Transportation Law Beda

8/10/2019 Transportation Law Beda

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San eda College of Law 54

MEMORY AID IN COMMERCIAL LAW

COMMERCIAL LAW COMMITTEE

CHAIRPERSON:Garny Luisa Alegre ASST.CHAIRPERSON:Jayson OS Ramos EDP: Beatrix I. Ramos SUBJECT HEADS:

Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario (Transportation

Laws);

Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John Lemuel Gatdula

(Banking Laws); RobespierreCU (Law on Intellectual Property)

TRANSPORTATION LAWS

CONTRACT OF TRANSPORTATION/ CARRIAGEA contract whereby a person, natural or juridical,

obligates to transport persons, goods, or both, fromone place to another, by land, air or water, for aprice or compensation.Classifications:

1. Common or Private2. Goods or Passengers3. For a fee (for hire) or Gratuitous4. Land, Water/maritime, or Air5. Domestic/inter-island/coastwise or

International/foreign It is a relationship which is imbued with thepublic interest.

COMMON CARRIER Persons, corporations, firms or associationsengaged in the business of carrying or transportingpassengers or goods or both, by land, water, or air,for compensation, offering their services to thepublic (Art. 1732, Civil Code). Art. 1732 of the New Civil Code avoids anydistinction between one whose principal businessactivity is the carrying of persons or goods or bothand one who does such carrying only as an ancillaryactivity (sideline). It also avoids a distinctionbetween a person or enterprise offeringtransportation service on a regular or scheduledbasis and one offering such service on anoccasional, episodic or unscheduled basis.

Neither does the law distinguish between acarrier offering its services to the general public thatis the general community or population and one

who offers services or solicits business only from anarrow segment of the general population.

A person or entity is a common carrier even ifhe did not secure a Certificate of Public Convenience(De Guzman vs. CA, 168 SCRA 612). It makes no distinction as to the means oftransporting, as long as it is by land, water or air. Itdoes not provide that the transportation should beby motor vehicle. (First Philippine IndustrialCorporation vs. CA)One is a common carrier even if he has no fixedand publicly known route, maintains no terminals,and issues no tickets (Asia Lighterage Shipping, Inc.vs. CA).Characteristics:

1. Undertakes to carry for all people indifferentlyand thus is liable for refusal withoutsufficient reason (Lastimoso vs. Doliente,October 20, 1961);

2. Cannot lawfully decline to accept a particularclass of goods for carriage to the prejudiceof the traffic in these goods;

3. No monopoly is favored (Batangas Trans.vs. Orlanes, 52 PHIL 455);

4. Provides public convenience.

PRIVATE CARRIER One which, without being engaged in thebusiness of carrying as a public employment,undertakes to deliver goods or passengers forcompensation. (Home Insurance Co. vs. American

Steamship Agency, 23 SCRA 24)

TESTS WHETHER CARRIER IS COMMON ORPRIVATE:The SC in First Philippine Industrial Corporationvs. CA (1995) reiterated the following tests:

1. It must be engaged in the business ofcarrying goods for others as a publicemployment and must hold itself out asready to engage in the transportation ofgoods generally as a business and not asa casual occupation;

2. It must undertake to carry goods of thekind to which its business in confined;

3. It must undertake to carry by the methodby which his business is conducted andover its established roads; and

4. The transportation must be for hire.In National Steel Corp. vs. CA (1997) the SC heldthat the true test of a common carrier is thecarriage of goods or passengers provided it hasspace for all who opt to avail themselves of itstransportation for a fee.

COMMON CARRIER PRIVATECARRIER

1. As to availability

Holds himself out for allpeople indiscriminately

Contracts with particularindividuals or groupsonly

2. As to required diligence

Extraordinary diligence isrequired

Ordinary diligence isrequired

3. As to regulation

Subject to Stateregulation

Not subject to Stateregulation

4. Stipulation limiting liability

Parties may not agree onlimiting the carriersliability except whenprovided by law

Parties may limit thecarriers liability,provided it is notcontrary to law, moralsor good customs

5. Exempting circumstance

Prove extraordinarydiligence and Art. 1733,NCC

caso fortuito, Art. 1174NCC

6.Presumption of negligenceThere is a presumptionof fault or negligence

No presumption of faultor negligence

7.Governing law

Law on common carriers Law on obligations andcontracts

GOVERNING LAWSA. Domestic/inter-island/coastwiseApplicable to Land, Water, and Air transportation

1. Civil Code - primary2. Code of Commerce (Arts. 349, 379, 573-

734, 580, 806-845) - suppletory

B. International/foreign/overseas (Foreign


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country to Philippines) Applicable to Water/maritime and AirtransportationThe law of the country of destination generallyapplies.

1. Civil Code - primary2. Code of Commerce - suppletory3. Others - suppletory

a. Water/maritime: Carriage of Goods bySea Act (COGSA)

b. Air: Warsaw Convention

I. NEW CIVIL CODE(Arts. 1732-1766)

REQUIREMENT OF EXTRAORDINARYDILIGENCE Rendition of service with the greatest skill andutmost foresight. (Davao Stevedore Co. v.Fernandez)Rationale:

1.

From the nature of the business and forreasons of public policy (Art. 1733)

2. Relationship of trust3. Business is impressed with a special

public duty4. Possession of the goods5. Preciousness of human life

A common carrier is not an absolute insurer of allrisks of travel.

COVERAGE1. Vigilance over goods (Arts. 1734-1754); and2. Safety of passengers (Arts. 1755-1763).

PASSENGER

A person who has entered into a contract ofcarriage, express or implied, with the carrier. Theyare entitled to extraordinary diligence from thecommon carrier.The following are not considered passengers, andare entitled to ordinary diligence only:

a. One who has not yet boarded any part ofa vehicle regardless of whether or not hehas purchased a ticket;

b. One who remains on a carrier for anunreasonable length of time after he hasbeen afforded every safe opportunity toalight;

c. One who has boarded by fraud, stealth,or deceit;

d.

One who attempts to board a movingvehicle, although he has a ticket, unlessthe attempt be with the knowledge andconsent of the carrier;

e. One who has boarded a wrong vehicle,has been properly informed of such fact,and on alighting, is injured by the carrier;

f. Invited guests and accommodationpassengers. (Lara vs. Valencia)

g. One who rides any part of the vehiclewhich is unsuitable or dangerous or whichhe knows is not designed or intended forpassengers.

DEFENSES OF A COMMON CARRIER IN THECARRIAGE OF GOODS

1. CASO FORTUITO/FORCE MAJEURERequisites:

a. Must be the proximate and only cause ofthe lossb. Exercise of due diligence to prevent or

minimize the loss before, during or after theoccurrence of the disaster (Art. 1739)c. Carrier has not negligently incurred indelay in transporting the goods (Art. 1740)

Fire is not considered a natural disaster orcalamity as it arises almost invariably from some actof man. (Eastern Shipping Lines Inc. vs. IAC)Mechanical defects are not force majeure if thesame was discoverable by regular and adequateinspections. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino, T. &Hernando, R.P. 2004 ed. p.120-122)

2. ACTS OF PUBLIC ENEMYRequisites:

a. Must be the proximate and only cause ofthe lossb. Exercise of due diligence to prevent orminimize the loss before, during or after theact causing the loss, deterioration ordestruction of the goods (Art. 1739)

3. NEGLIGENCE OF THE SHIPPER OR OWNERa. Sole and proximate cause: absolute defenseb. Contributory: partial defense. (Art. 1741)

4. CHARACTER OF THE GOODS OR DEFECTS INTHE PACKING OR IN THE CONTAINER Even if the damage should be caused by theinherent defect/character of the goods, the commoncarrier must exercise due diligence to forestall or

lessen the loss.(Art. 1742)The carrier which, knowing the fact of improperpacking of the goods upon ordinary observation, stillaccepts the goods notwithstanding such condition,is not relieved of liability or loss or injury resultingtherefrom. (Southern Lines, Inc. v. CA, 4 SCRA 258)

5. ORDER OR ACT OF PUBLIC AUTHORITY Said public authority must have the power toissue the order (Art. 1743). Consequently, wherethe officer acts without legal process, the commoncarrier will be held liable. (Ganzon v. CA 161 SCRA646) Diligence in the selection and supervision ofemployees under Article 2180 of the Civil Code

cannot be interposed as a defense by the commoncarrier because the liability of the carriers arisesfrom the breach of the contract of carriage. Thedefense under said articles is applicable tonegligence in quasi-delicts under Art. 2176. (DelPrado v. Manila Electric Co., 52 Phil 900)

LIABILITY OF A COMMON CARRIER FORDEATH OR INJURIES TO PASSENGERS DUE TOACTS OF ITS EMPLOYEES AND OTHERPASSENGERS OR STRANGERS

FOR ACTS OF ITSEMPLOYEES

FOR ACTS OF OTHERPASSENGERS OR

STRANGERS


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Required diligence and defense

Extraordinary diligence Ordinary diligence

Nature of liability

Tort; however,The employee must be

on duty at the time ofthe act. (Maranan v.Perez)

Not absolute; limitedby Art. 1763

The carrier is liable when its personnel allowed apassenger to drive the vehicle causing it to collidewith another vehicle resulting to the injuriessuffered by the other passengers. (MRR vs.

