, it
ceases to be juris private only and becomes
subject of regulation
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• The regulation is to promote common good
• Submission to regulation may be withdrawn by
owner discontinuing use, but as long as use of
the property is continued, the same is subject to
regulation
• Found under Section 6, Article XII of 1987
Constitution
Ownership of Public Utilities
• Subject to regulation by the State
• State may impose capitalization requirement
and such other requirements
• Section 11 of Article XII of the 1987 Constitution
- No franchise, certificate, or any other form of
authorization for the operation of the public
utility shall be granted except to citizens of the
Philippines or to corporations or associations
organized under the laws of the Philippines at
least 60 per centum of whose capital is owned
by such citizens, nor shall it be shall be exclusive
in character for a longer period than 50 years.
guarantees effective Filipino control of public utilities as
mandated by the Constitution.”
Ownership of Facilities
The limit imposed by the Constitution on foreign equity
applies only to the operation of the public utility and not
to ownership of facilities.
SC held in Tatad vs Garcia, Jr that the right to operate
public utility may exist independently and separately
from the ownership of the facilities thereof. One can own
facilities without operating them as a public utility, and
conversely.
Right to operate exists independently and separately
from the ownership of the facilities thereof.
Indeed a mere owner and lessor of facilities used by a
public utility is not a public utility,
Definite Term

When Ownership Commences

Franchise term given to public utilities at any given time
is fifty years but may be extended by appropriate
In Tatad vs Garcia, Jr – even the mere formation of a government body.
public utility corporation does not ipso facto
characterize the corporation as one operating a public
Non-exclusivity
utility.
Franchise cannot be exclusive.
The moment for determining the requisite Filipino
nationality is when the entity applies for a franchise,
certificate or any other form of authorization for that Subject to Modification or Amendment
purpose.
Franchise is a mere privilege that may be seasonably
Voting Control Test and Beneficial Ownership Test burdened with some form of public service.

In Gamboa vs Teves – the voting control and beneficial A franchise or right shall be granted only under the
ownership test must be applied to determine whether condition that it shall be subject to amendment,
the corporation is a “Philippine Corporation” alteration, or repeal by Congress when the common good
so requires.
Full beneficial ownership of the stocks, coupled with
Take-over of Public Utilities
voting rights is essential.
1. temporary – happens in times of national emergency
Ownership of at least 60% of the shares with voting
rights must pertain to Filipinos.
…when the public interest so requires, the State
may, during the emergency and under
State policy of an independent national economy - must
reasonable terms prescribed by it, temporarily
be effectively controlled by Filipinos.
take over or direct the operation of any
privately-owned public utility or business
The requirement of at least 60% Filipino ownership affected with public interest.
“must apply separately to each class of shares, whether
common, preferred or non-voting, preferred voting or
any other class of shares.”
2. permanent – in cases of expropriation
Hence the across the board application “regardless of
differences in voting rights, privileges and restrictions,

CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML] Page 78

 CDF- TRANSPORTATION LAW
…in the interest of national welfare or defense,
upon payment of just compensation, transfer
public ownership utilities and other private
enterprises to be operated by the Government.
Generally, the Congress is the repository of emergency
powers. It may be delegated to the President subject to
certain conditions:
1. there must be war or other emergency
2. the delegation must be for a limited period only
3. the delegation must be subject to such
restrictions as the Congress may prescribe
4. the emergency powers must be exercised to
carry out a national policy declared by Congress
Emergency as a generic term connotes the existence of
conditions suddenly intensifying the degree of existing
danger to life or well-being beyond that which is
accepted as normal.
3 principal heads as classified in the US
1. economic
2. natural disaster
3. national security
*while President alone can declare a state of national
emergency, however, without legislation, he has no
power to take over privately-owned public utility or
business affected with public interest
In short, President has no absolute authority to exercise
all the powers of the State under the Constitution in the
absence of emergency powers act passed by Congress.
Monopolies and Unfair Competition
Exercise of police power is paramount over the right
against non-impairment of contracts
Free competition in the industry may also provide
answer for to a much-desired improvement in the
quality and delivery any type of public utility.
Regulations of Rates
This aspect of regulation is in line with the policy of the
State to protect the public against arbitrary and
excessive rates while maintaining the efficiency and
quality of services rendered.
Public interest vs Return of Investment – the power to
regulate rates does not give the State the right to
prescribe rates that are so low as to deprive the public
utility of the reasonable return of investment.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
-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.
The fixing of just and reasonable rates involves a
balancing of the investor and consumer interest
While the power to fix rates is legislative function,
whether by the legislature or delegated, a determination
of whether the rates so fixed are reasonable and just is a
purely judicial question and is subject to review by the
courts.
Police Power
Through the exercise of this power, the State can
regulate the rates imposed by a public utility.
Rate regulation includes granting of a provisional rate
increase, increase of rates or directing the public utility
to refund its over-recoveries based on the applicable
provisions of law.
Non-delegation
The power to fix rates of public utilities is a power that
has been delegated to the regulatory administrative
agencies and as such, cannot be further delegated.
Potestas delegate non delegari potest – what has been
delegated cannot be delegated
Prohibition against Discrimination
Discrimination in the charging of rates is not allowed
under existing law and rules.
The law prohibits any common carrier from making or
giving any unnecessary or unreasonable preference or
advantage to any particular person, company, firm,
corporation or locality, or any particular kind of traffic,
to any undue or unreasonable prejudice or
discrimination whatsoever.
A common carrier may discriminate between shippers
when the amount of goods shipped by one actually costs
less to handle and transport, but he cannot discriminate
on the ground simply that he carries all of the goods of
one shipper, while he does not carry all of the goods of
another. The difference in the charge must be the
difference in the cost.
Reasonable and Just Standard Fixing
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Reasonable rates for public utilities are the ultimate
object. The extent of judicial interference is protection
against unreasonable rates.
Only standard – rate be reasonable and just
What is just and reasonable is a question of fact calling
for the exercise of discretion, good sense, and a fair,
enlightened and independent judgment.m
The requirement of reasonableness comprehends such
rates that must not be so low as to be confiscatory,, or
too high as to be oppressive.
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.
Operating Expenses
• These are included in the determination of just
and reasonable rate.
• Should be a requisite of or necessary in the
operation of a utility
• SC ruled that the principle behind the inclusion
of the operating expenses in the determination
of just and reasonable rate is to allow the public
utility to recoup the reasonable amount of
expenses it has incurred in connection with the
services it provides.
• Income tax is not included as it is inconsistent
with the nature of operating expenses.
• Income tax it should be stressed, is imposed on
an individual or entity as a form of excise tax or
a tax on privilege of earning income.
• Operating expenses are those reasonably
incurred in connection with business operations
to yield revenue or income.
Fixing Rates for Electric Companies
3 major factors considered by regulating agencies:
a. Rate of return
b. Rate base
c. Return itself or the computed revenue to be
earned by the public utility based on the rate of
