209540904 Transportation Law Reviewer SAN BEDA

8/10/2019 209540904 Transportation Law Reviewer SAN BEDA

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San Beda College of Law

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MEMORYAIDINCOMMERCIALLAW

COMMERCIAL LAW COMMITTEECHAIRPERSON:Garny Luisa Alegre ASST.CHAIRPERSON :Jayson OS Ramos EDP:Beatrix I. Ramos SUBJECTHEADS: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); Robespierre CU (Law on IntellectualProperty)

TRANSPORTATION LAWS

CONTRACT OF TRANSPORTATION/

CARRIAGEA contract whereby a person, natural or

juridical, obligates to transport persons,goods, or both, from one place to another,by land, air or water, for a price orcompensation.

Classifications:1. Common or Private2. Goods or Passengers3. For a fee (for hire) or Gratuitous

4. Land, Water/maritime, or Air5. Domestic/inter-island/coastwise or

International/foreign

It is a relationship which is imbued withthe public interest.

COMMON CARRIER

Persons, corporations, firms orassociations engaged in the business ofcarrying or transporting passengers or

goods or both, by land, water, or air, forcompensation, offering their services to thepublic (Art. 1732, Civil Code).

Art. 1732 of the New Civil Code avoidsany distinction between one whose principalbusiness activity is the carrying of personsor goods or both and one who does suchcarrying only as an ancillary activity(sideline). It also avoids a distinctionbetween a person or enterprise offeringtransportation service on a regular orscheduled basis and one offering suchservice on an occasional, episodic orunscheduled basis.

Neither does the law distinguish betweena carrier offering its services to the generalpublic that is the general community orpopulation and one who offers services orsolicits business only from a narrowsegment of the general population.

A person or entity is a common carrier

even if he 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 orair. It does not provide that thetransportation should be by motor vehicle.(First Philippine Industrial Corporation vs.CA)One is a common carrier even if he hasno fixed and publicly known route, maintains

no terminals, and issues no tickets (AsiaLighterage Shipping, Inc. vs. CA).

Characteristics:1. Undertakes to carry for all people

indifferently and thus is liable forrefusal without sufficient reason(Lastimoso vs. Doliente, October 20,1961);

2. Cannot lawfully decline to accept aparticular class of goods for carriage to

the prejudice of the traffic in thesegoods;

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

4. Provides public convenience.

PRIVATE CARRIER

One which, without being engaged in thebusiness of carrying as a publicemployment, undertakes to deliver goods orpassengers for compensation. (HomeInsurance Co. vs. American SteamshipAgency, 23 SCRA 24)

TESTS WHETHER CARRIER ISCOMMON OR PRIVATE:

The SC in First Philippine IndustrialCorporation vs. CA (1995) reiterated thefollowing tests:

1. It must be engaged in the business ofcarrying goods for others as a public


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employment and must hold itself outMEMORY AID IN COMMERCIAL LAW

5. Exempting circumstanceas ready to engage in thetransportation of goods generally as abusiness and not as a casual

occupation;

Proveextraordinarydiligence and

Art. 1733, NCC

caso fortuito,Art. 1174 NCC

2. It must undertake to carry goods of 6.Presumption of negligencethe kind to which its business inconfined;

3. It must undertake to carry by themethod by which his business is

There is apresumption offault ornegligence

Nopresumption offault ornegligence

conducted and over its establishedroads; and Law on

7.Governing lawLaw on

4. The transportation must be for hire.

In National Steel Corp. vs. CA (1997) the

SC held that the true test of a commoncarrier is the carriage of goods or

commoncarriers

GOVERNING LAWS

obligations andcontracts

passengers provided it has space for all whoopt to avail themselves of its transportationfor a fee.

A. Domestic/inter-island/coastwise

Applicable to Land, Water, and Airtransportation

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

COMMONCARRIER

PRIVATECARRIER

573-734, 580, 806-845) - suppletory

1. As to availability B. International/foreign/overseas

Holds himselfout for allpeopleindiscriminately

Contracts withparticularindividuals orgroups only

(Foreign country to Philippines)Applicable to Water/maritime and Air

transportation

The law of the country of destination2. As to required diligence generally applies.

Extraordinarydiligence isrequired

Ordinarydiligence isrequired

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

3. As to regulation a. Water/maritime: Carriage of GoodsSubject toStateregulation

Not subject toStateregulation

by Sea Act (COGSA)b. Air: Warsaw Convention

4. Stipulation limiting liability I. NEW CIVIL CODEParties maynot agree onlimiting thecarriers liabilityexcept whenprovided by

law

Parties maylimit thecarriersliability,provided it isnot contrary to

law, morals orgood customs

(Arts. 1732-1766)

REQUIREMENT OF EXTRAORDINARYDILIGENCE

Rendition of service with the greatest skilland utmost foresight. (Davao Stevedore Co.

v. Fernandez)Rationale:


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1. From the nature of the business andfor reasons 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 absoluteinsurer of all risks of travel.

