Transpo & Public Service Law[1]

7/29/2019 Transpo & Public Service Law[1]

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TRANSPORTATION &

PUBLIC SERVICE LAW

F.A.H…kinawat rani nako…at least

honest ko…



Chapter 1

GENERAL CONCEPTS IN

TRANSPORTATION LAW



Contract of Transportation There is contract of transportation where a person

obligates himself to transport persons or propertyfrom one place to another for a consideration.

The contract may therefore involve carriage of passengers or carriage of goods.

The person who obligates himself to transport thegoods or passengers may be a common carrier or aprivate carrier.



Parties in a contract of carriage Passenger – one who travels in a public conveyance

by virtue of contract, express or implied, with thecarrier as to the payment of fare or that which is

accepted as an equivalent thereof (Nueca v. Manila Railroad Co., G.R. 31731-R, Jan. 30, 1968)

Common Carrier – one that holds itself out as readyto engage in the transportation of goods for hire as apublic employment and not as a casual occupation.(De Guzman v. CA, G.R. L-47822, Dec. 22, 1988)



Baliwag Transit v. CA,

G.R. 80447, Jan. 31, 1989Facts:

The parents of George, who is already of legal agefiled a case against Baliwag for breach of contractalleging that because of the negligent manner by itsdriver, George was thrown off the bus as a result of which the latter sustained multiple serious physicalinjuries.

His parents was seeking reimbursement of their

medical expenses and other incidental expensesincurred by them due to hospitalization of George.

While the case was pending, George signed a waiverof claim in favor of Baliwag‟s insurer, FortuneInsurance.



Ruling: Since the suit is one for breach of contract of carriage, therelease of claims executed by George, as the injured party,discharging Fortune Insurance and Baliwag from any and all liabilityis valid.

Significantly, the contact of carriage was actually between George,as the paying passenger, and Baliwag, as the common carrier. x – x – x – x Since the contract may be violated only by the partiesthereto, as against each other, in an action upon that contract, thereal parties in interest, either as plaintiff or as defendant, must beparties to said contract.

In the absence of any contract of carriage between Baliwag and

George‟s parents, the latter are not real parties in interest in anaction for breach of that contract.



Parties in Carriage of Goods Shipper – is the person who delivers the goods to the

carrier for transportation. He is the person who pays theconsideration or on whose behalf payment is made.

Consignee – is the person to whom the goods are to bedelivered. The consignee may be the shipper himself ora third person who is not actually party to the contract.

Carrier (Ibid)



Everett Steamship Corp. v. CA

G.R. 122494, Oct. 8, 1998Facts: Hernandez Trading imported three crates of bus

spare parts from Japan. The crates were shipped on

board "ADELFAEVERETTE," a vessel owned bypetitioner's principal, Everett Orient Lines. Upon arrival at the port of Manila, it was discovered

that one of the crates was missing. The loss wasconfirmed and admitted by Everett.



However, Everett offered to pay only One HundredThousand (Y100,000.00) Yen, the maximum amountstipulated under Clause 18 of the covering bill of

lading which limits the liability of petitioner.Hernandez rejected.

The trial found in favor of Hernandez. On appeal,Everett argued that consent of the consignee to theterms and conditions of the bill of lading is necessary

to make such stipulations binding upon it .



Ruling:

When Hernandez formally claimed reimbursement forthe missing goods from Everett and subsequently filed acase against the it based on the very same bill of lading,it accepted the provisions of the contract and therebymade itself a party thereto, or at least has come to courtto enforce it.

However, the liability of the carrier under the limitedliability clause stands, which is limited to One HundredThousand (Y100,000.00) Yen.



Perfection of Contract involving

Carriage In General

If contract to carry, i.e. an agreement to carry thepassenger at some future date, perfection takesplace upon mere consent since such contract is

consensual in nature. If contract of carriage, which is a real contract,

perfection takes place when the carrier is actuallyused and the latter has assumed its obligation as acarrier.



Specific Perfections of Contract of

Carriage: AIRCRAFT

If contract to carry, there is perfection even if notickets have been issued provided there was meetingof minds with respect to the subject matter and theconsideration.

If contract of carriage, there is perfection if it wasestablished that the passenger had CHECKED IN atthe departure counter, passed through customs and

immigration, boarded the shuttle bus and proceededto the ramp of the aircraft.




Carriage: BUSES, JEEPNEYS, STREET CARS

Once the bus or jeepney stops, it is in effect makinga continuous offer to the passengers. Hence, it is theduty of the driver to stop their conveyances for a

reasonable length of time in order to affordpassengers an opportunity to board and enter. If passenger is injured upon boarding, liability based

on contract of carriage already attaches to thecommon carrier since the passenger was deemed tobe accepting the offer when he attempted to board.The contract is perfected from that precise moment.




Carriage: TRAINS

Perfection takes place when a person, with bona fideintention to use the facilities of the carrier andpossessing sufficient fare with which to pay for hispassage, has presented himself to the carrier fortransportation in the place and manner that he willbe transported.

Where a person has already purchased a LRT token

and while waiting on the platform designated forboarding fell thereon and hit by the train, he was

deemed a passenger.



British Airways v. CA,

G.R. 92288, Feb. 9, 1993

Facts:

On two occasions, private respondent recruitmentagency was not able to send its workers to Saudi Arabia despite the fact that its principal there hadalready purchased pre-paid tickets becausepetitioner‟s computers broke down.

Private respondent thereafter filed a case on breachof contract of carriage. Petitioner argued that there

was no perfected contract.



Ruling:

Petitioner's repeated failures to transport privaterespondent's workers in its flight despite confirmed

booking of said workers clearly constitutes breach of contract and bad faith on its part.

There is no dispute as to the Petitioner‟s consent to thesaid contract "to carry" its contract workers from Manila

to Jeddah.



The appellant's consent thereto, on the other hand,was manifested by its acceptance of the PTA orprepaid ticket advice that ROLACO Engineering has

prepaid the airfares of the Petitioner's contractworkers advising the appellant that it must transportthe contract workers on or before the end of March,1981 and the other batch in June, 1981.

Accordingly, there could be no more pretensions as

to the existence of an oral contract of carriageimposing reciprocal obligations on both parties.



Common Carrier Defined

Art. 1732. Common carriers are persons, corporation,firms or associations engaged in the business of carrying or transporting passengers or good or both

by land, water, or air, for compensation, offeringtheir services to the public.

A common carrier is also defined as one that holdsitself out as ready to engage in the transportation of goods for hire as a public employment and not as a

casual occupation, (De Guzman v. CA, G.R. L-47822,Dec. 22, 1988)



Concept of Common Carrier

analogous to Public Service

Public Service includes “every person that now orhereafter may own, operate, manage, or control inthe Philippines, for hire or compensation, withgeneral or limited clientele, whether permanent,occasional or accidental.

Done for general business purposes, any commoncarrier, railroad, street railway, traction railway,subway motor vehicle, either for freight orpassenger, or both, with or without fixed route.



Whatever may be its classification, freight or carrierservice of any class, express service, steamboat, orsteamship line, pontines, ferries and water craft.

Engaged in the transportation of passengers orfreight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,irrigation system, gas, electric light, heat and power,water supply and power petroleum, sewerage

system, wire or wireless communications systems,wire or wireless broadcasting stations and othersimilar public services.



Sorita v. Public Service Commission,

G.R. L-20965, Oct. 29, 1966

Held:

In drawing the line between "steamboats,motorships, and steamship lines" on one side and“pontines, ferries, and water crafts" on the other,Congress apparently means to accept the view that"boat, craft and watercraft" are usually applied tosmall vessels, while larger vessels are usually

referred to by the terms "steamer, steamship orvessel"



Test in determining whether a partyis a common carrier of goods

He must be engaged in the business of carryinggoods for others as a public employment, and musthold himself out as ready to engage in thetransportation of goods for person generally as abusiness and not as a casual occupation

He must undertake to carry goods of the kind towhich his business is confined.

He must undertake to carry by the method by which

his business is conducted and over his establishedroads.



The transportation must be for hire. [First Philippine

Industrial Corp. v. CA, G.R. 125948, Dec. 29, 1998]

Provided it has space, for all who opt to avail

themselves of its transportation service for a fee[National Steel Corp. v. CA, G.R. No. 112287, Dec. 12, 1997, quoting Mendoza v. PAL, 90 Phil. 836]



Common Carrier: Basic Rules

STILL A COMMON CARRIER:

Even if hauling is only ancillary.

Even if clientele is limited. Even if it has no fixed and publicly known route,

maintains no terminals and issues not tickets.

Even if means transportation is not through motor

vehicle.



Ancillary Activity Immaterial

Art. 1732 makes no distinction between one whoseprincipal business activity is carrying of persons orgoods or both, and one who does such carrying only

as an ancillary, nor does it make distinctions betweenone who offers the service to the „general public‟ or anarrow segment of the general population.

Therefore, a party who „back-hauled‟ goods for othermerchants from Manila to Pangasinan, even when

such activity was only periodical or occasional andwas not its principal line of business would besubject to the responsibilities and obligations of acommon carrier. [See De Guzman v. CA, G.R. L-47822, Dec. 22,1988]



Limited Clientele Not a Defense

Facts: Petitioner entered into a contract with SMC for the

transfer of paper and kraft board from the port area

to SMC‟s warehouse. Held: She is still a common carrier although she does not

indiscriminately hold her services out to the publicbut offers the same to select parties with whom she

may contract in the conduct of her business. [VirginesCalvo v. UCPB General Insurance Co., G.R. 148496, Mar. 19, 2002]



Facts: Respondent shipping company transported the 75,000

bags of cement to Petitioner in its barge. The bags of

cement perished after its barge sank while being towedby a tug boat.Held: Respondent is a common carrier because it was engaged

in the business of carrying goods for others for a fee. The

regularity of its activities in the area indicates more than just a casual activity on its part. Neither can the conceptof a common carrier change merely because individualcontracts are executed or entered into with the patronsof the carrier. [Phil. American General Insurance Co., et al. v. PKS ShippingCo., G.R. 149038, Apr. 9, 2003]



No fixed route, No terminal, NoTicket issued also not a Defense

Facts: Petitioner is involved in the business of carrying

goods through its barges. It has no fixed and publicly

known route, maintains no terminals, and issues notickets.Held: Petitioner is still a common carrier because its

principal business is that of lighterage and drayage

and it offers its barges to the public for carrying ortransporting by water for compensation. [Asia Lighterageand Shipping, Inc. v. CA, G.R. 147246, Aug. 19, 2003]



Drayage service is usually provided by a nationaltrucking/shipping company or an International shipment brokeragefirm in addition to the transportation of the freight to and from theexhibit site. Drayage service provides for:

- Completing inbound carrier's receiving documents;- Unloading and delivery of the goods to your booth/stand

space from the receiving dock;- Storing of empty cartons/crates and extra products at a

on/near-site warehouse;- Pickup of the goods from your booth/stand space to the

receiving dock and loading back into the carrier; or- Completing outbound carrier's shipping documents.



Means used in transporting not material [First

Philippine Industrial Corp. v. CA, G.R. 147246, Aug. 19, 2003]

Issue:

Are pipeline operators common carriers as to subjectthem to business taxes on common carriers?

Held: Yes. The Code makes no distinction as to the means

of transporting, as long as it is by land, water or air. Itdoes not provide that the transportation of the

passengers or goods should be by motor vehicle. Infact, in the US, oil pipe line operators are consideredcommon carriers. Also under the Petroleum Act ofthe Philippines (RA 387).



Effect when Common Carrier entersinto a charter party

If only by contract of affreightment, whether voyageor time charter, it remains a common carrier.

If by bareboat or demise charter, a common carrier istransformed into a private carrier.



Planters Products Inc. v. CA,G.R. 101503, Sept. 15, 1993

It is only when the charter includes both the vesseland its crew, as in a bareboat or demise that acommon carrier becomes private, at least insofar as

the particular voyage covering the charter-party isconcerned.

Indubitably, a shipowner in a time or voyage charterretains possession and control of the ship, although

her holds may, for the moment, be the property ofthe charterer.



Common Carrier v. Private Carrier(National Steel Corp. v. CA, supra)

The true nature of a common carrier is the carriage ofpassengers or goods, provided it has space, for allwho opt to avail themselves of its transportationservice for a fee.

As a general rule, private carriage is undertaken byspecial agreement and carrier does not hold himselfout to carry goods for the general public.

In private carriage, the rights and obligations ofparties, including liabilities for damage to cargo, aredetermined primarily by stipulations in their contractof carriage or charter party (demise or bareboat. Insuch case, the burden of proof is on the other party toshow that the private carrier was responsible for theloss of, or injury to the cargo.



FGU Insurance v. G.P. SarmientoTrucking, G.R. 141910, Aug. 6, 2002

Facts:

GPS, as the exclusive hauler of ConceptionIndustries, undertook to deliver thirty (30) units of

Condura refrigerators from latter‟s plant in Alabangto Dagupan City. While the truck was traversing thenorth diversion road along McArthur highway inBarangay Anupol, Bamban, Tarlac, it collided withan unidentified truck, causing it to fall into a deep

canal, resulting in damage to the cargoes. PetitionerFGU as subrogee to Concepcion Industries filed acomplaint for damages and breach of contract ofcarriage against GPS and its driver.



Issue No. 1:

WHETHER RESPONDENT GPS MAY BECONSIDERED AS A COMMON CARRIER.

Held: GPS, being an exclusive contractor and hauler of

Concepcion Industries, Inc., rendering or offering itsservices to no other individual or entity, cannot be

considered a common carrier. The above conclusionnothwithstanding, GPS cannot escape from liability.



In culpa contractual, upon which the action of petitionerrests as being the subrogee of Concepcion Industries,Inc., the mere proof of the existence of the contract andthe failure of its compliance justify, prima facie, acorresponding right of relief.

A breach upon the contract confers upon the injuredparty a valid cause for recovering that which may have

been lost or suffered.



The remedy serves to preserve the interests of thepromisee that may include his:

“Expectation interest," which is his interest in having

the benefit of his bargain by being put in as good aposition as he would have been in had the contract beenperformed; or



“Reliance interest," which is his interest in beingreimbursed for loss caused by reliance on the contract bybeing put in as good a position as he would have been inhad the contract not been made; or

“Restitution interest," which is his interest in havingrestored to him any benefit that he has conferred on theother party



The effect of every infraction is to create a new duty, thatis, to make recompense to the one who has been injuredby the failure of another to observe his contractualobligation unless he can show extenuating

circumstances, like proof of his exercise of due diligence(normally that of the diligence of a good father of afamily or, exceptionally by stipulation or by law such asin the case of common carriers, that of extraordinarydiligence) or of the attendance of fortuitous event, toexcuse him from his ensuing liability. .



In this case, the delivery of the goods in its custody tothe place of destination - gives rise to a presumption oflack of care and corresponding liability on the part of the

contractual obligor the burden being on him to establishotherwise. GPS has failed to do so.

Respondent driver, on the other hand, without concreteproof of his negligence or fault, may not himself be

ordered to pay petitioner.



The driver, not being a party to the contract of carriagebetween petitioner‟s principal and defendant, may notbe held liable under the agreement.

A contract can only bind the parties who have enteredinto it or their successors who have assumed theirpersonality or their juridical position.

Consonantly with the axiom res inter alios acta aliis neque

nocet prodest, such contract can neither favor norprejudice a third person.



Petitioner‟s civil action against the driver can only bebased on culpa aquiliana, which, unlike culpa contractual,would require the claimant for damages to prove

negligence or fault on the part of the defendant.



Issue No. 2: WHETHER THE DOCTRINE OF RES IPSA LOQUITUR

IS APPLICABLE IN THE INSTANT CASE.

Held: Res ipsa loquitur, a doctrine being invoked by petitioner,

holds a defendant liable where the thing which causedthe injury complained of is shown to be under thelatter?s management and the accident is such that, in theordinary course of things, cannot be expected to happenif those who have its management or control use propercare. It affords reasonable evidence, in the absence ofexplanation by the defendant, that the accident arosefrom want of care



It is not a rule of substantive law and, as such, it does notcreate an independent ground of liability. Instead, it isregarded as a mode of proof, or a mere procedural

convenience since it furnishes a substitute for, andrelieves the plaintiff of, the burden of producing specificproof of negligence.

The maxim simply places on the defendant the burden

of going forward with the proof.



Resort to the doctrine, however, may be allowed onlywhen (a) the event is of a kind which does not ordinarilyoccur in the absence of negligence; (b) other responsible

causes, including the conduct of the plaintiff and thirdpersons, are sufficiently eliminated by the evidence; and(c) the indicated negligence is within the scope of thedefendant's duty to the plaintiff.

Thus, it is not applicable when an unexplained accident

may be attributable to one of several causes, for some ofwhich the defendant could not be responsible.



Res ipsa loquitur generally finds relevance whether or nota contractual relationship exists between the plaintiffand the defendant, for the inference of negligence arisesfrom the circumstances and nature of the occurrence and

not from the nature of the relation of the parties. Nevertheless, the requirement that responsible causes

other than those due to defendant‟s conduct must firstbe eliminated, for the doctrine to apply, should be

understood as being confined only to cases of pure (non-contractual) tort since obviously the presumption ofnegligence in culpa contractual, as previously so pointedout, immediately attaches by a failure of the covenant orits tenor.



In the case of the truck driver, whose liability in a civilaction is predicated on culpa acquiliana, while headmittedly can be said to have been in control and

management of the vehicle which figured in theaccident, it is not equally shown, however, that theaccident could have been exclusively due to hisnegligence, a matter that can allow, forthwith, res ipsaloquitur to work against him.



Common Carrier v. Towage

In towage, one vessel is hire to bring another vesselto another place. Thus, a tugboat may be hired by acommon carrier to bring the vessel to a port. In this

case, the operator of the tugboat cannot beconsidered a common carrier.

In maritime law, towage refers to a service renderedto a vessel by towing for the mere purpose ofexpediting her voyage without reference to anycircumstances of danger. It usually confined tovessels that have received no injury or damage.



Common Carrier v. Arrastre

An Arrastre operator performs the followingfunctions:

Receive, handle, care for, and deliver all merchandise

imported and exported, upon or passing overGovernment-owned wharves and piers in the port; Record or check all merchandise which may be

delivered to said port at shipside; In general, furnish light, and water services and other

incidental services in order to undertake its arrastreservice



Hence, the functions of an arrastre operator has nothingto do with the trade and business of navigation, nor tothe use or operation of vessels.

An arrastre operator is like a depositary orwarehouseman.

Even if the arrastre service depends on, assists, orfurthers maritime transportation, it may be deemedmerely incidental and does not make its service

maritime



Common Carrier v. Stevedoring

The function of stevedores involve the loading andunloading of coastwise vessels calling at the port.



Governing Laws on Common Carrier

COASTWISE SHIPPING:

- New Civil Code (Arts. 1732-1766)

- Code of Commerce

CARRIAGE FROM FOREIGN PORTS TO PHILPORTS:

- New Civil Code (primary)

- Code of Commerce (suppletory)- Carriage of Goods by Sea Act [COGSA](suppletory)



CARRIAGE FROM PHIL PORT TO FOREIGN PORTS:

- The laws of the country to which the goods are to betransported.

–laws of the country of destination.

OVERLAND TRANSPORTATION:

- Civil Code (primary)

- Code of Commerce (suppletorily)- R.A. 4136 [The Land Transportation and Traffic Code]



AIR TRANSPORTATION:

- Civil Code (primary)

- Code of Commerce (suppletorily)- For international carriage – Warsaw Convention[Convention for the Unification of Certain RulesRelating to the International Carriage by Air]



Nature of Business of CommonCarriers, KMU V. Garcia, GR 115381, Dec. 23, 1994

Common carriers are public utilities within the contemplationof the public service law.

Public utilities are privately owned and operated businesses

whose services are essential to the general public.

They are enterprises which specially cater to the needs of thepublic and conduce to their comfort and convenience.

When, one devotes his property to a use in which the public hasan interest, he, in effect grants to the public an interest in that use,and must submit to the control by the public for the commongood, to the extent of the interest he has thus created.



Salient Provisions in R.A. 4136 onRegistration of Vehicles

Motor vehicle defined: Any vehicle propelled by anypower other than muscular power using the publichighways, but excepting road rollers, trolley cars,street-sweepers, sprinklers, lawn mowers,bulldozers, graders, fork-lifts, amphibian trucks, andcranes if not used on public highways, vehicleswhich run only on rails or tracks, and tractors,trailers and traction engines of all kinds used

exclusively for agricultural purposes. Trailers having any number of wheels, when

propelled or intended to be propelled by attachmentto a motor vehicle, shall be classified as separate

motor vehicle with no power rating .



The distinction between "passenger truck" and"passenger automobile" shall be that of common usage:Provided, That a motor vehicle registered for more than

nine passengers shall be classified as "truck": AndProvided, further, That a "truck with seating compartments at the back not used for hire shall beregistered under special "S" classifications. In case of

dispute, the Commissioner of LandTransportation shall determine the classification to

which any special type of motor vehicle belongs.



Articulated vehicle - means any motor vehicle with atrailer having no front axle and so attached that part of

the trailer rests upon motor vehicle and a substantialpart of the weight of the trailer and of its load is borneby the motor vehicle. Such a trailer shall be called as"semi-trailer."



Professional driver - means every and any driver hiredor paid for driving or operating a motor vehicle, whetherfor private use or for hire to the public. Any person

driving his own motor vehicle for hire is a professionaldriver.

Owner -The actual legal owner of a motor vehicle, inwhose name such vehicle is duly registered with the

Land Transportation Commission.



The "owner" of a government-owned motor vehicle isthe head of the office or the chief of the Bureau to

which the said motor vehicle belongs.

Parking or parked - A motor vehicle is "parked" or"parking" if it has been brought to a stop on the shoulderor proper edge of a highway, and remains inactive inthat place or close thereto for an appreciable period oftime .



A motor vehicle which properly stops merely todischarge a passenger or to take in a waiting passenger,or to load or unload a small quantity of freight with

reasonable dispatch shall not be considered as "parked",if the motor vehicle again moves away without delay.



Sec. 5(a) - No motor vehicle shall be used or operated onor upon any public highway of the Philippines unlessthe same is properly registered for the current year inaccordance with the provisions of this Act.



Sec. 5(e) Encumbrances of motor vehicles. –

Mortgages, attachments, and other encumbrances ofmotor vehicles, in order to be valid, must be recorded

in the Land Transportation Commission and mustbe properly recorded on the face of all outstandingcopies of the certificates of registration of the vehicle

concerned.

*register of deeds first before LTO



Section 16. Suspension of registration certificate. - If oninspection, as provided in paragraph (6) of Section fourhereof, any motor vehicle is found to be unsightly, unsafe,overloaded, improperly marked or equipped, or

otherwise unfit to be operated, or capable of causingexcessive damage to the highways, or not conforming tominimum standards and specifications, theCommissioner may refuse to register the said motorvehicle, or if already registered, may require the number

plates thereof to be surrendered to him, and uponseventy-two hours notice to the owner of the motorvehicle, suspend such registration until the defects of thevehicle are corrected and/or the minimum standards andspecifications fully complied with.



Section 21. Operation of motor vehicles by tourists. - Bonafide tourist and similar transients who are duly licensedto operate motor vehicles in their respective countries

may be allowed to operate motor vehicles during butnot after ninety days of their sojourn in the

Philippines.

After ninety days, any tourist or transient desiring tooperate motor vehicles shall pay fees and obtain andcarry a license as hereinafter provided.



If any accident involving such tourist or transient occurs,which upon investigation by the Commissioner or hisdeputies indicates that the said tourist or transient is

incompetent to operate motor vehicles, theCommissioner shall immediately inform the said touristor transient in writing that he shall no longer bepermitted to operate a motor vehicle.



Speed Restrictions

Section 35(a) Any person driving a motor vehicle ona highway shall drive the same at a careful andprudent speed, not greater nor less than isreasonable and proper, having due regard for the

traffic, the width of the highway, and of any othercondition then and there existing; and

No person shall drive any motor vehicle upon ahighway at such a speed as to endanger the life, limb

and property of any person, nor at a speed greaterthan will permit him to bring the vehicle to a stopwithin the assured clear distance ahead.



MAXIMUM ALLOWABLESPEEDS

Passengers

Cars and Motorcycle Motor trucks and buses

1. On open country roads, withno "blinds corners" not closelybordered by habitations

80 km. per hour 50 km. per hour

2. On "through streets" orboulevards, clear of traffic,

with no " blind corners”,when so designated.


3. On city and municipalstreets, with light traffic,when not designated “through streets”


4. Through crowded streets,approaching intersections at"blind corners," passing schoolzones, passing other vehicleswhich are stationery, or forsimilar dangerous circumstance




Exceptions to Rate Speed

A physician or his driver when the former respondsto emergency calls;

The driver of a hospital ambulance on the way to and

from the place of accident or other emergency;

Any driver bringing a wounded or sick person foremergency treatment to a hospital, clinic, or anyother similar place;

The driver of a motor vehicle belonging to the ArmedForces while in use for official purposes in times ofriot, insurrection or invasion;



The driver of a vehicle, when he or his passengers arein pursuit of a criminal;

A law-enforcement officer who is trying to overtake aviolator of traffic laws; and

The driver officially operating a motor vehicle of anyfire department, provided that exemption shall notbe construed to allow useless or unnecessary fastdriving of drivers aforementioned.



Section 36. Speed limits uniform throughout the Philippines.

- No provincial, city or municipal authority shall enactor enforce any ordinance or resolution specifyingmaximum allowable speeds other than those provided inthis Act.



Correct Driving

Pass to the right when meeting persons or vehiclescoming toward him.

Pass left when overtaking persons or vehicles going thesame direction.

Conduct to the right of the center of the intersection ofthe highway when turning left.

Applicable every person operating a motor vehicle or ananimal-drawn vehicle. (doctrine of last clear chance) The person who had the last oppurtunity to prevent the

accident who did not act to do so, shall be held liable



Exceptions:

Different course of action is required in the interest ofthe safety and the security of life, person or property; or

Because of unreasonable difficulty of operation in itscompliance.



f f h l b



Duty of Driver of Vehicle to beOvertaken [Sec. 40]

To give way to the overtaking vehicle on suitable andaudible signal being given by the driver of theovertaking vehicle; and

Not to increase the speed of his vehicle untilcompletely passed by the overtaking vehicle.

k d



Restrictions on overtaking andpassing [Sec. 41]

Do not drive to the left side of the center line of ahighway in overtaking or passing another vehicleproceeding in the same direction, unless such left

side is clearly visible, and is free of oncoming trafficfor a sufficient distance ahead to permit suchovertaking or passing to be made in safety.



Do not overtake:

when approaching the crest of a grade;

upon a curve in the highway;

driver's view along the highway is obstructed within adistance of five hundred feet ahead. Exception: When ona highway having two or more lanes for movement oftraffic in one direction where the driver of a vehicle mayovertake or pass another vehicle: Provided,

Exception to exception: On a highway within a businessor residential district, having two or more lanes formovement of traffic in one direction, overtaking orpassing at right is allowed.



Do not overtake:

at any railway grade crossing;

at any intersection of highways unless such intersection

or crossing is controlled by traffic signal, or unlesspermitted to do so by a watchman or a peace officer.

Exception: On a highway having two or more lanes formovement of traffic in one direction where the driver ofa vehicle may overtake or pass another vehicle on the

right. Nothing in this section shall be construed to prohibit a

driver overtaking or passing upon the right anothervehicle which is making or about to make a left turn.



Do not overtake, pass or attempt to pass:

between any points indicated by the placing of officialtemporary warning or caution signs indicating that men

are working on the highway;

in any "no-passing or overtaking zone."



Right of way [Sec. 42]

When two vehicles approach or enter an intersectionat approximately the same time:

Driver of the vehicle on the left to yield the right of

way to the vehicle on the right; Driver of vehicle traveling at an unlawful speed

forfeits right of way.



Driver of a vehicle approaching but not having enteredan intersection:

To yield right of way to a vehicle within suchintersection or turning therein to the left across the lineof travel of such first-mentioned vehicle;

Provided, driver of the vehicle turning left has given aplainly visible signal of intention to turn.