return and rate base
ERC Jurisdiction
-has original and exclusive jurisdiction under Rule 43(u)
of the EPIRA over all cases contesting rates, fees, fines
and penalties imposed by the ERC in the exercise of its
powers, functions and responsibilities and over all cases
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
of disputes between and among participants of the
energy sector.
LTFRB
Regulates rates with respect to carriers
2 methods in rate determination
1. Straight method - process by which the actual
distance travelled is multiplied by the
authorized are per succeeding km of .25
centavos
2. Add-on method- adding the established
minimum fare of .75 to the fare per succeeding
km multiplied by the distance travelled in excess
of 4km and 5 km respectively.
Provisional Increase
An administrative agency may be empowered by law to
approve provisionally, when demanded by urgent public
need, rates of public utilities without hearing.
Provisional rates are temporary in nature and subject to
adjustment in conformity with the definitive rates
approved after final hearing.
Provisional Rate Increase under EPIRA
Rate adjustments of electric distributors undergo the
following process:
1. Publication of application itself not just notice of
hearing in a newspaper of GC in the locality
where the applicant operates
2. Need for ERC to consider the comments and
pleadings of customers and LGU concerned
Collection
After the proper regulatory body approves the rate, the
public utility is obligated to collect only the rates agreed
upon.
Overcharging is prohibited.
Authority to Operate as Public Utility
The power to authorize and control the operation of
public utility is admittedly a prerogative of the
legislature since Congress is vested with plenary powers
of legislation.
Franchise is a legislative grant whether made directly by
the legislature or by its instrumentality.
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The grant when made binds the public and is directly or
indirectly an act of the State.
Franchise and Certificate of Public Convenience
Franchise – grant or privilege from the sovereign power
CPC – form of regulation through the administrative
agencies
When Legislative Franchise is Necessary
Even if there was already a delegation of authority to a
specific administrative agency to issue CPC, it does not
follow that a legislative franchise is no longer necessary.
It would still depend on the enabling law.
CPC however is not necessary for issuance of legislative
franchise.
Collateral attack on legislative franchise is not allowed. A
franchise is property right and cannot be revoked or
forfeited without due process of law.
The determination of the right to the exercise of a
franchise, or whether the right to enjoy such privilege
has been forfeited by non-user, is more properly the
subject of the prerogative writ of quo warranto.
Certificate of Public Convenience and Necessity
-requires prior issuance of municipal franchise
-laws imposing CPCNs no longer in force
Delegation to LGUs
Cities and municipalities are likewise given delegated
authorities to grant franchise to certain public utilities
including franchises in tricycle operations, ferries and
wharves.
The power to establish and maintain a public utility is
under the general welfare clause and not under the
specific and express provisions of its charter
While a public market is a public service or utility, is not
one that falls under the jurisdiction of PSC, not being
ejusdem generis with those enumerated in PSA
Thus LGUs can fix the fees for the use of its public
markets without the approval of any administrative
agencies.
Basic Rules on Issuance of CPC under the PSA
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
See PSA Secs 15 and 16 – but these are modified by the
Constitution and other special laws, certain principles
are still in force
Basic requirements
Concurrence of the ff, requisites for the issuance of CPC;
1. Applicant must be citizen of the Philippines or a
corporation, or a co-partnership or association
of joint stock company constituted and
organized under Philippine laws at least 60% of
stock or paid up capital of which belong entirely
to citizens of the Philippines
2. Applicant must be financially capable of
undertaking the proposed service and meeting
the responsibilities incident to its operations
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.
Public Interest is Overriding Principle
The overriding principle is public interest, necessity and
convenience.
Other rules and policies:
1. Prior operator rule – protects the first licensee’s
investment and will not be subjected to ruinous
competition. Under this, PSC will not issue a CPC
to second operator if there is a first operator
who in all things and respects is complying with
the rules and regulations of the Commission.
-related to “protection of investment rule”
2. Third operator rule – just a variation of prior
operator rule; instead of one prior operator,
there are two prior operators who are rendering
sufficient service.
3. Prior applicant rule – priority in the filing of
application for a CPC is other conditions being
equal, an important factor in determining the
rights of public service companies.
The primary concern is still public interest, necessity and
convenience.
Right Light & Ice Co. Inc. vs Municipality of Morong, Rizal