Ballesteros, 16 SCRA 641)

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Parties

1. Common carrier2. Shipper3. Consignee

1. Common carrier2. Passenger

Cause of liability

Delay in delivery, loss, destruction, or deterioration ofthe goods

Death or injury to the passengers

Duration of liability

From the time the goods are unconditionally placed inthe possession of, and received by the carrier fortransportation until the same are delivered actually orconstructively by the carrier to the consignee or to theperson who has the right to receive them. (Art. 1736)It remains in full force and effect even when theyare temporarily unloaded or stored in transit unless theshipper or owner has made use of the right ofstoppage in transitu. (Art. 1737) It continues to be operative even during the timethe goods are stored in a warehouse of the carrier atthe place of destination until the consignee has beeadvised of the arrival of the goods and has hadreasonable opportunity thereafter to remove them orotherwise dispose of them. (Art. 1738)

Delivery of goods to the custom authorities is notdelivery to the consignee. (Lu Do v. Binamira, 101 Phil120)

The duty of a common carrier to provide safety to itspassengers so obligates it not only during the courseof the trip, but for so long as the passengers arewithin its premises and where they ought to be inpursuance to the contract of carriage. (LRTA v.Navidad, [2003])All persons who remain on the premises within areasonable time after leaving the conveyance are tobe deemed passengers, and what is a reasonabletime or a reasonable delay within this rule is to bedetermined from all the circumstances, and includes areasonable time to see after his baggage and preparefor his departure. (La Mallorca v. CA, 17 SCRA 739 ;Abiotiz Shipping Corporation v. CA, 179 SCRA 95)It is the duty of common carriers of passengers to

stop their conveyances a reasonable length of time inorder to afford passengers an opportunity to enter,and they are liable for injuries suffered from thesudden starting up or jerking of their conveyanceswhile doing so. The duty which the carrier ofpassengers owes to its patrons extends to personsboarding the cars as well as to those alightingtherefrom (Dangwa Trans Co., Inc. vs. CA 202 SCRA574).

Presumption of negligence

Art.1735 Civil CodeReason: As to when and how goods were damaged intransit is a matter peculiarly within the knowledge ofthe carrier and its employees. (Mirasol v. Dollar, 53

PHIL 124)Mere proof of delivery of goods to a carrier in good

order and the subsequent arrival of the same goods atthe place of destination in bad order makes for a primafacie case against the carrier. (Coastwise LighterageCorp. v. CA, 245 SCRA 796)

Art.1755 Civil CodeReason: The contract between the passenger and thecarrier imposes on the latter the duty to transport thepassenger safely; hence the burden of explaining

should fall on the carrier.

Defenses

1. Ordinary circumstance: Exercise ofextraordinary diligence (Art. 1735)

2. Special circumstances:a.Flood, storm, earthquake, lighting, or

other natural disaster or calamity (plusforce majeure)

b.Act of the public enemy in war,whether international or civil

1. Exercise of extraordinary diligence (Art.1756)

2. Caso fortuito


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c.Act or omission of the shipper or theowner of goods

d.The character of the goods or defectsin the packing or in the containers

e.Order or act of competent public

authority (Art. 1734)

Valid stipulations

1. Reduction of degree of diligence to ordinarydiligence, provided it be:

a) In writing, signed by the shipper or owner;b) Supported by a valuable consideration other

than the service rendered by the carriers;and

c) Reasonable, just and not contrary to publicpolicy. (Art. 1744)

2. Fixed amount of liability: A contract fixing the sumto be recovered by the owner or shipper for the loss,destruction or deterioration of the goods, if it isreasonable and just under the circumstances and hasbeen fairly and freely agreed upon. (Art. 1750)3. Limited liability for delay: An agreement limiting thecommon carriers liability for delay on account ofstrikes or riots (Art. 1748)4. Stipulation limiting liability to the value of the goodsappearing in the bill of lading, unless the shipper orowner declares a greater value. (Art. 1749)

The diligence required in the carriage of the goodsmay be reduced by only one degree, fromextraordinary to ordinary diligence or diligence of agood father of a family. (Art. 1744, Art. 1745, no. 4)

Stipulation limiting liability when a passenger iscarried gratuitously, but not for willful acts or grossnegligence. (Art. 1758)

Void stipulations

1. That the goods are transported at the risk of theowner or shipper;2. That carrier will not be liable for any loss,destruction or deterioration of the goods;3. That the carrier need not observe any diligencein the custody of the goods;4. That the carrier shall exercise a degree ofdiligence less than that of a good father of a familyover the movable transported;5. That the carrier shall not be responsible for the

acts or omissions of his or its employees;6. That the carriers liability for acts committed bythieves or robbers who do not act with grave orirresistible threat, violence or force is dispensed withor diminished;7. That the carrier is not responsible for the loss,destruction or deterioration of the goods on accountof the defective condition of the car, vehicle, ship orother equipment used in the contract of carriage.(Art. 1745)

Dispensing with or lessening the extraordinaryresponsibility of a common carrier for the safety ofpassengers imposed by law by stipulation, by postingof notices, by statements on tickets or otherwise.(Art. 1757)


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RULES ON PASSENGERSBAGGAGE

IN THE CUSTODY OFTHE PASSENGERS(HAND-CARRIED)

IN THE CUSTODYOF THE COMMON

CARRIER(CHECKED-IN)

Legal nature of the baggageNecessary deposit Considered as

goods

Required diligence by the common carrier

Diligence of a depositary(ordinary diligence)

Extraordinarydiligence

Applicable rules

Arts. 1998 and 2000-2003 Arts. 1733-1753

CONCURRING CAUSES OF ACTION ARISINGFROM THE NEGLIGENT ACT OF THE COMMONCARRIER1. Culpa contractual(breach of contract) Only the carrier is primarily liable and not thedriver, because there is no privity between the

driver and the passenger.Basis: Art.1759, NCC.No defense of due diligence in the selection andsupervision of employees.

2. Culpa aquiliana (quasi-delict)The carrier and driver are solidarily liable as jointtortfeasors.Basis: Art. 2180, NCC. Defense of due diligence in the selection andsupervision of employees is available. Exception:maritime tort resulting in collision. (See notes onCollision)

3. Culpa criminal (criminal negligence)

The driver is primarily liable. The carrier issubsidiarily liable only if the driver is convicted anddeclared insolvent.Basis: Art. 100, RPC.

In case of injury to a passenger due to thenegligence of the driver of the bus on which he isriding and of the driver of another vehicle, thedrivers as well as the owners of the two vehicles arejointly and severally liable for damages. It makesno difference that the liability of the bus driver andowner springs from contract while that of the ownerand driver of the other vehicle arises from quasi-delict. (Fabre vs. CA)

LIMITATIONS AS TO CARRIERS LIABILITY

INVALID AS BEINGCONTRARY TO PUBLIC

POLICY

VALID &ENFORCEABLE

1. One exempting thecarrier from any and allliability for loss ordamage occasioned by itsown negligence.2. An unqualifiedlimitation of liability to anagreed valuation.

1. One limiting theliability of the carrier toan agreed valuation,unless the shipperdeclares a higher valueand pays a higher rateof freight(H.E. HeacockCompany vs.Macondray & CompanyInc.)

However, the carrier cannot limit its liability forinjury to, or loss of, goods shipped where suchinjury or loss was caused by its own negligence.(Shewaram vs. PAL, 17 SCRA 606)

SPECIAL RULES ON LIABILITES OF AIRLINECARRIERS1. In case of flight diversion due to bad weather orother circumstances beyond the pilots control, therelation between the carrier and the passengercontinues until the latter has been landed at theport of destination and has left the carrierspremises. The carrier should necessarily exerciseextraordinary diligence in safeguarding the comfort,convenience and safety of its stranded passengersuntil they have reached their final destination.(Philippine Airlines vs. CA, 226 SCRA 423)2. Even where overbooking of passengers is allowedas a commercial practice, the airline company wouldstill be guilty of bad faith and still be liable fordamages if it did not properly inform passenger thatit could breach the contract of carriage even if theywere confirmed passengers. (Zalamea vs. CA, 228SCRA 23)3. An open-dated ticket constitutes a completecontract between the carrier and passenger. Hence,the airline company is liable if it refused to confirm apassengers flight reservation. (Singson vs. CA, 282SCRA 149)4. An airline company which issued a confirmedticket to a passenger covering successive trips ondifferent airlines can be held liable for damagesoccasioned by bumping off by one of thesuccessive airlines. (Lufthansa German Airlines vs.CA, 238 SCRA 290)5. An airline ticket providing that carriage by

successive air carriers is to be regarded as a singleoperation is to make the issuing carrier liable forthe tortuous conduct of the other carrier. A printedprovision in the ticket limiting liability only to its ownconduct is not enough to rebut that liability. (KLMRoyal Dutch Airlines vs. CA, 65 SCRA 237)

II. CODE OF COMMERCE

A. OVERLAND TRANSPORTATION(Arts. 349-379)

Applicability1. Domestic land and water/maritime transportation.(Pandect of Commercial Law and Jurisprudence,

Justice Jose Vitug, 1997 ed.)2. Domestic Air Transportation. (Commercial LawReview, Cesar Villanueva, 2004 ed.)