Driver of any vehicle upon a highway within a businessor residential district:

To yield right of way to a pedestrian crossing suchhighway within a crosswalk;

Exception: at intersections where the movement of trafficis being regulated by a peace officer or by traffic signal.

Every pedestrian crossing a highway within a businessor residential district, at any point other than acrosswalk shall yield the right of way to vehicles upon

the highway.



When about to approach “through highway” orraildroad crossing:

Full stop before traversing;

Provided, That when it is apparent that no hazard exists,the vehicle may be slowed down to five miles per hourinstead of bringing it to a full stop.

E ti t th i ht f l



Exception to the right of way rule[Sec. 43]

Yield right of way to all vehicles approaching whenentering a highway from a private road or drive;

Yield to police or fire department vehicles andambulances when such vehicles are operated on officialbusiness and the drivers thereof sound audible signal oftheir approach;



Yield to all vehicles approaching from eitherdirection when entering a "through highway" or a"stop intersection“.

Provided, That nothing in this subsection shall beconstrued as relieving the driver of any vehicle beingoperated on a "through highway" from the duty ofdriving with due regard for the safety of vehiclesentering such "through highway" nor as protectingthe said driver from the consequence of an arbitrary

exercise off such right of way.



NO PARKING

(a) Within an intersection

(b) On a crosswalk

(c) Within six meters of the intersection of curb lines.

(d) Within four meters of the driveway entrance toand fire station.

(e) Within four meters of fire hydrant

(f) In front of a private driveway

(g) On the roadway side of any vehicle stopped orparked at the curb or edge of the highway

(h) At any place where official signs have beenerected prohibiting parking.



Ri ht f f li & th



Right of way for police & otheremergency vehicles [Sec. 49]

Upon the approach of any police or fire departmentvehicle, or of an ambulance giving audible signal,

The driver of every other vehicle shall immediatelydrive the same to a position as near as possible andparallel to the right-hand edge or curb of thehighway

Clear of any intersection of highways, and Shall stop and remain in such position, unless

otherwise directed by a peace officer, until suchvehicle shall have passed.



Vehicle Tampering [Sec. 50]

No unauthorized person shall sound the horn,handle the levers or set in motion or in any way

tamper with a damage or deface any motor vehicle.

Prohibition on Vehicle Hitching



Prohibition on Vehicle Hitching[Sec. 51]

No person shall hang on to, ride on, the outside orthe rear end of any vehicle; and

No person on a bicycle, roller skate or other similar

device, shall hold fast to or hitch on to any movingvehicle; and

No driver shall knowingly permit any person to hangon to or ride, the outside or rear end of his vehicle or

allow any person on a bicycle, roller skate or othersimilar device to hold fast or hitch to his vehicle.

Prohibition on Sidewalk Driving or



Prohibition on Sidewalk Driving orParking [Sec. 52]

No person shall drive or park a motor vehicle uponor along any sidewalk, path or alley not intended for

vehicular traffic or parking.



Driving Under The Influence [Sec.53]

No person shall drive a motor vehicle while under

the influence of liquor or narcotic drug.



Duty of Driver In Case of Accident



Duty of Driver In Case of Accident[Sec. 55]

In the event that any accident should occur as a resultof the operation of a motor vehicle upon a highway,the driver present, shall show his driver's license,

give his true name and address and also the truename and address of the owner of the motor vehicle.



No driver of a motor vehicle concerned in a vehicularaccident shall leave the scene of the accident withoutaiding the victim, except under any of the followingcircumstances:

1. If he is in imminent danger of being seriouslyharmed by any person or persons by reason of theaccident;

2. If he reports the accident to the nearest officer ofthe law; or

3. If he has to summon a physician or nurse to aidthe victim.



Traffic Violations

For registering later than seven days after acquiringtitle to an unregistered motor vehicle or afterconversion of a registered motor vehicle requiringlarger registration fee than that for which it wasoriginally registered, or for renewal of a delinquentregistration.

For failure to sign driver's license or to carry samewhile driving.



Driving a vehicle with a delinquent or invalid driver'slicense

Driving a motor vehicle with delinquent, suspended or

invalid registration, or without registration or withoutthe proper license plate for the current year

Driving a motor vehicle without first securing a driver'slicense



Driving a motor vehicle while under the influence ofliquor or narcotic drug.

Violation of Section thirty-two, thirty-four (a), (b) and (b-

1), thirty-five and forty-six Violations of Sections forty-nine, fifty and fifty-two.



For making, using or attempting to make or use adriver's license, badge, certificate or registration, numberplate, tag or permit in imitation or similitude of thoseissued under this Act, or intended to be used as or for a

legal license, badge, certificate, plate, tag or permit orwith intent to sell or otherwise dispose of the same toanother, or false or fraudulently represent as valid andin force any driver's license, badge, certificate, plate, tagor permit issued under this Act which is delinquent orwhich has been suspended or revoked



For using private passenger automobiles, private trucks,private motorcycles, and motor wheel attachments forhire, in violation of Section seven, subsections (a), (b),and (c), of this Act

For permitting, allowing, consenting to, or tolerating theuse of a privately-owned motor vehicle for hire inviolation of Section seven, subsections (a), (b), and (c), ofthis Act,



For violation of any provisions of this Act or regulationspromulgated pursuant hereto, not hereinbeforespecifically punished

In the event an offender cannot pay any fine imposedpursuant to the provisions of this Act, he shall be madeto undergo subsidiary imprisonment as provided for inthe Revised Penal Code.



If, as the result of negligence or reckless or unreasonablefast driving, any accident occurs resulting in death orinjury of any person, the motor vehicle operator at fault

shall, upon conviction, be punished under the provisionsof the Revised Penal Code.



Presumption of Negligence

Art. 2185, Civil Code – It is presumed that a persondriving a motor vehicle is negligent if at the time ofthe mishap, he was violating any traffic regulation,

unless the contrary.



Registered Owner Rule

The person who is the registered owner of a vehicle isliable for any damage caused by the negligentoperation of the vehicle although the same wasalready sold or conveyed to another person at thetime of the accident.

This is subject to the right of recourse by theregistered owner against the transferee or buyer.

The registered owner rule is applicable whenever the

persons involved are engaged in what is known asthe „kabit system‟.

CLASSIFICATIONS OF MOTOR



CLASSIFICATIONS OF MOTORREGISTRABLE VEHICLES [Sec. 7]

a) Private passengerautomobiles;

b) Private trucks;c) Private motorcycles,

scooters, or motorwheel attachments

d) Public utilityautomobiles;

e) Public utility trucks;f) Taxis and auto-calesasg) Garage automobilesh) Garage trucksi) Hire trucks;

j) Trucks owned bycontractors andcustoms brokers andcustoms agents;

k) Undertakes;l) Dealers;m) Government

automobilesn) Government trucks;o) Government

motorcycles;p) Motor vehicles of

tourists [for 90 days];

q) Special



Vehicles registered under classification under (a), (b) &(c) cannot be used for hire under any circumstances andcannot be used to solicit, accept, or be used to transportpassengers or freight for pay.

Laborers necessary to handle freight in private trucksmay ride on it (but not to exceed 10 laborers)

Dealer‟s vehicle can be operated only for the purpose oftransporting the vehicle itself from the pier or factory to

the warehouse or sales room or for delivery to aprospective purchaser or for test or demonstration

CONCLUSIVE PRESUMPTION OF



CONCLUSIVE PRESUMPTION OFA VEHICLE IS FOR HIRE

A vehicle habitually used to carry freight notbelonging to the registered owner thereof, orpassengers not related by consanguinity or affinity

within the fourth civil degree to such owner, shall beconclusively presumed to be "for hire."



KABIT SYSTEM

It is an arrangement whereby a person who has beengranted a certificate of public convenience allowsother persons who own motor vehicles to operatethem under his license, sometime for a fee orpercentage of earning.

Such arrangement is void for being contrary to publicpolicy [Abelardo Lim, et al. v. CA, GR 125817, Jan. 16,2002]



Teja Marketing v. IAC, GR 65510,



Teja Marketing v. IAC, GR 65510,Mar. 9, 1987

Facts: Petitioner was constrained to file an action fordamages because private respondent allegedly failedto pay the balance of the purchase price of itsmotorcycle sold. The motorcycle which was used forsidecar remained under the name of petitioner andoperated under its franchise under an arrangementcalled „kabit system‟.

Held: Dismissal of case sustained. Both parties are in

pari delicto. The court will not aid either party toenforce an illegal contract.



Chapter 2

OBLIGATIONS OF THE PARTIES



OBLIGATION OF CARRIER:

Duty to Accept;

Duty to Deliver Goods On Time;

Duty to Deliver Goods at the Place and to the person

named in the BL; and Duty to Exercise Due Diligence

OBLIGATION OF SHIPPER OR



OBLIGATION OF SHIPPER ORPASSENGER

Duty to exercise due diligence.

Duty to pay the amount of freight or passage on time.



1. Carrier‟s Duty to Accept

A common carrier granted CPC is duty bound to acceptpassengers or cargo without any discrimination.

Exceptions:

Dangerous objects or substances including dynamitesand other explosives;

Unfit for transportation;

Acceptance would result in overloading;



Contrabands or illegal goods;

Goods are injurious to health;

Good will likely be exposed to untoward danger likeflood, capture by enemies and the like;

Livestock with disease or exposed to disease;

Strike; and

Failure to tender goods on time

Rule on Hazardous and Dangerous



gSubstances

A carrier may be granted authority to carry goodsthat are by nature dangerous and hazardous. Acarrier specially designed to carry dangerous

chemicals and goods may be granted CPC for suchpurpose.

All other carriers may validly refuse to accept suchcargoes.

MARINA Memorandum Circular



No. 105, Apr. 6, 1995

Documentary Requirements for Special Permit toCarry Dangerous/Hazardous Cargoes and Goods inPackaged Form:

Letter of Intent PPA Clearance on packaging, marking and labeling

of cargoes or goods in packaged forms

Cargo Stowage Plan

Classification of Dangerous orHazardous Goods Under MC 105



Hazardous Goods Under MC 105

Class 1 – Explosives Class 2 – Gases: Compressed, liquefied or dissolved

under pressure Class 3 – Inflammable Liquids Class 4 – Inflammable Solids or Substances: a)

Inflammable Solid; b) Inflammable Solids, or Substancesliable to spontaneous combustion; and c) InflammableSolids, or Substances which in contact with waters emitinflammable gases;



Class 5 – a) Oxidizing Substances; b) OrganicPeroxide

Class 6 - a) Poisonous (toxic) substances; b)

Infectious Substances Class 7 – Radioactive Substances

Class 8 – Corrosives

Class 9 – Miscellaneous Dangerous Substances

MARINA Memorandum Circular



No. 147

Rules on carriage of vehicles, animals, forestproducts, fish and aquatic products, minerals andmineral products & toxic and hazardous materials on

board vessels: Master to accept only if these are covered by

necessary clearance from appropriate agencies;

Non-compliance will subject the shipowner and

master administrative penalties without prejudice tocriminal or civil suits

2. Carrier‟s Duty to Deliver The



yGoods

General Rule:

Carrier is not an insurer against delay intransportation of goods.

Exception: When there is agreement as to the time of delivery



When delay is deemed reasonable

Ordinary Goods – 2 months [Maersk Line v. CA, May17, 1993]

Perishable Goods – 2 to 3 days [Dissenting: Tan

Chiong Sian v. Inchausti, GR 6092, Mar. 8, 1912]

Rules on Delay on Overland



yTransportation (Code of Commerce)

Art. 358, Code of Commerce:

If there is no period fixed for the delivery of thegoods the carrier shall be bound to forward them in

the first shipment of the same or similar goods whichhe may make to the point of delivery; and should henot do so, the damages caused by the delay should befor his account.



Delay When Period Is Fixed

Art. 370. If a period has been fixed for the delivery of thegoods, it must be made within such time, and, for failureto do so, the carrier shall pay the indemnity stipulated inthe bill of lading, neither the shipper nor the consignee

being entitled to anything else. If no indemnity has beenstipulated and the delay exceeds the time fixed in the BL,the carrier shall be liable for the damages which thedelay may have caused.

Procedure in Abandonment by



yConsignee In Case of Delay (Type 2)

Art. 371. In case of delay through the fault of thecarrier referred to in the preceding articles, theconsignee may leave the goods transported in thehands of the former, advising him thereof in writing

before their arrival at the point of destination. When this abandonment takes place, the carrier shall

pay the full value of the goods as if they had beenlost or mislaid.



If the abandonment is not made, the indemnificationfor the losses and damages by reason of the delaycannot exceed the current price which the goodstransported would have had on the day and at theplace in which they should have been delivered; thissame rule is to be observed in all other cases in whichthis indemnity may be due.

FIVE TYPES OF ABANDONMENT



UNDER MERCANTILE LAW

WHEN DAMAGE IS SO GREAT [Art. 365, Code ofCommerce]

WHEN GOODS ARRIVE BEYOND THE DATEAGREED ON [Art. 371, Code of Commerce]

ABANDONMENT BY SHIPOWNER WHENLIABILITY EXCEEDS VALUE OF VESSEL [Art. 578,Code of Commerce]

DAMAGE TO GOODS IN LIQUID FORM [Sec. 687,Code of Commerce]

CONSTRUCTIVE LOSS UNDER THE INSURANCECODE [Sec. 138, Insurance Code of the Phil.]

1st Type: WHEN DAMAGE IS SO



yGREAT

Where the shipper ships goods and goods arrive indamaged condition and damage is so great thatshipper may not use goods for the purpose for whichthey have been shipped, the shipper may exercise

right of abandonment. NOTICE TO THE CARRIER IS SUFFICIENT –

consent of carrier is not necessary and once perfected,the ownership over damaged goods passes to the

carrier and carrier must pay the shipper market valueof goods at point of destination.

2nd Type: WHEN GOODS ARRIVE



BEYOND DATE AGREE ON

Under this set-up, shipper and carrier agreed inadvance that cargo must arrive on a certain date.

The date has passed but the cargo has not yet arriveddue to carrier‟s fault.

Shipper/consignee may exercise the right ofabandonment by NOTIFYING the carrier.

Once carrier has been notified, ownership over thegoods undelivered passes to carrier.

But carrier must pay shipper market value of thegoods at the point of destination.



4th Type: DAMAGE TO GOODS IN



LIQUID FORM

Charterers and shippers may abandon themerchandise damaged if cargo should consist ofliquids;

The contents have leaked out; What remains in the container is but ¼ of its content;

The cause was on account of inherent defect orfortuitous event.

5th Type: CONSTRUCTIVE LOSS



UNDER THE INSURANCE CODE

Shipowner‟s right of abandonment for constructive loss;

Takes place when vessel suffers damage in excess of ¾ ofits insured value;

Notice to Insurer from the insured is sufficient; Thereafter, ownership over the damaged vessel passes to

the insurer; and

Insurer must pay insured as if it were an ACTUAL

LOSS.



Characteristics of Abandonment

It is unilateral right;

It is perfected by mere notice;

Once perfected, ownership over damaged goods

passes to carrier; and Carrier must pay the shipper market value of goods

at the point of destination



Bar, Mercantile Law [1979]

Problem:

A, in Manila, shipped on board a vessel of B, chairs tobe used in the moviehouse of consignee C in Cebu.No date for delivery or indemnity for delay wasstipulated. The chairs, however, were not claimedpromptly by C and were shipped by mistake back toManila, where it was discovered and re-shipped toCebu. By the time the chairs arrived, the date of

inauguration of the moviehouse passed by and it hadto be postponed. C brings an action for damagesagainst B claiming loss of profits during theChristmas season when he expected the moviehouseto be opened. Decide the case with reason



Suggested Answer:

C may sue B for the loss of his profits provided thatample proof thereof are presented in court. The carrier is

obligated to transport the goods without delay. Thecarrier is liable if he is guilty of delay in the shipment ofcargo, causing damages to the consignee.

Mora in Civil Law distinguished



from Mora in Mercantile Law

Under Art. 1169, Civil Code requires demand by thecreditor in order that delay may exist.

Exceptions:

Obligation or law expressly so provides; Time is of the essence; and

Demand would be useless.



BUT under the Code of Commerce, demand, as a generalrule, is not necessary in commercial contracts in orderfor the obligor to incur delay [Arts. 61, 62 & 63, Code ofCommerce].

Exceptions: a) When fixed by contract, b) whenrecognized or allowed by law.

In commercial contracts, time is always of the essence.



Art. 63. The effect of default in the performance ofcommercial obligation shall commence:

1. In contracts with a day for performance fixed bythe will of the parties or by the law, on the day following

their maturity;2. In those which do not have such day fixed, fromthe day on which the creditor makes judicial demand onthe debtor or notifies him of protest of loss and damagesmade against him before a judge, notary or other public

official authorized to admit the same.

SUMMARY: When Debtor incursD l C l C



Delay in Commercial Contracts

If period of performance is fixed, debtor incurs delaythe day following the day fixed, without need ofdemand;

If no period fixed, ten (10) days from execution of

contract and on 11th day, debtor incurs delay withoutneed of demand; Potestative period (e.g. when the debtor desires) –

debtor in delay from date of demand.Note: distinguish from a potestative condition, e.g. „if

the debtor desires‟. Under the Civil Code and Codeof Commerce, such condition is void.

KINDS OF DELAY UNDER CIVILCODE



CODE

Mora solvendi – Delay of an obligor to deliver or toperform an obligation:

a. Mora solvendi ex re – delay when the obligation is togive or to deliver;

b. Mora solvendi ex persona – delay when theobligation is to do or to perform a personal service.

Mora accipiendi – Delay of an obligee in accepting thedelivery of the thing due;

Compensatio morae – Delay in reciprocal obligations(Art. 1169, last par.). Neither party is in default unlessthe other is ready to comply with his obligation.

UNDER CIVIL CODE: DEMANDNECESSARY FOR DELAY



NECESSARY FOR DELAY

In Compania General de Tabacos vs. Araza, 7 Phil.455, held: ‘The contract does not provide for the paymentof any interest. There is no provision in it declaring

expressly that the failure to pay when due should put thedebtor in default. There was therefore no default whichwould make him liable for interest until a demand wasmade. There was no evidence of any demand prior to the

presentation of the complaint. The plaintiff is therefore

entitled to interest only from the commencement of theaction’.

DEEMED MERCHANCE UNDERTHE CODE OF COMMERCE



THE CODE OF COMMERCE

Those who, having legal capacity to engage incommerce, habitually devote themselves thereto [Art.1]

Legal presumption of habituality: „From the momenta person who intends to engage in commerceannounces through circulars, newspapers, handbills,posters exhibited to the public, or in any mannerwhatsoever, an establishment which has for its object

some commercial operation‟ [Art. 3]

COMMERCIAL CONTRACTS



GOVERNED BY CODE OF COMMERCE

Art. 50. Commercial contracts, in everything relativeto their requisites, modifications, exceptions,interpretations, and extinction and to the capacity oftheir contracting parties, shall be governed in all

matters not expressly provided for in this Code or inspecial laws, by the general rules of civil law.

HIERARCHICAL APPLICABILITY OF LAWS TOCOMMERCIAL TRANSACTIONS:

1. Code of Commerce2. Commercial customs (in the absence of #1);

and

3. Civil Code (in the absence of 1 & 2)

PERFECTION OF COMMERCIALCO C S Y CO S O C



CONTRACTS BY CORRESPONDENCE

Art. 54. Contracts entered into by correspondenceshall be perfected from the moment an ANSWER ISMADE ACCEPTING THE OFFER OR THE

CONDITIONS by which the latter may be modified. Above is in contrast to Art. 1319, NCC where

negotiated contracts by correspondence are perfectedonly FROM THE TIME THE OFFEROR HASACTUAL KNOWLEDGE OF ACCEPTANCE

PERFECTION OF COMMERCIALCONTRACTS BY AGENT OR BROKER



CONTRACTS BY AGENT OR BROKER

Art. 55. Contracts in which an agent or brokerintervenes shall be perfected WHEN THECONTRACTING PARTIES SHALL HAVEACCEPTED HIS OFFER.

Compare Art. 1989, NCC: If the agent contracts in thename of the principal, exceeding the scope of his authority,and the principal does not ratify the contract, it shall bevoid if the party with whom the agent contracted is awareof the limits of the powers granted by the principal. In thiscase, however, the agent is liable if he undertook to securethe principals ratification.

CONSEQUENCE OF DELAY



CONSEQUENCE OF DELAY

Art. 1740, NCC: If the common carrier negligentlyincurs in delay in transporting the goods, a naturaldisaster shall not free such carrier from

responsibility. Art. 1747: If the common carrier, without just cause,

delays the transportation of the goods or changes thestipulated or usual route, the contract limiting thecommon carrier‟s liability cannot be availed of in caseof the loss, destruction or deterioration of the goods

RIGHT OF PASSENGER IN CASEOF DELAY



OF DELAY

Code of Commerce: Art. 698 In case a voyage already begun has been interrupted; Passengers to pay the fare in proportion to the

distance covered; No right to recover for losses and damages if

interruption is due to fortuitous event or forcemajeure;



Except when interruption was caused by the Captainexclusively.

If interruption is due to disability of the vessel andpassenger agrees to await the repair;

He is not required to pay any increased price ofpassage; BUT HIS LIVING EXPENSES DURING THE STAY

FOR HIS OWN ACCOUNT. (But see MARINA MC112)

MARINA MEMORANDUMCIRCULAR NO 112



CIRCULAR NO. 112

In case the vessel cannot continue or complete hervoyage FOR ANY CAUSE;

Carrier is under obligation to transport the passenger

to his/her destination AT THE EXPENSE OF THECARRIER including FREE MEALS and LODGINGbefore said passenger is transported to hisdestination.



A passenger may opt to have his ticket refunded in full ifthe cause of the unfinished voyage is due to thenegligence of the carrier; or

To an amount that will suffice to defray transportationcost at the shortest possible route towards hisdestination if the cause is fortuitous event.



If arrival is delayed, carrier shall provide for meals, freeof charge, during mealtime.

If departure is delayed due to carrier‟s negligence,carrier is also under the obligation to provide meals, free

of charge, during meal time to TICKETEDPASSENGERS for the particular voyage.

If departure is delayed due to fortuitous event, thecarrier is under no obligation to serve free meals to thepassengers.

3. CARRIER‟S DUY TO DELIVERGOODS AT THE PLACE DESIGNATEDAND TO PERSON NAME IN BL



AND TO PERSON NAME IN BL

Art. 360 (Code of Commerce):

The shipper may change the consignment of goods,without necessarily changing the place of delivery;

But must, at the time of ordering the change ofconsignee in the BL signed by the carrier;

Return the BL to the carrier in lieu of another BLcontaining the novated contract.

Expenses of the change of consignee at the expense of

the shipper.

Bar Mercantile Law [1975]



Bar, Mercantile Law [1975]

Bar Question:

If a shipper, without changing the place of deliverychanges the consignment of consignee of the goods

(after said goods had been delivered to the carrier),under what condition will the carrier be required tocomply with the new order of the shipper?



Suggested Answer:

Art. 360 of the Code of Commerce provides that if theshipper should change the consignee of the goods

without changing their destination, the carrier shallcomply with the new order provided the shipperRETURNS TO THE CARRIER the bill of lading and anew one is issued shoving the novation of the contract.However, all expenses for the change must be paid bythe shipper.

4. CARRIER‟ DUTY TO EXERCISEEXTRAORDINARY DILIGENCE



EXTRAORDINARY DILIGENCE

Art. 1733 (NCC). Common carriers, from the nature oftheir business and for reasons of public policy, arebound to observe extraordinary diligence in thevigilance over the goods and for the safety of thepassengers transported by them, according to all thecircumstances of each case.



Such extraordinary diligence in the vigilance over thegoods is further expressed in Arts. 1734, 1735, and 1745,Nos. 5, 6, and 7, while the extraordinary diligence for thesafety of the passengers is further set forth in Arts. 1755

and 1756.



Art. 1755. A common carrier is bound to carry thepassengers safely as far as human care and foresight canprovide, using the utmost diligence of very cautiouspersons, with a due regard for all the circumstances.



The foregoing provisions in the Civil Code modify Arts.363, 364 & 365 of the Code of Commerce:

Art. 363 on the requirement of the carrier to deliver thegoods shipped in the same condition where they were

found at the time they were received; and Art. 364 on when damage is merely diminution in the

value of the goods, carrier‟s liability shall be reduced tothe payment of the amount constituting the difference invalue determined by experts.



Art. 365 on instance when goods are rendered useless forsale and consumption for the purposes they aredestined, consignee may not receive them and maydemand only their value at the current price of the day.

PRESUMPTION OF NEGLIGENCE



PRESUMPTION OF NEGLIGENCE

In case of loss of effects or cargo; or

In case of death or injury of passenger;

Common carrier is presumed to be at fault;

Unless, it can prove that it had observedextraordinary diligence in the vigilance thereof.

BATANGAS TRANSPORT CO. v.CAGUIMBAL, ET AL.,G R L 22985 Jan 24 1968



G.R. L-22985, Jan. 24, 1968

In an action based on a contract of carriage, the courtneed not make an express finding of fault ornegligence on the part of the carrier in order to holdit responsible to pay the damages sought;

It is sufficient that plaintiff shows: a) there exist acontract between the passenger or the shipper andthe common carrier; and b) the loss, deterioration,injury or death took place during the subsistence ofthe contract.

MRASOL v. THE ROBERT DOLLARCOMPANY, G.R. L-29721, Mar. 27,1929



1929

Facts:

Mirasol is consignee of two cases of EncyclopediaBritannica books that he ordered from New York,

shipped in good order and condition on board MSPresident Garfield, principal defendant company.The books arrived in bad order and condition. Therewas total loss of one case and partial loss on theother, all in all amounting to P2,080.



Held:

Defendant having received the two boxes in goodcondition, its legal duty was to deliver them to the

plaintiff in the same condition in which it received them. As the boxes were damaged while in transit, the burden

of proof then shifted, and it devolved upon thedefendant to both allege and prove that the damage wascaused by reason of some fact which exempted it from

liability.



As to how the boxes were damaged, was a matterpeculiarly and exclusively within the knowledge of thedefendant.

To require plaintiff to prove as to when and how thedamage was caused would force him to call and relyupon the employees of the defendant‟s ship. That is notthe law.



The evidence for the defendant shows that the damagewas largely caused by „sea water‟, from which itcontends that it is exempt.

Damage by „sea water‟, standing alone and within itself,is not evidence that they were damaged by force majeureor for a cause beyond defendant‟s control.

The words „perils of the sea‟ apply to all kinds of marinecasualties, such as shipwreck, foundering, stranding, etc.

Where the peril is the proximate cause of the loss, theshipowner is excused. But something fortuitous and outof the ordinary must be involved in both words „peril‟ or„accident‟

DURATION OF DUTY TOEXERCISE EXTRAORDINARYDILIGENCE [Carriage of Goods]



DILIGENCE [Carriage of Goods]

Art. 1736, NCC:

The extraordinary responsibility of the common carrierlasts from the time the goods are unconditionally placed

in the possession of, and received by the carrier fortransportation until the same are delivered, actually orconstructively, by the carrier to the consignee, or theperson who has a right to receive them, withoutprejudice to the provisions of Art. 1738.



Art. 1737 (NCC):

The common carrier‟s duty to observe extraordinarydiligence over the goods remains in full force and effecteven when they are temporarily unloaded or stored in

transit, unless the shipper or owner has made use of theright of stoppage in transitu.

Note: Right to stoppage in transitu is the right of theunpaid seller who has parted with the possession of thegoods, when the buyer is or becomes insolvent, to stopthem and resume possession while they are in transit.The unpaid seller will become entitled to the same rigthsto the goods, as if he had never parted with possession.[Art. 1530, NCC]



Art. 1738 (NCC):

The extraordinary liability of the common carriercontinues to be operative even during the time the goodsare stored in a warehouse of the carrier at the place ofdestination, until the consignee has been advised of thearrival of the goods and has had reasonable opportunitythereafter to remove them or otherwise dispose of them.



As per letter of credit requirement, copies of the BL andcommercial invoices were submitted by Ben-Mac toSolidBank. The latter then paid Ben-Mac the total valueof the shipment.

Upon arrival in Hongkong, the shipment was delivereddirectly to GPC, not to Pakistan Bank and without therequired BL having been surrendered.