– prior operator rule is not absolute, for nobody has
exclusive right to secure franchise or a CPC.
-requires for its application that old operator offers to
meet the increase in the demand the moment it arises
and not when another operator, even a new one, had
made the offer to serve the public needs.
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Free Competition
In addition to protection of public interest, the aim to
promote competition may likewise work against the
application of the different policies like the prior
operator rule, prior applicant rule and other related
policies or rules.
Monopoly is eschewed and the aim to deliver adequate
service to serve the public takes precedence.
Nature of CPC
CPC may be considered property depending on the
perspective or point of view.
A CPC – mere privilege that is always subject to the
regulation of the State. Insofar as the State is concerned a
CPC constitutes neither a franchise nor a contract,
confers no property right and is a mere license or
privilege.
In a broad sense, a CPC may also be considered property.
-under Public Service Law, a CPC can be sold by the
holder thereof because it has considerable material value
and is considered as valuable asset.
-with respect to other persons and other public utilities,
a CPC as property, which represents the right and
authority to operate its facilities for public service,
cannot be taken or interfered without due process of
law.
-while these franchises may be said to be intangible
character, they are however of value and are considered
properties which can be seized through legal process.
Provisional Authority
Certain public utilities may be allowed to operate
pending issuance of CPC by acquiring PA.
The SC adopted the ff. definition of PA which “refers to an
authority given to an entity qualified to operate public
utility for a limited period during the pendency of its
application for, or before the issuance of its CPC. It has
general scope because it is akin to a provisional CPC in
that it gives the public utility provider power to operate as
such and be bound by the laws and rules governing public
utilities, pending the issuance of its actual CPC.”
Necessarily, a public utility that is granted a provisional
authority is already allowed to operate. However, the
timeline of the PA is limited and may be revoked by the
agency at any time in accordance with law and subject to
final action on the main application for CPC.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
An example: one that is being used by MARINA in
domestic shipping.
PA distinguished fom Temporary Permits
PA is not equivalent to temporary permits.
Temporary permit – a document containing the call sign,
authorized power, frequency/channel, class station,
hours of operation, points of communication, and
equipment particulars granted to an authorized public
utility.
TP scope is more specific than PA because it contains
details and specifications under which a public utility
should operate pursuant to a previously updated PA.
Thus there should be an effective PA before a TP is
issued. (PA prerequisite to TP)
Instances when CPC is not required (exemptions)
Section 14 of the PSA provides for the exemptions:
1. Warehouses;
2. Vehicles drawn by animals and bancas moved by
sail or oar and tugboats and lighters;
3. Airships within the Philippines except as
regards the fixing of their maximum rates on
freight and passengers;
4. Radio companies except with respect to fixing
rates;
5. Public service owned or operated by the
instrumentality of the National Government or
by the GOCC, except with respect to fixing rates.
Note:
Airlines are now under – CAB (Civil Aeronautics Board)
with respect to the economic aspect of civil aviation.
Transfer of Certificate
-applicable statute may deny or grant to the operator the
right to transfer a franchise.
Under Section 20(g) of the PSA, the PSC has the power
and authority to approve a sale or transfer of a CPC if;
1. There are just and reasonable grounds for
making the transfer
2. The sale/transfer is not detrimental to the
public interest
The basic reason for the provision is that approval is
only necessary to protect public interest.
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If property covered by a franchise is transferred or
leased to another without the requisite approval, the
transfer is not binding against PSC and in contemplation
of law, the grantee continues to be responsible under the
franchise in relation to the PSC and to the public.
The Registered Owner Rule applies if the transfer of
the franchise was not approved by the regulating agency.
Transfer of the franchise is prohibited if the transfer
is for illegal purpose.
Other transactions:
Section 20(g) likewise covers the ff transactions:
1. Sale or any alienation;
2. Mortgage
3. Encumbrance
4. Lease
5. Merger/consolidation
The transaction cover not only the CPC but also its
property or privileges, or rights or any part thereof.
Revocation or Cancellation of Certificate
Since CPC is just a privilege, the same can be revoked by
the administrative agency concerned.
It is the condition that franchise is subject to
amendment, alteration or repeal when the common good
so requires.
The SC held in few cases that the cancellation of CPC
where;
1. The holder is a mere dummy