IMPORTANT CONCEPTS:1. Bill of lading2. Obligations of the carrier3. Right of abandonment4. Notice of damage5. Combined carrier agreement

BILL OF LADINGThe written acknowledgment of receipt of goodsand agreement to transport them to a specific placeto a person named or to his order.

Rules:


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matter from what causeit may have arisen.

forward them in the 1stshipment of the same orsimilar goods which hemay make to the pointof delivery. (ART. 358

Code of Commerce)

Effects of delaya. Merely suspends and generally does notterminate the contract of carriageb. Carrier remains duty bound to exerciseextraordinary diligencec. Natural disaster shall not free the carrier fromresponsibility (Art.1740)d. If delay is without just cause, the contractlimiting the common carriers liability cannot beavailed of in case of loss or deterioration of thegoods (Art.1747)

RIGHT OF CONSIGNEE TO ABANDON GOODS

Instances:1. Partial non-delivery, where the goods areuseless without the others (Art. 363);2. Goods are rendered useless for sale orconsumption for the purposes for which they areproperly destined (Art. 365); and3. In case of delay through the fault of the carrier(Art. 371).

NOTICE OF DAMAGE (ART. 366)Requisites for applicability:1. Domestic/inter-island/coastwise transportation2. Land/water/air transportation3. Carriage of goods4. Goods shipped are damagedRules:a. Patent damage: shipper must file a claim against

the carrier immediately upon delivery (it may beoral or written)

b. Latent damage: shipper should file a claimagainst the carrier within 24 hours fromdelivery.

Note: These rules does not apply to misdelivery ofgoods. (Roldan vs. Lim Ponzo)Purpose of notice:To inform the carrier that theshipment has been damaged, and it is charged withliability therefore, and to give it an opportunity tomake an investigation and fix responsibility whilethe matter is fresh. The filing of notice of claim is a conditionprecedent for recovery.

Shorter period may be stipulated by the partiesbecause it merely affects the shippers remedy anddoes not affect the liability of the carrier.(PHILAMGEN vs. Sweetlines, Inc.)Prescriptive Period Not provided by Article 366. Thus, in suchabsence, Civil Code rules on prescription apply.If despite the notice of claim, the carrier refusesto pay, action must be filed in court.

1. No bill of lading was issued:within 6 years

2. Bill of lading was issued: within10 years.

ARTICLE 366 COGSA Sec.3 (6)

Applicability

1.

Domestic/inter- 1.

International/

island/coastwisetransportation2. Land, water, airtransportation3. Carriage of goods

overseas/foreign (fromforeign country toPhils.)Note: subject to therule on Paramount

Clause2. Water/maritimetransportation3. Carriage of goods

Notice of damage

1. Condition precedent2. 24-hour period forclaiming latent damage

1. Not a conditionprecedent2. 3-day period forclaiming latent damage

Prescriptive period

None provided; CivilCode applies.

One year from the dateof delivery (deliveredbut damaged goods),or date when thevessel left port or from

the date of delivery tothe arrastre (non-delivery or loss).

COMBINED CARRIER AGREEMENT (ART. 373)GENERAL RULE: In case of a contract oftransportation of several legs, each carrier isresponsible for its particular leg in the contract.EXCEPTION:A combined carrier agreement wherea carrier makes itself liable assuming the obligationsand acquiring as well the rights and causes of actionof those which preceded it.

B. MARITIME COMMERCE(Arts. 573-869)

IMPORTANT CONCEPTS:1. Merchant vessel2. Maritime lien and Preference of Credit3. Doctrine of limited liability4. Causes of revocation of voyage5. Participants in maritime commerce6. Charter party7. Loans on bottomry and respondentia8. Accidents in maritime commerce

MARITIME/ADMIRALTY LAWIt is the system of laws which particularly relatesto the affairs and business of the sea, to ships, theircrews and navigation, and to maritime conveyanceof persons and property. (Notes and Cases on theLaw on Transportation and Public Utilities, Aquino &Hernando, citing Francisco, p.254)

Maritime laws apply only to maritime trade andsea voyages. (Pandect of Commercial Law andJurisprudence, Justice Jose Vitug, 1997 ed.)

Arrastre service is not maritime in character. Itrefers to a contract for the unloading of goods froma vessel. (ICTSI vs. Prudential Guarantee, 320 SCRA244)

CHARACTERISTICS OF MARITIMETRANSACTION


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1. Real - similar to transactions over real propertywith respect to effectivity against third personswhich is done through registration. (Rubiso vs.Rivera, 37 Phil. 72). The evidence of real nature isshown by: 1) the limitation of the liability of the

agents to the actual value of the vessel and thefreight money; and 2) the right to retain the cargoand embargo and detention of the vessel (LuzonStevedoring Corp v. CA, 156 SCRA 169);2. Hypothecary - the liability of the owner of thevalue of the vessel is limited to the vessel itself(Doctrine of Limited Liability).

The real and hypothecary nature of maritime lawsimply means that the liability of the carrier inconnection with losses related to maritime contractsis confined to the vessel, which stands as theguaranty for their settlement. (Aboitiz ShippingCorp. vs. General Accident Fire and Life AssuranceCorp. 217 SCRA 359).

MERCHANT VESSELVessel engaged in maritime commerce, whetherforeign or otherwise. (Bar Review Materials inCommercial Law, Jorge Miravite, 2002 ed.)Constitutes property which may be acquired andtransferred by any of the means recognized by law.They shall continue to be considered as personalproperty. (Arts. 573, 585)They are susceptible to maritime lienssuch as forthe repair, equipping and provisioning of the vesselin the preparation of a voyage, as well as mortgageliabilities, in satisfaction of which a vessel may bevalidly arrested and sold. (Ship Mortgage Decree of1978)

MARITIME LIEN It constitutes a present right of property in theship, a jus in re, to be afterward enforced inadmiralty by process in rem. (PNB vs. CA, 337 SCRA381)If the maritime lien arose prior to the recordingof a preferred mortgage, it shall have priority overthe said mortgage lien. (PNB vs. CA, 337 SCRA 381)

ORDER OF PREFERENCE IN CASE OF SALE OFVESSEL

R.A. 6106 P.D. 1521

Effectivity date

1969 1978

Applicability

Overseas shipping only Both domestic andoverseas shipping

Kind of sale

Judicial Judicial andextrajudicial

Order of Preference

A preferred mortgageshall have priority overall claims against thevessel, except thefollowing preferences inthe order stated:1. Judicial costs of theproceedings;

The preferredmortgage lien shallhave priority over allclaims against thevessel, except thefollowing preferencesin the order stated:1. Expenses and fees

2. Taxes due thePhilippine Government;3. Salaries and wagesof the Captain andCrew of the vessel

during its last voyage;4. General average orsalvage includingcontract salvage,bottomry loans, andindemnity due shippersfor the value of goodstransported but whichwere not delivered tothe consignee;5. Costs of repair andequipment of thevessel, and provisioningof food, supplies andfuel during its lastvoyage; and6. Preferred mortgagesregistered prior in time.

allowed and coststaxed by the court andtaxes due to theGovernment;2. Crews wages;

3. General average;4. Salvage, includingcontract salvage;5. Maritime liensarising prior in time tothe recording of thepreferred mortgage;6. Damages arising outof tort; and7. Preferred mortgageregistered prior in time.

Effect of sale: All pre-existing claims in the vesselare terminated. They will then be satisfied from theproceeds of the sale subject to the order ofpreference.

DOCTRINE OF LIMITED LIABILITY(HYPOTHECARY RULE)Cases where applicable:

1. Art. 587 civil liability for indemnities tothird persons

2. Art. 590indemnities from negligent acts

of the captain (not the shipowner or shipagent)3. Art. 837collision4. Art. 643 liability for wages of the

captain and the crew and for advancesmade by the ship agent if the vessel islost by shipwreck or capture

GENERAL RULE: The liability of shipowner andship agent is limited to the amount of interest insaid vessel such that where vessel is entirely lost,the obligation is extinguished. (Luzon Stevedoring v.Escano, 156 SCRA 169) The interest extends to: 1)the vessel itself; 2) equipments; 3) freightage; and4) insurance proceeds. (Chua v. IAC, 166 SCRA 183)

EXCEPTIONS:

1.