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

PASSENGER

A person who has entered into a contractof carriage, express or implied, with thecarrier. They are entitled to extraordinarydiligence from the common carrier.

The following are not consideredpassengers, and are entitled to ordinarydiligence only:

a. One who has not yet boarded any part

of a vehicle regardless of whether ornot he has purchased a ticket;

b. One who remains on a carrier for anunreasonable length of time after hehas been afforded every safeopportunity to alight;

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

d. One who attempts to board a movingvehicle, although he has a ticket,

unless the attempt be with theknowledge and consent of the carrier;

e. One who has boarded a wrongvehicle, has been properly informed ofsuch fact, and on alighting, is injuredby the carrier;

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

g. One who rides any part of the vehiclewhich is unsuitable or dangerous or

which he knows is not designed or

intended for passengers.

DEFENSES OF A COMMON CARRIER INTHE CARRIAGE OF GOODS

1. CASO FORTUITO/FORCE MAJEURERequisites:a. Must be the proximate and only causeof the lossb. Exercise of due diligence to prevent orminimize the loss before, during or afterthe occurrence of the disaster (Art. 1739)c. Carrier has not negligently incurred indelay in transporting the goods (Art.1740)

Fire is not considered a natural disasteror calamity as it arises almost invariablyfrom some act of man. (Eastern ShippingLines Inc. vs. IAC)

Mechanical defects are not force majeureif the same was discoverable by regular andadequate inspections. (Notes and Cases onthe Law on Transportation and PublicUtilities, Aquino, T. & Hernando, R.P. 2004ed. p.120-122)

2. ACTS OF PUBLIC ENEMYRequisites:a. Must be the proximate and only causeof the lossb. Exercise of due diligence to prevent orminimize the loss before, during or afterthe act causing the loss, deterioration ordestruction of the goods (Art. 1739)

3. NEGLIGENCE OF THE SHIPPER OROWNER

a. Sole and proximate cause: absolutedefense

b. Contributory: partial defense. (Art.1741)

4. CHARACTER OF THE GOODS ORDEFECTS IN THE PACKING OR IN THECONTAINER

Even if the damage should be caused by


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the inherent defect/character of the goods,the common carrier must exercise duediligence to forestall or lessen the loss. (Art.1742)

The carrier which, knowing the fact ofimproper packing of the goods uponordinary observation, still accepts the goodsnotwithstanding such condition, is notrelieved of liability or loss or injury resultingtherefrom. (Southern Lines, Inc. v. CA, 4SCRA 258)

5. ORDER OR ACT OF PUBLICAUTHORITY

Said public authority must have the powerto issue the order (Art. 1743). Consequently,where the officer acts without legal process,the common carrier will be held liable.(Ganzon v. CA 161 SCRA 646)Diligence in the selection and supervisionof employees under Article 2180 of the CivilCode cannot be interposed as a defense bythe common carrier because the liability ofthe carriers arises from the breach of the

contract of carriage. The defense under saidarticles is applicable to negligence in quasi-delicts under Art. 2176. (Del Prado v. ManilaElectric Co., 52 Phil 900)

LIABILITY OF A COMMON CARRIER FORDEATH OR INJURIES TO PASSENGERSDUE TO ACTS OF ITS EMPLOYEES ANDOTHER PASSENGERS OR STRANGERS

FOR ACTSFOR ACTS OF OF OTHER

ITS PASSENGEREMPLOYEES S OR

STRANGERSRequired diligence and defenseExtraordinary Ordinarydiligence diligence

Nature of liability

Tort; however, Not absolute;The employee limited by Art.must be on 1763duty at the timeof the act.(Maranan v.Perez)

The carrier is liable when its personnelallowed a passenger to drive the vehicle

causing it to collide with another vehicleresulting to the injuries suffered by the otherpassengers. (MRR vs. Ballesteros, 16 SCRA641)

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

1. Common carrier2. Shipper3. Consignee

Parties1. Common carrier2. Passenger

Delay in delivery, loss,Cause of liability

Death or injury to the passengersdestruction, or deterioration of thegoods

Duration of liability

From the time the goods are

unconditionally placed in thepossession of, and received by

The duty of a common carrier to

provide safety to its passengersso obligates it notonly during the


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the carrier for transportation untilthe same are delivered actually orconstructively by the carrier to theconsignee or to the person who

has the right to receive them. (Art.1736)It remains in full force and effect

even when they are temporarilyunloaded or stored in transitunless the shipper or owner hasmade use of the right of stoppagein transitu. (Art. 1737)