2. The operator ceased operations and placed his
vehicles on storage
3. Where the operator totally abandoned the
service
If the public utility has offended against any provision of
the legislative franchise, or has subject to misuse or
abuse, the violation may be more properly inquired into
in quo warranto proceedings instituted by the State and
not in a collateral attack thereto.
CPC can properly be cancelled on the ground of
misrepresentation.
Mere failure to operate temporarily should likewise not
be a ground for cancellation, especially as when the
suspension of the service was directly caused by
circumstances beyond the control of the operator.
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
Due Process
The SC held that regulatory agency like the PSC cannot
make an ex parte revocation of CPC without giving the
operators previous notice and opportunity to explain
their side.
However, the SC also held that the absence of notice or
hearing required by the PSA before the suspension,
revocation or cancellation of any CPC is a defect that can
be cured by a hearing held on the motion to reconsider
filed by the operator.
Alternative Penalty
-fine after due notice and hearing
Imposition of fine may only be one of the remedies that
the Commission may resort to, in its discretion. But that
remedy is not conclusive of, or has preference over, the
other remedies.
When NTC has NO power to cancel legislative
franchise
The SC held that NTC has no power to cancel CPC that is
issued to the holders of duly issued legislative franchises
in the broadcast industry.
Transfer of Shares of Stocks
Section 20 (h) of the PSA governs the sale of shares of
stock of a public utility. Pursuant thereto, the PSC is the
government agency vested with the authority to approve
the transfer of more than 40% of the subscribed capital
stock of a telecommunications company to single
transferee.
Transfers of shares of stock of a public utility
corporation need only approval of the appropriate
regulatory agency, not Congressional authorization.
Due Process
PSA and its successor regulatory agencies are required
to accord parties before them the right to administrative
due process.
Notice and hearing are required in the ff. instances;
1. Issuance of CPC and CPCN
2. Fixing of standards and qualifications
3. Fixing of standards for measuring quantity
4. Establishment of rules to secure accuracy of all
meters and all measuring appliances
5. Order to compel operators to furnish proper
service
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6. Allowing extension of facilities
When NO hearing is required
The power to investigate a public utilities’ compliance
with a standard, rule, regulation, or order or other
requirements imposed by law or the regulation
promulgated by the administrative agency, as well as
require compliance if necessary may be exercised
without prior notice and hearing.
The power to impose fine is not included.
Administrative fines
Notice and hearing are indispensable for the valid
exercise by an administrative agency of its quasi-judicial
functions including the imposition of the administrative
fine.
Imposition of fines is not barred by the issuance of TP.
Distinguished from Criminal
There are criminal proceedings under the penal clause of
PSA. Sections 23 to 26 pertain to fines imposed “in the
discretion of the court” – which means they are imposed
in criminal court proceedings.
In Sec 21 it is imposed by the then PSC, after due notice
and hearing.
The 60-day prescriptive period under PSA applies to
criminal cases filed in court and does not apply to the
administrative case.
CHAPTER 22- POWERS OF ADMINISTRATIVE
AGENCIES
PSC powers are now exercised by different government
agencies.
The Rule-Making and Quasi-Judicial Powers
Administrative agencies possess:
a. quasi-legislative or rule-making power – power
to make rules and regulations which results in
delegated legislation that is within the confines
of the granting statute and the doctrine of non-
delegability and separability of powers.
a. Must be germane to the puposes of the
law
b. Must be in conformity by the standards
required by law
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
c. Must be consistent with the
Constitution
b. quasi-judicial or administrative adjudicatory
powers – power to hear and determine
questions of fact to which the legislative policy
is to apply and decide in accordance with the
standards laid down by the law itself in
enforcing and administering the same law.
a. In carrying out this power, they are
required to investigate and ascertain
the existence of facts, hold hearings,
weigh evidence, and draw conclusion
from them as basis for their official
action and exercise of discretion.
Multiple Functions:
An administrative agency that fixes the rates to be
charged by public utilities may be given Congress
multiple functions.
Thus the PSA empowered PSC with varied functions that
include both regulatory and quasi-judicial functions.
Primary Jurisdiction
It is a basic rule in Administrative Law that there should
be fidelity to the basic concept of exhausting
administrative remedies.
However, there are cases that the jurisdiction of
regulators of public services cannot be invoked. Thus if
the scope and coverage of the franchise of a public utility
is not clear, a legal question arises which is more