GPC failed to pay Pakistan Bank. Pakistan Bank refusedto pay Ben-Mac through Solidbank.

Since SolidBank already pre-paid Ben-Mac the value ofthe shipment, it demanded payment from Wallem but

was refused. Ben-Mac was forced to refund SolidBank.



Held: We emphasize that the extraordinary responsibility of

the common carriers lasts until actual or constructivedelivery of the cargoes to the consignee or TO THEPERSON WHO HAS A RIGHT TO RECEIVE THEM.

Pakistan Bank was indicated in the BL as consigneewhereas GPC was the notify party. However, in theexport invoices GPC was clearly named asbuyer/importer. Ben-Mac also referred to GPC as suchin his demand letter to Wallem.

This premise draws us to conclude that the delivery toGPC as buyer/importer which, conformably with Art.1736 had, other than the consignee, the right to receivethem was proper.

DURATION OF DUTRY TO EXERCISEDILIGENCE [Carriage of Passengers]



DILIGENCE [Carriage of Passengers]

For Trains: Starts from the moment the person whopurchases the ticket (or token or card) from the carrierpresents himself at the proper place and in a proper

manner to be transported with bona fide intent to ridethe coach. Same for Ships & Aircrafts.

For jeepneys/buses: Starts from the time the personsteps on the platform.

WHEN CONTRACT OF CARRIAGEENDS



ENDS

The relation of carrier does not cease at the momentthe passenger alights from the carrier‟s vehicle butcontinues until the passenger has had a reasonabletime or a reasonable opportunity to leave the carrier‟spremises.

La Mallorca v. CA, G.R. L-20761, July27, 1966



27, 1966

Facts: Plaintiffs, as husband and wife boarded Pambusco

Bus No. 352 together with their (3) minor daughtersfrom San Fernando, Pampanga to Anao, Mexico,

Pampanga. All alighted at the designated place of unloading but

Mariano, the father had to return to the bus to getone of his bayong left under his seat.

Unknown to him, her daughter Raquel followed him.

She was ran over by the bus when it started to runagain.



Held:

There can be no controversy that as far as the father isconcerned, when he returned to the bus for his bayongwhich was not unloaded, the relation of passenger andcarrier does not necessarily cease where the latter, afteralighting from the car, aids the carrier‟s conductor inremoving his baggage.



The issue to be determined here is whether as to thechild, who was already led by the father to a place about5 meters away from the bus, the liability of the carrier forher safety under the contract of carriage also persisted.

In the present case, the father returned to the bus to getone of his baggages which was not unloaded when theyalighted from the bus.

Raquel, the child that she was, must have followed the

father.



However, although the father was still on the runningboard of the bus awaiting for the conductor to hand himthe bag or bayong, the bust started to run, so the eventhe father had to ump down from the moving vehicle.

It was at this instance that the child, who must be nearthe bus, was run over and killed. In the circumstances, itcannot be claimed that the carrier‟s agent had exercisedthe utmost diligence required under Art. 1755.

The presence of said passengers near the bus was notunreasonable and they are, therefore, to be consideredstill as passengers of the carrier, entitled to theprotection under their contract.

ABOITIZ SHIPPING v. CA, G.R.84458, Nov. 6, 1989



, ,

Facts: Anacleto was a passenger of MV Antonia from San

Jose, Mindoro to Manila. Upon reaching Pier 4, NorthHarbor, he disembarked from the ship by jumping

from the 3rd

deck which is at level with the pier. After 1 hour when all the passengers have already

disembarked and the crane started unloading thecargoes, Anacleto went back to the vessel afterrealizing that he left some of his cargoes there.

It was while he was pointing to the crew the placewhere his cargoes were loaded that the crane hit him.He later died. His heir sued Aboitiz for breach ofcontract of carriage.



Held: In consonance with common shipping procedure as to

the minimum time of 1 hr. allowed for the passengers todisembark, it may be presumed that the victim had justgotten off the vessel when he went to retrieve his

baggage. Yet, even if he had already disembarked an hour earlier,

his presence in petitioner‟s premises was not withoutcause. The victim had to claim his baggage which waspossible only one (1) hour after the vessel arrived since it

was admittedly standard procedure in the case ofpetitioner‟s vessels that the unloading operations shallstart only after that time.

Consequently, the victim Anacleto is still deemedpassenger at the time of his tragic death.

DEFENSES OF COMMONCARRIERS [Art. 1734, NCC]



[ , ]

1. Flood, storm, earthquake, lightning, or othernatural disaster or calamity;

2. Act of public enemy in war, whether internationalor civil;

3. Act or omission of the shipper or owner of thegoods;4. The character of the goods or defects in the packing

or in the containers; and5. Order or act of competent public authority.

Note: The enumeration is exclusive; no other defensemay be raised by the CC.

DEFENSE NO. 1: FORTUITOUSEVENT



Requisites:

Independent of human will;

Impossible to foresee or if it can be foreseen,impossible to avoid;

Must be such as to render it impossible for theobligor to fulfill the obligation in a normal manner;and

Obligor must be free from any participation in or the

aggravation of the injury [Lasam v. Smith, No. 19495,Feb. 2, 1924]



For fortuitous event to be a valid defense:

It must be the PROXIMATE AND ONLY CAUSE OFTHE LOSS;

Carrier must be free from any participation in causing

the damage or injury; It must exercise due diligence to prevent or minimize the

loss BEFORE, DURING AND AFTER the fortuitousevent. [Art. 1739, NCC]

TAN CHIONG SIAN v. INCHAUSTI,G.R. No. 6092, March 8, 1921



Justice Moreland speaking:

An act of God cannot be urged for the protection of aperson who has been guilty of gross negligence in not

trying to avert its results. One who has accepted responsibility for pay can not

weakly fold his hands and say that he was preventedfrom meeting that responsibility by an act of God, whenthe exercise of the ordinary care and prudence wouldhave averted the results flowing from that act.



One who has placed the property of another, intrusted tohis care, in an unseaworthy craft, upon dangerouswaters, cannot absolve himself by crying, „an act of God‟,when every effect which a typhoon produced upon that

property could have been avoided by the exercise ofcommon care and prudence.

When the negligence of the carrier concurs with an act ofGod producing a loss, the carrier is not expempted fromliability by showing that the immediate cause of the

damage was the act of God, or, as it has been expressed,“when the loss is caused by the act of God, if thenegligence of the carrier mingles with it as an active andcooperative cause, he is still liable”.

FIRE NOT A NATURAL DISASTER ORCALAMITY [Cokaliong v. UCPB Gen.

Insurance, G.R. 146018, June 25, 2003]



J

Facts:

M/V Tandag sank after a crack from her auxiliaryengine‟s fuel tank caused the spurt of fuel towards the

heating exhaust manifold ignited a fire in the engineroom



Held:

Fire is not considered a natural disaster or calamity. Thismust be so as it arises almost invariably from some act ofman or by human means.

It does not fall within the category of an act of Godunless caused by lighting or by other natural disaster or

calamity.

HIJACKING NOT AN EXEMPTINGCAUSE



A Common Carrier can be held liable for failing toprevent a hijacking by frisking passengers andinspecting their baggages, especially when it hadreceived prior notice of such threat. (Fortune Expressv. CA, 305 SCRA 14)

BATANGAS TRANS. v.CAGUIMBAL, 22 SCRA 171 (1967)



( )

Problem: A BLTB Bus going north stopped on thehighway because a passenger wanted to alight.Another bus was going south fast and recklessly,trying to pass a carretela. In trying to overtake the

carretela, the driver of the approaching bus made amiscalculation and hit the bus of BLTB. Thepassenger who was then alighting was thrown outand killed. The heirs of the victim sought recovery.BLTB raised the defense of fortuitous event.



Answer: BLTB is still liable. In civil law, where afortuitous event concurs with negligence, liability isnot extinguished. The BLTB bus was then in a „stop‟

position but since it did not stop on the shoulder ofthe road at the time the passenger was alighting, thesame can be considered negligence that concurredwith fortuitous event and did not operate toextinguish the liability.

FIRECRACKERS EXPLODING FROMPASSENGER BAGGAGE: CARRIEREXCUSED (Nocum v. LTD, 30 SCRA 69)



Facts: One of the bus passengers had firecrackers inside his

bag. They exploded after another passenger smokedcigarettes causing injuries to another passenger. The

injure passenger sought to recover from the carrier.Held: Carrier not liable. The carrier cannot be expected to

examine and search each and every piece of baggageof passengers, otherwise the bus may not all together

be able to leave. This is only true so long as the cause of the accident

was not apparent and the carrier or its employees arenot guilty of negligence.



Held:

As a rule, a passenger is entitled to recover damagesfrom a carrier for injury resulting from a defect in anappliance purchased from a manufacturer PROVIDED

IT APPEARS THAT THE DEFECT WOULD HAVEBEEN DISCOVERED BY THE CARRIER IF IT HADEXERCISED THE DEGREE OF CARE WITH REGARDTO INSPECTION AND APPLICATION OF THENECESSARY TESTS.

When the defect is LATENT, i.e. cannot be discovered bythe application of any known tests, then it qualifies as afortuitous event to exempt the common carrier fromliability.

YOBIDO v. CA, G.R. 113003, Oct. 17,1997



Held:

The explosion of a new tire cannot by itself beconsidered a fortuitous event to exempt the commoncarrier from liability in the absence of showing on the

part of the carrier that other human factors that couldhave intervened to cause the blowout of the new tiredid not in fact occur.

Moreover, a common carrier may not be absolvedfrom liability in case of force majeure or fortuitousevent alone. It must still prove that it was notnegligent in causing the death or injury resultingfrom the accident.

PESTANO v. SUMAUYANG, 346SCRA 870 (2000)



Held:

The fact that the driver was able to use a buswith a faulty speedometer shows that the

employer was remiss in the supervision of itsemployees and in the proper care of itsvehicles. Under Arts. 2180 and 2176 of theCivil Code, owners and managers are

responsible for damages caused by theiremployees.

SPS. LANDINGAN v.PANTRANCO, 33 SCRA 284



Facts: A married couple with two children werepassengers in a bus going to Baguio. Whilenegotiating Kennon Road, the motor suddenlystopped and the bus backed down. The driverexpertly guided the bus to rest on the mountainsideof the road. But because of the noise, the two childrenbecame frightened and they jumped out of the busand were killed.

Held: The bus when it stopped, was not in perfectrunning condition. It is the carrier‟s duty to see to it

that the bus is always in perfect condition. Here, thedefect was not latent.

TRANS-ASIA v. CA, 254 SCRA 260(1996)



Held:

Before commencing the contracted voyage, thecarrier undertook some repairs on one of the vessel‟stwo engines, but even before it could finish these

repairs, it allowed the vessel to leave the port oforigin on only one functioning engine, instead oftwo.

Moreover, even the lone functioning engine was notin perfect condition as sometime after it had run itscourse, it conked out. Plainly, the vessel wasunseaworthy even before the voyage began.



For a vessel to be seaworthy, it must be adequatelyequipped for the voyage and manned with a sufficientnumber of competent officers and crew.‟

The failure of common carrier to maintain in seaworthycondition its vessel is clear breach of its duty prescribed

under Art. 1755 of the Civil Code, which binds thecarrier to carry the passengers safely as far as humancare and foresight could provide, using the utmostdiligence of a very cautious person, with due regard forall the circumstances.

OTHER INVALID CAUSES



Explosion – Damage to cargo from explosion ofanother cargo is not ordinarily attributable to peril ofthe sea or accidents of navigation particularly whereit occurs after the vessel has ended its voyage and is

finally moored to unload; Worms & rats – Whenever the ship is damaged by

worms resulting in damage to cargo, the same cannotbe cited as an excuse. The same is true with respect todamage of cargo by rats whether the cargo was

directly damaged by the rats or by water let inthrough holes gnawed by rats in the ship or herfixtures.



OTHER CASES/BAR PROBLEMS



Problem: P shipped a box of cigarettes to a dealer inNaga City through Bicol Bus. When the bus reachedLucena City, it developed engine trouble. The driverbrought the bus to a repair shop in Lucena where he wasinformed by the mechanic that an extensive repair was

necessary which would at least take two days. While thebus was in the repair shop, Typhoon Coring lashed atQuezon Province. The cargoes inside the bus, includingMauricio‟s cigarettes, got wet and were totally spoiled.Mauricio sued BBC for the damage to his cargoes. (Bar1987)



Answer: The bus company is liable. While a typhoonis a natural disaster, the same cannot be consideredthe only cause of the loss. The engine trouble isforeseeable and could have been detected if only the

bus company exercised reasonable case. Moreover,carrier‟s employee should have secured the cargoeswhile the bus was being repaired for two days.



Problem: P boarded a Victory Liner bus bound forOlongapo. He chose a seat at the front near the busdriver. P told the bus driver that he had valuable itemsin his bag which was placed near his feet. Since he had

not slept for 24 hours, he requested the driver to keep aneye on the bag should he doze off during the trip. Uponarrival at his destination, the bag was nowhere found.

Answer: P may not hold the carrier liable. The drivercould not have set his eyes on the luggage as his

attention was on the road during the trip.



Problem: M, a paying passenger was hit above her lefteye by a stone hurled at the bus by an unidentifiedbystander as he bus was speeding through the NationalHighway. The bus owner‟s personnel lost no time in

bringing M to the provincial hospital where she wasconfined and treated. M wants to sue the bus companyfor damages and seeks your advise. (Bar 1994)

Answer: M cannot legally hold the bus company if thestone throwing was entirely unforeseeable and thecarrier exercised utmost diligence. However, I will alsoinform her that the burden is on the carrier to prove suchexercise of due diligence. If she decides to file a case, allthat she will prove is that she was a passenger and shewas injured while on board the bus

RAYNERA v. HICENTA, 306 SCRA102 (1999)



Held:

Drivers of vehicles who bump the rear of anothervehicle must be presumed to be the cause of theaccident, unless contradicted by other evidence, sincethe rear driver is deemed to have the last clear chanceof avoiding the accident, and therefore deemednegligent.

Bar Problem 1992



Facts: Marino was a passenger on a train. Another

passenger, Juancho, had taken a gallon of gasolineplaced in a plastic bag into the same coach whereMariano was riding. The gasoline ignited andexploded causing injury to Marino who filed a civilsuit for damages against the railway companyclaiming that Juancho should have been subjected toinspection by its conductor.



The railway company disclaimed liability resultingfrom the explosion contending that it was unaware ofthe contents of the plastic bag and invoking the rightof Juancho to privacy. A) Should the railway

company be held liable for damages? B) If it were anairline company involved, would your answer be thesame? Explain your answer briefly.



Held: A) No. The railway company is not liable for damages.

This is subject to the qualification that the companyshould prove that it, through the exercise of

extraordinary diligence, cannot detect the presence ofgasoline. It should be noted that in overlandtransportation, the common carrier is not bound norempowered to make an examination on the contents ofpackages or bags particularly those handcarried bypassengers.

B) No, my answer would not be the same. If an airlinecompany was involved, it is duty bound to inspect eachand every cargo this brought into the aircraft (R.A. 6235).Exercise of extraordinary diligence would thereforeresult in the discovery of the gasoline.



DEFENSE NOS. 3 & 4: ACT OROMISSION OF OWNER & IMPROPERPACKING



COGSA also provides for similar defense, i.e. carriershall not be liable for (1) wastage in bulk or weight orany other loss or damage arising from inherentdefect, quality or vice of goods, (2) insufficiency of

packing, (3) insufficiency or inadequacy of the marks,or (4) latent defect not discoverable by due diligence.

However, common carrier are still required toexercise due diligence to forestall or lessen the lossnotwithstanding the existence of improper packing.

SOUTHERN LINES v. CA, G.R. No.L-16629, Jan. 31, 1962



Facts: More than a thousand sacks of rice wereshipped through the vessel of petitioner SouthernLines. There was shortage when the sacks of ricewere delivered to the consignee although it wasalleged that the shortage in the shipment was due to

shrinkage, leakage or spillage of the rice on accountof the bad condition of the sacks at the time itreceived them.

Held: Carrier still liable because it was aware of thecondition of the sacks when it received the goods.

VIRGENES CALVO v. UPCB GEN.INSURANCE, G.R. 148496, Mar. 19, 2002



Held: Art. 1734 cannot apply where the carrieraccepted the goods despite such defects.

For this provision to apply, the rule is that if theimproper packing or, in this case, the defect in thecontainer is known to the carrier or his employees orapparent upon ordinary observation, but itnevertheless accepts the same without protest orexception notwithstanding such condition, the carrier

is not relieved of liability for the resulting damage.

BELGINA OVERSEAS CHARTERING &SHIPPING v. PHIL. FIRST INSURANCECO., G.R. 143133, June 5, 2002



Facts: Carrier tried to escape liability by citing thenotation „metal envelopes rust stained and slightlydented‟ printed in the BL as evidence that the characterof the goods or defect in the packing or the containers

was the proximate cause of the damage.



Held: It cannot be reasonably concluded that the damage to

the four coils was due to the condition noted on the BL. The aforecited exception refers to cases when goods are

lost or damaged while in transit as a result of the natural

decay of perishable goods or the fermentation orevaporation of substances liable therefor, the necessaryand natural wear of goods in transport, defects inpackages in which they are shipped, or the naturalpropensities of animals. None of these is present.

Even if the fact of improper packing was known to thecarrier or its crew or was apparent upon ordinaryobservation, it is not relieved of liability for loss or injuryresulting therefrom, once it accepts the goodsnotwithstanding such condition.

DEFENSE NO. 5: ORDER OFPUBLIC AUTHORITY



Requisite: Such public authority must had power toissue the order.

GANZON v. CA & TUMAMBING, G.R.L-48757, May 30, 1988



Facts: Tumambing contracted the service of Ganzonto haul 305 tons of scrap iron from Mariveles, Bataanto Manila on board LCT Batman. While loadingabout half of the total cargo, the elected Mayor

arrived and demanded P5,000 from Tumambing. Thelatter refused hence was shot and later hospitalized.

After sometime, the loading resumed. But, the ActingMayor accompanied by 3 policemen order thecaptain to dump some of the scrap iron at sea and the

rest were brought to by the former, which issued areceipt in behalf of the municipality.



DEFENSES IN CARRIAGE OFPASSENGERS



Art. 1759: Common carriers are liable for the death ofor injuries to passengers through the negligence orwillful acts of the former‟s employees, although suchemployees may have acted beyond the scope of their

authority or in violation of the orders of the commoncarriers.

The liability of the common carriers does not ceaseupon proof that they exercised all the diligence of a

good father of a family in the selection andsupervision of their employees.



Art. 1763: A common carrier is responsible for theinjuries suffered by a passenger on account of the willfulacts or negligence of other passengers or of strangers, ifthe common carrier‟s employees through the exercise of

the diligence of a good father of a family could haveprevented or stopped the act or omission

CARRIER LIABLE FOR ACTS OFITS EMPLOYEES



Unlike in quasi-delict, a common carrier cannotescape liability by claiming the he exercised duediligence in the selection and supervision of theemployee.

It is not a defense that the employee acted beyond thescope of his authority because the riding public is notexpected to inquire from time to time before theyboard the carrier whether or not the driver or anyother employee is authorized to drive the vehicle or

that said driver is acting within the scope of hisauthority and observing the existing rules andregulations required of him.

Willful acts of the employees include theft.

YU CON v. IPIL, GR No. L-10195,Dec. 29, 1916



Held:

It is well and good that the shipowner be not heldcriminally liable for such crimes or quasi-crimes; buthe cannot be excused from liability for the damageand harm which, in consequence of those acts, maybe suffered by the third parties who contracted withthe captain, in his double capacity of agent andsubordinate of the shipowner himself.



In maritime commerce, the shippers and passengers inmaking contracts with the captain do so through theconfidence they have in the shipowner who appointedhim; they presume that the owner made a most carefulinvestigation before appointing him, and above all, they

themselves are unable to make such an investigation,and even though they should do so, they could notobtain complete security, inasmuch as the shipownercan, whenever he sees fit, appoint another captaininstead.

The shipowner is in the same case with respect to themembers of the crew, for, though he does not appointdirectly, he expressly or tacitly, he contributes to theirappointment.



On the other hand, if the shipowner derives profits fromthe results of the choice of the captain and the crew,when the choice turns out successful, it is also just thathe should suffer the consequences of an unsuccessful

appointment, by application of the rule of natural lawcontained in the Partidaz, viz., that he who enjoys thebenefits derived from a thing must likewise suffer thelosses that ensue therefrom.

3 REASONS UNDERLYING RULE[Art. 1759, NCC]



The special undertaking of the carrier requires that itfurnish its passenger that full measure of protectionafforded by the exercise of the high degree of careprescribed by the law, inter alia, from violence and

insults at the hands of strangers and otherpassengers, but all, from the acts of the carrier‟s ownservants charged with the passenger‟s safety;



Said liability of the carrier for the servant‟s violation ofduty to passengers, is the result of the former‟s confidingin the servant‟s hands the performance of his contract tosafely transport the passenger, delegating thereiwth the

duty of protecting the passenger with the utmost careprescribed by law; and

As between the carrier and the passenger, the formermust bear the risk of wrongful acts or negligence of thecarrier‟s employees against passengers, since it, and not

the passengers, has power to select and remove them.(Maranan v. Perez, infra.)

PAL v. CA, 275 SCRA 621 (1997)



Held:

Even assuming arguendo that airline passengershave no vested right to hotel accommodationallowances in case a flight is cancelled due to force

majeure, nevertheless the airline company would beliable for damages when its employees blatantlyrefused to accord the so-called amenities equally toall its stranded passengers, and there was nocompelling or justifying reason advanced for such

discriminatory and prejudicial conduct.

BACHELOR EXPRESS v. CA, G.R.85691, July 31, 1990



Held:

The act of passenger stabbing another passenger inthe bus is considered as force majeure.

However, to be absolved from liability in the case of force majeure, the common carrier must still prove thatit was not negligent in causing the injuries resultingfrom such accident. Otherwise, it would still be heldliable.



FORTUNE EXPRESS v. CA,305 SCRA 14



Held:

A common carrier can be held liable for failing toprevent a hijacking by frisking passengers andinspecting their baggage, especially when it hadreceived prior notice of such threat.

Note: Compare with Nocum v. LTD, infra.

NOCUM v. LTD, G.R. L-23733, Oct.31, 1969



Facts: One of the bus passengers had firecrackersinside his baggage, which ignited when anotherpassenger smoked cigarettes, causing injuries toanother passenger. The injured passenger sought to

recover damages from the carrier. Held: Carrier is not liable. The reason is that the

carrier cannot be expected to examine and searcheach and every piece of baggage of passengers,otherwise the bus may not altogether be able to leave.

Note: This in only true so long as the cause of theaccident was not apparent and the carrier or itsemployees are not guilty of negligence.

FABRE v. CA, 259 SCRA 426 (1996) [on due diligence in selection andsupervision of employees]



Held:

For a bus company, due diligence in selection ofemployees is not satisfied by finding that the applicantpossessed a professional driver‟s license. The employer

should also examine the applicant for his qualifications,experience and record of service.

Due diligence in supervision, on the other hand, requiresthe formulation of rules and regulations for the guidanceof employees and issuance of proper instructions as wellas actual implementation and monitoring of consistentcompliance with the rules.

CARRIER ALSO LIABLE FOR ACTS OFSTRANGERS AND OTHERPASSENGERS



But subject to defense of EXERCISE BY THECARRIER OF DUE DILIGENCE TO PREVENT ORSTOP THE ACT OR OMISSION.

Defense is not available if the carrier‟s driver allowed

another person who is not an employee or a regulardriver to take over the task of driving the vehicle.

MARANAN v. PEREZ, 20 SCRA 413



Facts: A taxi driver tried to hold-up his passenger,who resisted and was killed. His heirs sued based onculpa contractual against the taxi company, whichdenied liability on the ground that the driver actedbeyond the scope of his authority.

Held: It may be true that the taxi driver was actingbeyond the scope of his authority, but Art. 1759 ofthe Civil Code expressly provides that the owner isliable for negligence of the employees even if suchacts are beyond the scope of his authority.

Note: This case repealed the doctrine in De Gillaco v.Manila Railroad, 97 Phil. 884 which absolved thecarrier for liability caused by its security guard whokilled one of its passengers while already off-duty.

MANILA RAILROAD v.BALLESTEROS, 6 SCRA 641



Facts: A bust of the Manila Railroad reached one ofthe towns along its route. The bus driver stopped thebus and went down to answer a call of nature. Whilethe driver was outside the bus, one of the passengers

went into the driver‟s seat and drove off the bus. Itmet an accident causing injuries to other passengers.



RULES ON PASSENGERBAGGAGE



Art. 1754: The provision of Articles 1733 to 1753 shallapply to the passenger‟s baggage which is not in hispersonal custody or in that of his employee. As toother baggage, the rules in Articles 1998 and 2000 to2003 concerning the responsibility of hotel-keepers

shall be applicable. Art. 1998: The deposit of effects made by the travelers

in hotels or inns shall also be regarded as necessary.The keepers of hotels or inns shall be responsible forthem as depositaries, PROVIDED THAT NOTICE

WAS GIVEN TO THEM, or to their employees, of theeffects brought by the guests and that, on the part ofthe latter, they take the precautions which said hotel-keepers or their substitutes advised relative to thecare and vigilance of their effects.



Art. 1998: The deposit of effects made by the travelersin hotels or inns shall also be regarded as necessary.The keepers of hotels or inns shall be responsible forthem as depositaries, PROVIDED THAT NOTICEWAS GIVEN TO THEM, or to their employees, of the

effects brought by the guests and that, on the part ofthe latter, they take the precautions which said hotel-keepers or their substitutes advised relative to thecare and vigilance of their effects.



Art. 2000: The responsibility referred to in the twopreceding articles shall include the loss of, or injury tothe personal property of the guests caused by theservants or employees of the keepers of hotels or inns aswell as strangers; but not that which may proceed fromany force majeure. The fact that travelers are constrainedto rely on the vigilance of the keeper of the hotels or innsshall be considered in determining the degree of carerequired of him.

Art. 2001: The act of a thief or robber, who has enteredthe hotel is not deemed force majeure, unless it is donewith the use of arms or through an irresistible force.



Art. 2002: The hotel-keeper is not liable forcompensation if the loss is due to the acts of the guests,his family, servants or visitors, or if the loss arises fromthe character of the things brought into the hotel.

Art. 2003: The hotel-keeper cannot free himself fromresponsibility by the posting notices to the effect that heis not liable for the articles brought by the guest. Anystipulation between the hotel-keeper and the guestwhereby the responsibility of the former as set forth in

Articles 1998 to 2001 is suppressed or diminished shallbe void.

SARKIES TOURS PHIL. v. CA, 280SCRA 58



Held: Where a common carrier accepts its passenger‟s

baggage for transportation and even had it placed inthe vehicle by its own employee, its failure to collect

the freight charge is the common carrier‟s ownlookout, and the common carrier is responsible forthe consequent loss of the baggage.

PAL v. IAC, 216 SCRA 334



Held: Although the baggage of a passenger was eventually

delivered to him, that did not constitute a case ofmere delay in delivery since the baggage was notdelivered at all to the passenger for the purpose ofthe trip in contravention of a common carrier‟sundertaking to transport the goods from the place ofembarkation to the ultimate point of destination.

The non-delivery of luggage during the entire lengthof passenger‟s stay abroad is a breach of carrier‟s

obligation.

OBLIGATION OF SHIPPER &PASSENGER



The shipper and passenger have the correspondingobligation to exercise due diligence in avoidingdamage to the goods or injury to himself.

However, contributory negligence on the part of the

passenger is not a defense that will excuse the carrierfrom liability. It will only mitigate such liability.

BUT IF HIS CONTRIBUTORY NEGLIGENCE IS THESOLE AND PROXIMATE CAUSE, CARRIER ISABSOLVED.

WHAT IS PROXIMATE CAUSE



Proximate cause is that which, in the natural andcontinuous sequence, unbroken by an efficientintervening cause, produces injury and withoutwhich the result would not have occurred. [Sabena

Belgian World Airlines v. CA, 255 SCRA 38]

f h h l b d



Art. 1741: If the shipper or owner merely contributed tothe loss, destruction or deterioration of the goods, theproximate cause thereof being the negligence of thecommon carrier, the latter shall be liable in damages,which however, shall be equitably reduced.