It continues to be operativeeven during the time the goods

are stored in a warehouse of thecarrier at the place of destinationuntil the consignee has beeadvised of the arrival of the goodsand has had reasonableopportunity thereafter to removethem or otherwise dispose ofthem. (Art. 1738)

Delivery of goods to thecustom authorities is not delivery

to the consignee. (Lu Do v.Binamira, 101 Phil 120)

MEMORY AID IN COMMERCIAL LAW

course of the trip, but for so longas the passengers are within itspremises and where they oughtto be in pursuance to the contract

of carriage. (LRTA v. Navidad,[2003])

All persons who remain on thepremises within a reasonabletime after leaving theconveyance are to be deemedpassengers, and what is areasonable time or a reasonabledelay within this rule is to bedetermined from all the

circumstances, and includes areasonable time to see after hisbaggage and prepare for hisdeparture. (La Mallorca v. CA, 17SCRA 739 ; Abiotiz ShippingCorporation v. CA, 179 SCRA95)

It is the duty of commoncarriers of passengers to stoptheir conveyances a reasonable

length of time in order to affordpassengers an opportunity toenter, and they are liable forinjuries suffered from the suddenstarting up or jerking of theirconveyances while doing so.The duty which the carrier ofpassengers owes to its patronsextends to persons boarding thecars as well as to those alighting

therefrom (Dangwa Trans Co.,Inc. vs. CA 202 SCRA 574).

Presumption of negligence

Art.1735 Civil CodeReason: As to when and howgoods were damaged in transit isa matter peculiarly within theknowledge of the carrier and itsemployees. (Mirasol v. Dollar, 53

PHIL 124)

Art.1755 Civil CodeReason: The contract betweenthe passenger and the carrierimposes on the latter the duty totransport the passenger safely;hence the burden of explaining

should fall on the carrier.


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Mere proof of delivery of goodsto a carrier in good order and thesubsequent arrival of the samegoods at the place of destination

in bad order makes for a primafacie case against the carrier.(Coastwise Lighterage Corp. v.CA, 245 SCRA 796)


Defenses

1. Ordinary circumstance:Exercise of extraordinarydiligence (Art. 1735)

2. Special circumstances:

a. Flood, storm,earthquake, lighting, orother natural disaster orcalamity (plus forcemajeure)

b. Act of the publicenemy in war, whetherinternational or civil

c. Act or omission of theshipper or the owner of

goodsd. The character of the

goods or defects in thepacking or in thecontainers

e. Order or act ofcompetent publicauthority (Art. 1734)

1. Exercise of extraordinarydiligence (Art. 1756)

2. Caso fortuito


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Valid stipulationsMEMORY AID IN COMMERCIAL LAW

1. Reduction of degree ofdiligence to ordinary diligence,

provided it be:a) In writing, signed by the

shipper or owner;b) Supported by a valuable

consideration other thanthe service rendered by thecarriers; and

c) Reasonable, just and notcontrary to public policy.(Art. 1744)

2. Fixed amount of liability: Acontract fixing the sum to berecovered by the owner orshipper for the loss, destruction ordeterioration of the goods, if it isreasonable and just under thecircumstances and has beenfairly and freely agreed upon.(Art. 1750)3. Limited liability for delay: An

agreement limiting the commoncarriers liability for delay onaccount of strikes or riots (Art.1748)4. Stipulation limiting liability tothe value of the goods appearingin the bill of lading, unless theshipper or owner declares agreater value. (Art. 1749)

The diligence required in thecarriage of the goods may bereduced by only one degree, fromextraordinary to ordinary diligenceor diligence of a good father of afamily. (Art. 1744, Art. 1745, no.4)

Stipulation limiting liability when apassenger is carried gratuitously,

but not for willful acts or grossnegligence. (Art. 1758)

Void stipulations

1. That the goods are

transported at the risk of the

Dispensing with or lessening the

extraordinary responsibility of a


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owner or shipper;2. That carrier will not be liablefor any loss, destruction ordeterioration of the goods;

3. That the carrier need notobserve any diligence in thecustody of the goods;4. That the carrier shall exercisea degree of diligence less thanthat of a good father of a familyover the movable transported;5. That the carrier shall not beresponsible for the acts oromissions of his or its

employees;6. That the carriers liability foracts committed by thieves orrobbers who do not act withgrave or irresistible threat,violence or force is dispensedwith or diminished;7. That the carrier is notresponsible for the loss,destruction or deterioration of the

goods on account of thedefective condition of the car,vehicle, ship or other equipmentused in the contract of carriage.(Art. 1745)


common carrier for the safety ofpassengers imposed by law bystipulation, by posting of notices,by statements on tickets or

otherwise. (Art. 1757)


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IN THE IN THECUSTODY OF CUSTODY