appropriate for the judiciary than for an administrative
agency to resolve.
The Doctrine of Primary Jurisdiction calls for application
when there is such competence to act on the part of an
administrative body.
Persons Covered by Regulation
PSC has jurisdiction only over persons engaged in public
utilities, or over a public utility that holds CPC.
And NOT over persons who are not engaged in public
utilities, except those who may violate any regulation it
may promulgate under the law.
Prosecuting and Investigating Functions
The PSC has power to investigate, upon its own initiative
or upon complaint in writing, any matter concerning any
public service as regards matters under its jurisdiction;
to, require any public service to furnish safe, adequate,
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and proper service as the public interest may require
and warrant.
E.g. PSC has power to cancel and revoke a CPCN even
without a formal charge filed by any interested party,
with the only limitation that the holder of the certificate
be given a day in court.
Powers and Functions of Administrative Agencies
(5 lang mga besh)
1. Department of Transportation and
Communications
a. Administer and enforce all laws, rules and
regulations in the field of transportation and
communications;
b. Issue certificates of public convenience for the
operation of public land and rail transportation
utilities and services;
c. Establish and prescribe rules and regulations for
identification of routes, zones and/or areas of
operations of particular operators of public land
services;
d. Establish and prescribe rules and regulations for
the issuance of licenses to qualified motor
vehicle drivers, conductors, and airmen;
e. Determine, fix and/or prescribe charges and/or
rates pertinent to the operation of public air and
land transportation utility facilities and services,
except such rates and/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;
2. Land Transportation Franchising and Regulatory
Board
a. To issue, amend, revise, suspend or cancel
Certificates of Public Convenience or permits
authorizing the operation of public land
transportation services provided by motorized
vehicles, and to prescribe the appropriate terms
and conditions therefor
b. To determine, prescribe and 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;
c. To issue preliminary or permanent injunction,
whether prohibitory or mandatory, in all cases
in which it has jurisdiction, and in which cases
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
the pertinent provisions of the Rules of Court
shall apply;
d. To issue subpoena and subpoena duces tecum
and summon witnesses to appear in any
proceedings of the Board, to administer oaths
and affirmations;
e. To review motu proprio the decisions/actions of
the Regional Franchising and Regulatory Office
herein created;
3. Civil Aeronautics Board – charged with the power to
regulate the economic aspects of air transportation in
the Philippines
-has general supervision and jurisdiction over
air carriers as well as properties, property
rights, equipment and franchise
a. Licensing of domestics and international
airlines, the latter with the approval of the
President
b. Regulation of fares and rates for the carriage of
properties and property
c. Enforcement of Economic provisions of RA 776
d. Authorization of navigation of foreign aircraft in
the Philippines
e. Participation in the negotiation of air
agreements covering exchange of air rights.
4. Civil Aviations Authority of the Philippines (CAAP)
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
issue subpoena 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
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such books, papers, tariffs, contracts,
agreements and all other documents;
5. Maritime Industry Authority (MARINA)
a. Develop and formulate plans, policies, programs,
projects, standards, specifications and
guidelines geared toward the promotion and
development of the maritime industry, the
growth and effective regulation of shipping
enterprises, and for the national security
objectives of the country;
b. Establish, prescribe and regulate routes, zones
and/or areas of operation of particular
operators of public water services;
c. Issue Certificates of Public Convenience for the
operation of domestic and overseas water
carriers;
d. Register vessels as well as issue certificates,
licenses or documents necessary or incident
thereto;
e. Undertake the safety regulatory functions
pertaining to vessel construction and operation
including the determination of manning levels
and issuance of certificates of competency to
seamen;
6. Philippine Coast Guard (PCG)
-described in the law as an armed and uniformed service
attached to the DOTC, however, in times of war, the PCG
is attached to the Department of National Defense (DND)
a. To enforce regulations in accordance with all
relevant maritime international conventions,
treaties or instruments and national laws for the
promotion of safety of life property at sea within
the maritime jurisdiction of the Philippines and
conduct port state control implementation;
b. To inspections on all merchant ships and
vessels, including but shall not be limited to
inspections prior to departure, to ensure and
enforce compliance with safety standards, rules
and regulations;
c. To detain, stop or prevent a ship or vessel which