Art. 1761: The passenger must observe the diligence of agood father of a family to avoid injury to himself.

Art. 1762: The contributory negligence of the passengerdoes not bar recovery of damages for his death or

injuries, if the proximate cause thereof is the negligenceof the common carrier, but the amount of damages shallbe equitably reduced.

ISAAC v. AMMEN TRANSPORT,101Phil. 1046 (On contributorynegligence)

F Th d hi h h b i



Facts: The road on which the bus was passing waswide enough for 2 buses only. A passenger placed hiselbow outside the window railing of the bus. Anoncoming bus hit the passenger‟s elbow, injuring it insuch a manner that it had to be amputated.

Held: Carrier is not liable because the proximatecause of the injury was the passenger‟s owncontributory negligence. This is a complete defense tothe common carrier, and absolves it from liability.

Note: While contributory negligence will only serve

to diminish the liability of the carrier under Art. 1761,NCC, the same will not apply if the proximate causeof his injury is his contributory negligence and notthat of carrier‟s negligence.

CERVANTES v. CA, GR 125138, Mar.2, 1999

F PAL i d d i i k P i i



Facts: PAL issued a round trip ticket to Petitionerwhich expressly provides for an expiry date of 1-yearfrom issuance. A separate written agreementprovides that the 1-year period may be extended

provided that the petitioner sends a letter to theairline‟s counsel asking for extension. Petitionerfailed to do the terms in the agreement.

Held: Petitioner cannot sue PAL for breach when hewas not allowed to board. Although he was booked

for the flight through PAL‟s agent, the latter was notauthorized to change the agreement.

DOCTRINE ON AVOIDABLECONSEQUENCES

Th ff i l i j i h



The party suffering loss or injury must exercise thediligence of a good father of a family to minimize thedamages resulting from the act or omission inquestion. (Art. 2203, NCC)

DOCTRINE OF LAST CLEAR CHANCEINAPPLICABLE TO PASSENGERCLAIM

Th i i l f l l h li i i



The principle of last clear chance applies in a suitbetween the owners and drivers of colliding vehicles.

It does not arise where a passenger demandsresponsibility from the carrier to enforce its

contractual obligations. It would be inequitable to exempt the negligent

driver of the jeepney and its owner on the groundthat the other driver was likewise guilty ofnegligence.

DOCTINE ON ASSUMPTION OF RISK

Th t t t k h i k i id t t th



That passengers must take such risks incident to themode of travel he takes since carriers are not insurersof the lives of their passengers.

In air travel, adverse weather conditions or extreme

climactic changers are some of the perils involved,the consequence of which the passenger must assumeor expect. (Japan Airlines v. CA, GR No. 118664, Aug.7, 1998).

But there is no assumption of risk in case the

passenger voluntarily boarded a carrier that wasoverloaded.

YOBIDO v. CA, 281 SCRA 1 (1997)

H ld



Held: As a rule, when a passenger boards a common

carrier, he takes the risks incidental to the mode oftravel he has taken, since after all, a carrier is not aninsurer of the safety of its passengers and is not

bound absolutely and at all e vents to carry themsafely and without injury.

However, when a passenger is injured or dies whiletraveling, the law under Art. 1755 of the Civil Codepresumes that the common carrier is negligent, andtherefore the burden of proof is upon such commoncarrier to prove that it has exercised theextraordinary diligence required under the law toavoid damage or injury to the passenger.

H h i i j d di hil



However, when a passenger is injured or dies whiletraveling, the law under Art. 1755 of the Civil Codepresumes that the common carrier is negligent, andtherefore the burden of proof is upon such common

carrier to prove that it has exercised theextraordinary diligence required under the law toavoid damage or injury to the passenger.

CALALAS v. CA, G.R. 122039, May31, 2000

F t A t d t t k j t d



Facts: A student took a passenger jeepney operatedby petitioner. As the jeepney was filled to capacity ofabout 24 passengers, the student was given by theconductor an extension seat. The jeepney stopped onits way to let a passenger off and the student gaveway to the outgoing passenger. Just as she was doingso, a truck bumped the rear end portion of the

jeepney. She suffered injuries as a result.



COMPANA MARITIMA v. CA &CONCEPCION, G.R. L-31379, Aug. 29,1988

F t



Facts: Respondent Concepcion loaded his construction

equipment aboard MV Cebu to Cagayan de Oro City.

Upon arrival, one of his cargoes, a payloader fell on

the pier while being unloaded and damaged. Heclaimed for replacement of the unit. Petitioner deniedthe claim contending that Respondent furnished itwith inaccurate weight of his equipment. The excessweight caused the crane cables to snap.

Held



Held: While the act of private respondent in furnishing

petitioner with an inaccurate weight of the payloadercannot successfully be used as an excuse by petitioner toavoid liability, said act constitute a contributory

circumstance to the damage which mitigates the liabilityof petitioner.

We find equitable the conclusion of the CA reducing therecoverable amount of damages by 20% or 1/5 of thevalue of the payloader.

CANGCO v. MANILA RAILROADCO., G.R. 12191, Oct. 14, 1918

Facts:



Facts: Cangco was clerk of Manila Railroad with a monthly

wage of P25. In going to his workplace daily, he rodeon the trains to from his town of San Mateo, Rizal.

One day while returning home and while the trainwas slowing down alighted from his coach but one offeet came in contact with a sack of watermeloncausing him to fell violently on the platform. Hesustained serious injuries.

Held:



Held: The test by which to determine whether the passenger

has been guilty of negligence in attempting to alightfrom a moving railway train, is that of ordinaryreasonable care.

It is to be considered whether an ordinarily prudentperson, of the age, sex and condition of the passenger,would have acted as the passenger acted under thecircumstances disclosed by the evidence.

This care has been defined to be, not the care which mayor should be used by the prudent man generally, but thecare which a man of ordinary prudence would useunder similar circumstance, to avoid injury.

Or if we prefer to adopt the mode of exposition used by



Or, if we prefer to adopt the mode of exposition used bythis court in Picart v. Smith (37 Phil. 809), we may saythat the test is this: Was there anything in thecircumstances surrounding the plaintiff at the time healighted from the train which would have admonished a

person of average prudence that to get off the trainunder the conditions then existing was dangerous? If so, the plaintiff should have desisted from alighting;

and his failure so to desist was contributory negligence. Our conclusion is that the conduct of the plaintiff in

undertaking to alight while the train was yet slightlyunder way was not characterized by imprudence andthat therefore he was not guilty of contributorynegligence.

Plaintiff was earning P25 a month His expectancy of lifedi h d d li bl i



Plaintiff was earning P25 a month. His expectancy of life,according to the standard mortality tables, isapproximately 33-years.

We are of the opinion that a fair compensation for thedamage suffered by him for his permanent disability is

the sum of P2,500, and that he is also entitled to recoverof defendant the additional sum of P790.25 for medicalattention, etc.

Note: Net Earning Capacity = Life Expectancy [2/3 x 80less the age of the plaintiff] x Gross Annual Incomeless Living Expenses [computed @ 50% of GrossAnnual Income]

DEL PRADO v. MANILA ELECTRICCO., G.R. 29462, Mar. 7, 1929

Facts:



Facts: Manila Electric operated a street in Manila for

conveyance of passengers. While still moving,plaintiff ran across the street to catch the car, hisapproach being made from the left. The car was of

the kind having entrance and exit at either end, andthe movement of plaintiff was so timed that hearrived at the front entrance of the car at the momentwhen the car was passing.

Upon approaching the car, plaintiff raised his handas an indication to the motorman of his desire toboard. In response, the latter eased up a little,without stopping.

Upon this the plaintiff seized with his left hand the



Upon this the plaintiff seized, with his left hand, thefront perpendicular handpost, at the same time placinghis left foot upon the platform.

However, before the plaintiff‟s position had become

secure, and even before his raised right foot had reachedthe platform, the motorman applied power whichcaused plaintiff‟s foot to slip. He fell to the ground andhis right foot crushed by the moving car.

Held:



Held: Although the motorman was not bound to stop to let the

plaintiff on, it was his duty to do no act that would havethe effect of increasing the plaintiff‟s peril while he wasattempting to board the car. The premature acceleration

of the car was a breach of this duty. As to contributory negligence of plaintiff, it should be

treated as a mitigating circumstance. It is obvious that the plaintiff‟s negligence in attempting

to board the moving car was not the proximate cause of

the injury. The direct and proximate cause was the act ofappellant‟s motorman in putting on the powerprematurely.

DUTY TO PAY FREIGHT

Rates charged by vessels for hire is now deregulated



Rates charged by vessels for hire is now deregulated(R.A. 9295).

However, on overland transportation, deregulatedrates are applied only to aircon buses.

Person to pay: The shipper or the consignee if carrierand shipper stipulates in the BL.

Time to pay: NCC is silent but Art. 374 provides for24-hr period to pay the freight.

CARRIER‟S LIEN

If consignee fails to pay the freight within the period



If consignee fails to pay the freight within the periodprescribed, the carrier may exercise it lien inaccordance with Art. 375 of the Code of Commerce.

Art. 375: The goods transported shall be especially

bound to answer for the cost of transportation andfor the expenses and fees incurred for them duringtheir conveyance and until the moment of delivery.

This special right shall PRESCRIBED EIGHT (8)DAYS AFTER THE DELIVERY HAS BEEN MADE,

and once prescribed, the carrier shall have no otheraction that that corresponding to him as an ordinarycreditor.

DEMMURRAGE

In its strict sense it is the compensation provided for



In its strict sense, it is the compensation provided forin the contract of affreightment for the detention ofthe vessel beyond the time agreed on for loading andunloading. It is essentially a claim for damages for

failure to accept delivery. In its broad sense, every improper detention of a

vessel may be considered demurrage.

Liability for demurrage, viewed in its strict sense, existsonly when expressly stipulated in the contract



only when expressly stipulated in the contract.

In its broader sense, damages in the nature of demurrageare recoverable for a breach of the implied obligation toload or unload the cargo with reasonable dispatch, but

only by the party to whom the duty is owed and onlyagainst one who is a party to the shipping contract.Notice of arrival of the vessel or conveyance, or theirplacement for purposes of unloading is CONDITIONPRECEDENT to the right to collect demurrage charges.



Chapter 3

EXTRAORDINARY DILIGENCE

RATIONALE IN THE REQUIREMENTOF UTMOST DILIGENCE

A common carrier is bound to carry the passengerssafely as far as human care and foresight can provide



safely as far as human care and foresight can provide,using the utmost diligence of very cautious persons,with due regard for all circumstances.

This extraordinary diligence required of common

carriers is calculated to protect the passengers fromthe tragic mishaps that frequently occur inconnection with rapid modern transportation.

This high standard of care is imperatively demandedby the preciousness of human life and by the

consideration that every person must in every way besafeguarded against all injury. [Report of the CodeCommission, pp. 35-36]

HOW DUTY IS COMPLIED WITH

Source of common carrier‟s legal liability is contract



Source of common carrier s legal liability is contractof carriage binding itself to carry the passengerssafely as far as human care and foresight can provide,using the utmost diligence of a very cautious person,with due regard for all the circumstances.

It is not enough to exercise ordinary diligence; whatis required is extraordinary diligence. There is, however no fixed definition on what

extraordinary diligence means. In most cases,exercise of extraordinary diligence are given meaning

by way of illustrative examples.

EXTRAORDINARY DILIGENGEAPPLICALBE TO THIRD PERSONS

Primarily the duty is owed by the common carrier to



Primarily, the duty is owed by the common carrier toits passengers and cargoes.

But, the duty also extends to:

- the members of the crew or complement;

- the pedestrians; and

- even to the owners and passengers of othervehicles.

KAPALARAN BUS LINES v.CORONADO, GR 85331, Aug. 25, 1989

Judicial notice is made on the gross negligence andthe appalling disregard of the physical safety and



Judicial notice is made on the gross negligence andthe appalling disregard of the physical safety andproperty of other so commonly exhibited today bythe drivers of passenger buses and similar vehicleson our highways.

In requiring the highest possible degree of diligencefrom common carriers and crating a presumption ofnegligence against them, the law compels them tocurb the recklessness of their drivers.

While the immediate beneficiaries of the standard ofextraordinary diligence are, of course the passengersand owners of cargo carried by a common carrier,they are not the only persons that the law seeks tobenefit.

For if common carriers carefully observed the statutory



For if common carriers carefully observed the statutorystandard of extraordinary diligence in respect of theirown passengers,

They cannot help BUT SIMULTANEOUSLY BENEFITPEDESTRIANS AND THE OWNERS ANDPASSENGERS OF OTHER VEHICLES who are equallyentitled to the safe and convenient use of our roads andhighways.

The law seeks to stop and prevent the slaughter and

maiming of people (whether passenger or not) and thedestruction of property (whether freight or not) on ourhighways by buses, the very size and power of whichseem often to inflame the minds of their drivers.

EFFECT ON STIPULATION LOWERTHAN THE REQUIRED DEGREE

On Goods:



On Goods: Art. 1744: A stipulation between the common carrier and

the shipper or owner limiting the liability of the formerfor the loss, destruction, or deterioration of the goods toa degree less than extraordinary diligence shall be valid,

provided it be:1. In writing, signed by the shipper or owner;2. Supported by a valuable consideration other than

the service rendered by the common carrier; and3. Reasonable, just and not contrary to public policy.

On passengers in general:A t 1757 Th ibilit f i f th



On passengers in general: Art. 1757: The responsibility of a common carrier for the

safety of passengers as required in Articles 1733 and1755 cannot be dispensed with or lessened bystipulation, by the posting of notices, by statements on

tickets, or otherwise.On gratuitous passengers: Art. 1758: When a passenger is carried gratuitously, a

stipulation LIMITING THE COMMON CARRIER‟SLIABILITY for negligence is valid, BUT NOT FOR

WILLFUL ACTS OR GROSS NEGLIGENCE.The reduction of fare does not justify any limitationof the common carrier‟s liability.

LARA v. VALENCIA,GR 9907, June 30, 1958

Facts: The deceased Lara was inspector of the BFD at Davao



Facts: The deceased Lara was inspector of the BFD at Davao

City. Defendant Valencia was engaged in thebusiness of exporting logs from his timber concessionin Cotabato. Lara went to Valencia‟s area uponinstruction of his chief to classify the logs ofDefendant.

After six days of work, Lara, who was then eager toreturn home asked Valencia if he could take him inhis pick-up truck to which defendant agreed.

Lara was with the five other passengers who werewith Lara at the back of the pick-up. Lara was seatedon a bag.

While the pick-up was cruising along Km 96, Laraaccidentally fell from the pick-up and died.

After six days of work, Lara, who was then eager to



After six days of work, Lara, who was then eager toreturn home asked Valencia if he could take him inhis pick-up truck to which defendant agreed.

Lara was with the five other passengers who were

with Lara at the back of the pick-up. Lara was seatedon a bag.

While the pick-up was cruising along Km 96, Laraaccidentally fell from the pick-up and died.

Held:Deceased were merely accommodation passengers who



e d: Deceased were merely accommodation passengers who

paid nothing for the service and so they can beconsidered invited guests within the meaning of the law.

The rule is established by the weight of authority that

the owner or operator of an automobile owes the duty toan invited guest to exercise reasonable care in itsoperation, and not unreasonably to expose him todanger and injury by increasing the hazard of travel.

Note: Lara is not controlling upon common carriers sinceValencia was a private carrier who accommodated Lara.

EXTRAORDINARY DILIGENCE IN



EXTRAORDINARY DILIGENCE INCARRIAGE BY SEA

WARRANTY OF VESSEL‟SSEAWORTHINESS

First step in complying with the requiredt di d f i il



p p y g qextraordinary degree of vigilance.

Seaworthiness of vessel is impliedly warranted underthe Insurance Code and the Carriage of the Goods bythe Sea Act (COGSA).

Shippers when transacting with common carriers arenot expected to inquire into the vessel‟sseaworthiness, genuineness of its license andcompliance with all maritime laws. Also true withpassengers.

The burden of proof on seaworthiness is with thecarrier.

SEAWORTHINESS DEFINED

Generally, seaworthiness is that strength, durability



y, g , yand engineering skill made a part of s ship‟sconstruction and continued maintenance, togetherwith a competent and sufficient crew, which would

withstand the vicissitudes and dangers of the of theelements which might reasonably be expected orencountered during her voyage without loss ordamage to her particular cargo. [Delsan TransportLines v. CA, GR 127897, Nov. 15, 2001]

STATUTORY PROVISIONS ONSEAWORTHINESS

Section 116, Code of Commerce: A warranty of



, yseaworthiness extends not only to the condition ofthe structure of the ship itself, but requires that it beproperly laden, and provided with a competent

master, a sufficient number of competent officers andseamen, and the requisite appurtenances andequipment, such as ballasts, cables and anchors,cordage and sails, food, water, fuel and lights, andother necessary or proper stores and implements forthe voyage.

Sec. 119, Insurance Code: A ship is seaworthy for thef i th hi



, p ypurpose of an insurance upon the ship may,nevertheless, by reason of being unfitted to receive thecargo, be unseaworthy for the purpose of insuranceupon the cargo.

Sec. 3[1] COGSA: The carrier shall be bound befored t th b i i f th t i d



[ ]and at the beginning of the voyage to exercise duediligence to –

(a) Make the ship seaworthy;(b) Properly man, equip, and supply the ship;(c) Make the holds, refrigerating and coolingchambers, and all other parts of the ship in whichgoods are carried, fit and safe for their reception,carriage and preservation.

Sec. 3[2] COGSA: The carrier shall properly andcarefully load, handle, stow, carry, keep, care for, anddischarge the goods carried.

SUMMATION OF THE REQUIREMENTON SEAWORTHINESS

A vessel must have such degree of fitness which anh i i i t di dili



gowner who is exercising extraordinary diligencewould require his vessel to have at thecommencement of the voyage, having regard to allthe probable circumstances of it.

Seaworthiness includes fitness of the vessel itself towithstand the vicissitudes of the voyage, fitness ofthe vessel to store the cargoes and accommodatepassengers to be conveyed and adequately equipped

with and properly manned with sufficient andcompetent officers and crew.

FITNESS OF VESSEL: HOWPROVED

It was drydocked and inspected by the PGC before it



y p yproceeded to its destination.

PGC cleared it as searworthy, fitted, equipped andmet all the requirement for trading.

Note: A ship will not normally sink if the sea ismoderate and if it is seaworthy or if the carrier andits employees were not negligent. [Loadstar Shippingv. CA, G.R. 131621, Sept. 28, 1999]

CARGOWORTHY

Ship must not only be seaworthy. IT MUST ALSO BECARGO WORTHY



p y yCARGO WORTHY.

To be cargo-worthy, the ship must be an efficientstorehouse for her cargo.

Cargo-worthiness means that the vessel must besufficiently strong and equipped to carry theparticular kind of cargo which she has contracted tocarry and her cargo must be so loaded that it is safefor her to proceed on her voyage. [Lord Chorley and

O.C. Siles, Shipping Law, 6th

Ed., p. 120]



Art. 609, Code of Commerce: Captains, masters orpatrons of vessels must be Filipinos have legal capacity



ppatrons of vessels must be Filipinos, have legal capacityto contract in accordance with this code, and provenskill, capacity, and qualifications necessary to commandand direct the vessel, as established by marine or

navigation laws, ordinances, or regulations, and mustnot be disqualified according to the same for thedischarge of the duties of the position

If the owner of a vessel desires to be the captainthereof, without having the legal qualifications therefor,he shall limit himself to the financial administration ofthe vessel, and shall instrust the navigation to a personpossessing the qualifications required by said ordinancesand regulations.

OVERLOADING

Duty to exercise due diligence also includes the dutyto take passengers or cargoes that are within the



y g yto take passengers or cargoes that are within thecarrying capacity of the vessel.

A carrier fails in this requirement where it allowedon 1,004 passengers when it total passenger capacityis only 864 [Negros Navigation v. CA, G.R. 110398, Nov.7, 1997]

REQUIREMENT OF PROPERSTORAGE

It is not enough that vessel must be suited for thecargo it contracted It must also be properly stored



cargo it contracted. It must also be properly stored.

Hence, where it was found out that the cause ofexplosion was due to the improper storage of anacetylene cylinder which caught fire which wasplaced in the accommodation area near the engineroom instead at the storage, the common carrier washeld to be negligent. [Phil. Home Assurance Corp. v.CA, G.R. 106999, June 20, 1996]

LIMITED LIABILITY RULE

The liability of the carrier in connection with lossesl d i i i fi d h l



related to maritime contracts is confined to the vessel,which is hypothecated for such obligations or whichstands as the guaranty for their settlement.

„No vessel, no liability‟ rule

NEGLIGENCE OF CAPTAIN &CREW

If the negligence of the captain or crew can be tracedto the fact that they are incompetent and that the ship



to the fact that they are incompetent and that the shipowner was negligent in their selection, the LimitedLiability Rule will not apply.

If simple negligence only by the captain or crew, whoare otherwise competent to discharge their duties, atthe time of the accident, the rule applies.

RULES ON PASSENGER SAFETYAND COURTESY DUE HIM

Failure to comply with MARINA rules andl ti tit t li th t f th



regulations constitutes negligence on the part of thecaptain and crew and of the shipowner.

MARINA Memorandum Circular 112 provides that

„passengers have the right to be treated by the carrierand its employees with kindness, respect, courtesyand due consideration. The are entitled to beprotected against personal misconduct, injurious

language, indignities and abuses from the carrier andits employees.

MEMORANDUM CIRCULAR NO. 114

Provisions on:



Emergency exits

Handling of Handcarried Luggage

Lifevests or Lifejackets

Watertight doors, potholes, ramps and manholes

Wearing of proper prescribed uniform by Ship‟sofficers and crew.

Other safety measures

DEVIATION

Art. 359, CoC: If there is an agreement between theshipper and the carrier as to the road over which the



shipper and the carrier as to the road over which theconveyance is to be made, the carrier may not changethe route, unless it be by reason of force majeure; andshould he do so without this cause, he shall be liable

for all the losses which he goods he transports maysuffer from any of other cause, beside paying the sumwhich may have been stipulated for such case.

When on account of said cause of force majeure, the

carrier had to take another route which produced anincrease in transportation charges, he shall bereimbursed for such increase upon formal proofthereof.

TRANSSHIPMENT

The act of taking cargo out of one ship and loading itin another; or



in another; or The transfer of goods from the vessel stipulated in

the contract of affreightment to another vessel beforethe place of destination named in the contract has

been reached; or The transfer for further transportation from one ship

or conveyance to another.Notes: Improper deviation and Transshipment without

consent of the shipper is violation of the required

standard of care. Improper deviation may be a validground to deny a marine insurance claim; whiletransshipment of freight without legal excuse is aviolation of the contract of carriage.

EXTRAORDINARY DILIGENCE IN



CARRIAGE BY AIR

AIRWORTHINESS

Airworthiness means that an aircraft, it engines,ll d h d i f



propellers, and other components and accessories, are ofproper design and construction, and are safe for airnavigation purposes, such design and construction being

consistent with accepted engineering practice and inaccordance with aerodynamic laws and aircraft science.(R.A. 779)

IT MUST BE PROVIDED WITH COMPETENT AND

WELL TRAINED CREW.Assigning a pilot inflicted with a tumor for a long time



- Assigning a pilot inflicted with a tumor for a long timefails in the requirement.

IT MUST FOLLOW THE DESIGNATED ROUTE.- A plane did not take the designated route resulting tothe tragic crash. The tragic crash could have beenavoided had it taken said designated route. (Abeto v.PAL, 115 SCRA 489)

IT MUST INSPECT ALL CARGO AND/OR BAGGAGEFOR LOADING. (R.A. 6235)

Saludo v. CA, G.R. 95536, Mar. 23,1992

Held:Wh i h bl d t



Where a common carrier has reasonable ground tosuspect that the offered goods are of a dangerous orillegal character, the carrier has the right to know the

character of such goods and to insist on aninspection, if reasonable and practical under thecircumstances, as a condition of receiving andtransporting such goods.

Northwest Airlines v. Laya, G.R.146020, May 29 2002

Held: Thorough inspection of the briefcase of Plaintiff as



Thorough inspection of the briefcase of Plaintiff asdeemed justified pursuant to the directive of the FAAof the US brought about by the tragic event thatunfolded on Sept. 11, 2001.

The fact that Plaintiff was greatly inconvenienced bythe fact that his attache case was subjected to furtherinspection does not warrant imposition of liabilitybecause he was not singled out and discriminated by

the employees of the carrier.

Protection of passengers must take precedence overconvenience. Nevertheless, the implementation of the



security measures must be ATTENDED BY BASICCOURTESIES.

Hence, the carrier was made liable not for implementingthe security measure BUT FOR TREATING THEPLAINTIFF IN A RUDE, BRUSQUE, ARROGANT ANDDOMINEERING manner that caused his humiliation.

PAL v. CA & ZAPATOS, GR 82619,Sept. 15, 1993

Facts:O A 2 1976 Z t t th ith 20 th



On Aug. 2 1976, Zapatos, together with 20 otherpassengers, boarded PAL flight 477 from Cebu-Ozamis. The flight route was Cebu-Ozamis-Cotabato.

While on flight, the pilot received a radio messagethat the Ozamis airport was closed due to heavyrains and inclement weather and that the planeshould instead proceed to Cotabato.

Upon arrival at Cotabato, PAL agent informed thepassengers of their option to return to Cebu on-board



passengers of their option to return to Cebu on boardFlight 560 on the same day and take the next availableflight to Ozamis City on Aug. 5, 1975. Zapatos chose theoption offered but was not accommodated on the returnflight to Cebu because he was checked in as passengerno. 9 on Flight 477. He insisted to be given priority overconfirmed passengers but the station agent refused.

He tried to stop the departure of Flight 560 as his

personal belongings, including a package containing acamera was still on board.

Held:

The position taken by PAL in this case clearly illustratesits failure to grasp the exacting standard required by



its failure to grasp the exacting standard required bylaw. PAL‟s diversion of its flight due to inclementweather was a fortuitous event.

Nonetheless, such occurrence did not terminate itcontract with its passengers. Being in the business of aircarriage and the sole one to operate in the country, PALis deemed equipped to deal with situations as in the caseat bar.

What we said in one case once again must be stressed,i.e. the relation of carrier and passenger continues until



i.e. the relation of carrier and passenger continues untilthe latter has been landed at the port of destination andhas left the carrier‟s premises.

Hence, PAL necessarily would still have to exerciseextraordinary diligence in safeguarding the comfort,convenience and safety of its stranded passengers untilthey have reached their final destination.

ABETO v. PAL, GR L-28692, July 30,1982

Facts: Judge Abeto boarded PAL flight from Iloilo toManila on Nov. 23, 1960. The plane did not reach



, pManila. After 3 days, it was ascertained that itcrashed at Mt. Baco, Mindoro. All passengersperished.

Held: It is clear that the pilot did not follow thedesignated route for his flight between Romblon andManila. The weather was clear and he was supposedto cross airway “Amber I” over Romblon. Instead, hemade a straight flight to Manila in violation of anytraffic rules.

Baliwag Transit Inc. v. CA (256 SCRA746)

Held: A common carrier breaches its contract of carriage when



A common carrier breaches its contract of carriage whenit failed to deliver its passengers to their destination safeand sound. A common carrier is bound to carry itspassengers safely as far as human care and foresight can

provide, using the utmost diligence of a very cautiousperson, with due regard for all the circumstances.

In contract of carriage, it is presumed that thecommon carrier was at fault or was negligent when a



common carrier was at fault or was negligent when apassenger dies or is injured.

Unless presumption is rebutted, the court need noteven make an express finding of fault or negligence

on the part of the common carrier. This statutorypresumption may only be overcome by evidence thatthe carrier exercised extraordinary diligence asprescribed in Arts. 1733 and 1755 of the Civil Code.

Chapter 4



BILL OF LADING

CONCEPT OF BL

A bill of lading, like a passage ticket, is not necessaryfor the perfection of a contract of carriage.



p g

Art. 354, Code of Commerce: In the absence of a billof lading, disputes shall be determined by the legalproofs which the parties may present in support oftheir respective claims, according to the generalprovisions established in this Code for commercialtransaction.