THE OF THEPASSENGERS COMMON

(HAND- CARRIERCARRIED) (CHECKED-

IN)Legal nature of the baggage

Necessary Considereddeposit as goods

Required diligence by thecommon carrier

Diligence of a Extraordinarydepositary diligence(ordinary

diligence)Applicable rules

RULES ON PASSENGERSBAGGAGE he is riding and of the driver of anothervehicle, the drivers as well as the owners ofthe two vehicles are jointly and severallyliable for damages. It makes no differencethat the liability of the bus driver and ownersprings from contract while that of the ownerand driver of the other vehicle arises fromquasi-delict. (Fabre vs. CA)

LIMITATIONS AS TO CARRIERSLIABILITY

Arts. 1998 and2000-2003

Arts. 1733-1753

INVALID ASBEING

CONTRARYTO PUBLICPOLICY

1. Oneexempting thecarrier from anyand all liabilityfor loss or

VALID &ENFORCEAB

LE

1. One limitingthe liability ofthe carrier toan agreedvaluation,

CONCURRING CAUSES OF ACTIONARISING FROM THE NEGLIGENT ACT OFTHE COMMON CARRIER1. Culpa contractual (breach of contract)

Only the carrier is primarily liable and not

the driver, because there is no privitybetween the driver and the passenger.

asis:Art.1759,NCC.

No defense of due diligence in theselection and supervision of employees.

2. Culpa aquiliana (quasi-delict)

damageoccasioned byits ownnegligence.2. An

unqualifiedlimitation ofliability to anagreedvaluation.

unless theshipperdeclares ahigher valueand pays a

higher rate offreight(H.E. HeacockCompany vs.Macondray &CompanyInc.)

The carrier and driver are solidarily liableas joint tortfeasors.

asis: Art. 2180,NCC.Defense of due diligence in the selection

and supervision of employees is available.Exception: maritime tort resulting in collision.(See notes on Collision)

3. Culpa criminal (criminal negligence)The driver is primarily liable. The carrier is

subsidiarily liable only if the driver isconvicted and declared insolvent.

asis: Art. 100,RPC.

In case of injury to a passenger due tothe negligence of the driver of the bus onwhich


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However, the carrier cannot limit its liabilityor injury to, or loss of, goods shipped whereuch injury or loss was caused by its ownegligence.

Shewaram vs. PAL, 17 SCRA 606)

SPECIAL RULES ON LIABILITES OFAIRLINE CARRIERS

. In case of flight diversion due to badweather or other circumstances beyond the

ilots control, the relation between thearrier and the passenger continues until theatter has been landed at the port ofestination and has left the carriers premises.

The carrier should necessarily exercisextraordinary diligence in


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safeguarding the comfort, convenience andsafety of its stranded passengers until theyhave reached their final destination.(Philippine Airlines vs. CA, 226 SCRA 423)2. Even where overbooking of passengers isallowed as a commercial practice, the airlinecompany would still be guilty of bad faith and

still be liable for damages if it did notproperly inform passenger that it couldbreach the contract of carriage even if theywere confirmed passengers. (Zalamea vs.CA, 228 SCRA 23)3. An open-dated ticket constitutes acomplete contract between the carrier andpassenger. Hence, the airline company isliable if it refused to confirm a passengersflight reservation. (Singson vs. CA, 282SCRA 149)4. An airline company which issued aconfirmed ticket to a passenger coveringsuccessive trips on different airlines can beheld liable for damages occasioned bybumping off by one of the successiveairlines. (Lufthansa German Airlines vs. CA,238 SCRA 290)5. An airline ticket providing that carriage bysuccessive air carriers is to be regarded as asingle operation is to make the issuingcarrier liable for the tortuous conduct of theother carrier. A printed provision in the ticketlimiting liability only to its own conduct is notenough to rebut that liability. (KLM RoyalDutch Airlines vs. CA, 65 SCRA 237)

II. CODE OF COMMERCE

A. OVERLAND TRANSPORTATION(Arts. 349-379)

Applicability1. Domestic land and water/maritimetransportation. (Pandect of Commercial Lawand Jurisprudence, Justice Jose Vitug, 1997ed.)2. Domestic Air Transportation. (CommercialLaw Review, Cesar Villanueva, 2004 ed.)

IMPORTANT CONCEPTS:1. Bill of lading2. Obligations of the carrier

3. Right of abandonment4. Notice of damage5. Combined carrier agreement

BILL OF LADING

The written acknowledgment of receipt ofgoods and agreement to transport them to aspecific place to a person named or to hisorder.

Rules:1. It is not indispensable for the creation of

a contract of carriage. (Compania Maritimavs. Insurance Company of North America,12 SCRA 213)

2. Ambiguity is construed against the carrier,

the contract being one of adhesion.