Claims under Workmens Compensation (Abuegvs. San Diego 77 Phil 730);

2. Injury or damage due to shipowner or to theconcurring negligence of the shipowner andthe captain;

3. The vessel is insured (Vasquez vs. CA 138SCRA 553).

4. Expenses for repair on vessel completed beforeloss;

5. In case there is no total loss and the vessel isnot abandoned;

6. Collision between two negligent vessels;

Abandonment of the vessel is necessary to limitthe liability of the shipowner. The only instance

were abandonment is dispensed with is when the


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vessel is entirely lost (Luzon Stevedoring vs. CA 156SCRA 169).

RIGHT OF SHIPOWNER OR SHIP AGENT TOABANDON VESSEL

Instances:1.In case of civil liability from indemnities to thirdpersons (Art. 587);2. In case of leakage of at least of the contentsof a cargo containing liquids (Art. 687); and3. In case of constructive loss of the vessel (Sec.138, Insurance Code).

RIGHT OF ABANDONMENT

SHIPOWNER OR SHIPAGENT

CONSIGNEE

What may be abandoned

Vessel Goods shipped

Instances

1. In case of civil liabilityfrom indemnities to thirdpersons (Art. 587);2. Sec. 138, InsuranceCode;3. In case of leakage ofat least of thecontents of a cargocontaining liquids (Art.687)

1. Partial non-delivery,where the goods areuseless without theothers (Art. 363);2. Goods are rendereduseless for sale orconsumption for thepurposes for whichthey are properlydestined (Art. 365);and3. In case of delaythrough the fault of thecarrier (Art. 371).

Effects

1. Transfer of ownershipof the vessel from theshipowner to theshippers or insurer.2. In case of (2), theinsurer must pay theinsured as if there wasactual total loss of thevessel.

1. Transfer ofownership on thegoods from the shipperto the carrier.2. Carrier should paythe shipper the marketvalue of the goods atthe point ofdestination.

CAUSES OF REVOCATION OF VOYAGE1. War or interdiction of commerce;2. Blockade;3. Prohibition to receive cargo at destination;4. Embargo;5. Inability of the vessel to navigate. (Art. 640)

Terms:1. Interdiction of commerce A governmental

prohibition of commercial intercourse intendedto bring about an entire cessation for the timebeing of all trade whatever.

2. BlockadeA sort of circumvallation of a placeby which all foreign connection andcorrespondence is, as far as human power caneffect it, to be cut off.

3. EmbargoA proclamation or order of a state,usually issued in time of war or threatenedhostilities, prohibiting the departure of ships orgoods from some or all the ports of such stateuntil further order.

PARTICIPANTS IN MARITIME COMMERCEA. Shipowners and ship agentsB. Captains and masters of the vesselC. Officers and crew of the vesselD. Supercargoes

E. Pilot

A. SHIPOWNERS AND SHIP AGENTSShipowner (proprietario) Person who has possession, control andmanagement of the vessel and the consequent rightto direct her navigation and receive freight earnedand paid, while his possession continues.

Ship agent (naviero) Person entrusted with provisioning andrepresenting the vessel in the port in which it maybe found; also includes the shipowner.Not a mere agent under civil law; he is solidarilyliable with the ship owner.Powers and functions:1.

Capacity to trade;2. Discharge duties of the captain, subject to

Art.609;3. Contract in the name of the owners with

respect to repairs, details of equipment,armament, provisions of food and fuel, andfreight of the vessel, and all that relate to therequirements of navigation;

4. Order a new voyage, make a new charter orinsure the vessel after obtaining authorizationfrom the shipowner or if granted in certificateof appointment.

Civil Liabilities of the Shipowner And ShipAgent

1.

All contracts of the captain, whether authorizedor not, to repair, equip and provision thevessel; (Art. 586)

2. Loss and damage to the goods loaded on thevessel without prejudice to their right to freethemselves from liability by abandoning thevessel to the creditors. (Art. 587)

Duty of Ship Agent to Discharge the Captainand Members of the CrewIf the seamen contract is not for a definite periodor voyage, he may discharge them at his discretion.(Art. 603) If for a definite period, he may not dischargethem until after the fulfillment of their contracts,

except on the following grounds:a. Insubordination in serious matters;b. Robbery;c. Theft;d. Habitual drunkenness;e. Damage caused to the vessel or to itscargo through malice or manifest or provennegligence. (Art. 605)

B. CAPTAINS AND MASTERSThey are the chiefs or commanders of ships. The terms have the same meaning, but areparticularly used in accordance with the size of thevessel governed and the scope of transportation,i.e., large and overseas, and small and coastwise,respectively.


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Nature of position (3-fold character):1. General agent of the shipowner;2. Technical director of the vessel;3. Representative of the government of the

country under whose flag he navigates.

Qualifications:1. Filipino citizen;2. Legal capacity to contract;3. Must have passed the required physical

and mental examinations required forlicensing him as such. (Art. 609)

Inherent powers:1. Appoint crew in the absence of ship

agent;2. Command the crew and direct the vessel

to its port of destination;3. Impose correctional punishment on those

who, while on board vessel, fail to complywith his orders or are wanting indiscipline;

4. Make contracts for the charter of vessel inthe absence of ship agent.

5. Supply, equip, and provision the vessel;and

6. Order repair of vessel to enable it tocontinue its voyage. (Art. 610)

Sources of funds to comply with the inherentpowers of the captain (in successive order):

1. From the consignee of the vessel;2. From the consignee of the cargo;3. By drawing on the ship agent;4. By a loan on bottomry;5. By sale of part of the cargo. (Art. 611)

Duties:1. Bring on board the proper certificate and

documents and a copy of the Code of

Commerce;2. Keep a Log Book, Accounting Book and

Freight Book;3. Examine the ship before the voyage;4. Stay on board during the loading and

unloading of the cargo;5. Be on deck while leaving or entering the

port;6. Protest arrivals under stress and in case

of shipwreck;7. Follow instructions of and render an

accounting to the ship agent;8. Leave the vessel last in case of wreck;9. Hold in custody properties left by

deceased passengers and crew members;

10.

Comply with the requirements of customs,health, etc. at the port of arrival;11. Observe rules to avoid collision;12. Demand a pilot while entering or leaving a

port.(Art. 612)

A ships captain must be accorded a reasonablemeasure of discretionary authority to decide whatthe safety of the ship and of its crew and cargospecifically requires on a stipulated ocean voyage(Inter-Orient Maritime Enterprises Inc. vs. CA).

No liability for the following:1. Damages caused to the vessel or to the

cargo by force majeure;

2. Obligations contracted for the repair,equipment, and provisioning of the vesselunless he has expressly bound himselfpersonally or has signed a bill ofexchange or promissory note in his name.

(Art. 620)

Solidary Liabilities of the ShipAgent/Shipowner for Acts Done by theCaptain towards Passengers and Cargoes

1. Damages to vessel and to cargo due tolack of skill and negligence;

2. Thefts and robberies of the crew;3. Losses and fines for violation of laws;4. Damages due to mutinies;5. Damages due to misuse of power;6. For deviations;7. For arrivals under stress;8. Damages due to non-observance of

marine regulations. (Art. 618)

C. OFFICERS AND CREW1. Sailing Mate/First Mate2. Second Mate3. Engineers4. CrewNo liability under the following circumstances:1. If, before beginning voyage, captain attempts

to change it, or a naval war with the power towhich the vessel was destined occurs;

2. If a disease breaks out and be officiallydeclared an epidemic in the port of destination;

3. If the vessel should change owner or captain.(Art. 647)

Sailing Mate/First Mate

Second chief of the vessel who takes the place ofthe captain in case of absence, sickness, or deathand shall assume all of his duties, powers andresponsibilities. (Art. 627)Duties:

1. Provide himself with maps and charts withastronomical tables necessary for thedischarge of his duties;

2. Keep the Binnacle Book;3. Change the course of the voyage on

consultation with the captain and theofficers of the boat, following the decisionof the captain in case of disagreement;

4. Responsible for all the damages caused tothe vessel and the cargo by reason of his

negligence. (Arts. 628 - 631)

Second Mate Takes command of the vessel in case of theinability or disqualification of the captain and thesailing mate, assuming in such case their powersand responsibilities.Third in commandDuties:

1. Preserve the hull and rigging of thevessel;

2. Arrange well the cargo;3. Discipline the crew;4. Assign work to crew members;5. Inventory the rigging and equipment of

the vessel, if laid up. (Art. 632)


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Engineers Officers of the vessel but have no authorityexcept in matters referring to the motor apparatus.When two or more are hired, one of them shall be

the chief engineer.Duties:

1. In charge of the motor apparatus, spareparts, and other instruments pertaining tothe engines;

2. Keep the engines and boilers in goodcondition;

3. Not to change or repair the enginewithout authority of the captain;

4. Inform the captain of any damage to themotor apparatus;

5. Keep an Engine Book;6. Supervise all personnel maintaining the

engine. (Art. 632)

CrewThe aggregate of seamen who man a ship, or theships company.Hired by the ship agent, where he is present andin his absence, the captain hires them, preferringFilipinos, and in their absence, he may take inforeigners, but not exceeding 1/5 of the crew. (Art.634)

Classes of Seamans Contracts1. By the voyage;2. By the month; and3. By share of profits or freightage.