Note: If involving common carrier, disputes without

BL is governed by the Civil Code. In respect toelectronic commerce, it is governed by R.A. 8792 ofthe Electronic Commerce Act.

BILL OF LADING DEFINED

A written acknowledgment, signed by the master ofa vessel or other authorized agent of the carrier, that



a vessel or other authorized agent of the carrier, thathe has received the described goods from theshipper, to be transported on the expressed terms to

the described place of destination, and to bedelivered there to the designated consignee orparties. [70 Am Jur 2d 924]

KINDS OF BILLS OF LADING

Negotiable or Non-negotiable Bill of Lading Clean Bill of Lading or Foul Bill of Lading



Clean Bill of Lading or Foul Bill of Lading

On-board Bill or Received-For-Shipment Bill ofLading

Spent Bill of Lading

Through Bill of Lading

Custody Bill of Lading

Port Bill of Lading

Negotiable or Non-negotiable Bill ofLading

When delivered to the Order or to bear, negotiable. Otherwise non-negotiable



Otherwise, non-negotiable.

Clean Bill of Lading or Foul Bill ofLading

When it does not contain any notation indicating anydefect in the goods – Clean BL



g

Otherwise, it is Foul BL

On-board Bill or Received-For-Shipment Bill of Lading

On-board BL is one in which it is stated that thegoods have been received on board the vessel which



is to carry the goods

Received for shipment BL is one which it is statedthat the goods have been received for shipment withor without specifying the vessel by which the goodsare to be shipped.

Custody Bill of Lading

One which states that the goods are already receivedby the carrier but the vessel indicated therein has not



yyet arrived at port.



NATURE OF BILL OF LADING

It operates both as:1. A receipt for the goods shipped; and



1. A receipt for the goods shipped; and

2. A contract to transport and deliver the goods asstipulated therein. Being a contract, it is the law

between the parties who are bound by its terms andconditions sol longs as they are not contrary to law,morals, good customs, public order and publicpolicy.

It is also a document of title.

DOCUMENT OF TITLE

Includes any bill of lading, dock warrant, „quedan’, orwarehouse receipt or order for the delivery of goods,



p y gor any other document used in the ordinary course ofbusiness in the sale or transfer of goods, as proof of

the possession or control of the goods, or authorizingor purporting to authorize the possessor of thedocument to transfer or receive either byendorsement or by delivery, goods represented bysuch document. [Art. 1636, NCC]

EFFICACY OF BL

Upon delivery to and acceptance by the shipper. It is presumed that the stipulations of the BL were

k t th hi i th b f f d



known to the shipper, in the absence of fraud,concealment or improper conduct, and he generallybound by his acceptance whether he reads the bill or

not.

A shipper who receives a BL without objection afteran opportunity to inspect it, and permits the carrier

b d h h h



to act on it by proceeding with the shipment ispresumed to have accepted it as correct and assentedto its terms.

A BL accepted without dissent raises thepresumption that all the terms therein were broughtto the knowledge of the shipper and agreed to byhim, and in the absence of fraud or mistake, he is

estopped from thereafter denying that he assented tosuch terms.

BL AS CONTRACT OF ADHESION

BLs, like tickets constitute a class of contracts ofadhesion.



Construed liberally in favor of the passenger orshipper.

But, they are not ENTIRELY prohibited.

One who adheres to the contract is in reality free toreject it entirely.

If he adheres, he gives his consent.

Receipt of the BL or ticket is tantamount to adherenceto the stipulation embodied therein

Qua Chee Gan v. Law Union and

Rock Insurance Co., 25 SCRA 70[1968]

Held: The courts cannot ignore that nowadays,monopolies, cartels and concentration of capitalendowed with overwhelm economic power, manage to



endowed with overwhelm economic power, manage toimpose upon parties dealing with them cunninglyprepared „agreements‟ that the weaker party may notchange one with his participation in the „agreement‟being reduced to the alternative „to take it or leave it‟,labelled since Raymond Sleilles „contracts of adherence‟(contracts d‟ adhesion) in contrast (of which policies ofinsurance and international bill of lading are primeexamples) obviously cap for greater strictness and

vigilance on the part of the court with view to protectingthe weaker party from abuses and imposition, andprevent their becoming traps of the unwary.

RULE ON PROTECTION OF THEDISADVANTAGED

Art. 24, NCC: In all contractual property or otherrelations, when one of the parties is at the



disadvantage on account of his moral dependence,ignorance, indigence, mental weakness, tender age

and other handicap, the courts must be vigilant forhis protection.

Servando, et al. v. Phil. Steam Navigation

Co., G.R. No. L-36481-2 October 23, 1982

Held: While it may be true that petitioner had not signed

the plane ticket (Exh '12') he is nevertheless bound



the plane ticket (Exh. '12'), he is nevertheless boundby the provisions thereof.

Such provisions have been held to be a part of the

contract of carriage, and valid and binding upon thepassenger regardless of the latter's lack of knowledgeor assent to the regulation.

It is what is known as a contract of 'adhesion', inregards which it has been said that contracts of



gadhesion wherein one party imposes a ready madeform of contract on the other, as the plane ticket in

the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free

to reject it entirely; if he adheres, he gives his consent.

Magellan Manufacturing Marketing Corp.v. CA, G.R. 95529, Aug. 22, 1991

Issue 1: On the argument that there could have beenno agreement in the transshipment even if the BL



contained such since the same is prohibited in theLetter of Credit, and that, therefore, it had no

intention to allow transshipment of the subject cargo,it was:

Held: As between such stilted thesis of petitioner and the

contents of the bill of lading evidencing the intention of



g gthe parties, it is irremissible that the latter must prevail.

The terms of the contract as embodied in the bill oflading are clear and thus obviates the need for anyinterpretation. The intention of the parties which is thecarriage of the cargo under the terms specifiedthereunder and the wordings of the bill of lading do notcontradict each other.

The terms of the contract being conclusive upon theparties and judging from the contemporaneous and

b t t ti f titi t it



subsequent actuations of petitioner, to wit:personally receiving and signing the bill of ladingand paying the freight charges, there is no doubt that

petitioner must necessarily be charged with fullknowledge and unqualified acceptance of the termsof the bill of lading and that it intended to be boundthereby.

Issue No. 2: Can a consignee refuse a bill of lading on theground that there was overshipment of goods than thequantit co ered b the letter of credit?



quantity covered by the letter of credit?

Held: In a letter of credit, there are three distinct andindependent contracts: (1) the contract of sale betweenthe buyer and the seller; (2) the contract of the buyerwith the issuing bank; and (3) the letter of credit properin which the bank promises to pay the seller pursuant tothe terms and conditions stated therein.

It is clearly settled in law that the three contracts which

make up the letter of credit arrangement are to bemaintained in a state of perpetual separation.



p p p

A transaction involving the purchase of goods may alsorequire, apart from a letter of credit, a contract of

transportation specially when the seller and the buyerare not in the same locale or country, and the goodspurchased have to be transported to the latter.

Hence, the contract of carriage, as stipulated in the bill oflading must be treated independently of the contract ofsale between the seller and the buyer, and the contract



sale between the seller and the buyer, and the contractfor the issuance of a letter of credit between the buyerand the issuing bank.

Any discrepancy between the amount of goodsdescribed in the commercial invoice in the contract ofsale and the amount allowed in the letter of credit willnot affect the validity and enforce-ability of the contractof carriage as embodied in the bill of lading.

As a bank cannot be expected to look beyond the

documents presented to it by the seller pursuant to theletter of credit, neither can the carrier be expected to go



p gbeyond the representations of the shipper in the bill oflading and to verify their accuracy vis-à-vis the

commercial invoice and the letter of credit.

Having no actual knowledge of the kind, quantity, orcondition of the contents of the container, the carrierissues the corresponding bill of lading based on the



issues the corresponding bill of lading based on thedeclaration of the shipper, and the bill of lading simplystates the contents of the container either as advised by

the shipper or prefaced by the phrase “said to contain”. The matter of quantity, description and conditions of the

cargo inside the container is the sole responsibility of theshipper.

PAROLE EVIDENCE RULE

Sec. 9, Rule 130, Rules of Court: When the terms of anagreement have been reduced to writing, it isconsidered as containing all the terms agreed upon



considered as containing all the terms agreed uponand there can be, between the parties and theirsuccessors in interest, no evidence of such terms

other than the contents of the written agreement. BL is covered by the parole evidence rule.

EXCEPTIONS TO PAROLEEVIDENCE RULE

However, a party may present evidence to modify,explain or add to the terms of the written agreementif he puts in issue in his pleading:



if he puts in issue in his pleading:

a) An intrinsic ambiguity, mistake or imperfection inthe written agreement;

b) The failure of the written agreement to express thetrue intent and agreement of the parties thereto;

c) The validity of the written agreement; or

d) The existence of other terms agreed to by the

parties or their successors in interest after theexecution of the written agreement.

The term “agreement” includes wills.

SUBSTANTIVE PROVISIONS ONBILL OF LADING

Art. 353, Code of Commerce: The legal evidence ofthe contract between the shipper and the carrier shallb th bill f l di b th t t f hi h th



be the bills of lading, by the contents of which thedisputes which may arise regarding their execution

and performance shall be decided, no exceptionsbeing admissible other the those of falsity andmaterial error in the drafting.

After the contract has been complied with, the bill oflading which the carrier has issued shall be returned tohim, and by virtue of the exchange of this title with thething transported the respective obligations and actions



thing transported, the respective obligations and actionsshall be considered cancelled, unless in the same act theclaim which the parties may wish to reserve be reduced

to writing, with the exception of that provided for inArticle 366 In case the consignee, upon receiving the goods, cannot

return the bill of lading subscribed by the carrier,because of its loss or of any other cause, he must give the

latter a receipt for the goods delivered, this receiptproducing the same effects as the return of the bill oflading.

Art. 709, Code of Commerce: A bill of lading drawn upin accordance with the provisions of this title shall beproof as between all those interested in the cargo and



proof as between all those interested in the cargo andbetween the latter and the insurers, proof to the contrarybeing reserved for the latter.

Art. 710, Code of Commerce: If the bills of lading arecontradictory, and no change or erasure can be observedin any of them, those possessed by the shipper orconsignee signed by the captain shall be proof againstthe captain or ship agent in favor of the consignee orshipper; and those possessed by the captain or shipagent signed by the shipper shall be proof against theshipper or consignee in favor of the captain or shipagent.

Sec. 3[4] & [5], COGSA, C.A. No. 65: [4] Such a bill of lading shall be prima facie evidence of

the receipt by the carrier of the goods as therein



the receipt by the carrier of the goods as thereindescribed in accordance with paragraphs 3(a), (b), and(c), of this section.

[5] The shipper shall be deemed to have guaranteed tothe carrier the accuracy at the time of the shipment of themarks, number, quantity, and weight, as furnished byhim; and the shipper shall indemnify the carrier againstall loss, damages, and expenses arising or resulting frominaccuracies in such particulars. The right of the carrierto such indemnity shall in no way limit his responsibilityand liability under the contract of carriage to any personother than the shipper.

MATTERS TO BE ENTERED IN ABL OR AIRWAY BILL

For BL (Art. 706, Code of Commerce): Name, registry and tonnage of the vessel Name of captain and his domicile [not anymore



Name of captain and his domicile [not anymoreapplicable as of present]

Port of loading and unloading Name of shipper Name of consignee Quantity, quality, number of packages and marks of

the merchandise; and

Freight and primage

For Airwaybill (Art. 3[1], Warsaw Convention on AirTransport:

Place and date of issue



Place of departure and destination;

Agreed stopping places, provided the carrier may

reserve the right to alter the stopping places in case ofnecessity, and that if he exercises that right, thealteration shall not have the effect of depriving thetransportation of its international character;

Name and address of the carrier or carriers; and Statement that the transportation is subject to the rules

relating to liability in this convention.

KINDS OF STIPULATIONS IN ABILL OF LADING

First kind: One exempting the carrier from any andall liability for loss or damage occasioned by its ownnegligence – VOID;



Second kind: One providing for an unqualifiedlimitation of such liability to an agreed valuation – VOID; and

Third kind: One limiting the liability of the carrier toan agreed valuation unless the shipper declares ahigher value and pays a higher rate of freight –VALID.

[H.E. Heacock Co. v. Macondray & Co., G.R. 16598l, Oct.3, 1991]

LIABILITY OF CARRIER UNDERCOGSA

If goods are to be shipped from a foreign port to the aPhilippine, COGSA is applicable suppletority to theCivil Code



Civil Code.

Liability of the carrier is US$500 per package, in the

absence of a shipper‟s declaration of a higher value inthe BL.

The above condition is deemed part of the BL even ifnot expressly stated.

MEANING OF PACKAGE

If goods are shipped in cartons – Each carton isconsidered a package even if they are stored incontainer vans.



If what ordinarily considered as packages areshipped in a container supplied by the carrier and the

number of such unit is disclosed in the BL – Each ofthose units (not the container) constitutes thepackage referred to in COGSA.

Belgian Overseas Chartering v. Phil. FirstInsurance Co., G.R. 143133, June 5, 2002

Facts: Steel sheets numbering 242 coils were shippedon board a vessel of Petitioner in Germany to Manila.The coils were shipped inside the container vans



The coils were shipped inside the container vansprovided by the carrier. The LC covering theshipment state the per metric ton price of the coils.Upon arrival, it was found out that 4 coils weredamaged.

Held: Each coil is considered one package. Theliability of the carrier should not be based on the

price declared in the Letter of Credit.

WARSAW CONVENTION ON AIRTRANSPORT

Liability to passenger – P250,000 francs (passenger &carrier may agree to a higher limit of liability

Liability to baggage and cargo – P250 francs per kg



Liability to baggage and cargo P250 francs per kg(unless the passenger or consignor has made, at thetime when the package was handed over to the

carrier, a special declaration of interest in delivery atdestination and has paid a sup- plementary sum notexceeding the declared sum, unless he proves thatsum is greater than the actual value to the consignorat delivery.

In case of loss, damage or delay of part of registeredbaggage or cargo, or of any object contained in thewaybill – The weight shall be taken into consideration in



determining the amount and carrier‟s liability is limitedto the TOTAL WEIGHT OF THE PACKAGE/S

However, when the loss, damage or delay of a part ofthe registered baggage or cargo, or of an object containedtherein, affects the value of other packages covered bythe same baggage check of the same airway bill, theTOTAL WIEHT OF SUCH PACKAGE/S shall also be

taken into consideration in determining the limit ofliability.

Liability to hand carried items – 5,000 francs perpassenger

The above limitations are without prejudice to the local



court‟s award in accordance to its own law, in addition,the whole or part of the court cost and other expenses of

litigation incurred by plaintiff.

Not applicable if the amount of damages awarded,excluding court costs and other expenses of litigation,does not exceed the sum which the carrier has offered in

iti t l i tiff ithi 6 th f th d t f



writing to plaintiff within 6 months from the date ofoccurrence causing the damage or before

commencement of the action, if that is later. If damage is caused by willful misconduct or by such

default on the part of the carrier: Carrier cannot invokethe provisions in Warsaw Convention on limitedliability.

HAGUE PROTOCOL AMENDMENT TOWARSA CONVENTION ON AIR TRANSPORT

Removed the provision that exculpates the airlinecompletely if it took all necessary steps to avoid thedamage.Th t l d l th t th t t d li it f li bilit



The protocol declares that the stated limits of liabilityare not applicable „if it is proved that the damageresulted from an act or omission of the carrier, itsservants or agents, done with intent to cause damageor recklessly and with knowledge that damagewould probably result.

Note: Montreal Agreement of 1966 allows a passengerto recover unlimited damages upon proof of willful

misconduct.

LIABILITY UNDER COGSA

If no value is state – Maximum: US$500. If value is stated – Rule on Qualified Liability.

Q lifi d Li bilit R l



Qualified Liability Rule:

A carrier may fix a maximum liability in the event

the shipper does not declare any value or a valude upto a certain amount. Should shipper declare a highervalue, and willing to pay higher freightage, thecarrier shall accordingly be liable for greater damage.

CASES INVOLVING BILLS OFLADING



LADING

Maersk Line v. CA, 222 SCRA 108

Held: Bill of lading, although contracts of adhesion, are not

prohibited and the terms thereof binding since the



prohibited and the terms thereof binding, since theother party is free to reject it, and yet has accepted

the terms thereof. But the terms of the bill of ladingwhich create an absurd situation as having the effectof practically leaving the date of arrival of theshipment to the sole determination and will of thecarrier cannot be enforced.

Telengtan Bros. v. CA, 236 SCRA 617

Held: A bill of lading is both a receipt and a contract. As a

contract its terms and conditions are conclusive on



contract, its terms and conditions are conclusive onthe parties, including the consignee, as to the route,

destination, freight rates or charges, and stipulatesthe rights and obligations assumed by the parties.

Saludo, Jr. v. CA, 207 SCRA 498

Held: A bill of lading is a written acknowledgment of the

receipt of the goods and an agreement to transport



p g g pand deliver them at a specific place to a personnamed or on his order.

Acceptance thereof without dissent raises thepresumption that all the terms therein were broughtto the knowledge of the shipper and agreed to byhim and estops him thereafter from denying thesame.

United States Lines v. Commissionerof Customs, 151 SCRA 189

Held: The containerization system was devised to facilitate

the expeditious and economical loading, carriage andunloading of cargoes



unloading of cargoes. Under that system, the shipper loads his cargoes in a

specially designed container, seals the container anddelivers it to the carrier for transportation. The carrier does not participate in the counting of the

merchandise for loading into the container, the actualloading thereof nor the sealing of the container.

Everett Steamship v. CA, 287 SCRA496

Held:

A stipulation printed in BL limiting common carrier‟sliability for loss or destruction of a cargo to a certainsum unless shipper or owner declare a greater value



sum, unless shipper or owner declare a greater valueis sanctioned by law, particularly Arts. 1749 and 1750of the Civil Code, provided such stipulation must bereasonable and just under the circumstances and hasbeen freely and fairly agreed upon.

The printing of such limiting stipulation in a smallprint on the BL does not make the BL invalid nor can

it be argued that the stipulation has not been fairlyand freely agreed upon as to be binding on thecarrier.

At most, the situation only calls for a greater vigilanceon the part of courts when dealing with such contracts ofadhesion in that said contracts must be carefully

d d h ld h ( k



scrutinized in order to shield the unwary (or weakerparty) from deceptive schemes contained in ready-made

covenants. In this case, since the shipper is engaged in trading

business, it cannot be said to be ignorant of the businesstransactions it entered into involving the shipment of itsgoods to its customers.

The shipper could have known, or should know thestipulations in the BL and there it should have declared ahigher valuation of the goods shipped.

Valenzuela Hardwood v. CA, 274SCRA 642

Held:

A stipulation in a charter party that the owners shallnot be responsible for loss, split, short-landing,breakages and any kind of damage to the cargo is



breakages and any kind of damage to the cargo, isNOT VOID as being contrary to public policy, when

it is clear from the arrangement that the carriermerely acted as private carrier under the terms of thecharter party.

In a contract of private carriage, the parties mayvalidly stipulate the responsibility for the cargo rests

solely on the charterer, exempting the shipownerfrom liability for loss of or damage to the cargocaused even by the negligence of the ship captain.

PAL v. CA, 255 SCRA 48 on theperiod provided in Way bill

Held:

Where the failure to file the formal claim within theprescriptive period contemplated in the air waybillwas largely due to the fault of carrier‟s



was largely due to the fault of carrier srepresentatives, the condition was deemed fulfilled

considering the collective action of the carrier‟spersonnel in tossing around the claim and leaving itunresolved for an indefinite period of time, whichwas tantamount to „voluntarily preventing itsfulfillment‟, and therefore the filing of the baggage

freight claim constituted substantial compliance withthe requirement of the filing of a formal claim

Chapter 5PRESCRIPTIVE PERIODS IN CLAIMS



PRESCRIPTIVE PERIODS IN CLAIMS

FILING OF CLAIM IN INTER-ISLANDCOMMERCE (Art. 366, Code ofCommerce)

If goods arrived in damaged condition: Apparent – Must file a claim immediately (oral or

written)



tte )

Not apparent – Must file a claim within 24 hours

from deliver

FILING OF ACTION ININTERISLAND TRADE

Period to file action if claim is filed but CARRIERREFUSES TO PAY:

6 years – if no BL



y

10 years – if there is BL

Note: Filing of the claim under Art. 366, CoC isCONDITION PRECEDENT for recovery. If no claimis filed, there will be no recovery, even if an actiontherefor is meritorious since the claim is part of the

cause of action

FILING OF CLAIMS IN OVERSEASTRADE

If damage is APPARENT – CLAIM SHOULD BEFILED IMMEDIATELY.

If damage is NOT APPARENT – CLAIM SHOULD



g

BE FILED WITHIN 3 DAYS.

FILING OF ACTION IN OVERSEASTRADE

1 year from the time vessel departs from port withoutmaking delivery; or1 f th d t th d d i d li d



1 year from the date the damaged cargo is deliveredto arrastre.

Note: the 1 year period applies also to collision cases. If mis-delivered: 10 years; If claim is based on delay:

10 years.Note: Filing of claim is NOT A CONDITION

PRECEDENT in the filing of action.

Rizal Surety v. Macondray, 22 SCRA902

Facts: A vessel arrived in Manila on Oct. 25. It leftManila on Oct. 31. The BL showed that the cargo wasaboard the vessel, but it was never delivered. Theshipper brought an action against the carrier for non-



pp g gdelivery.

Held: Since there was no tally sheet AND NODELIVERY, the 1- year prescriptive period for filingthe action should be counted from the LAST DAYON WHICH THE CARRIER HAD ANOPPORTUNITY TO MAKE THE DELIVERY, i.e. Oct.31 when the vessel departed from port.

Union Carbide v. Manila Railrod, 77SCRA 359

Held: In the case when the vessel docked at the pier, where

the cargo has been unloaded and delivered to the



garrastre, the 1-year period begins to run from the

date of delivery to the arrastre operator.

Ang v. American SS Agencies, 19SCRA 631

Held: Where there was delivery to the wrong person, the

prescriptive period is (10) years because there is a



p p p ( ) yviolation of contract, and COGSA does not apply to

misdelivery.

US Insurance v. Cia. Maritima, 21SCRA 998

Facts: Cargo was loaded in New York for Davao City. Since

most of the cargo was for Manila, the carrierl d d ll th i l di th t f D Cit



unloaded all the cargo, including that for Davao City,in Manila and did not make a trip to Davao. Instead,

the goods for Davao were transshipped on an inter-island vessel. The cargo arrived in a damagedcondition.

Held:

The 1-year period provided in COGSA shall still applysince the contract of carriage is from New Yor to Davao.The inter-island vessel from Manila to Davao is



The inter island vessel from Manila to Davao isconsidered merely a connecting vessel and the

transshipment did not constitute a separate contract ofcarriage.

Filipino Merchants Ins. Co. v.Alejandro, 145 SCRA 42

Held: The insurer of the goods is also bound by the 1-year

prescriptive period under the Carriage of Goods by



p p p g ySea Act.

Dole Philippines v. Maritime Co., 148SCRA 118

Held: The written extrajudicial demand by creditor DOES

NOT TOLL the running of the 1-year prescriptive



period under COGSA since an action must be filed

within the period.

Mitsui O.S.K. Lines v. CA, 287 SCRA366

Facts:

Carrier undertook loading. However, while in Taiwan,goods were not transshipped immediately, with theresult that goods arrived in France late during the „off



result that goods arrived in France late during the off-season‟. Consignee paid only half of the value of the

goods and balance was charged against loss sustaineddue to late arrival. Shipper now seeks to recover unpaidbalance from the carrier which opposes the same sincethe loss or damage to goods shipped under Sec. 3(6) ofthe Carriage of the Goods by Sea Act has been barred by

the lapse of 1-year period.

Held: Indeed, what is in issue here is not the liability of carrier

of its handling of goods as provided under Sec. 3(6) ofCOGSA, but its liability under its contract of carriage



COGSA, but its liability under its contract of carriagewith shipper as covered by the laws of more generalapplication.

Since the concept of „loss or damage‟ involves hedeterioration of goods DUE TO DELAY in theirtransportation, the claims of shipper DO NOTCONSTITUTE LOSS OR DAMAGE within the meaningof COGSA which requires the suit to be brought within

1-year from the time the cause of action accrued. The 1-year prescriptive period under COGSA is

inapplicable. What is applicable is Art. 1144 of the CivilCode providing for a 10-year prescriptive period.

Mayer Steel Pipe Corp. v. CA, 274SCRA 432

Facts:

The shipper has insured the merchandise against allrisks with South Sea Surety During the voyage the



risks with South Sea Surety. During the voyage, themerchandise were damaged. Insurer opposed claim on

the ground, inter alia, that it was filed more than one (1)year from discovery of the damage to the merchandiseand therefore barred by the provisions under COGSA.

Held:

The provision applies only to carrier‟s liability which isextinguished if no suit is brought within one year.

The liability of the insurer is not extinguished becausethe insurer‟s liability is based not on the contract of



the insurer s liability is based not on the contract ofcarriage but on the contract of insurance.

COGSA governs relationship between carrier andshipper, the consignee and/or the insurer on the otherhand and defines the obligations of the carrier under thecontract of carriage.

It does not, however, affect the relationship between

shipper and insurer which is governed by InsuranceCode.

MEANING OF DAMAGES

The pecuniary compensation, recompense, orsatisfaction for an injury sustained; or

The pecuniary consequences which the law imposes



for the breach of some duty or violation of somerights.

DAMAGES RECOVERABLE

Actual Damages (dano emergente) Unrealized Profits (lucro cesante)

Moral Damages



Nominal Damage

Temperate or Moderate Damages Liquated Damages

Exemplary or Corrective Damages

Other damages

ACTUAL & COMPENSATORYDAMAGES

Art. 2205, NCC: Damages may be recovered:(1) For loss or impairment of earning capacity incases of temporary or permanent personal injury;



(2) For injury to the plaintiff‟s business standing or

commercial credit. Amount of damages in case of death: P100,000 per

passenger for overland; P200,000 for marinetransportation.

LOSS OF EARNING CAPACITYUNDER ART. 2206

Formula: Net Earning Capacity = Life Expectancy [2/3 x 80 –

age at death] x Gross Annual Income less NecessaryLi i E [fi d 50% f h i i



Living Expenses [fixed at 50% of the gross income inthe absence of proof]

MORAL DAMAGES (Art. 2219, CivilCode)

Include Physical suffering, Mental anguish, Fright



Fright, Serious anxiety, Besmirched reputation, Wounded feelings, Moral shock, Social humiliation, and

Similar injury

PRINCIPLES INVOLVING AWARDOF MORAL DAMAGES

As a general rule, no moral damages may beawarded where the breach of contract is NOTMALICIOUS.

Moral damages may be awarded if the contractual



Moral damages may be awarded if the contractualnegligence is considered gross negligence.

Though incapable for pecuniary estimation, moraldamages may be recovered if they are the proximateresult of the defendant‟s wrongful act or omission.

The award of moral damages is designed tocompensate the claimant for actual injury and is notmeant to enrigh the complainant at the expense ofthe defendant.

CASES WHEN MORAL DAMAGES

MAY BE AWARDED (Arts. 2219 & 2220,NCC)

Criminal offense resulting in physical injuries; Quasi-delicts causing physical injuries Seduction, abduction, rape, or other lascivious acts Adultery or concubinage



Adultery or concubinage Illegal or arbitrary detention or arrest Illegal search Libel, slander or any other form of defamation Malicious prosecution Acts mentioned in Art. 309 [disrespect to the dead, or

wrongful interference with a funeral] Acts and actions referred to in Articles 21, 26, 27, 28,

29, 30, 32, 34 and 35 [on human relations]

In culpa contractual, moral damages may be awarded:

Where the mishap resulted in the death of the passenger.(Art. 1764 in relation to Art. 2206)

When the carrier was guilty of fraud or bad faith, even if



death did not result. (Art. 2220; Sabena Belgian World

Airlines v. CA, 171 SCRA 620) Note: If the cause of action is culpa aquiliana where the

passenger suffered physical injuries, there is no moreneed to prove that the carrier acted fraudulent or in badfaith (Art. 2210[2], Civil Code)

Lopez v. Pan Am, 16 SCRA 431(1966)

Facts: VP Lopez with his wife, daughter and son-in-law had

tickets for 1st class bound for SF. When they arrivedin Tokyo, the plane‟s crew found out that the 1st class



in Tokyo, the plane s crew found out that the 1 classtickets had been overold, and Lopez and his family

were compelled to take the economy seats. When the plane arrived at SF, Filipino official and the

Filipino community with a band waited for Lopez toappear from the 1st class section. It caused himhumiliation.