3. The consignee, although the instrument isoftentimes drawn up only by the consignorand carrier, becomes bound by all thestipulations contained therein by making aclaim for loss on the basis of said bill oflading. (Sea-Land Services Inc. vs. IAC)

4. The right of a party to recover for loss of

shipment consigned to him under a bill oflading drawn up only by and between theshipper and the carrier, springs from either arelation of agency between him and theshipper, or his status as stranger in whosefavor some stipulation is made in saidcontract, and who becomes a party theretowhen he demands fulfillment of thatstipulation. (Art. 1311 (2), (Mendoza vs. PALInc.)

5. Acceptance of the bill of lading withoutdissent raises the presumption that all theterms therein where brought to theknowledge of the shipper and agreed to byhim and, in the absence of fraud or mistake;he is estopped from thereafter denying thathe assented to such terms. (Notes andCases on the Law on Transportation andPublic Utilities, Aquino, T. & Hernando, R.P.

2004 ed. p.261)

Kinds:1. On board - issued when the goods have


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been actually placed aboard the shipwith very reasonable expectation thatthe shipment is as good as on its way.

2. Received - one in which it is stated thatthe goods have been received forshipment with or without specifying thevessel by which the goods are to be

shipped.3. Negotiable - one in which it is stated

that the goods referred to therein will bedelivered to the bearer or to the order ofany person named therein.

4. Non-negotiable - One in which it isstated that the goods referred to thereinwill be delivered to a specified person.

5. Clean One which does not indicateany defect in the goods.

6. Foul One which contains a notationthereon indicating that the goodscovered by it are in bad condition.

7. Spent One which covers goods thatalready have been delivered by thecarrier without a surrender of a signedcopy of the bill.

8. Through One issued by the carrierwho is obliged to use the facilities ofother carriers as well as his ownfacilities for the purpose of transportingthe goods from the city of the seller tothe city of the buyer, which bill of ladingis honored by the second and otherinterested carriers who do not issuetheir own bills.

9. Custody One wherein the goods arealready received by the carrier but thevessel indicated therein has not yetarrived in the port.

10. Port One which is issued by thecarrier to whom the goods have beendelivered, and the vessel indicated inthe bill of lading by which the goods areto be shipped is already in the portwhere the goods are held for shipment.

Functions:1. Best evidence of the existence of the

contract of carriage of cargo (Art. 353)2. Document of title3. Receipt of cargo4. Contract to transport and deliver goods

as stipulated5. Symbol of the goods

OBLIGATIONS OF THE CARRIERA. Duty to accept the goods

GENERAL RULE: A common carriercannot ordinarily refuse to carry a particularclass of goods.EXCEPTION: For some sufficient reasonthe discrimination against the traffic in suchgoods is reasonable and necessary. (Fishervs. Yangco Steamship Co. 31 Phil 1).Instances when the carrier may validlyrefuse to accept the goods include the ff:1.) Goods sought to be transported aredangerous objects, or substances including

dynamite and other explosives2.) Goods are unfit for transportation3.) Acceptance would result in overloading4.) Contrabands or illegal goods5.) Goods are injurious to health6.) Goods will be exposed to untowarddanger like flood, capture by enemies andthe like7.) Goods like livestock will be exposed todisease

8.) Strike9.) Failure to tender goods on time. (Notesand Cases on the Law on Transportationand Public Utilities, Aquino, T. & Hernando,R.P. 2004 ed. p.68)

In case of carriage by railway, the carrieris exempted from liability if carriage isinsisted upon by the shipper, provided itsobjections are stated in the bill of lading.

However, when a common carrier

accepts cargo for shipment for valuableconsideration, it takes the risk of delivering itin good condition as when it was loaded.(PAL vs. CA)

B. Duty to deliver the goods

Not only to transport the goods safely butto the person indicated in the bill of lading.The goods should be delivered to theconsignee or any other person to whom the

bill of lading was validly transferred ornegotiated.


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Time of delivery3. Carriage of goods4. Goods shipped are damaged

Stipulated inContract/Bill

of Lading1. Carrier isbound to fulfillthe contractand is liable forany delay; nomatter fromwhat cause itmay havearisen.

Effects of delay

No stipulation

1. Within areasonabletime.2. Carrier isbound toforward themin the 1st

shipment ofthe same orsimilar goodswhich he maymake to thepoint ofdelivery. (ART.358 Code ofCommerce)

Rules:a. Patent damage: shipper must file a claim

against the carrier immediately upondelivery (it may be oral or written)

b. Latent damage: shipper should file aclaim against the carrier within 24 hoursfrom delivery.

Note: These rules does not apply tomisdelivery of goods. (Roldan vs. LimPonzo)

Purpose of notice: To inform the carrierthat the shipment has been damaged,and itis charged with liability therefore, and to giveit an opportunity to make an investigationand fix responsibility while the matter isfresh.