Just Causes for the Discharge of SeamanWhile Contract Subsists

1.

Perpetration of a crime;2. Repeated insubordination, want of discipline;3. Repeated incapacity and negligence;4. Habitual drunkenness;5. Physical incapacity;6. Desertion. (Art. 637)

Rules in case of Death of a Seaman The seamans heirs are entitled to payment asfollows:1. If death is natural:

a. compensation up to time of death ifengaged on wage

b. if by voyage - half of amount if deathoccurs on voyage out; and full, if on

voyage inc. if by shares - none, if before departure;full, if after departure

2. if death is due to defense of vessel - fullpayment;

3. if captured in defense of vessel - full payment;4. if captured due to carelessness - wages up to

the date of the capture. (Art. 645)

Complement of the Vessel All persons on board, from the captain to thecabin boy, necessary for the management,maneuvers, and service, thus including the crew,the sailing mates, engineers, stokers and otheremployees on board not having specificdesignations.

Does not include the passengers or the personswhom the vessel is transporting.

D. SUPERCARGOES Persons who discharges administrative duties

assigned to him by ship agent or shippers, keepingan account and record of transaction as required inthe accounting book of the captain. (Art. 649)

E. PILOTA person duly qualified, and licensed, to conducta vessel into or out of ports, or in certain waters.The term generally connotes a person taken onboard at a particular place for the purpose ofconducting a ship through a river, road or channel,or from a port. Master pro hac vice for the time being in thecommand and navigation of the ship.While in exercising his functions a pilot is in solecommand of the ship and supersedes the master forthe time being in the command and navigation ofthe ship, the master does not surrender his vesselto the pilot and the pilot is not the master. Thereare occasions when the master may and shouldinterfere and even displace the pilot, as when thepilot is obviously incompetent or intoxicated (FarEastern Shipping Company vs. CA).Compulsory PilotageStates possessing harborshave enacted laws or promulgated rules requiringvessels approaching their ports to take on boardpilots licensed under the local laws. (Notes andCases on the Law on Transportation and PublicUtilities, Aquino, T. & Hernando, R.P. 2004 ed. p.518)

Liablity of Pilot

GENERAL RULE: On compulsory pilotage grounds,the Harbor Pilot is responsible for damage to avessel or to life or property due to his negligence.EXCEPT:1. Accident caused by force majeure or naturalcalamity provided the pilot exercised prudence andextra diligence to prevent or minimize damages.2. Countermand or overrule by the master of thevessel in which case the registered owner of thevessel is liable. (Sec.11, Art.III PPA Admin Order 03-85)

SPECIAL CONTRACTS OF MARITIMECOMMERCE

1. Charter party

2.

Bill of lading3. Contract of transportation of passengerson sea voyages

4. Loan on bottomry5. Loan on respondentia6. Marine insurance

CHARTER PARTYA contract by virtue of which the owner or agentbinds himself to transport merchandise or personsfor a fixed price. A contract by which an entire ship, or someprincipal part thereof is let/leased by the owner toanother person for a specified time or use. (PlantersProducts, Inc. vs. CA, 226 SCRA 476)Parties:


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1. Ship owner or ship agent2. Charterer

Classes:1. Bareboat or demise The charterer providescrew, food and fuel. The charterer is liable as if he

were the owner, except when the cause arises fromthe unworthiness of the vessel. The shipownerleases to the charterer the whole vessel,transferring to the latter the entire command,possession and consequent control over the vesselsnavigation, including the master and the crew, whothereby become the charters servants. Ittransforms a common carrier into a private carrier.

The charterer becomes the owner of thevessel pro hac vice, just for that one particularpurpose only. Because the charterer is treatedas owner pro hac vice, the charterer assumesthe customary rights and liabilities of theshipowner to third persons and is held liablefor the expense of the voyage and the wagesof the seamen.

2. Contract of AffreightmentA contract wherebythe owner of the vessel leases part or all of itsspace to haul goods for others.

The shipowner retains the possession,command and navigation of the ship, thecharterer merely having use of the space in thevessel in return for his payment of the charterhired.Kinds:a. Time charter vessel is chartered for a

fixed period of time or duration of voyage.b. Voyage or trip charter the vessel is

leased for one or series of voyagesusually for purposes of transporting goodsfor charterer.

LEASE CHARTER PARTY

If for a definite period,lessee cannot give upthe lease by paying aportion of the amountagreed upon.

Charterer may rescindcharter party by payinghalf of the freightageagreed upon.

If the leased property issold to one who knowsof the existence of thelease, the new ownermust respect the lease.

The new owner is notcompelled to respect thecharter party so long ashe can load the vesselwith his own cargo. (Art.689)

Civil law concept Commercial law concept

CHARTER PARTY BILL OF LADING

An entire or completecontract.

More like a privatereceipt which thecaptain gives to accreditgoods received frompersons

Consensual contract Real contract

BAREBOAT ORDEMISE CHARTER

CONTRACT OFAFFREIGHTMENT(TIME OR VOYAGE

CHARTER)

Charterer becomes Owner remains liable as

liable to others causedby its negligence

carrier and must answerfor any breach of duty

Charterer regarded asowner pro hac vice forthe voyage

Charterer is notregarded as owner.

Owner of vesselrelinquishes possession,command andnavigation to charterer

The vessel ownerretains possession,command andnavigation of the ship

Common carrier isconverted to privatecarrier.

Common carrier is notconverted to a privatecarrier.

PERSONS WHO MAY MAKE A CHARTER1. Owner or owners of the vessel, either in

whole or in majority part, who have legalcontrol and possession of the vessel

2.

Charterer may subcharter entire vessel to3rdperson only if not prohibited in originalcharter. (Art.679)

3. Ship agent if authorized by the owner/s orgiven such power in the certificate ofappointment. (Art.598)

4. Captain in the absence of the ship agentor consignee and only if he acts inaccordance with the instructions of theagent or owner and protects the lattersinterests. (Art.609)

REQUISITES OF A VALID CHARTER PARTY1. Consent of the contracting parties2. Existing vessel which should be placed at

the disposition of the shipper3. Freight4. Compliance with Art. 652 of the Code of

Commerce

Clauses Which May Be Included In a CharterParty

Jason clause Clause paramount orparamount clause


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A stipulation in a charterparty that in case of amaritime accident forwhich the shipowner isnot responsible by law,

contract or otherwise,the cargo shippers,consignees or ownersshall contribute with theshipowner in generalaverage. (Pandect ofCommercial Law andJurisprudence, JusticeJose Vitug, 1997 ed.)

A clause in a charterparty providing that theCOGSA shall apply, eventhough thetransportation is

domestic, subject to theextent that any term ofthe bill of lading isrepugnant to the COGSAor applicable law, thento the extent thereof theprovision of the bill oflading is void. (Pandectof Commercial Law andJurisprudence, JusticeJose Vitug, 1997 ed.)

Rights and Obligations of Parties

SHIPOWNER ORSHIP AGENT

CHARTERER

1. If the vessel ischartered wholly, not toaccept cargo fromothers;2. To observerepresented capacity;3. To unload cargoclandestinely placed4. To substituteanother vessel if load isless than 3/5 ofcapacity;5. To leave the port ifthe charterer does notbring the cargo withinthe lay days and extralay days allowed;6. To place in a vesselin a condition tonavigate;7. to bring cargo tonearest neutral port incase of war or blockade.(Arts. 669-678)

1. To pay the agreedcharter price;2. To pay freightageon unboarded cargo;3. To pay losses toothers for loadinguncontracted cargo andillicit cargo;4. To wait if thevessel needs repair;5.

To pay expensesfor deviation. (Arts.679-687)

Rescission of a Charter Party

At charterersrequest

(Art 688)

Atshipowners

request(Art. 689)

Fortuitouscauses

(Art. 690)

1. Byabandoningthe charter andpaying half ofthe freightage;2. Error intonnage orflag;3. Failure to

place the

1. If the extralay daysterminatewithout thecargo beingplacedalongside thevessel;2. Sale by the

owner of the

1. War orinterdiction ofcommerce;2. Blockade;3. Prohibitionto receivecargo;4. Embargo;and

5. Inability of

vessel at thecharterersdisposal;4. Return ofthe vessel due

to pirates,enemies or badweather;5. Arrival at aport forrepairs.

vessel beforeloading by thecharterer;

the vessel tonavigate.

Terms:1. Primage- bonus to be paid to the captain after

the successful voyage.2. Demurragethe sum fixed in the charter party

as a remuneration to the owner of the ship forthe detention of his vessel beyond the numberof days allowed by the charter party for loadingor unloading or for sailing.