Held:

Pan-Am should have informed Lopez of the possibledowngrading to prevent his humiliation

The court award Lopez P300,000 in moral damages andP150 000 in attorney‟s fees



P150,000 in attorney s fees.

The substantial amount of damages was awarded inview of the importance of the person of the passenger

Zulueta v. Pan-Am (1972)

Facts: Zulueta was a passenger on a Pan-Am flightwith his wife and children from SF to Manila. Onstopover at Wake Island, the passengers were toldthat the plane would leave in 30 minutes. After 30mins Zulueta failed to show up the crew had to look



mins. Zulueta failed to show up, the crew had to lookfor him. When he was found, the plane captain called

him „a brown monkey. Bitter exchanged followed.The captain then order the crew to unload Zulueta‟sbaggage and he was left behind.

Held: Zulueta is entitled to moral damages ofP500,000 and Attorney‟s fees of P50,000

Ong Yui v. CA, 91 SCRA 223

Held: In repealing the Shewaran Doctrine, the SC ruled that

the qualified liabilityappearing on the ticket isbinding even if the passenger did not sign it



binding even if the passenger did not sign it.

ARRASTRE

In its generic term, it refers to a contract for theunloading of goods from a vessel.

In maritime law, arrastre applies only to overseastrade.



When a person brings in cargo from abroad, he

cannot unload and deliver the cargo by himself. Thisis done through the arrastre operator, which will beobligated to deliver the cargo to the importer.

Firemen‟s Fund v. Cia. General deTabacos, 34 SCRA 392 (1970)

Held:

The Arrastre operator, for the privilege of thoseundertaking signs a Management Contract with thePhilippine Government. But among the stipulations



pp g pin the MC are provisions that adversely affect the

importer. The management contract contains stipulations pour

autrui and there is stamped across the DeliveryPermit that the importer received the goods subjectto the management contract, then he shall be bound

by the same.

PARTIES IN ARRASTRECONTRACT

The Government (RP) The Arrastre Operator being awarded the privilege of

operating an arrastre service

Thi d t b fi i h i th hi



Third party beneficiary, who is the shipper or person

being serviced by the arrastre.

4 STIPULATIONS IN THE REVISEDMANAGEMENT CONTRACT AFFECTINGTHE IMPORTER OR SHIPPER

Formal claim against arrastre:

- Within 30 days from date of final entry with the Bureauof Customs supported by invoices and other shippingdocuments. (A condition precedent)



Action on claim by arrastre: 60 days from receipt. (A

condition precedent)

If claim is refused: Action to be filed within 1 years.

If claim is not acted upon: The 1 year period begins torun from the date of the expiry of the 60-day period.

Qualified liability of arrastre: P2,000 per package unless



Q y , p p ghigher value is declared.

NATURE OF LIABILITY OF ARRASTRE & CARRIER:Solidary

Metro Port Services v. IAC, 213SCRA 103 (1992)

Held: A provision limiting the liability of arrastreoperator through the imposition of a requirementthat a formal claim must be made within 30 daysfrom filing of entry is complied with when theconsignee filed a provisional claim within the 30-day



consignee filed a provisional claim within the 30 dayperiod.

As of that date, the arrastre operator was givenreasonable opportunity to check the validity of theclaim while the facts were still fresh in the minds ofthe person who took part in the transaction andwhile pertinent documents were still available.

It did not matter that the provisional claim was forthe whole amount of the invoice. It is sufficient aslong as the name of the carrying vessel, its date ofarrival and BL are attached.

Firemen‟s Fund v. Tabacalers, 34SCRA 392

Held: The adverse stipulations of the Revised Management

Contract will affect the importer only if the deliverypermit is stamped: „subject to RMC‟



permit is stamped: subject to RMC .

Where there is none, the importer cannot be bound.

DEGREE OF DILIGENCEREQUIRED IN ARRASTRE

In the performance of its obligations, an arrastreoperator should observe the same degree of diligenceas that required of a common carrier and awarehouseman, i.e. EXTRAORDINARY DILIGENCE.



, N N

Being custodian of the goods discharged from avessel, an arrastre operator‟s duty is to take goodcare of the goods and to turn them over to the partyentitled to their possession. [Summa Insurance v. CA,253 SCRA 175]

BURDEN OF PROOF IN ARRASTRECLAIMS

In a claim for loss filed by a consignee, the burden ofproof to show compliance with the obligation todeliver the goods to the appropriate party devolvesupon the arrastre operator.



The reason is because the safekeeping of the goods

rest within its knowledge. Hence, it must prove thatthe losses were not due to its negligence or that of itsemployee. [ICTSI v. Prudential Guarantee & AssuranceCo., Inc., 320 SCRA 244]

„SHIPPER‟S LOAD & COUNT‟SHIPMENT

When consigned goods are shipped under „shipper‟sload and count‟, the shipper is solely responsible forthe container‟s load as the carrier would then beoblivious of the contents of the shipment.



Protection against pilferage of the shipment are then

the consignee‟s lookout. The arrastre operator is, like any ordinary depositary,

duty-bound to take good care of the goods receivedfrom the vessel and to turn the same over to the partyentitled to their possession, subject to such

qualification as may have validly been imposed inthe contract between the parties.

The arrastre operator is not required to verify

the contents of the container received and tocompare them with those declared by theshipper because the cargo was at the shipper‟s



shipper because the cargo was at the shipper sload and count, and is expected to deliver to theconsignee only the container received from thecarrier.

COMMERCIAL TERMS WHENCARRIER INTERVENES

FOB (Free on Board) – Delivery to the vessel isdelivery to the buyer. Carrier becomes the AGENTOF THE BUYER.

FAS (Free Alongside Ship) – The seller pays all



FAS (Free Alongside Ship) The seller pays allcharges and bears the risk until the goods are placedalongside overseas vessel and within the reach of itsloading tackle. The same presumption as FOB.

CIF (Cost, Insurance & Freight) – The quotation price

quotation on CIF presumes that the seller shall pay thecost of rating and packaging, insurance and thefreightage. Carrier is deemed the agent of the seller andownership is retained by him throughout the trip It



ownership is retained by him throughout the trip. It

passes to the buyer only upon reaching the port ofdestination and the cargo is discharged and delivered tothe buyer. Insurable interest is with the SELLER. Taxesare not yet due since the sale is not yet deemed perfecteduntil the cargo reaches the port of destination.

PART IIMARITIME LAW



Chapter 6GENERAL CONCEPTS



MARITIME LAW

The system of laws which particularly relates to theaffairs and business of the sea, to ships, their crewsand navigation, and to marine conveyance of personsand property.

I l d



Includes:

Book II, Code of Commerce (Maritime Commerce Act No. 2616 (The Salvage Law)

C.A. No. 65 (Carriage of Goods by Sea Act)

P.D. 1521 (Ship Mortgage Decree of 1978)

R.A. 9295 (The Domestic Shipping Act of 2004) Other special laws relating to maritime commerce

ORIGINS OF SHIPPING

Man‟s first use of the sea started 3,000 years ago – Fishing developed into highly organized activity.

At that time, ships were used to carry large andheavy piece of cargo which neither man nor beast ofburden can carry.



bu de ca ca y. In one account, the Queen of Ancient Egypt move her

stone obelisks weighing 700 tons through the entirelength of Egypt on the Nile River.

Egyptians were credited in revolutionizing shippingwhen they invented the SAIL.

But it is the ROMANS who conceived the basic principle

of marine transport on economic dimension of shippingwhen they found out that carting a large quantity ofgrain to the empire‟s frontier 75 miles away would costmore than to ship it by sea.



more than to ship it by sea.

CODE OF HAMURRABI

In 2000 BC, Babylonian Ruler Hamurrabi codified thefollowing maritime laws on:

- Marine Collisions

- Bottomry



Bottomry

- Reimbursement for Leased Watercraft

DEVELOPMENT OF UNIVERSALMARITIME LAW

Phoenician‟s Sea Law

Code of Rhodes, which regulated Greek Commercefor a very long time

Roman Maritime Law



Roman Maritime Law

RHODIAN - ROMAN MARITIMELAW

1st Section (MARE) – Deals with the sea and concernsof public law of the sea. Mare liberium did not existyet.

2nd Section (NAVIS) – Deals with the ship andenunciates the classification of watercrafts into



enunciates the classification of watercrafts into

freighter or passenger vessels and seagoing or inlandcrafts.

3rd Section (MERX) – Deals with cargo and theadmiralty principles as known today.

4th Section (OBLIGACIONES) - Deals with theresponsibilities of ship owners and masters.

5th Section (ACTIONS) – Deals with disputesettlement arising from shipping transactions.

EVOLUTION OF MODERN LAWON MERCHANT SHIPPING

1896: Comite Maritime Internationale (CMI) organizedfor the purposed of unification of merchant marinerules.

Conference Diplomatique De Droit Maritime (Brussels) -



f p q ( )16 International Conventions and protocolsapproved, i.e. collision at sea, salvage, bill of lading,carriage of goods by sea, etc.

UN AGENCIES IN MARITME LAW

International Maritime Organization (IMO) – established the Technical Regulation of Shipping.

United Nations Conference on Trade andDevelopment (UNCTAD) – established the EconomicRegulations of Shipping.



g pp g International Labor Organization (ILO) – established

the International Merchant Labor RegulationsStandards.

UN Conferences – Established UNCLOS (1982),Geneva Conventions on the Law of the Sea(1958/1960)

REAL AND HYPOTHECARYNATURE MARITIME LAW

That which distinguishes the maritime from the civillaw and even from the mercantile law in general isthe REAL AND HYPOTHECARY nature of theformer, and the many securities of a real nature thatmaritime customs from time immemorial, the laws,



maritime customs from time immemorial, the laws,the codes, and the later jurisprudence, have providedfor the protection of the various and conflictinginterest which are ventured and risked in maritimeexpeditions. [Phil. Shipping Co. v. Vergara, G.R. No.16000, June 1, 1906]

MEANING OF REAL ANDHYPOTHECARY NATURE

The liability of the carrier in connection with lossesrelated to maritime contracts is confined to the vessel,which is hypothecated for such obligations or whichstands as the guaranty for their settlement.



NO VESSEL, NO LIABILITY RULE.

SUMMARY OF THE NATURE OFMARINE TRANSACTIONS

REAL – A vessel is essentially a personal propertybecause it is movable. But the Supreme Courtcharacterized maritime transactions as having a realnature insofar as these transactions are similar totransactions over real property with respect to



transactions over real property with respect toeffectivity against third persons which are effectedthrough registration. Registration of vessels nowlodged at MARINA.

HYPOTHECARY – The liability of the owner of thevessels is limited to the vessel itself. If he vessel sinks,

generally the liability of the owner is extinguished,although he may have other properties

EVIDENCE OF REAL NATURE OFMARITIME LAW

Limitation of the liability of the agents to the actualvalue of the vessel and the freight money; and

Right to retain the cargo and the embargo anddetention of vessel even in cases where the ordinarycivil law would not allow more than a personal



civil law would not allow more than a personal

action against the debtor or person liable. [LuzonStevodoring v. CA, 156 SCRA 169]

Aboitiz Shipping v. General AccidentFire Ins., 217 SCRA 359

Held:

The rights of vessel owner or agent under theLimited Liability Rule are akin to those of the rightsof shareholders to limited liability under ourCorporation Law



Corporation Law.

In both insolvency of a corporation and the sinking ofa vessel, the claimants or creditors are limited in theirrecovery to the remaining value of accessible assets.

Monarch Insurance v. CA,333 SCRA 71

The Limited Liability Rule in Maritime Law has notbeen rendered obsolete by the advances in moderntechnology which have considerably lessen the risksinvolved in maritime trade, and the courts continuet l th id l i i t



to apply the said rule in appropriate cases.

ICTSI v. PRUDENTIALGUARANTEE, 320 SCRA 244

Held:

As both nature of the function and the place of theirperformance, an arrastre operator‟s service areclearly not maritime in character.

The legal relationship between an arrastre operator



The legal relationship between an arrastre operator

and a consignee is akin to that between awarehouseman and a depositor.

PROVISIONS ON LIMITEDLIABILITY RULE

Art. 587, CoC: The ship agent shall also be civilly

liable for the indemnities in favor of third personswhich may arise from the conduct of the captain inthe care of the goods which he loaded on the vessel;but he may exempt himself therefrom by abandoningthe vessel with all her equipment and the freight it

h d d i h



may have earned during the voyage. Art. 590: The co-owners of the vessel shall be civilly

liable in the proportion of their contribution to thecommon fund for the results of the acts of thecaptain, referred to in Art. 587.

Each co-owner may exempt himself from this

liability by the abandonment, before a notary, of thatpart of the vessel belonging to him

Art. 643 (Ibid): If the vessel and her cargo should

be totally lost, by reason of capture or wreck, allrights shall be extinguished, both as regards thecrew to demand any wages whatsoever, and asregards the ship agent to recover the advancesmade



made. If a portion of the vessel or of the cargo, or both,

should be saved, the crew engaged on wages,including the captain shall retain their rights onthe salvage, so far as they go, on the remainderof the vessel as well as on the amount offreightage of the cargo saved;

But sailors who are engaged on shares shall not have any

right whatsoever on the salvage of the hull, but only onthe portion of the freightage saved. If they should haveworked to recover the remainder of the shipwreckedvessel they shall be given from the amount of the



y gsalvage an award in proportion of the efforts made andto the risks encountered in order to accomplish thesalvage.

Art. 837 (Ibid): The civil liability incurred by theshipowners in the cases prescribed in this section, shallbe understood as limited to the value of the vessel withall her appurtenances and freight.

N t A t 837 li t lli i l



Notes: Art. 837 applies to collision cases only.

EXCEPTIONS

Where the injury or death to a passenger is due eitherto the fault of the ship owner or to theCONCURRING NEGLIGENCE OF THE SHIPOWNER AND THE CAPTAIN.

Where the vessel is insured.



Where the vessel is insured.

In workmen‟s compensation claims. Where vessel is partially lost.

Liability on repairs made prior to the loss of thevessel.

Foreclosure of mortgage on the ship

SHIPOWNER‟S FAULT

The well-entrenched rule in our jurisprudence is thata ship owner may be held liable for injuries topassengers notwithstanding the exclusively real and



p g g y

hypothecary nature of Maritime Law, if fault can beattributed to the ship owner. [Negros Navigation v.CA, 281 SCRA 534]

CONCURRENT NEGLIGENCE OFSHIPOWNER & CAPTAIN

Although the ship agent is liable for the negligent actof the captain in the care of goods loaded on thevessel, this liability can be limited throughabandonment of the vessel, its equipment andfreightage as provided in Art. 387.



g g p

Nonetheless, there are exceptional circumstanceswherein the ship agent could still be held answerabledespite the abandonment as where loss or injury wasdue to fault OF SHIPOWNER AND CAPTAIN.

Manila Steamship v. Abdulhman,100 Phil. 32

Facts:

Abdulhaman bought a submarine chaser of WWIIvintage, which he converted into a passenger ship.The chaser, being at fault collided with a new steelvessel of Manila Steamship and it sank. ManilaSteamship sued to recover damanges as Adbulhaman



Steamship sued to recover damanges as Adbulhaman

had other properties. The latter put up the defense that his liability was

extinguished by the loss of the chaser.

It was proven that the chaser, being of a certaintonnage, should have been commanded by onehaving qualifications of captain and not a merepatron.

Held:

Abdulhaman is still liable. The hypothecary nature willnot apply when the ship owner is personally at fault dueto:

- Lack of proper equipment; or



- Lack of proper technical training of the officers andcrew.

PARTIAL LOSS

In the event the vessel is not entirely lost, thehypothecary nature of the maritime transactionunder Art. 837 of the Code of Commerce will notapply, unless the shipowner or agent abandons thevessel [Luzon Stevedoring v CA 156 SCRA 169]



vessel. [Luzon Stevedoring v. CA, 156 SCRA 169]

REPAIRS ON VESSEL

The limited liability rule in maritime law does notapply in case where the liability was for repairs onthe vessel that was completed before her loss.[Government of P.I. v. Insular Maritime Co.. 45 Phil. 805]



LOSS COVERED BY INSURANCE

Where vessel is at fault sinks but is insure, theinsurance takes the place of such vessel.

The liability subsists but only to the extent of theinsurance proceeds.

Th ll b h h h l



The excess is still subject to the hypothecary rule.[Pedro Vazquez v. CA, 138 SCRA 553]

Abueg v. San Diego, 77 Phil. 32

Facts:

A vessel of San Diego, a shipping operator, sank andone crew member died. When the heirs of thedeceased sought compensation under the Workmen‟sCompensation Law San Diego put up the defense of



Compensation Law, San Diego put up the defense of

the hypothecary nature of maritime transactions toavoid liability.

Held:

San Diego is still liable. Workmen‟s compensation is anexception to the hypothecary nature of maritimetransactions in view of two reason, to wit:

(1) The Code of Commerce was promulgated in 1880



while the Workmen‟s Compensation Law was enacted in1925. In case of conflict, the latter prevails.

(2) Provisions on hypothecary nature of maritimetransactions contained in the Code of Commerce aregeneral provisions while that in Workmen‟s

Compensation Law are specific. In case of conflict,specific provisions of law prevail.

Loadstar Shipping v. CA,315 SCRA 339

Held:

Failure of common carrier to maintain in seaworthycondition its vessel involved in a contract of carriageis a clear breach of its duty prescribed in Art. 1755 ofthe Civil Code



the Civil Code.

The doctrine of limited liability will not apply.

ABANDONMENT OF VESSEL

Abandonment of the vessel, its appurtenances and

freightage is an indispensable requirement before theshipowner can enjoy the benefits o the limitedliability principle.

In case of collision, abandonment of the vessel is



necessary in order to limit the liability of theshipowner or the agent to the value of the vessel, itsappurtenances and freightage earned in the voyage.

Only instance abandonment is dispensed with iswhen the vessel was entirely lost. [Phil. Shipping Co.

v. Garcia, 6 Phil. 281

Protest

A written statement by the master of a vessel or any

authorized officer, attested by a proper officer or anotary, to the effect that damages has been sufferedby the ship.

Protest is required under the Code of Commerce in



the following cases:1. Arrival under stress

2. Shipwrecked

3. Gone through a hurricane or the captain believesthat the cargo has suffered damage or average

4. Maritime collisions

Admiralty Jurisdiction

RTC or MTc, depending on the amount of thedemand or claim.

Amount determines jurisdiction of the court.

The proceeding is in rem.



Chapter 7

Vessels



Vessels

Ship or vessel

Ship or Vessel - means any kind, class or type of craft

or artificial contrivance capable of floating in water,designed to be used, or capable of being used, as ameans of floating in water transport in the domestictrade for the carriage of passengers or cargo, or both,utili ing its own moti e power or that of another



utilizing its own motive power or that of another.[R.A. 9295]

Prescriptive Period on Vessels

Acquisitive prescription: Good faith – 4 years; badfaith – 8 years. Prescription doesn‟t run in favor thecaptain since he holds the position that of a trustee.[Art. 573]

Right of pre-emption and legal redemption available



Right of pre emption and legal redemption available

to co-owners to be exercised within 30-days fromsale of the vessel. [Art. 575]

Rules on Co-ownership of Vessel

Co-ownership of vessel gives rise to a partnership

ipso jure . No agreement is needed before apartnership is created. {Note: This is one instance of a partnership coming into existence by mereoperation of law. Another instance when there iscommingling of similar good of fungible nature.}



Majority may perform acts of administration but actsof ownership require the concurrence of all the co-owners.

Majority is determined in accordance to the following:1 vote given to the co-owner who contributed the

least capital, 2 votes to the one who gave double, etsequitur.

Importance of the Definition

The word „vessel‟ (Spanish: buque or nave) was not

intended to include all ships, craft or floatingstructures of every kind without limitation, and theprovisions of that section should not be held toinclude minor craft engaged only in river and baytraffic.



The word „nave‟, which is used inter-changeably with „buque‟ means a “SHIP, A VESSEL WITH DECKS ANDSAILS. A deck is not a feature of the smallest typesof watercraft.

Such type of watercraft is not contemplated in Art.835 requiring protest in case of collision

. [Lopezv.Dureolo, 52 Phil. 229]

It is therefore clear that a passenger on a boat like

the Jison, in the case before us, is not required tomake protest as a condition precedent to his right of action for the injury suffered by him in the collisiondescribed in the complaint. Art. 835 does not apply.

Nevertheless, under Article 836, it is provided that



, , p

want of protest cannot prejudice a person not in acondition to make known his wisher. An individual who has suffered a compound fracture

of the femur and received other physical injuriessufficient to keep him in a hospital for many months,cannot be supposed to have been in a condition tomake protest within 24-hours of such occurrence.

Peculiar nature of vessels (Philippine

Refining Co. v. Jarque, G.R. 41506, Mar.25, 1935)

Vessels are considered personal property under civil

law. Similarly under the common law, vessels arepersonal property although referred to as a peculiarkind of personal property.

Since the term personal property includes vessels



Since the term personal property includes vessels,

they are subject to mortgage agreeably to theprovisions of the Chattel Mortgage Law (Act No.1508, Sec. 2).

The only difference between a chattel mortgage of avessel and of other personalty is that it is not nownecessary for a chattel mortgage of a vessel to benoted in the register of deeds, but it is essential thata record of documents affecting title to a vessel beentered in the record of the Collector of Customs



entered in the record of the Collector of Customs(now with MARINA by virtue of M.C. 90) at the portof entry (now at the port of registry, in case of coastwise vessel).

Otherwise, a mortgage on a vessel is generally like

other chattel mortgages as to its requisites andvalidity.

Mortgage of Ship (P.D. 1521)

Sec. 3. Mortgage of Vessel of Domestic Ownership;

records – (a) No mortgage is valid in respect to such vesselagainst any person other than the mortgagor, his heiror assign, and a person with actual notice thereof unless recorded with the PCG (now MARINA)



( )

Sec. 4. Preferred Mortgages: Mortgage is preferredbased on the date of recording if:- It is recorded with PCG (MARINA)- An affidavit in good faith is filed together with therecord of mortgage.

- No waiver of preferred status.

Suit in Admiralty(Sec. 10. P.D. 1521)

Preferred mortgage constitutes as a lien upon the

vessel. In case of default, the mortgage lien may beenforced by SUIT IN REMAINING ADMIRALTY,wherein the vessel itself may be made a partydefendant and be arrested in accordance with Sec.11.



Original jurisdiction: CFI (now depending on theamount of the claim) Requirement of notice by publication and actual

notice to:- the master or other ranking officer, or caretaker of

the vessel; and- Any person who has recorded a notice of claim of an un-discharged lien upon the vessel.

Arrest of Vessels[Sec. 11, P.D. 1521]

Upon filing of petition for judicial foreclosure of a

Preferred Ship Mortgage or immediately thereafter, Applicant may apply ex-parte for an order for the

arrest of the mortgaged vessel. Judge to immediately issue arrest order, if it is made

to appear by affidavit of the applicant, or of some



to appear by affidavit of the applicant, or of some

other person who personally know the facts that adefault in the mortgage has occurred and thatapplicant files a bond executed to the adverse partyin an amount to be fixed by the judge, not exceedingthe applicant‟s claim, conditioned that the latter willpay all the costs which may be adjudged to theadverse part and all damages sustained.

Procedure in discharge of arrest(Sec. 12, P.D. 1521)

File counter-bond in an amount double of the claim;or

Apply for order on the ground of improper orirregular issuance of order.



Extrajudicial Foreclosure of Vessel(Sec. 14, P.D. 1521)

Applicable provisions in Chattel Mortgage Law

govern. For purpose of taking possession of the vessel, the

foreclosing creditor to secure from RTC Judge of theprovince where the vessel may be our or where thecreditor or debtor resides, an order for the arrest or



seizure of the vessel. Upon issuance of the order, the sheriff to

immediately take possession of the vessel for thepurpose of foreclosure and sale.

Foreign Ship Mortgage(Sec. 15, P.D. 1521)

Preferred mortgage in foreign ship includes those

duly recorded by virtue of Sec. 4 (supra) and:

Preferred mortgage lien in foreign ship is subordinateto maritime liens for repairs, supplies towage, use of drydock or marine railway, or other necessaries



y y,

performed or supplied in the Philippines.

How proceeds of sale disposed(Sec. 17, P.D. 1521)

Preferred mortgaged lien takes priority over all claims

against the vessel. Exceptions:1. Expenses and fees allowed and costs taxed by the

court and taxes due to the government.2. Crew‟s wages. 3 General average



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.

7. Preferred mortgaged registered prior in time.

If proceeds of the sale is not sufficient to pay all

creditors included in one number or grade, theresidue shall be divided among them pro rata.

All credits not paid, whether fully or partially shallsubsist as ordinary credits enforceable by personal



action against the debtor.

Suit in Personam in Admiralty uponDefault (Sec. 18. P.D. 1521)

Allows the creditor to bring suit in personam in

admiralty against the mortgagor for the amount of the outstanding mortgage indebtedness even if secured by the vessel.

If the debt is also secured by other realty or



y y

personalty, the creditor may proceed upon the same.

Maritime Lien for Necessaries(Sec. 21, P.D. 1521)

Repairs, supplies, towage, use of drydock or marine

railway, or other necessaries were furnished to thevessel.

The work is done on orders of the ship owner orperson authorized by the owner.



p y

Such credit must be alleged or proved that it wasgiven to the vessel.

Enforceable by suit in rem.

MARINA M.C. 100 (Guidelines onAnnotation/Cancellation of Mortgage)

Documentary requirements:

Letter of Intent & Duly accomplished applicationform;

Duly notarized mortgage contract;

Proof of payment of documentary stamp tax with the



Proof of payment of documentary stamp tax with theBIR; and

Original copy of CO and CVR.

Note: The annotation of mortgage to be reflected at theback of the CVR and CO.

Other applicable MARINA regulationson vessels

M.C. No. 48 – Measure to control overcrowding/

overloading and scalping of tickets in the interislandvessels. M.C. No. 72 – Guidelines on the Implementation of at

least 10-minute film on safety features of eachspecific passenger/passenger-cargo vessels as



amended by M.C. No. 136. M.C. No. 83 – Guideline on the issuance of

endorsement certificates in accordance with theSTCW (Standards for Training, Certification andWatchkeeping) 1978 Convention.

M.C. No. 89 – Implementing guidelines for vesselsafety regulations as amended by 89-B.

M.C. No. 114 – Preventive Safety Measure and other

concerns M.C. No. 123 – Wearing of lifejackets during boarding

and/or prior to departure by all passenger vesselswith open deck accommodation.



M.C. No. 135 – Rules on the implementation of voicetape on the safety features of a vessel.

M.C. No. 143 – Rules and regulations to implementthe International Safety Management (ISM) Code inDomestic Shipping ( M.C. No. 159 for NSM).

Republic Act 9295



The Domestic ShippingDevelopment Act of 2004

State policies on shipping(Sec. 2)

(a) promote Filipino ownership of vessels operated

under Philippine flag;

(b) attract private capital to invest in the shippingindustry by creating a healthy and competitiveinvestment and operating environment;



(c) provide necessary assistance and incentives forthe continued growth of the Philippine domestic

merchant marine fleet;

(d) encourage the improvement and upgrading of the

existing domestic merchant marine fleet and Filipinocrew to meet international standard;

(e) ensure the continued viability of domesticshipping operations; and

(f) encourage the development of a viable



(f) encourage the development of a viableshipbuilding and ship repair industry to support theexpansion and modernization of the Philippinedomestic merchant marine fleet and its strictadherence to safety standards which will ensure theseaworthiness of all sea-borne structures.

Important terms in R.A. 9295 & IRR

Domestic Shipping - means the transport of

passengers or cargo, or both, by ships duly registeredand licensed under Philippine law to engage in tradeand commerce between Philippine ports and withinPhilippine territorial or internal waters, for hire orcompensation, with general or limited clientele,



p g

whether permanent, occasional or incidental, with orwithout fixed routes, and done for contractual orcommercial purposes.