The filing of notice of claim is a conditionprecedent for recovery.Shorter period may be stipulated by theparties because it merely affects theshippers remedy and does not affect the

a. Merely suspends and generally does notterminate the contract of carriageb. Carrier remains duty bound to exercise

extraordinary diligencec. Natural disaster shall not free the carrierfrom responsibility (Art.1740)d. If delay is without just cause, the contractlimiting the common carriers liability cannotbe availed of in case of loss or deteriorationof the goods (Art.1747)

RIGHT OF CONSIGNEE TO ABANDONGOODS

Instances:1. Partial non-delivery, where the goods are

liability of the carrier. (PHILAMGEN vs.Sweetlines, Inc.)Prescriptive Period

Not provided by Article 366. Thus, in suchabsence, Civil Code rules on prescriptionapply.

If despite the notice of claim, the carrierrefuses to 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

useless without the others (Art. 363);2. Goods are rendered useless for sale orconsumption for the purposes for which theyare properly destined (Art. 365); and3. In case of delay through the fault of thecarrier (Art. 371).

NOTICE OF DAMAGE (ART. 366)

Requisites for applicability:1. Domestic/inter-island/coastwise

transportation2. Land/water/air transportation

1. Domestic/inter-island/coastwisetransportation2. Land, water, airtransportation

3. Carriage of goods

1.International/overseas/foreign (fromforeigncountry toPhils.)Note: subject

to the rule onParamountClause2.


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Vessel engaged in maritime commerce,whether foreign or otherwise. (Bar ReviewMaterials in Commercial Law, JorgeMiravite, 2002 ed.)

Constitutes property which may beacquired and transferred by any of themeans recognized by law. They shallcontinue to be considered as personalproperty. (Arts. 573, 585)

They are susceptible to maritime lienssuch as for the repair, equipping andprovisioning of the vessel in the preparationof a voyage, as well as mortgage liabilities,in satisfaction of which a vessel may bevalidly arrested and sold. (Ship MortgageDecree of 1978)

MARITIME LIENIt constitutes a present right of property in

the ship, a jus in re, to be afterward enforcedin admiralty by process in rem. (PNB vs. CA,337 SCRA 381)

If the maritime lien arose prior to therecording of a preferred mortgage, it shallhave priority over the said mortgage lien.(PNB vs. CA, 337 SCRA 381)

ORDER OF PREFERENCE IN CASE OFSALE OF VESSEL

R.A. 6106 P.D. 1521Effectivity date

1969 1978Applicability

preferences inthe orderstated:1. Judicialcosts of theproceedings;2. Taxes duethe PhilippineGovernment;3. Salariesand wages ofthe Captainand Crew ofthe vesselduring its lastvoyage;4. Generalaverage orsalvageincludingcontractsalvage,bottomryloans, andindemnity dueshippers forthe value ofgoodstransportedbut whichwere notdelivered tothe consignee;5. Costs ofrepair and

preferences inthe orderstated:1. Expensesand feesallowed andcosts taxed bythe court andtaxes due totheGovernment;2. Crewswages;3. Generalaverage;4. Salvage,includingcontractsalvage;5. Maritimeliens arisingprior in time tothe recordingof thepreferredmortgage;6. Damagesarising out oftort; and7. Preferredmortgageregisteredprior in time.

Overseas

shipping only

Both domestic

and overseasshipping

equipment of

the vessel,and

Kind of saleJudicial Judicial and

extrajudicialOrder of Preference

provisioning offood, suppliesand fuelduring its last

A preferredmortgageshall havepriority over all

claims againstthe vessel,except thefollowing

The preferredmortgage lienshall havepriority over all

claims againstthe vessel,except thefollowing

voyage; and6. Preferredmortgagesregistered

prior in time.

Effect of sale: All pre-existing claims inthe vessel are terminated. They will then be


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satisfied from the proceeds of the salesubject to the order of preference.

DOCTRINE OF LIMITED LIABILITY(HYPOTHECARY RULE)

ases where applicable:1. Art. 587 civil liability for indemnities

to third persons2. Art. 590 indemnities from negligent

acts of the captain (not the shipowneror ship agent)

nstances:1. In case of civil liability fromindemnities to third persons (Art. 587);2. In case of leakage of at least of thecontents of a cargo containing liquids (Art.687); and3. In case of constructive loss of thevessel (Sec. 138, Insurance Code).