3.

Deadfreight the amount paid by orrecoverable from a charterer of a ship for theportion of the ships capacity the lattercontracted for but failed to occupy.

4. Lay Days - days allowed to charter parties forloading and unloading the cargo.

5. Extra Lay Daysdays which follow after thelay days have elapsed.

USUAL FORMS OF CONSUMMATINGCONTRACTS1. C.I.F.cost, insurance and freight;2. F.O.B. - free on board;3. F.A.S. - free alongside ship; and4. C. & F. - cost and freight.

TRANSSHIPMENT OF GOODS The act of taking cargo out of one ship andloading it in another, or the transfer of goods fromthe vessel stipulated in the contract of affreightmentto another vessel before the place of destinationnamed in the contract has been reached, or thetransfer for further transportation from one ship orconveyance to another. It is not dependent on the ownership of thetransporting ships or in the change of carriers, butrather on the fact of actual physical transfer ofcargo from one vessel to another.If done without legal excuse, however competentand safe the vessel into which the transfer is made,is a violation of contract and infringement of right of

shipper and subjects carrier to liability if freight islost event by cause otherwise excepted. (MagellanManufacturing vs. CA, 201 SCRA 102)

LOAN ON BOTTOMRY AND RESPONDENTIAA real, unilateral, aleatory contract, by virtue ofwhich one person lends to another a certain amountof money or goods on things exposed to maritimerisks, which amount, with its earnings, is to bereturned if the things are safely transported, andwhich is lost if the latter are lost.

LOAN ONBOTTOMRY

LOAN ONRESPONDENTIA

Definition


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destination, and to the cargo from the port ofloading to the port of consignment. (Art. 806)The person whose property has been saved mustcontribute to reimburse the damage caused orexpense incurred if the situation constitutes general

average.Classes:

1. Particular or Simple Average2. Gross or General Average

Where both vessel and cargo are saved, it isgeneral average; where only the vessel or only thecargo is saved, it is particular average. Expenses incurred to refloat a vessel, whichaccidentally ran aground, in order to continue itsvoyage, do not constitute general average. Not onlyis there absence of a marine peril, common safetyfactor, and deliberateness. It is the safety of theproperty, and not the voyage, which constitutes thetrue foundation of general average. (A. Magsaysay,Inc. vs. Agan, G.R.No. L-6393, Jan. 31, 1955)

PARTICULAR ORSIMPLE

GROSS OR GENERAL

Definition

Damages or expensescaused to the vessel orcargo that did not inureto the common benefit,and borne by respectiveowners. (Art. 809)

Damages or expensesdeliberately caused inorder to save thevessel, its cargo orboth from real andknown risk. (Art. 811)

Requisites

1. common danger;2. deliberate

sacrifice;3. success;4.

proper formalitiesand legal steps.

Liability

The owner of the goodswhich gave rise to theexpense or suffered thedamage shall bear thisaverage. (Art. 810)

All the persons havingan interest in thevessel and the cargotherein at the time ofthe occurrence of theaverage shallcontribute to satisfythis average. (Art. 812) The insurers(Art.859) and lenderson bottomry andrespondentia shall

likewise contribute.(Art.732).

Number of interests involved

Only one interestinvolved

Several interestsinvolved

Share in the damage or expense

100% share In proportion to thevalue of the ownersproperty saved

Right to recover

No reimbursement There may bereimbursement

Kinds (not exclusive)

Art. 809 Art. 811

Procedure for recovery

1. Assembly anddeliberation2. Resolution of thecaptain

3.

Entry of theresolution in thelogbook4. Detailed minutes5. Delivery of theminutes to themaritime judicialauthority of the firstport, within 24 hoursfrom arrival,6. Ratification bycaptain under oath.(Arts. 813-814)

GOODS NOT COVERED BY GENERAL AVERAGE

EVEN IF SACRIFICED1. Goods carried on deck. (ART.855)2. Goods not recorded in the books or

records of the vessel. (ART.855 (2))3. Fuel for the vessel if there is more than

sufficient fuel for the voyage. (Rule IX,York-Antwerp Rule)

Jettison Act of throwing cargo overboard in order tolighten the vessel.Order of goods to be cast overboard:

1. Those which are on the deck, preferringthe heaviest one with the least utility andvalue;

2. Those which are below the upper deck,

beginning with the one with greatestweight and smallest value. (Art. 815)

Jettisoned goods are not res nullius nor deemedabandoned within the meaning of civil law so as tobe the object of occupation by salvage. (Pandect ofCommercial Law and Jurisprudence, Justice JoseVitug, 1997 ed.) In order that the jettisoned goods may beincluded in the gross or general average, theexistence of the cargo on board should be provenby means of the bill of lading. (Art. 816)

York-Antwerp (Y-A) Rules on DeterminingLiability for Averages With Regard To Deck

Cargo1. Deck cargo is allowed only indomestic/coastwise/inter-island shipping, and isprohibited in international/overseas/foreignshipping.2. If deck cargo is loaded with the consent of theshipper on overseas trade, it must always contributeto general average, but should the same bejettisoned, it would not be entitled toreimbursement because there is violation of the Y-ARules.3. If deck cargo is loaded with the consent of theshipper on coastwise shipping, it must alwayscontribute to general average and if jettisonedwould be entitled to reimbursement. Reason: In domestic shipping, voyages are


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usually short and the seas are generally not rough.In overseas shipping, the vessel is exposed formany days to perils of the sea.

DOMESTIC INTERNATIONAL

Deck cargo is allowed Deck cargo is notallowed

With shippers consent

General average Particular average

Without shippers consent

Captain is liable Captain is liable

ARRIVAL UNDER STRESS (ARRIBADA)The arrival of a vessel at the nearest and mostconvenient port instead of the port of destination, ifduring the voyage the vessel cannot continue thetrip to the port of destination.

When lawful Whenunlawful

Who bearsexpenses:

The inability tocontinuevoyage is dueto lack ofprovisions,well-foundedfear of seizure,privateers,pirates, oraccidents ofthe seadisabling it tonavigate. (Art.819)

1. Lack ofprovisions dueto negligence tocarry accordingto usage andcustoms;2. Risk ofenemy not wellknown ormanifest3. Defect ofvessel due toimproperrepair; and

4.

Malice,negligence, lackof foresight orskill of captain.(Art. 820)

The shipowneror ship agentis liable in caseof unlawfularrival understress. Butthey shall notbe liable forthe damagescaused byreason of alawful arrival.(Art. 821)

It is the duty of the captain to continue thevoyage without delay after the cause of the arrivalunder stress has ceased failing in such duty rendershim liable. However, in case the cause has been riskof enemies, there must first be an assembly beforedeparture. (Art. 825)Steps:

1. Captain should determine during thevoyage if there is well founded fear of

seizure, privateers and other validgrounds;2. Captain shall assemble the officers and

summon the persons interested in thecargo who may attend the meeting butwithout a right to vote;

3. The officers shall determine and agree ifthere is well-founded reason afterexamining the circumstances. Thecaptain shall have the deciding vote;

4. The agreement shall be drafted and theproper minutes shall be signed andentered in the log book;

5. Objections and protests shall likewise beentered in the minutes.

COLLISIONImpact of two vessels both of which are moving.

AllisionImpact between a moving vessel and a stationary

one.

Nautical Rules to Determine Negligence1. When two vessels are about to enter a port,

the farther one must allow the nearer to enterfirst; if they collide, the fault is presumed to beimputable to the one who arrived later, unlessit can be proved that there was no fault on itspart.

2. When two vessels meet, the smaller shouldgive the right of way to the larger one.

3. A vessel leaving port should leave the wayclear for another which may be entering thesame port.

4. The vessel which leaves later is presumed tohave collided against one which has left earlier.

5.

There is a presumption against the vesselwhich sets sail in the night.

6. There is a presumption against the vessel withspread sails which collides with another whichis at anchor and cannot move, even when thecrew of the latter has received word to liftanchor, when there was not sufficient time todo so or there was fear of a greater damage orother legitimate reason.

7. There is a presumption against an improperlymoored vessel.

8. There is a presumption against a vessel whichhas no buoys to indicate the location of itsanchors to prevent damage to vessels whichmay approach it.

9.

Vessels must have proper look-outs orpersons trained as such and who have noother duty aside therefrom. (Smith Bell v. CA)

Nautical Rules as to Sailing Vessel andSteamship1. Where a steamship and a sailing vessel are

approaching each other from oppositedirections, or on intersecting lines, thesteamship from the moment the sailing vesselis seen, shall watch with the highest diligenceher course and movements so as to be able toadopt such timely means of precaution as willnecessarily prevent the two boats from comingin contact.