Domestic Trade - means the sale, barter or exchange

of goods, materials or products within thePhilippines.

Domestic Ship Operator" or "Domestic Ship Owner" -

means a citizen of the Philippines, or a commercialpartnership wholly owned by Filipinos, or acorporation at least sixty percent (60%) of the capitalof which is owned by Filipinos, which is dulyauthorized by the Maritime Industry Authority(MARINA) to engage in the business or domestic



( ) g gshipping.

Shipper - means any person, partnership orcorporation who shall procure for itself the servicesof a domestic ship operator for the carriage of itscargo in the domestic trade upon payment of proper

compensation.

Certificate of Public Convenience - means the license

or authority issued by MARINA to a domestic shipoperator to engage in domestic shipping. Cargo Handling Equipments - means any machinery

gear or equipment used by the ship operator or aduly authorized and licensed port operator to serviceor handle cargo on board the vessel at the pier or



or handle cargo, on board the vessel, at the pier, orin the terminal or container yard such as, but notlimited to, cranes, forklifts, top lift, stacker, tractorheads, containers, pallet boards, and the like,including all spare parts, replacement parts,appurtenances, accessories, articles, supplies, and

material thereof.

Shipbuilding - means the design, construction,

launching and outfitting of all types of ships andwatercraft;

Ship repair - means the overhaul, refurbishment,renovating, improvement, or alternation of the hull,machineries equipment outfits and components of



machineries, equipment, outfits and components of all types of ships;

Shipyard - means the shipbuilding or repair facilitieswhich have the capability to lift vessels above thewaterline in order to effect ship work vessels,

appendages, structure, machinery and equipment.

Investment incentives to domesticshipping industry (Sec. 4)

(a) Exemption from value-added tax on the

importation and local purchase of passenger and/orcargo vessels of one hundred fifty (150) tons andabove, including engine and spare parts of saidvessels.

Vessels to be imported must comply with the age



limit requirement, at the time of acquisition countedfrom the date of the vessel‟s original commissioning,as follows: 1) For passenger and/or cargo vessels,the age limit is fifteen (15) years old, 2) For tankers,the age limit is ten (10) years old, and 3) For high-speed passenger craft, the age limit is five (5) years

old;

(b) Exemption from value-added tax on the

importation of life-saving equipment, safety andrescue equipment and communication andnavigational safety equipment, steel plates, and othermetal plates including marine-grade aluminum plates,used for transport operations.



CONDITIONS IN THE GRANT OF (a) & (b): Not manufactured domestically in sufficient quantity,

of comparable quality and at reasonable prices;

Directly imported by a MARINA-registered domestic

shipping operator;

Reasonably-needed and will be used exclusively by

the registered domestic shipping operators in itstransport operations;

Approval of a MARINA was obtained prior to theimportation of said articles;



Valid up to ten (10) years from effectivity.

Deregulation of the DomesticShipping Industry (Sec. 8)

Domestic ship operators authorized to establish their

own domestic shipping rates provided that effectivecompetition is fostered and public interest is served.

MARINA shall monitor all shipping operations andexercise regulatory intervention where it is



established, after due process that public interestneeds to be protected and safeguarded.

Safety Standards(Sec. 9)

All vessels shall at all times be in seaworthy

condition, properly equipped with adequate life-saving, communication, safety and other equipment,operated and maintained in accordance with thestandards set by MARINA, and manned by duly



licensed and competent vessel crew. The MARINA given the power to inspect vessels and

all equipment on board vessels to ensure compliancewith safety standards.

Jurisdiction of MARINA(Sec. 10)

Register vessels;

Issue certificates of public convenience, or anyextensions or amendments thereto, authorizing theoperation of all kinds, classes and types of vesselsin domestic shipping: Provided, That no suchcertificate shall be valid for a period of more than



twenty-five (25) years; Modify, suspend or revoke at any time, upon notice

and hearing, any certificate, license or accreditationit may have issued to any domestic ship operator;

Establish and prescribe routes, zones of areas of

operations of domestic ship operators;

Require any domestic ship operator to provide

shipping services to any coastal area, island orregion in the country where such services arenecessary for the development of the area, to meetemergency sealift requirements, or when publicinterest so requires;



Set safety standards for vessels in accordance withapplicable conventions and regulations;

Require all domestic ship operators to comply with

operational and safety standards for vessels set byapplicable conventions and regulations, maintain itsvessels in safe and serviceable condition, meet thestandards of safety of life at sea and safe manningrequirements, and furnish safe, adequate, efficient,



reliable and proper service at all times;

Inspect all vessels to ensure and enforce compliancewith safety standards and other regulations;

Ensure that all domestic ship operators shall have

the financial capacity to provide and sustain safe,reliable, efficient and economic passenger or cargoservice, or both;

Determine the impact which any new service shallhave to the locality it will serve;



y ;

Adopt and enforce such rules and regulations whichwill ensure compliance by every domestic shipoperator with required safety standards and otherrules and regulations on vessels safety;

Adopt such rules and regulations which ensure the

reasonable stability of passengers and freight ratesand, if necessary, to intervene in order to protectpublic interest;

Hear and adjudicate any compliant made in writinginvolving any violation of this law or the rules and



regulations of the Authority; Impose such fines and penalties on, including the

revocation of licenses of, any domestic shipoperator who shall fail to maintain its vessels insafe and serviceable condition, or who shall violateor fail to comply with safety regulations;

Investigate any complaint made in writing against

any domestic ship operator, or any shipper, or anygroup of shippers regarding any matters involvingviolations of the provisions of this Act;

Upon notice and hearing, impose such fines,suspend or revoke certificates of publicconvenience or other license issued, or otherwise



,penalize any ship operator, shipper or group of shippers found violating the provisions of this Act;and



Prohibited Acts and Practices of Domestic Ship Operators (Sec. 16)

Operate without a valid certificate of public convenience,

accreditation or other form of authority required by this Act; Refuse to accept or carry any passenger or cargo without

just cause;

Fail to maintain its vessels in safe and serviceable condition,or violate safety rules and regulations;

Fail to obtain or maintain adequate insurance coverage;



q g ;

Fail to meet or maintain safe manning requirements; and

Such other acts which the MARINA shall determine, afterdue notice and hearings, to be detrimental or prejudicial tothe safety, stability and integrity of domestic shipping.

CPC Issuance (Sec. 2, Rule IV, IRR of R.A. 9295 on Deregulation)

Power of MARINA to issue CPC or any

amendments/extensions/renewals.Requirements:

Economic and beneficial effect which the proposedservice shall have to the port, province or region



which it proposes to serve; and Financial capacity of the domestic

shipowner/operator to provide and sustain safe,reliable, adequate, efficient and economical service inaccordance with the standards set by government

regulations.

Amendment to CPC(Sec. 3, Rule IV IRR)

Permanent Addition or Deletion of a route/port/link;

or, Permanent Addition/ Reduction/ Replacement of

Ship/Fleet or Change in Ship‟s Name; or,

Permanent Addition/ Reduction/ Replacement of



Ship/Fleet or Change in Ship‟s Name; or, Change in name of the

entity/corporation/partnership/cooperative.

Validity of CPC

(Sec. 5, Rule IV IRR)

Years of Operation Validity of CPC

More than 10 years 25 years



More than 5 years up to 10years

15 years

5 years and below 10 years

Qualification Requirements(Sec. 6, Rule IV, IRR)

Must be a MARINA-registered shipowner/operator

per MARINA MC 79/79-A or their subsequentamendments. Must be financially capable to provide and sustain

safe, reliable, adequate, efficient and economicalservice in undertaking the proposed shipping



service.Formula on Financial Capability: Capitalization = (Equity – fixed assets net of long-term liabilities) + totaldepreciation

Must provide a service that has economic and

beneficial effect on the port, province or region itproposes to serve.

Jurisdictional Requirements(Sec. 8, Rule IV, IRR)

Affidavit of publication with the newspaper

clipping; Copy of the whole newspaper where the Order was

published;

Photographs showing proof of the required posting

f d



of Order.

Safety Standards(Sec. 1, Rule VI, IRR)

All ships shall, at all times, be in seaworthy condition

as to their hull and machinery Properly outfitted with adequate navigational aids

and equipment, firefighting, life-saving,communication, and other safety

li / i



appliances/equipment. Operated and maintained in accordance with

prescribed standards, and manned by duly licensedand competent ship crew.

Rates(Sec. 1, Rule VIII, IRR)

Domestic shipowners/operators are authorized to

establish/fix their own domestic shipping rates,passenger or cargo rates or both.

Limitation: Effective competition is fostered andpublic interest is served.

Eff i i 7 l d d f h d f



Effectivity: 7 calendar days from the date of publication.

Conditions in Fixing Rates(Sec. 2, Rule VIII, IRR)

Shipowners/operators with Entity/Company CPC to

submit under oath with the MARINA their Notice forthe adoption of initial/ subsequent upward ordownward adjustment of deregulated rates in aprescribed form.

Th ti h ll i di t th th f



The notice shall indicate, among others, the name of covered ship(s), authorized route(s)/link(s), rate(s)per route/link and the grounds for the adjustment.

Publication Requirement of Adjusted Rates

The notice shall be published in any of the five (5)

major newspapers of national circulation, if theroute(s)/area(s) of operation to be served is nationaland/or inter-regional in scope.

If the route(s)/area(s) to be served is local or intra-

i l i bli ti i f l l



regional in scope, publication in a newspaper of localcirculation is sufficient.

And, posting of the notice in in all conspicuous placesat the affected port(s), vessel(s), company premises,

passenger terminals and ticketing office(s).

Instances Warranting MARINAIntervention (Sec. 4, Rule VIII, IRR)

Monopoly of a route/link, lack of effective

competition in a route/link, and practices whichconstitute combinations in restraint of trade.

Any complaint against the rates charged and/orservices rendered by the shipowners/operatorsprovided sufficient basis/justification is submitted.

A d fi di / d ti lt



Any adverse findings/recommendations as a resultof monitoring activities undertaken by the MARINA.

Other analogous instances.

Compulsory Insurance Coverage(Sec.1, Rule IX, IRR)

(1) Not less than Php 200,000.00 per manifested

passenger; (2) Adequate insurance coverage for cargo, in an

amount to be computed in accordance with existinglaws, rules and regulations, and the total amount of such coverage shall be equivalent to the total cargocapacity being offered by the vessel.



(3) If a domestic shipowner/operator should offerboth passenger and cargo service, then the totalinsurance coverage shall be in the total sumequivalent to that stipulated in paragraphs (1.1)and (1.2) of this Section.

Amount of Insurance If Operatingmore than (1) ship

The amount equivalent to the total authorized

number of passengers, or total cargo capacity, orboth, of the largest operating ship.

But must not exceed the value of such ship.



Prohibited Acts(Sec. 1, Rule XII, IRR)

Operating without a valid certificate of public

convenience, accreditation or other form of authority. Refusal to accept or carry any passenger or cargo

without just cause, except for tramp operations.

Failure to maintain the vessels in safe andserviceable condition, or violation of the safety rules

d l ti



and regulations.

Failure to obtain or maintain adequate insurancecoverage.

Failure to meet or maintain safe manning

requirements.

Failure to submit the required Quarterly Report and

an audited Annual Report of Operations andFinances, attaching the copy of the Official Receipt(OR) of Quarterly and Monthly Common Carriers TaxPayments to the Bureau of Internal Revenue.

Othe det imental o p ej dicial to the safet



Other detrimental or prejudicial to the safety,stability and integrity of domestic shipping.

Those prohibited acts defined in existing MARINA Circulars.

Powers of MARINA(Rule XIV, IRR)

Power to Investigate

Power to Hear and Adjudicate

Power to Issue Summons



Rules on Appeals to MARINA RegionalOffices’ CPC Decisions (Rule XV, IRR)

Order, ruling, decision or resolution rendered by

MARINA Regional Office relating to CPC application MR – 15 days from receipt;

If denied, appeal to Administrator – 15 days fromreceipt.

If denied by MARINA Administrator:



If denied by MARINA Administrator:- ADMINISTRATIVE APPEAL to the MARINA Boardwithin 15 days from receipt; or

- Special Civil Action on Certiorari with CA within 30days from receipt.

All other Decisions

MR – 15 days from receipt;

If denied, appeal to MARINA Administrator – 15 daysfrom receipt.

If denied by MARINA Administrator: ADMINISTRATIVE APPEAL to the MARINA Board

within 15 days from receipt



within 15 days from receipt.

Perfection of Appeal

File a Notice of Appeal with the MARINA

Administrator and the concerned CO/MRODirector/OIC.

Copy to be served upon the adverse party.

Within 15 days from receipt of the appealed from

decision etc



decision, etc.

Payment of Docket Fee of P1,000.

Temporary Take-Over of Operations

(Sec. 1, Rule IX, IRR)

In times of national emergency;

When the public interest so requires; Under reasonable terms prescribed by the Flag state; Flag state may temporarily take over or direct the

operations of any vessel engaged in domestic tradeand commerce or prescribe its rates or routes of

operation



operation. Immediately upon the cessation of the emergency,

the State shall immediately reinstate to the domesticshipowner/operator the operation of the ship underthe same terms and conditions existing prior to the

occurrence of the emergency.

Chapter 8

Persons Who Take Part In Maritime

Commerce



Commerce

Ship owner and Ship agent

Ship owner – the person primarily liable for damages

sustained in the operation of vessel. Ship agent – the person entrusted with provisioning

of the vessel, or who represents her in the port inwhich she happens to be.

Both are civilly liable for the acts of the captain and



Both are civilly liable for the acts of the captain andfor the obligations contracted by the him to repair,equip, and provision the vessel. [Art. 586, Code of Commerce]

Domestic Shipowner/operator

A citizen of the Philippines, or a commercial

partnership wholly owned by Filipinos, or acorporation at least sixty percent (60%) of the capitalof which is owned by Filipinos, which is dulyaccredited by the MARINA under MemorandumCircular No. 79/79-A or their subsequentamendments to engage in the business of domestic

shipping which may include cooperative or



shipping, which may include cooperative orassociation duly registered with relevant governmentagency. [IRR, R.A. 9295]

Captain and Masters

Captain – those who govern vessels that navigate the

high seas or ships of large dimensions andimportance, although they may be engaged incoastwise trade.

Masters – those who command smaller ships

engaged exclusively in the coastwise trade



engaged exclusively in the coastwise trade.Note: For purposes of maritime commerce, both have

the same meaning, i.e. they command ships.

Powers & Functions of Captains(Masters)

Nature of his position: confidential and managerial.

3 distinct roles he performs:(1) As general agent. If he is also a co-owner, hisagency becomes one coupled with interest. He maynot be dismissed if he is a co-owner or thepartnership agreement stipulates as a condition asship captain [see Art 602 & 606 -607];



ship captain [see Art. 602 & 606 -607];

(2) As commander and technical director of thevessel; and

(3) As representative of the country under whose flag

he navigates.

Vessel Pilot

A person duly qualified, and licensed, to conduct a

vessel into or out of ports, or in certain waters. In a broad sense, the term „pilot‟ includes:

- Those whose duty it is to guide vessels into or outof ports, or in particular waters; and

- Those entrusted with navigation of vessels on the



- Those entrusted with navigation of vessels on thehigh seas.

Compulsory pilotage is enforced in the Port of Manila,Port of Cebu, Port of Tacloban, among others.

Pro Hac Vice Nature of Position of Pilot

Under English and American authorities, generally

speaking, the pilot supersedes the master for thetime being in the command and navigation of theship, and his order must be obeyed in all mattersconnected with her navigation.

He becomes master pro hac vice and should give alldirections as to speed, course, stopping andreversing anchoring towing and the like



reversing, anchoring, towing and the like. And when a licensed pilot is employed in a place

where pilotage is compulsory, it is his duty to insiston having effective control of the vessel or to declineas pilot. [Far Eastern Shp., v. CA, G.R. No. 130068, Oct.

1, 1998]

Occasions When Master MayInterfere or Even Displace Pilot

When Pilot is obviously incompetent or intoxicated;

In cases of danger which pilot does not foresee; In all cases of great necessity.

To advise or offer suggestions to the pilot consideringthat he is still in command of the vessel, except so

far as her navigation is concernedT th t th i ffi i t t h d k d th t



far as her navigation is concerned. To see that there is sufficient watch on deck and that

the men are attentive to their duties, etc.

Failure on the part of the Master to comply withabove duties makes him personally liable for resulting

damage cause. [Ibid]

Liability of Pilot

Rule: a pilot is personally liable for damages caused

by his own negligence or default to the owners of thevessel and to third parties for damages sustained in acollision.

Negligence of Pilot is known as „MARITIME TORT‟

As held In Far Eastern Shipping:

In the United States the owners of a vessel are not



In the United States, the owners of a vessel are notpersonally liable for the negligent acts of acompulsory pilot, but by admiralty law, the fault ornegligence of a compulsory pilot is imputable to the

vessel and it may be held liable therefor in rem.

Where, however, by the provisions of the statute the

pilot is compulsory only in the sense that his feemust be paid, and is not in compulsory charge of thevessel, there is no exemption from liability.

Even though the pilot is compulsory, if his negligencewas not the sole cause of the injury, but thenegligence of the master or crew contributed thereto,the owners are liable



the owners are liable. But the liability in rem does not release the pilot from

the consequences of his own negligence. Therationale for this rule is that the master is not entirelyabsolved of responsibility with respect to navigation

when a compulsory pilot is in charge.

Other Officers and Crew

Deck Officer – an officer qualified in accordance with

the provision of the International Convention onStandards of Training, Certification andWatchkeeping for Seafarers (STCW) 1978, asamended, Chapter II.

Chief Engineer – a senior licensed marine engineofficer responsible for the mechanical propulsion andthe operation and maintenance of the mechanical



the operation and maintenance of the mechanicaland electrical installations of the ship.

Engineer Officer – an officer qualified in accordancewith the provision of (STCW) 1978, as amended,Chapter III.

Radio Officer –a person holding an appropriate

certificate issued and recognized by the MARINA under the provisions of the Radio regulations.

Ratings – a member of the ship‟s crew other than themaster or an officer.

Major Patron (MAP) – a marine deck officer duly



Major Patron (MAP) a marine deck officer dulyregistered and certificated to act as officer or masterof vessel of not more than 500 GT navigating in themajor coastwise trade routes within the territoriallimits of the Philippines.

Minor Patron (MIP) – a marine deck officer duly

registered and certificated to act as officer or masterof vessel of not more than 250 GT navigating withina specified body of water in the minor coastwisetrade route in the Philippines.

Marine Diesel Mechanic (MDM) – a person authorizedb MARINA to ope ate and maintain the ship‟s diesel



Marine Diesel Mechanic (MDM) a person authorizedby MARINA to operate and maintain the ship‟s dieselengines or the qualification/license to act as such.

Supercargoes – administrative officers of the ship

with duties to keep an account and record of theirtransaction. Powers and duties of the captain withregard to that part of the administration shall ceasewhen thee is a supercargo.

Supernumerary - a person who is not a regularmember of the crew but performing functions



Supernumerary a person who is not a regularmember of the crew but performing functions

appropriate to the certificate possessed.

Chapter 9Charter Party



Definition of a Charter Party

A written contract whereby the ship owner or the

ship agent leases the vessel to transport passengersor cargo for a fixed price. [Art. 652, Code of Commerce]

A contact by which an entire ship or some principalpart thereof, is left by the owner to another person

for a specified time or use. [Caltex Philippines, Inc. v.S l i i Li I 315 SCRA 709]



for a specified time or use. [Caltex Philippines, Inc. v.Sulpicio Lines, Inc., 315 SCRA 709]

National Union Fire Insurance v.Stolt-Nielsen Phil., 184 SCRA 682

Held:

Where BL has been issued covering goods shippedaboard a vessel under a charter party, and chartererremains the holder of the BL, it operates as a receiptfor the goods, and as document of title passing theproperty of the goods, but not as varying thecontract between the charterer and ship owner.

The BL becomes merely a receipt and not the



The BL becomes merely a receipt and not thecontract of carriage in a charter of the entire vessel.

Ouano vs. CA, 211 SCRA 740

Held:

Even if a charter party has a condition against sub-chartering, and the vessel was in fact sub-charteredwithout knowledge on the part of the sub-chartererof the prohibition, no cause of action arises in favorof the owner of the vessel against the sub-charterer.

Neither does such owner have any lien against thecargo of sub-charterer.



Neither does such owner have any lien against thecargo of sub charterer. Carrier has a lien on the goods only while he retains

possession of the goods

Obligation of the Charterer

Charterer, before transporting its cargo, is of no

obligation to ensure that the vessel it charteredcomplied with all legal requirements. The duty restsupon the common carrier as it is the one engaged in „public service‟. [Caltex v. Sulpicio Lines, infra]



Important Terms Used in CharterParty

Primage – the bonus to be paid to the captain after asuccessful voyage.

Demurrage – A penal clause intended to compensatethe owner of the vessel for its non-use.

Lay days – The period when the vessel will bedelayed in port for loading and unloading.

Deadfreight –The portion of the cargo under acharter not loaded It is also used as the amount



Deadfreight The portion of the cargo under acharter not loaded. It is also used as the amountrecoverable by the ship owner from the charterer forthat portion of the ship‟s capacity that the latterfailed to occupy despite the stipulation in the charterparty.

Cases on Demurrage

In its strict sense, demurrage is the compensation

provided for in the contract of affreightment for thedetention of the vessel beyond the lay time or thatperiod of time agreed on for loading and unloading of cargo and is given to compensate the ship owner forthe non-use of the vessel. [National Steel v. CA, 283

SCRA 45] D i th fi d i h t t



SC 5] Demurrage is the sum fixed in a charter party as

remuneration to the ship owner for the detention of his vessel beyond the number of days allowed by thecharter party for loading or unloading or for sailing.

[NFA v. CA, 311 SCRA 700]

NFA v. CA, 311 SCRA 700

The shipper or charter is liable for the payment of demurrage claims when he exceeds the period of loading or unloading as agreed upon or the agreedlay days. The period for such may or may not bestipulated in the contract. A charter party may eitherprovide for a fixed lay days or contain general orindefinite words such as „customary quick dispatch‟ or

„as fast as the steamer can load‟. C t i k di t h i li th t l di d



Customary quick dispatch implies that loading andunloading of the cargo should be within a reasonableperiod of time. Due diligence should be exercisedaccording to the customs and usages of the port or

ports of call.

The circumstances obtaining at the time of loadingand unloading are to be taken into account.

When the provision is for „demurrage/dispatch:NONE‟ it will be deemed a waiver of the right to claimdemurrages.

Delay in loading or unloading, to be deemed asdemurrage, runs against the charterer as soon as thevessel is detained for an unreasonable length of timef h l f h l b l bl



gfrom the arrival of the vessel because no availableberthing space was provided for the vessel due to thenegligence of the charterer or by reason of thecircumstances caused by the fault of the chartere.

Keng Hua Paper Products v. CA, 286SCRA 257

Held:

A claim for demurrage by carrier involves anobligation NOT ARISING from a loan or forbearanceof money. The applicable interest rate is 6% P.A.pursuant to Art. 2209, NCC.

When the BL does not specify the demurrageamount, and the total amount claimed by the carrierincreased as the days went by, the total amount



y y,demanded cannot be deemed to have beenestablished with reasonable certainty until the trialcourt rendered its judgment. Hence, the 6% is to becomputed from the date of the trial court‟s decision

imposing demurrage charges against the consignee.

Kinds of Charter Party

Contract of Affreightment – one whereby the owner

of the vessel leases a part or all of its space to haulgoods for others. It is a contract for special servicesto be rendered by the ship owner. The ship ownerRETAINS the possession, command and navigation of the ship, the charterer merely having use of the

space in the vessel in return for his payment.B b t D i Ch t h th hi



p p y Bare-boat or Demise Charter – where the shipowner

turns over possession of his vessel to the charterer,with the latter undertaking to provide the crew,victuals, supplies and fuel during the term of the

charter. Charterer is owner PRO HAC VICE.

Two Classes of Contract of Affreightment

Voyage Charter –The vessel is leased to the

chartered for a single voyage only; Time Charter – The vessel is leased for a fixed period

of time.



Substantive Provisions Relating toCharter Party

If charterer‟s cargo is not sufficient to fill up 3/5 of the capacity of the vessel, carrier has the right tounload the cargo and put it on a smaller vessel at theexpense of the charterer. If cargo exceeds 3/5 of thecpacity, the carrier cannot exercise the right. [Arts.670 & 671, CoC]

If vessel has been chartered in whole by one party,

the owner cannot receive the cargo of any otherperson as the charter party becomes an exclusive



g yperson as the charter party becomes an exclusivecontract. [Art. 672]

The owner of the vessel is liable to the charterer fordamages in case the captain unduly delays the

voyage. [Art. 673]

If charterer brings more than that agreed upon, thecarrier may accept the increase in cargo and demandincrease of freightate provided the vessel is notoverloaded. [Art. 674]

If vessel has been chartered to load cargo in anotherport and upon arrival in that port there is no cargodelivered, the captain has two options:

a) Look for other cargo; or



) g ;b) After expiry of lay days there is still no cargo, thecaptain should file a marine protest and return tohome port in full ballast. The charterer should payfreightage in full. [Art. 675]

No right to freightage if charterer can prove that the

vessel is not in condition to navigate. [Art. 676] Charter may sub-charter where there is no express

prohibition. [Art. 679]

Charterer who cannot fill the vessel is liable for fullfreightage. [Art. 680]

Charterer is liable for damages if loaded cargo



C a e e s ab e o da ages oaded a gosubjects the vessel to forfeiture or confiscation.Under Art. 356, carrier can open the packages of shipper to find out whether they contain items which

may subject the vessel to forfeiture. [Art. 681]

If merchandise should have been shipped for

purpose of illicit commerce, and were taken on boardwith knowledge of the person from whom the vesselwas chartered or of the captain, the captain is jointlyliable with the ship owner for all the losses whichmay cause the other shippers. [Art. 682]

Where the vessel is in need of repairs, chartere mustwait until vessel is repaired [Art 683]



wait until vessel is repaired. [Art. 683]

Before beginning of the trip, charterer may unloadthe cargo by paying ½ of the freightage. [Art. 685 inrelation to Art. 688]

Charterer is under obligation to pay the freightage

after the discharge of the cargo. [Art. 686] Charterer and shippers cannot abandon the cargo

unless it consist of liquids and ¾ leaks out due toinherent defect of the cargo and with not more than

¼ remaining in the container. [Art. 687]



Other rules affecting charter party

and cargo

If merchandise sold to make necessary repairs,

charterer shall still pay for the freightage. [Art. 659] If merchandise is jettisoned, lost at sea or seized by

pirates, no obligation to pay freightage. Consideredas general average. [Arts. 660 & 661]

Merchandise damaged due to inherent defect: payfull freightage [Art 663]



full freightage. [Art. 663]

Where payment is based on weight and the cargo

increases in weight during the voyage, the charterermust pay the increase. [Art. 664]

Cargo carried is subject to retaining lien by the shipowner. Retaining lien – while in possession; Carrier‟slien – subsists up to 30 days from date of release of cargo. [Arts. 665 - 667]



Valid Rescission By Charterer of

Charter Party (Arts. 688 – 690, CoC)

Before loading by paying ½ of the freightage agreedupon. The consent of ship owner is NOT NECESSARY.Mere notice to him is sufficient. {Note: This is the 1st distinction between charter party and in ordinarylease. In lease, none of the parties may unilaterallycancel the contract without paying the fullconsideration plus damages};

When the vessel is not up to the capacity agreedupon or the flag under which she sails differs from



upon or the flag under which she sails differs fromthat agreed upon. No obligation to pay thefreightage.

When the vessel is not place at the disposal of the

charterer. No obligation to pay the freightage.

When the vessel returns due to pirates or to bad

weather and charterer decides to unload. He mustpay the full freightage.

When the vessel returns for repairs. If repairs takeless than 30 days, charterer must pay in full the

freightage; if it exceeds 30 days, he must pay thatportion of the freightage proportionate to the



portion of the freightage proportionate to thedistance covered.

Total Rescission by the Ship owner

(Art. 689)

When the charterer fails to load the vessel and laydays have expired. In this case, charterer is underobligation to pay ½ of the freightage.