RIGHT OF ABANDONMENT

3. Art. 837collision4. Art. 643 liability for wages of the

captain and the crew and for

SHIPOWNEROR SHIPAGENT

CONSIGNEE

advances made by the ship agent ifthe vessel is lost by shipwreck orcapture

What may be abandonedVessel Goods

shippedInstancesGENERAL RULE: The liability ofshipowner and ship agent is limited to theamount of interest in said vessel such thatwhere vessel is entirely lost, the obligation isextinguished. (Luzon Stevedoring v. Escano,156 SCRA 169) The interest extends to: 1)the vessel itself; 2) equipments; 3)freightage; and 4) insurance proceeds.

(Chua v. IAC, 166 SCRA 183)EXCEPTIONS:1. Claims under Workmens Compensation

(Abueg vs. San Diego 77 Phil 730);2. Injury or damage due to shipowner or to

the concurring negligence of theshipowner and the captain;

3. The vessel is insured (Vasquez vs. CA138 SCRA 553).

4. Expenses for repair on vessel completed

before loss;5. In case there is no total loss and thevessel is not abandoned;

6. Collision between two negligent vessels;

Abandonment of the vessel is necessary

1. In case ofcivil liabilityfromindemnities tothird persons(Art. 587);2. Sec. 138,Insurance

Code;3. In case ofleakage of atleast of thecontents of acargocontainingliquids (Art.687)

1. Partial non-delivery,where thegoods areuselesswithout theothers (Art.363);

2. Goods arerendereduseless forsale orconsumptionfor thepurposes forwhich they areproperlydestined (Art.

365); and3. In case ofdelay throughthe fault of thecarrier (Art.371).

to limit the liability of the shipowner. The Effectsonly instance were abandonment isdispensed with is when the vessel is entirelylost (Luzon Stevedoring vs. CA 156 SCRA

169).

RIGHT OF SHIPOWNER OR SHIP AGENTTO ABANDON VESSEL

1. Transferof ownership ofthe vessel from

the shipownerto the shippersor insurer.2. In case

1.Transfer ofownership onthe goods

from theshipper to thecarrier.2.Carrier


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of (2), theinsurer mustpay the insuredas if there wasactual totalloss of thevessel.

should pay theshipper themarket valueof the goodsat the point ofdestination.

Ship agent (naviero)

Person entrusted with provisioning andrepresenting the vessel in the port in which itmay be found; also includes the shipowner.

Not a mere agent under civil law; he issolidarily liable with the ship owner.

owers and functions:1. Capacity to trade;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 commercialintercourse intended to bring about anentire cessation for the time being of alltrade whatever.

2. Blockade A sort of circumvallation of aplace by which all foreign connection andcorrespondence is, as far as humanpower can effect it, to be cut off.

3. Embargo A proclamation or order of astate, usually issued in time of war orthreatened hostilities, prohibiting thedeparture of ships or goods from some orall the ports of such state until furtherorder.

PARTICIPANTS IN MARITIMECOMMERCE

A. Shipowners and ship agentsB. Captains and masters of the vesselC. Officers and crew of the vesselD. SupercargoesE. Pilot

A. SHIPOWNERS AND SHIP AGENTSShipowner (proprietario)

Person who has possession, control andmanagement of the vessel and the

consequent right to direct her navigation andreceive freight earned and paid, while hispossession continues.

2. Discharge duties of the captain, subjectto Art.609;

3. Contract in the name of the owners withrespect to repairs, details of equipment,armament, provisions of food and fuel,and freight of the vessel, and all thatrelate to the requirements of navigation;

4. Order a new voyage, make a new charter

or insure the vessel after obtainingauthorization from the shipowner or ifgranted in certificate of appointment.

Civil Liabilities of the Shipowner AndShip Agent1. All contracts of the captain, whether

authorized or not, to repair, equip andprovision the vessel; (Art. 586)

2. Loss and damage to the goods loaded on

the vessel without prejudice to their rightto free themselves from liability byabandoning the vessel to the creditors.(Art. 587)

Duty of Ship Agent to Discharge theCaptain and Members of the Crew

If the seamen contract is not for a definiteperiod or voyage, he may discharge them athis discretion. (Art. 603)

If for a definite period, he may notdischarge them until after the fulfillment oftheir contracts, except on the followinggrounds:

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

proven negligence. (Art. 605)

B. CAPTAINS AND MASTERS

They are the chiefs or commanders of


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ships.

The terms have the same meaning, butare particularly used in accordance with thesize of the vessel governed and the scope oftransportation, i.e., large and overseas, andsmall and coastwise, respectively.

ature 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 henavigates.