does not comply with safety standards, rules
and regulations from sailing or leaving port;
d. To conduct emergency readiness evaluation on
merchant marine vessels;
e. To issue permits for the salvage of vessels and to
supervise all marine salvage operations, as well
as prescribe and enforce rules and regulations
governing the same
7. Philipine Ports Authority (PPA)
CDF NOTES – TRANSPORTATION LAW[Sagocsoc, M||Pacuribot, ML]
a. To supervise, control, regulate, construct,
maintain, operate, and provide such facilities or
services as are necessary in the ports vested in,
or belonging to the Authority.
b. To prescribe rules and regulations, procedures,
and guidelines governing the establishment,
construction, maintenance, and operation of all
other ports, including private ports in the
country.
c. To license, control, regulate, supervise any
construction or structure within any Port
District.
d. To control, regulate, and supervise pilotage and
the conduct of pilots in any Port District.
e. To exercise control of or administer any
foreshore rights or leases which may be vested
in the Authority from time to time.
8. National Telecommunications Commission (NTC)
-it is the sole body that exercises supervision,
adjudication and control over all telecommunications
services throughout the country.
- NTC’s decision are appealable only and directly to the
Supreme Court
-broadcast industry, such as the operators of television
network and radio stations, is also being regulated by the
NTC
a. Grant CPC/CPCN /PA to install, operate and
maintain telecommunications and CATV
services
b. Grant licenses to install, operate and maintain
the use of radio frequencies
c. Allocate/sub-allocate and assign the use of radio
frequencies
d. Type-approve/type-accept all radio
communications and broadcast equipment
e. Conduct radio telecommunications examination
and issue radio operators certificate
9. Cable Television Industry – still under NTC, which was
granted the sole power of regulation and supervision
over the cable television industry
a. Determination of rates
b. Issuance of Certificates of Authority
c. Establish areas of operations
d. Examination and assessment of technical, legal
and financial qualifications of applicant
operators
e. Granting permits for the use of frequencies
With respect to the foregoing, NTC exercises exclusive,
original, and primary jurisdiction to the exclusion of
regular courts.
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Municipal corporations have no power to issue
franchises for cable television operator as it would deem
encroachment to the authority of NTC.
10. Energy Regulatory Commission (ERC)
a. Enforce the implementing rules and
regulations of EPIRA law
b. Amend or revoke the authority to operate of any
person or entity which fails to comply with the
provisions hereof, the IRR or any order or
resolution of the ERC, after due notice and
hearing.
c. Review and approve any changes on the terms
and conditions of service of the TRANSCO or any
distribution utility;
d. Set a lifeline rate for the marginalized end-users;
e. Impose fines or penalties for any non-
compliance with or breach of EPIRA law, the IRR
of this Act and the rules and regulations which it
promulgates or administers.
b. Design and Construction. Minimum criterial for
the design and construction of new or additional
facilities for water supply, treatment,
transmission and distribution, and for
wastewater collection, treatment and disposal;
c. Equipment, Materials and Supplies. Standards
for the optimum selection and effective
utilization of equipment, materials and supplies
by local water and sewer utilities;
d. Operations and Maintenance. Standardized
procedures for operating and maintaining
equipment and facilities;
e. Personnel. The training of personnel who
operate or manage local water utilities;
MWSS (Metropolitan Waterworks and Sewerage System)
– exercises jurisdiction over the waterworks and
sewerage systems in Metropolitan Manila, Province of
Rizal and Cavite

Franchise under EPIRA (Electric Power Industry Reform

Act ) law - The power to grant franchises to persons
engaged in the transmission and distribution of
electricity shall be vested exclusively in the Congress of
the Philippines

"Generation Company" refers to any person or entity

authorized by the ERC to operate facilities used in the
generation of electricity

"Generation of Electricity" refers to the production of

electricity by a generation company or a co-generation
facility

Power generation shall not be considered a public utility

operation.

11. Local Water Utilities Administration (LWUA)

-Local Water Districts are regulated by the LWUA

Administration shall have the power and duty to

establish standards for local water utilities, and adopt
rules and regulations for the enforcement thereof. The
Administration shall vigorously consult and coordinate
its actions with all governmental agencies active in the
areas of public works and all other concerned agencies in
the promulgation of these standards. Said standards and
regulations shall include the following:

a. Water Quality. Minimum drinking water

standards including a uniform testing and
reporting system. Said Standards shall include
bacteriological, chemical and physical
parameters;

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