When the owner sells the vessel and the new owner,despite knowledge of the charter party, decides toload the vessel with his own cargo. There is noobligation on the part of the ship owner to

compensate the charterer. But if the new owner hasno cargo to load he must respect the charter party



no cargo to load, he must respect the charter party.{Note: This is the 2nd distinction between charterparty and in ordinary lease. In ordinary leasecontract, if the buyer of the object of lease was

aware of the lease, he must respect the contract.}



Chapter 10

Bottomry & Respondentia



Concepts of Bottomry &

Respondentia

Bottomry: A maritime 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 ) assecurity, with the stipulation that if the ship is lostduring the voyage or during the limited time on

account of the perils enumerated, the lender shalllose his money.



y

Respondentia: A maritime contract where it is thegoods, or some part thereof, are hypothecated assecurity for a loan, the repayment of which is

dependent upon maritime risks.

Distinguished from Simple Loan

Firstly, in bottomry & respondentia, rate of interest isnot subject to the Usury Law on account of theextraordinary risks involved while in simple loan, therate of interest must not exceed the ceiling fixed bythe Usury Law (note: read now as unconscionable).

Secondly, in the former, there must necessarily be amarine risk, the existence of which must be dulyestablished while there is no need for such risk underthe latter



the latter. Thirdly, in the former, it must be executed in

accordance with form and manner required in theCode of Commerce while in the latter, the formal

requisites on contract apply.

Fourthly, loan on bottomry or respondentia must berecorded in the registry of vessels in order to bindthird persons while no such registration is required insimple loan.

Lastly, in the former, preference is extended to thelast lender if there are several lenders upon the

theory that were it not for the last lender, then theprior lenders would not have benefited from the



p o e de s ou d ot a e be e ted o t epreservation of the security. Whereas in the latter,the first lender, as a general rule, enjoys preferenceover subsequent ones. [Art. 730, CoC]

Characteristics/Common Elements

of Bottomry & Respondentia

Exposure of security to marine peril. [Art. 732]

Obligation of debtor conditioned only upon the safearrival of the security at the point of destination.



Who May Contract Bottomry or

Respondentia

Bottomry: General rule – only the owner. If owner is

absent – the captain. [Art. 728] Respondentia: only the owner of the cargo.



Hypothecary Nature of Bottomry &

Respondentia (Art. 731)

General Rule:

The loss of the security, i.e. vessel in bottomry orcargo in respondentia, extinguishes the obligation.

Exceptions:

Due to inherent defect (cargo);

Due to barratry on the part of the captain, i.e.malfeasance;



Due to fault or malice of borrower;

Vessel was engaged in contraband; and

Cargo loaded different from that agreed upon.

Other Relevant Provisions on

Bottomry & Respondentia

No bottomry on the salaries of the crew. [Art. 725]

If loan given in excess of security throughovervaluation by borrower, the excess must bereturned with legal interest. [Art. 726]

When respondentia loan is not all utilized for thecargo, the excess must be returned. [Art. 727]

If the security in bottomry or respondentia is notsubject to a marine peril, it becomes an ordinaryloan [Art 729]



loan. [Art. 729]

Lenders of bottomry and respondentia mustcontribute to the general average once jettison has

made possible the safe arrival of the security. [Art.732] Exposure to marine peril takes place from the time

the anchors are a weighed at the port of departureuntil anchors are dropped at the port of destination.

[Art. 733] In case of shipwreck and there is salvage, loan will



p g ,depend on the repayment on what may be salvaged.[Art. 734]

The concurrence of bottomry loan with insurance, the

insurable interest of the owner of the vessel is thevalue of the vessel less the loan in bottomry, inreference to Sec. 101 of the Insurance Code. [Art.735]

Failure to pay the premium on time of bottomry orrespondentia loans gives rise to liablility for legal



interest (delay ex re). [Art. 736]

Chapter 11Averages



Average Defined

Any damage deliberately caused, or any expensedeliberately incurred due to a marine peril andbecause of which the vessel and/or cargo is saved.

Art. 806: All extraordinary or accidental expenseswhich may be incurred during the voyage in order topreserve the vessel, the cargo, or both.

Excludes: Petty and ordinary expenses incident tonavigation, e.g., pilotage, lighterage, towage,anchorage, inspection, health, quarantine, lazaretto



anchorage, inspection, health, quarantine, lazaretto[i.e., quarantine station for maritime travellers ] , andother so-called port expenses, costs of barges andunloading until the merchandise is place in the wharf,

and any other usual expenses in navigation.

Kinds of Average

Particular (or Simple) Average – All the damages andexpenses caused to the vessel or to her cargo whichhave NOT INURED TO THE COMMON BENEFIT ANDPROFIT of all the persons interested in the vessel andher cargo. The damages sustained shall be borne bythe owner of the vessel or the goods only. [Art. 809]

General Average – All the damages and expenses

which are DELIBERATELY caused in order to save thevessel, its cargo or both, AT THE SAME TIME, from



, g , ,REAL AND KNOW RISKS. [Art. 811]

Examples of Particular Average

(Art. 809)

Losses suffered by the cargo from the time of itsembarkation until it is unloaded, either on account of inherent defect of the goods or by reason of anaccident of the sea or force majeure, and theexpenses incurred to avoid and repair the same.

Losses and expenses suffered by the vessel in itshull, rigging, arms, and equipment, for the same

causes and reasons, from the time it puts to sea fromthe port of departure until it anchors and lands in the



p pport of destination.

Losses suffered by the merchandise LOADED ONDECK, except in coastwise navigation, if the marine

ordinances allow it.

The wages and victuals of the crew when the vesselis detained or embargoed by legitimate order or force majeure , it the charter has been contracted for afixed sum for the voyage.

The necessary expenses on arrival at a port, in orderto make repairs or secure provisions.

The lowest value of the goods sold by the captain inarrivals under stress for the payment of provisions



p y pand in order to save the crew, or to meet any otherneed of the vessel, against which the proper amountshall be charged.

The victuals and wages of the crew while the vesselis in quarantine.

The loss inflicted upon the vessel or cargo by reasonof an impact or collision with another, if it isaccidental and unavoidable. If the accident shouldoccur through the fault or negligence of the captain,the latter shall be liable for all the losses caused.

Any loss suffered by the cargo through the fault,negligence, or barratry of the captain or of the crew,



g g , y p ,without prejudice to the right of th owner to recoverthe corresponding indemnity from the captain, thevessel, and the freightage.

Requisites of General Average

There must be common danger;

That for the common safety, part of thevessel or of the cargo or both is sacrificedDELIBERATELY;

That from the expenses or damages causedfollows the successful saving of the vesseland cargo; andThat the expenses or damages should have



That the expenses or damages should havebeen incurred or inflicted after taking properlegal steps and authority

Procedure in General Average

Before the loss is caused or the expenses incurred,the captain must call a meeting with the chief mate

and other officers and any cargo owner who may beon board;

They shall decide by voting on a resolution of thecaptain. If majority disagrees with the captain, thelatter shall have the final decision;

The minutes must be entered in the deck log book,signed by all the persons present and stating in detail



g y p p gall the goods jettisoned and the injuries caused tothose kept on board;

Copy of the minutes to be filed within 24 hours after

arrival at first port of entry.

Examples of General Average

The goods or cash invested in the redemption of thevessel or of the cargo captured by enemies,

privateers, or pirates, and the provisions, wages, andexpenses of the vessel detained during the time thesettlement or redemption is being made.

The goods jettisoned to lighten the vessel, whetherthey belong to the cargo, to the vessel, or to the

crew, and the damage suffered through said act bythe goods which are kept on board.



The cables and masts which are cut or rendereduseless, the anchors and the chains which areabandoned, in order to save the cargo, the vessel or

both.

The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place it in

condition to enter a port or roadstead, and thedamage resulting therefrom to the goods removed ortransferred.

The damage suffered by the goods of the cargo bythe opening made in the vessel in order to drain it

and prevent its sinking. The expenses caused in order to float a vessel

ll d d f h f



intentionally stranded for the purpose of saving it. The damage caused to the vessel which had to be

opened, scuttled or broken in order to save the

cargo.

The expenses for the treatment and subsistence of the members of the crew who may have beenwounded or crippled in defending or saving thevessel.

The wages of any member of the crew held ashostage by enemies, privateers, or pirates, and the

necessary expenses which he may incur in hisimprisonment, until he is returned to the vessel or tohi d i il h ld h f it



his domicile, should he prefer it.

The wages and victuals of the crew of a vesselchartered by the month, during the time that it is

embargoed or detained by force majeure or by orderof the government, or in order to repair the damagecaused for the common benefit.

The depreciation resulting in the value of the goodssold at arrival under stress in order to repair the

vessel by reason of gross average. The expenses of the liquidation of the average.



Who Will Contribute for the

General Average

Those who benefited from the sacrifice: the ship

owner and owners of the cargoes that were saved. Contribution may also be imposed on the insurers of

the vessel or cargoes that were saved as well aslenders on bottomry or respondentia.



Who Are Entitled To The

General Average

All the owners whose goods were sacrificed

pro rata .Exceptions:

Goods carried on deck unless the law orcustoms of the place allow such stowage.

Goods that are not recorded in the books orrecords of the vessel



records of the vessel.

Fuel for the vessel if there is more thansufficient fuel for the voyage.

American Home Assurance v. CA,

208 SCRA 343

Held:

A particular average presupposes that the loss ordamage is due to an inherent defect of the goods, anaccident of the sea, or a force majuere or thenegligence of the crew of the carrier governed by the

Code of Commerce. The claims for damages due to the negligence of the



common carrier are governed by the Civil Codeprovisions on common carriers.

Magsaysay Inc. vs. Agan,

96 Phil. 504

Facts: An interisland vessel of petitioner sailed fromManila to Aparri. The vessel entered the Aparri river

where she stopped to load and unload. Overnight, asand bar formed at the mouth of the river. On herway out, the vessel hit the sand bar and got stuck. A tug boat was sent by the owner to town the vessel.In Manila, the captain demanded from Agan and

other cargo owners to reimburse him for theexpenses of hiring the tugboat.Held: Particular average only The cargo was not



Held: Particular average only. The cargo was notbenefited since it was not perishable nor the cargoowner in a hurry. Even assuming it was generalaverage, the captain did not call the meeting.

Philippine Home Assurance v. CA,

257 SCRA 468

Facts:

A vessel, with cargo on board, caught fire due to asmall flame coming from the acetylene cylinder whichwere stored in the accommodation area near theengine room and which exploded despite efforts toextinguish the fire. The vessel was subsequently

towed to port with the expenses of having the cargotransshipped to port of destination was charged tothe consignees Petitioner sought recovery as



the consignees. Petitioner sought recovery assubrogee.

Held: The consignee of the cargo cannot be made toshare with the carrier for additional freight and

salvage charges. Fire cannot be considered a natural disaster or

calamity since it almost always arises from some actof man. It cannot be an act of God unless caused bya lightning or a natural disaster or casualty not

attributable to human agency. While the facts of the case may technically fall within

the purview of general average the formalities



the purview of general average, the formalitiesprescribed were not complied with. Consequently,the carrier‟s claim for contribution from the

consignees cannot be enforced.

Jettison of Cargo

Cargo on deck shall be first to be jettisoned followedby those from the lower deck then those of biggerbulk but of smaller value. [Art. 815]

Cargo jettisoned, to be entitled to reimbursement forgeneral average, must be covered by a bill of lading.[Art. 816]

Expenses to lighten a vessel by the transfer of goodsto other vessels is general average. Also when therei fi t d th i d t i k th l t



is fire on port and there is need to sink the vessel tosave the goods. [Arts. 817 & 818]

Liquidation of Average

Whether general or particular average, the

person benefited by the damage or expenseincurred must contribute his proportionateshare, to be determined by the amount of damages or expenses incurred and

apportioned among the those benefited inproportion to the value of their property save.

I ti l it i i li d th t th



In particular average, it is implied that thereis only one interest involved and the

proportion pertains to him 100%.

The York-Antwerp Rules

Allow deck cargo on coastwise shipping but prohibitsit on overseas trade.

Hence, a deck cargo stowed on deck, with consent of the shipper in an overseas trade must alwayscontribute to general average. But if it is the one jettisoned, it will not be entitled to reimbursement.

On the other, a deck cargo stowed on deck in acoastwise trade with consent of the shipper whilel t t ib t t l i lik i



also must contribute to general average is likewiseentitle to reimbursement if jettisoned.

Chapter 12

Collisions



Collision & Allision

Collision – occurs when both vessels are onmotion.

Allision – happens when one of the vessels isstationary.

Rule on Collision: The guilty vessel shall payfor the damage caused by the collision.Exception: If guilty vessel sinks due to thehypothecary nature of maritime transactions.



yp yException to exception: When there isnegligence of ship owner [see Abdulhaman

case]



Five Cases Covered by Collision/

Allision

One vessel is at fault – Vessel at fault is liable for thedamage caused to the innocent vessel as well as to

the damage suffered by the owners of cargo of bothvessels.

Both vessels at fault – Each vessel must bear its ownloss, but the shippers of both vessels may go againstthe ship owners, being solidarily liable to them.

Vessel at fault is unknown – Same rule when bothvessels are at fault.Thi d l t f lt S l h l



Third vessel at fault – Same rule as when one vesselis at fault.

Fortuitous Event – No liability; res perit domino .

Three stages in Collision

When the 2 vessels approach each other.

When the vessel are so near each other that contactis imminent.

Actual contact or collision.

Note: The foregoing rule was laid down in Urrutia v.

Baco River Plantation, 26 Phil. 623 to apply thedoctrine of last clear chance. But this ruling wasb d d i Willi Y 27 Phil 68 (i f )



abandoned in Williams v. Yangco, 27 Phil. 68 (infra)

Williams v. Yangco,

27 Phil. 68 (1914)

Held:

The doctrine of last clear chance is inapplicable formarine collision since the rule of liability in this jurisdiction for maritime accidents such as that nowunder consideration is clearly, definitely, andunequivocally laid down in Art. 827 of the Code of

Commerce. Under the rule, the evidence disclosing that both

vessels were at fault gives neither of the owners an



vessels were at fault gives neither of the owners anaction against the other for the loss or injurysustained by their respective vessel.

Villacarlos v. Everett Steamship,

4 CA Reports 961

Facts:

A fishing vessel of Philippine registry collided with avessel from Europe. The foreign vessel was at faultbut its owner was beyond the jurisdiction of thecourts. The owner, however, had a shipping agent inthe Philippines who, nonetheless denied liability.

Held:

Th t i li bl i th b f th hi



The agent is liable in the absence of the ship owner.The shipping agent or naviero acts as owner in theabsence of the ship owner.

Code of Commerce uses the word „buque‟ in

reference to collision of vessel, i.e.a draft with deck. A fishing vessel here had no deck, hence, not abuque so that Art. 835 on marine protest does notapply.

Failure of the captain of the fishing vessel to filemarine protest does not bar recovery.



Duty of the Overtaking or Crossing Vessel

(Sulpicio Lines v. CA, 305 SCRA 478)

Under Rule 24-C of the Regulations for PreventingCollision at Sea, the duty of overtaking or crossingvessel to keep out of the way subsists even if theovertaking vessel cannot determine with certaintywhether she is at forward or aft more than twopoints from the vessel being overtaken.

In case of collision, it would be beyond cavil that theovertaking vessel must assume responsibility as shewas in a better position to avoid the collision



was in a better position to avoid the collision.

She should have blown its horn or given signs towarn the other vessel that she was overtaking her.

When moving vessel strikes stationary

object (Far Eastern Shipping v. CA, 297

SCRA 30)

Held:

American evidentiary rule provided for a presumptionof fault against a moving vessel that strikes astationary object, such as a dock or navigational aid.

In admiralty, this presumption does more thanmerely require the ship to go forward and produce

some evidence on the presumptive matter. Themoving vessel must show that it was without fault orthat the collision (allision) was occasioned by the



that the collision (allision) was occasioned by thefault of the stationary object or was the result of inevitable accident.

Chapter 13Arrival Under Stress & Shipwrecks



Steps To Be Taken In Determination

Of Propriety Of Arrival Under Stress

Captain to determine during voyage if there is well-founded fear of seizure, privateers or other valid

grounds. He then assembles all the officers. He summons the persons interested in the cargo who

are present and who may attend. They have no rightto vote.

Officers to be determined and agree if there is well-founded reason after examining the circumstances.The captain has the deciding vote



The captain has the deciding vote. Agreement to be drafted and minutes to be signed

and entered in the deck log book. Also objections.

Instances of Arribada

Lack of provision or fuel Pirates Inability to navigate.Note: If the lack of fuel or provision is not due to lack of

foresight, or the fear of pirates is well-founded or theinability to navigate is not attributable to fault of captain or crew, then these arrivals under stressbecomes particular average of the vessel. Shippersmust wait.N d d t b id t th hi B t if



No damage needs to be paid to the shippers. But if due to bad faith, the damages must be paid toshippers for delay and the vessel bears the loss.

Improper Arribada

If lack of provisions should rise from the failure totake the necessary provisions for the voyage

according to usage and customs, or if they shouldhave been rendered useless or lost through badstowage or negligence in their care.

If the risk of enemies, privateers, or pirates shouldnot have been well-known, manifest, and based on

positive and provable facts. If the defect of the vessel should have arisen from

the fact that it was not repaired rigged equipped



the fact that it was not repaired, rigged equipped,and prepared in a manner suitable for the voyage, orfrom some erroneous order of the captain.

When malice, negligence, want of foresight, or lack

of skill on the part of the captain exists in the actcausing the damage.

Expenses. [Art. 820, Code of Commerce]



Shipwreck (Agrounding)

The demolition or shattering of a vessel caused by

her driving ashore or on rocks and shoals in themidseas, or by the violence of winds and waves intempests.



Rules on Shipwrecks (Arts. 840-845)

Losses/deterioration due to shipwreck or stranding tothe account of the owners & ship owner.

If caused by malice, negligence, or lack of skill of thecaptain or because vessel put to sea wasinsufficiently repaired and equipped: Shippers candemand indemnity from the captain.

The goods saved from the wreck to be specially

bound for the payment of the expenses of therespective salvage.

If several vessels sail under convoy and any of them



If several vessels sail under convoy, and any of themshould be wrecked, the cargo saved will bedistributed among the rest in proportion to the

amount which each one is able to take.

If any captain should refuse, without sufficient cause,to receive what may correspond to him, the captain

of the wrecked vessel to enter a marine protestagainst him.

If it is not possible to transfer to the other vesselsthe entire cargo of the vessel wrecked, the goods of the highest value and smallest volume to be saved

first. Designation to be made by the captain withconcurrence of his officers. The captain taking on-board the goods saved from



The captain taking on board the goods saved fromthe wreck to continue his course to the port of destination and upon arrival he should deposit the

goods for disposal to their owners.

In case the captain changes his course, and if he canunload them at the port of which they were

consigned, he may make said port if the shippers orsupercargoes present and the officers andpassengers of the vessel consent thereto. But he isnot required to do so even if he has the consentduring time of war or when the port is difficult and

dangerous to make. The owners of the cargo to defray all the expenses of

this arrival and the payment of the freightage.



p y g g If cannot be, proceed to judicial sale complying with

the formalities and on publicity.

Chapter 14Salvage



Definition and Philosophy of Salvage

Salvage is a service which one person renders to theowner of a ship or goods, by his own labor,preserving the goods or the ship which the owner orthose entrusted with the care of them have eitherabandoned in distress at sea, or are unable to protectand secure.

Salvage Law provides for the compulsory reward tothose who brave the perils of the sea to save thecargo or vessel in order to encourage such services.



g gWhether the owner of the property save likes it ornot, he must give a reward. The maximum amount is

50% of the value of the property save.

Kinds of Salvage Services

Voluntary – compensation is dependent on thesuccess.

Under contract for a per diem or per horam wage,payable at all event.

Under contract for compensation payable only in case

of success.



Requisites For Salvage Reward

Valid object of salvage.

Such object must be exposed to marine peril. Must be rendered voluntarily.

Must be successful.



Derelict

A vessel or cargo badly damaged and abandoned bythe crew to the mercy of the sea.

Mere abandonment does not make such vessel orcargo res nullius.

Proper procedure must be followed by the salvors tobe entitled of the reward.



Procedure In Derelict If vessel is abandoned, salvor must tow her to the

nearest port where it will be delivered to the

municipal treasurer or collector of customs who willadvertise the fact of salvage. If owner of salvaged vessel or cargo appears, he may

take possession of vessel or cargo and pay thereward amount not exceeding 50% of the value of

the vessel. Reward is determined by considering:

- the value of the property save; zeal employed;



the value of the property save; zeal employed;danger posed to the salvors; number of persons whotook part; services render; and expenses incurred.

If no claim for the vessel is made within 3 monthsafter publication, the municipal treasurer to sell the

property salvaged at public auction. The reward andexpenses will be deducted from the proceeds. Thebalance to be deposited with the treasury.

If no one claims for the balance after 3 years, ½ willgo to the salvors and the other half to the

government. If one vessel saves another:

- ½ to the ship owner of the saving vessel



½ to the ship owner of the saving vessel.- ¼ to the captain- ¼ to the crew

Honorio Barrios v. Go Thong & Co.,

G.R. L-17192, March 30, 1963

Facts: Go Thong is the owner of a vessel plying theroute from Mindanao to Cebu. The engine of his

vessel conked out while she was in the middle of thesea. The captain radioed the owner and was advisedthat a sister ship was on its way to tow the vessel.The sea at the time was calm. The radio messagewas picked up by another vessel which thereafterproceeded to the stranded vessel of Go Thong. Thecaptain agreed that the vessel be towed. The ownerof the towing vessel knew the owner of the strandedvessel He waived charges of towing But the captain



vessel. He waived charges of towing. But the captainand the crew the responding vessel complained of their respective ¼ shares in the reward.

Issue: Was there salavage or towage?

Held: There was no salvage because there was nomarine peril at the time. There was no danger for thestranded ship. The sea was calm and a sister shipwas nearby. Hence, no reward is due. Also, there isno need for compensation for the towage because of

the waiver of the towing vessel.



Chapter 15COGSA



History of COGSA

Originally passed by Congess of the US on April 16,1936 as Public Act No. 521.

Adopted by the Phil Commonwealth on October 22,1936 as Commonwealth Act No. 65.

When the New Civil Code took effect on August 30,1950, it became the primary law on carriage of goodsby sea.

Art. 1753, NCC: The law of the country to which thegoods are to be transported shall govern the liabilityof the common carrier for their loss, destruction or



,deterioration.

COGSA remains suppletory law for international trade

Chapter 16

Public Service Laws



Meaning and Concept of Public Utility

A business or service engaged in regularly supplyingthe public with some commodity or service of public

consequence such as electricity, gas, water,transportation, telephone or telegraph service.[National Power Corporation v. Court of Appeals, G.R.No. 112702, September 26, 1997]

In a very real sense, a public utility is engaged inpublic service-- providing basic commodities andservices indispensable to the interest of the general

bli [R bli M l G R N 141314 A il



public. [Republic v. Meralco, G.R. No. 141314, April 9, 2003]

When, therefore, one devotes his property to a use inwhich the public has an interest, he, in effect grantsto the public an interest in that use, and must submitto the control by the public for the common good, tothe extent of the interest he has thus created.[Kilusang Mayo Uno Labor Center v. Hon. Jesus B.Garcia Jr., G.R. No. 115381, December 23, 1994 citing Pantranco v. Public Service Commission, 70 Phil.221]



Constitutional Provisions

Public utilities – must be owned by Filipino citizen or60% owned by Filipino citizens. [Art. XII, Sec. 11]

Mass media – must 100% Filipino.

Government take-over: In times of nationalemergency, when the public interest so requires, theState may, during the emergency and under

reasonable terms, temporarily take over or direct theoperation of any privately owned public utility orbusiness affected with public interests. [Art. XII, Sec.



17]

Operation of vital industries: The State, may, in theinterest of national welfare or defense, establish andoperate vital industries and upon payment of justcompensation, transfer to public ownership utilitiesand other private enterprises to be operated by thegovernment. [Art. XII, Sec. 18]

Prohibition against monopolies: The State shallregulate or prohibit monopolies when the publicinterest so requires; no combination in restraint of t d f i titi h ll b ll d [A t XII



trade or unfair competition shall be allowed. [Art. XII,Sec. 19]

Public Service

Includes every person who may own, operate,manage, or control in the Philippines for hire or

compensation, with general or limited clientele,whether permanent, occasional or accidental, anddone for general business purposes, any commoncarrier, railroad, street railway, fraction railway,subway motor vehicle, steamboat, or steamship lineferries, and water craft, shipyard, ice plant, electriclight, heat and power or any other public utility. [Sec.13(b) Act 146]



13(b), Act. 146]

PAL V. CAB, 270 SCRA 538

Held: The terms „convenience and necessity‟ if usedtogether is a statute, are usually held not to be

separable, but are construed together. Both wordsmodify each other and must be construed together.The word „necessity‟ is so connected, not as anadditional requirement but to modify and qualifywhat might otherwise be taken as the strictsignificance of the word necessity.

Public convenience and necessity exists when theproposed facility will meet a reasonable want of the



proposed facility will meet a reasonable want of thepublic and supply a need which the existing facilities

do not adequately afford.

It does not mean or require an actual physicalnecessity or an indispensable thing.

The use of the word „necessity‟, in conjunction with „public convenience‟ in a certificate of authorization toa public service entity to operate, does not in anyway modify the nature of such certification, or therequirements for the issuance of the same.

It is the law which determines the requisite for theissuance of such certification, and not the titleindicating the certificates.



Public Utilities

Public utilities are privately owned and operatedbusinesses whose services are essential to the

general public. They are enterprises which speciallycater to the needs of the public and conduce to theircomfort and convenience. As such, public utilityservices are impressed with public interest andconcern. The same is true with respect to thebusiness of common carrier which holds such apeculiar relation to the public interest that there issuperinduced upon it the right of public regulation



superinduced upon it the right of public regulationwhen private properties are affected with publicinterest, hence, they cease to be juris privati only.

When, therefore, one devotes his property to a use inwhich the public has an interest, he, in effect grantsto the public an interest in that use, and must submitto the control by the public for the common good, tothe extent of the interest he has thus created.[Kilusang Mayo Uno Labor Center v. Hon. Jesus B.Garcia Jr., G.R. No. 115381, December 23, 1994 citing Pantranco v. Public Service Commission, 70 Phil.221]



Difference Between Operation of a

Public Utility and Ownership of Facilities

While the Constitution in no uncertain terms requiresa franchise for the operation of a public utility, it does

not require a franchise before one can own thefacilities needed to operate a public utility so long asit does not operate them to serve the public.

In law, there is clear distinction between the

operation of a public utility and the ownership of thefacilities and equipment used to serve the public.[Ibid]



Telecommunications



Radio Industry



Broadcasting

Broadcast is an undertaking the object of which is totransmit over-the-air commercial radio or televisionmessages for reception of a broad audience in ageographic area.



Cable Television Operations (E.O.

436, Sept. 9, 1997)

Classified as mass media

Essential components:

Reception facilities which extract the broadcast signalfrom the air, or microwave transmission.

Input equipment, which converts and amplifies thesignal received; and

Distribution system, which consists of feeder or trunk lines originating from the input equipment; smallerdistribution cables which carry the signal to the



y gimmediate vicinity of the subscriber; and drop lineswhich carry the signal into the subscriber‟s premises.

Electronic Commerce Act



Internet and Value Added-Services

Electronic Mail (Email) –

Bulletin Board System (BBS) – World Wide Web (www)



Mass Media



Build-Operate-Transfer Law (R.A.

6957, as amended by R.A. 7718)



BOT Schemes

Build-Operate-and-Transfer (BOT Build-and-Transfer (BT) Build-Own-Operate (BOO) Build-Lease-Transfer (BLT Build-Transfer-and-Operate (BTO)

Contract-Add-and-Operate (CAO) Develop-Operate-and-Transfer (DOT) Rehabilitate-Operate-and-Transfer (ROT)



p ( ) Rehabilitate-Own-and-Operate (ROO)

Transpo & Public Service Law[1]

Documents

Transcript of Transpo & Public Service Law[1]