2. The sailing vessel is required to keep hercourse unless the circumstances requireotherwise.

Zones of Time in the Collision of Vessels1. First zoneall time up to the moment when riskof collision begins.No rule is as yet applicable for none is necessary.2. Second zonetime between moment when riskof collision begins and moment it becomes apractical certainty.It is in this period where conduct of the vessels isprimordial. It is in this zone that vessels muststrictly observe nautical rules, unless a departuretherefrom becomes necessary to avoid imminentdanger.


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3. Third zone time when collision is certain andtime of impact.An error in this zone would no longer be legallyconsequential.Error in Extremis- sudden movement made by a

faultless vessel during the third zone of collisionwith another vessel which is at fault during the 2ndzone. Even if such sudden movement is wrong, noresponsibility will fall on said faultless vessel.(Urrutia and Co. v. Baco River Plantation Co., 26PHIL 632)

Cases Covered By Collision and Allision1. One vessel at faultVessel at fault is liable for damage caused toinnocent vessel as well as damages suffered by theowners of cargo of both vessels. (Art. 826)2. Both vessels at fault Each vessel must bear its own loss, but theshippers of both vessels may go against theshipowners who will be solidarily liable. (Art. 827)3.

Vessel at fault not known Each vessel must bear its own loss, but theshippers of both vessels may go against theshipowners who will be solidarily liable. (Art. 828)

Doctrine of Inscrutable Fault In case ofcollision where it cannot be determined whichbetween the two vessels was at fault, bothvessels bear their respective damage, but bothshould be solidarily liable for damage to thecargo of both vessels.

4. Third vessel at fault The third vessel will be liable for losses anddamages. (Art. 831)5. Fortuitous event/force majeureNo liability. Each bears its own loss. (Art. 830)

The doctrine of res ipsa loquitur applies in case amoving vessel strikes a stationary object, such as abridge post, dock, or navigational aid. (Far EasternShipping v. CA, Luzon Stevedoring vs. CA)

Even if the cause of action against the commoncarrier is based on quasi-delict, the defense of duediligence in the selection and supervision ofemployees is unavailing in case of a maritime tortresulting in collision. It is not a civil tort governed bythe Civil Code but a maritime one governed by Arts.826-839 of the Code of Commerce. (ManilaSteamship vs. Insa Abdulhaman)

Doctrine of Last Clear Chance and Rule onContributory Negligence cannot be applied incollision cases because of Art.827 of the Code ofCommerce. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino, T. &Hernando, R.P. 2004 ed.)

MARITIME PROTEST Condition precedent or prerequisite to recoveryof damages arising from collisions and othermaritime accidents.It is a written statement made under oath by thecaptain of a vessel after the occurrence of anaccident or disaster in which the vessel or cargo islost or damaged, with respect to the circumstancesattending such occurrence, for the purpose of

recovering losses and damages. Excuses for not filing protest: 1) where theinterested person is not on board the vessel; and 2)on collision time, need not be protested. (Art. 836)Cases applicable:

1.

Collision (Art. 835);2. Arrival under stress (Art. 612(8));3. Shipwrecks (Arts. 612(15), 843);4. Where the vessel has gone through a

hurricane or when the captain believesthat the cargo has suffered damages oraverages (Art. 624).

Who makes: CaptainWhen made: within 24 hours from the time thecollision took place.Before whom made: competent authority at thepoint of collision or at the first port of arrival, if inthe Philippines and to the Philippine consul, if thecollision took place abroad. (Art. 835)

SHIPWRECK It is the loss of the vessel at sea as aconsequence of its grounding, or running against anobject in sea or on the coast. It occurs when thevessel sustains injuries due to a marine perilrendering her incapable of navigation. If the wreck was due to malice, negligence orlack of skill of the captain, the owner of the vesselmay demand indemnity from said captain. (Art. 841) The rules on collision or allision, as may bepertinent, can equally apply to shipwrecks.

SPECIAL CONCEPTSARRASTRE SERVICE A contract for the unloading of goods from avessel.

Applicability:Overseastrade only. (CommercialLaw Review, C. Villanueva, 2004 ed.) Significance: When a person brings in cargofrom abroad, he cannot unload and deliver thecargo by himself. The unloading must be done bythe arrastre operator, which will then deliver thecargo to the importer. (Commercial Law Review, C.Villanueva, 2004 ed.) Nature of business: It is a public utility,discharging functions which are heavily investedwith public interest.Liability:1. Similar to a warehouseman (Lua Kian v. Manila

Railroad)2. Similar to a common carrier (Northern Motors

v. Prince Line)3. Solidary liability with the common carrier

Note: In order that the arrastre operator may beheld liable, the consignee must prove that thedamage was due to the negligence and while thegoods are in the custody of the arrastre operator.(Hartford Fire Insurance v. E. Razon, Inc.)

STEVEDORING SERVICE The carriage of goods from the warehouse orpier to the holds of the vessel. (Chief of Staff vs.CIR) As understood in the port business, the termconsists of the handling of cargo from the hold ofthe ship to the dock, in case of pier-side unloading;


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or to a barge, in case of unloading at sea. (Anglo-FilTrading Corp. vs. Lazaro)The loading on the ship of outgoing cargo is alsopart of stevedoring work. (Ibid.)

CONTAINERIZATION/ SAID-TO-CONTAIN/SHIPPERS LOAD AND COUNT SYSTEMSystem whereby the shipper loads his cargoes ina specially designed container, seals the containerand delivers it to the carrier for transportation. Thecarrier does not participate in the counting of themerchandise for loading into the container, theactual loading, and the sealing of the container. (USLines v. Comm. Of Customs, ICTSI v. PrudentialGuarantee) The matter of quantity, description andconditions of the cargo inside the container is thesole responsibility of the shipper, unless there isstipulation to the contrary. (US Lines vs. Comm. OfCustoms, Reyma Brokerage v. Phil. HomeAssurance)

Note: In order to attribute to the carrier anydamage to the shipment that may be found,inspection of the goods should be done at pier-side.(Bankers vs. CA)

III. CARRIAGE OF GOODS BY SEA ACT/COGSA(C.A. No. 65)

APPLICABILITYThe transportation must be:

1. Water/maritime transportation;2. for the carriage of goods; and3. overseas/international/foreign (from

foreign port to Philippine port).

It can be applied in domestic sea transportation ifagreed upon by the parties. (Clause paramount orparamount clause)

IMPORTANT FEATURES:1. Amount of carriers liability2. Notice of damage3. Prescriptive period

AMOUNT OF CARRIERS LIABILITY Under the Sec. 4(5), the liability limit is set at$500 per package or customary freight unit unlessthe nature and value of such goods is declared bythe shipper. This is deemed incorporated in the billof lading even if not mentioned in it. (Eastern

Shipping vs. IAC, 150 SCRA 463) Note that Art. 1749, NCC applies todomestic/inter-island/coastwise trade.

NOTICE OF DAMAGE (SEC. 3(6))Rules:a. Patent damage: shipper should file a claim with

the carrier immediately upon deliveryb. Latent damage: shipper should file a claim with

the carrier within three days from delivery.

Note: The filing of a notice of claim is not acondition precedent.

PRESCRIPTIVE PERIODAction for loss or damage to the cargo should be

brought within one year after:a. Delivery of the goods (delivered but

damaged goods); orb. The date when the goods should have

been delivered (non-delivery). (Sec. 3[6])

Loss or Damage as applied to the COGSAcontemplates a situation where no delivery at allwas made by the shipper of the goods because thesame had perished, gone out of commerce, ordisappeared in such a way that their existence isunknown or they cannot be recovered. Thus, it isinapplicable in case of misdelivery or conversion.(Ang vs. American Steamship Agencies Inc.) anddamage arising from delay or late delivery (MitsuiO.S.K. Lines Ltd. vs. CA). In such instance the, CivilCode rules on prescription shall apply.

The one-year prescriptive period is suspendedby:

1. The express agreement of the parties(Universal Shipping Lines, Inc. vs. IAC,188 SCRA 170)

2. The filing of an action in court until it isdismissed. (Stevens & Co. vs.Nordeutscher Lloyd, 6 SCRA 180)

The one-year period shall run from delivery ofthe last package and is not suspended byextrajudicial demand. (Dole Phils.,Inc. vs. MaritimeCo.,148 SCRA 118)

The one-year period shall run from delivery tothe arrastre operator and not to the consignee.(Union Carbide Phils, Inc. vs. Manila RailroadCo.,SCRA 359)

The insurer exercising its right of subrogation isbound by the one-year prescriptive period.However, it does not apply to the claim against theinsurer for the insurance proceeds. (Fil. MerchantsIns. Co. vs. Alejandro; Mayer Steel Pipe Corp. vs.CA)

IV. WARSAW CONVENTION OF 1929 (WC)

PURPOSE: To protect the emerging airtransportation industry and to secure the uniformityof recovery by the passengers.APPLICABILITYThe transportation must be:

1.

International transportation;2. Air transportation; and3. Carriage of passengers, baggage or

goods. The WC shall also apply to fortuitoustransportation by aircraft performed by an airtransportation enterprise.

International transportation - any transportationin which the place of departure and the place ofdestination are situated either:

1. Within the territories of two HighContracting Parties regardless of whether ornot there be a break in the transportation ortransshipment, or2. Within the territory of a single High


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Contracting Party, if there is an agreedstopping place within a territory subject to thesovereignty, mandate or authority of anotherpower, even though that power is not a partyto the Convention. (round trip, Am. Jur.)

Transportation to be performed by severalsuccessive air carriers shall be deemed to be oneundivided transportation, if it has been regarded bythe parties as a single operation, whether it hasbeen agreed upon under the form of a singlecontract or of a series of contracts, and it shall notlose its international character merely because onecontract or a series of contracts is to be performedentirely within a territory subject to the sovereignty,suzerainty, mandate, or authority of the same HighContracting Party. (Art. 1 Sec.3)

WHEN INAPPLICABLE1. When public policy is contradicted;2. If the requirements under the Convention

are not complied with.

IMPORTANT CONCEPTS:1. Transportation documents

a. Passenger ticketb. Baggage checkc. Air way bill

2. Liability of the carrier for damagesa. Death or injury to passengersb. Loss or damage to baggage or goodsc. Delay

3. Successive carrier agreement4. Jurisdiction5. Combined transportation agreement

PASSENGERTICKET

BAGGAGECHECK

AIRWAYBILL

Passenger Checked-inbaggage

Goods to beshipped

LIABILITY OF CARRIER FOR DAMAGES1. Death or injury of a passenger if the accidentcausing it took place on board the aircraft or in thecourse of its operations of embarking ordisembarking; (Art. 17)2. Destruction, loss or damage to any baggage orgoods, if it took place during the transportation byair; (Art. 18) andTransportation by airThe period during whichthe baggage or goods are in the charge of the

carrier, whether in an airport or on board anaircraft, or, in case of a landing outside an airport,in any place whatsoever.

It includes any transportation by land or wateroutside an airport if such takes place in theperformance of a contract for transportation by air,for the purpose of loading, delivery, ortransshipment.3. Delay in the transportation of passengers,baggage or goods.(Art. 19)

Note: The Hague Protocol amended the WC byremoving the provision that if the airline took allnecessary steps to avoid the damage, it couldexculpate itself completely (Art. 20(1)). (Alitalia vs.IAC, 192 SCRA 9)

LIMIT OF LIABILITY (Art. 22, as amended byGuatemala Protocol, 1971; Alitalia vs. IAC)1. PassengersGENERAL RULE:$100,000 per passenger

EXCEPTION:Agreement to a higher limit

2. Checked-in baggageGENERAL RULE:$20 per kilogramEXCEPTION: In case of special declaration ofvalue and payment of a supplementary sum byconsignor, carrier is liable to not more than thedeclared sum unless it proves the sum is greaterthan actual value.3. Hand-carried baggage$1000/passenger4. Goods to be shippedGENERAL RULE:$20 per kilogramEXCEPTION: In case of special declaration ofvalue and payment of a supplementary sum byconsignor, carrier is liable to not more than thedeclared sum unless it proves the sum is greaterthan actual value.

An agreement relieving the carrier from liabilityor fixing a lower limit is null and void. (Art. 23)Carrier is not entitled to the foregoing limit if thedamage is caused by willful misconduct or defaulton its part. (Art. 25)

Thus, the WC does not operate as an exclusiveenumeration of the instances of an absolute limit ofthe extent of liability. It does not preclude theapplication of the Civil Code and other pertinent

local laws. It does not regulate or exclude liabilityfor other breaches of contract by the carrier, ormisconduct of its employees, or for some particularor exceptional type of damage. (Alitalia vs. CA)

In PanAm v. IAC, the WC was applied as regardsthe limitation on the carriers liability, there being asimple loss of baggage without any improperconduct on the part of the officials or employees ofthe airline or other special injury sustained by thepassenger.

In KLM Royal v. Tuller, the WC has invariablybeen held inapplicable, or as not restrictive of thecarriers liability, where there was satisfactory

evidence of malice or bad faith attributable to itsofficers and employees. (Alitalia vs. IAC)

ACTION FOR DAMAGES1. Notice of claimA written complaint must me made within:

a. 3 days from receipt of baggageb. 7 days from receipt of goodsc. In case of delay, 14 days from receipt of

baggage/goodsThe complaint is a condition precedent. Withoutthe complaint, the action is barred except in case offraud on the part of the carrier. (Art. 26)


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2. Prescriptive periodAction must be filed within 2 years from:

a. date of arrival at the destinationb. date of expected arrivalc. date on which the transportation stopped.

(Art. 29)

In United Airlines vs. Uy the two-year prescriptiveperiod was not applied where the airline employeddelaying tactics.

RULE IN CASE OF VARIOUS SUCCESSIVECARRIERS1. Carriage of passengersGENERAL RULE: Action is filed only against thecarrier in which the accident or delay occurred.EXCEPTION:Agreement or contract whereby thefirst carrier assumed liability for the whole journey.2. Carriage of baggage or goods

a. Passenger or consignor can file an actionagainst the firstcarrier and the carrier inwhich the damage occurred

b. Passenger or consignee can file an actionagainst the lastcarrier and the carrier inwhich the damage occurred.

These carriers are jointly and severallyliable. (Art. 30)

A contract of international carriage by air,although performed by different carriers under aseries of airline tickets constitutes a singleoperation. Members of the International AirTransportation Association (IATA) are under ageneral pool partnership agreement wherein theyact as agent of each other in the issuance of ticketsto contracted passengers to boost ticket sales

worldwide and at the same time provide passengerseasy access to airlines which are otherwiseinaccessible in some parts of the world. (AmericanAirlines vs. CA)

Under a general pool partnership agreement, theticket-issuing airline is the principal in a contract ofcarriage while the endorsee-airline is the agent.The obligation of the former remained and did notcease even when the breach occurred not on itsown flight but on that of another airline which hadundertaken to carry the passengers to one of theirdestinations. (China Airlines vs. Chiok)

JURISDICTION

At the option of the plaintiff, the action fordamages may be filed in the:a. Court of domicile of the carrier;b. Court of its principal place of business;c. Court where it has a place of business

through which the contract has beenmade; or

d. Court of the place of destination. (Art.28(1))

NOTE: It is the passengers ultimate destinationnot an agreed stopping place that determines thecountry where suit is to be filed.The forum of action provided in Art. 28(1) is amatter of jurisdiction rather than of venue. (SantosIII vs. Northwest; 2A C.J.S.)

V. SALVAGE LAW (Act No. 2616)

SALVAGETwo concepts:1. Services one person renders to the owner of a

ship or goods, by his own labor, preserving thegoods or the ship which the owner or thoseentrusted with the care of them have eitherabandoned in distress at sea, or are unable toprotect or secure.2. Compensation allowed to persons by whosevoluntary assistance a ship at sea or her cargo orboth have been saved in whole or in part fromimpending sea peril, or such property recoveredfrom actual peril or loss, as in cases of shipwreck,derelict or recapture.Requisites:

1. Valid object of salvage;2. Object must have been exposed to marine

peril (not perils of the ship);3. Services rendered voluntarily (neither an

existing duty nor out of a pre-existingcontract);

4. Services are successful, total or partial.Subjects of Salvage:1. Ship itself;2. Jetsamgoods which are cast into the sea, andthere sink and remain under water;3. Floatsam or Flotsam goods which float uponthe sea when cast overboard;4. Ligan or Lagangoods cast into the sea tied to abuoy, so that they may be found again by theowners (p.173, Judge Diaz).Persons who have no right to a reward forsalvage:1. Crew of the vessel saved;

2. Person who commenced Salvage in spite ofopposition of the Captain or his representative;3. In accordance with Sec. 3 of the Salvage Law,a person who fails to deliver a salvaged vessel orcargo to the Collector of Customs.

Derelict a ship or her cargo which isabandoned and deserted at sea by those who are incharge of it, without any hope of recovering it, orwithout any intention of returning to it.

The intention of those in charge must beascertained. If those in charge left with theintention of returning, or of procuring assistance,the property is not derelict, but if they quitted the

property with the intention of finally leaving it, it isderelict and a change of their intention and anattempt to return will not change its nature(Erlanger & Galinger vs. Swedish East Asiatic Co.Ltd.).

If it is clear that the intention to return is slight,the salvage which was done thereafter is consideredvalid. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino, T. &Hernando, R.P. 2004 ed. p. 616)

CONTRACT OF TOWAGE A contract whereby one vessel, usuallymotorized, pulls another, whether loaded or notwith merchandise, from one place to another, for a


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compensation. It is a contract for services ratherthan a contract of carriage.

SALVAGE TOWAGE

Governed by speciallaw (Act No. 2616)

Governed by Civil Codeon contract of lease

Requires success,otherwise no payment

Success is not required

Must be done with theconsent of thecaptain/crewmen

Only the consent ofthe tugboa

Transportation Law Beda

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