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

physical and mental examinationsrequired for licensing him as such.(Art. 609)

Inherentpowers: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 comply with his orders or arewanting in discipline;4. Make contracts for the charter of

vessel in the absence of ship agent.5. Supply, equip, and provision the

vessel; and6. Order repair of vessel to enable it to

continue its voyage. (Art. 610)Sources of funds to comply with the

inherent powers 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)

uties:1. Bring on board the proper certificate

and documents and a copy of theCode of Commerce;

2. Keep a Log Book, Accounting Bookand Freight Book;

3. Examine the ship before the voyage;

4. Stay on board during the loading andunloading of the cargo;

5. Be on deck while leaving or enteringthe port;

6. Protest arrivals under stress and incase 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 crewmembers;

10. Comply with the requirementsof customs, health, etc. at the port ofarrival;

11. Observe rules to avoid collision;12. Demand a pilot while entering

or leaving a port. (Art. 612)

A ships captain must be accorded areasonable measure of discretionaryauthority to decide what the safety of theship and of its crew and cargo specificallyrequires on a stipulated ocean voyage(Inter-Orient Maritime Enterprises Inc. vs.CA).

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 thevessel unless he has expressly boundhimself personally or has signed a billof exchange or promissory note in hisname. (Art. 620)

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

1. Damages to vessel and to cargo dueto lack 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;


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8. Damages due to non-observance ofmarine regulations. (Art. 618)

C. OFFICERS AND CREW1. Sailing Mate/First Mate2. Second Mate3. Engineers

4. CrewNo liability under the following

circumstances:1. If, before beginning voyage, captain

attempts to change it, or a naval war withthe power to which the vessel wasdestined occurs;

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

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

Sailing Mate/First Mate

Second chief of the vessel who takes theplace of the captain in case of absence,sickness, or death and shall assume all ofhis duties, powers and responsibilities. (Art.627)

uties:1. Provide himself with maps and chartswith astronomical tables necessary forthe discharge 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 thedecision of the captain in case ofdisagreement;

4. Responsible for all the damagescaused to the vessel and the cargo byreason of his negligence. (Arts. 628 -631)

Second Mate

Takes command of the vessel in case ofthe inability or disqualification of the captainand the sailing mate, assuming in such casetheir powers and responsibilities.

Third in commanduties:

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)

Engineers

ers of the vessel but have no authorityexcept in matters referring to the motorapparatus. When two or more are hired, oneof them shall be the chiefengineer.

uties:1. In charge of the motor apparatus,

spare parts, and other instrumentspertaining to the 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 tothe motor apparatus;

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

the engine. (Art. 632)

Crew

The aggregate of seamen who man aship, or the shipscompany.Hired by the ship agent, where he is

present and in his absence, the captainhires them, preferring Filipinos, and in theirabsence, he may take in foreigners, but notexceeding 1/5 of the crew. (Art. 634)

Classes of SeamansContracts1. By the voyage;

2. By the month; and3. By share of profits or freightage.

Just Causes for the Discharge of SeamanWhile Contract Subsists1. 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


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The seamans heirs are entitled topayment as follows: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 onvoyage in

c. if by shares - none, if beforedeparture; full, if after departure

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

3. if captured in defense of vessel - fullpayment;

4. if captured due to carelessness - wagesup to the date of the capture. (Art. 645)

Complement of the Vessel

All persons on board, from the captain tothe cabin boy, necessary for themanagement, maneuvers, and service, thusincluding the crew, the sailing mates,engineers, stokers and other employees onboard not having specific designations.

Does not include the passengers or thepersons whom the vessel is transporting.

D. SUPERCARGOES

Persons who discharges administrativeduties assigned to him by ship agent orshippers, keeping an account and record oftransaction as required in the accountingbook of the captain. (Art. 649)

E. PILOT

A person duly qualified, and licensed, to

conduct a vessel into or out of ports, or incertain waters.

The term generally connotes a persontaken on board at a particular place for thepurpose of conducting a ship through a river,road or channel, or from a port.

Master pro hac vice for the time being inthe command and navigation of the ship.

While in exercising his functions a pilot isin sole command of the ship and

supersedes the master for the time being inthe command and navigation of the ship, themaster does not surrender his vessel to thepilot and the pilot is not the master. There

are occasions when the master may andshould interfere and even displace the pilot,as when the pilot is obviously incompetent orintoxicated (Far Eastern Shipping Companyvs. CA).

Compulsory PilotageStates possessingharbors have enacted laws or promulgatedrules requiring vessels approaching theirports to take on board pilots licensed underthe local laws. (Notes and Cases on the Lawon Transportation and Public Utilities,

Aquino, T. & Hernando, R.P. 2004 ed. p.518)

Liablity of Pilot

GENERAL RULE: On compulsory pilotage

grounds, the Harbor Pilot is responsible fordamage to a vessel or to life or property dueto his negligence.

EXCEPT:1. Accident caused by force majeure ornatural calamity provided the pilot exercisedprudence and extra diligence to prevent orminimize damages.2. Countermand or overrule by the master

of the vessel in which case the registered

owner of the vessel is liable. (Sec.11, Art.IIIPPA Admin Order 03-85)

SPECIAL CONTRACTS OF MARITIMECOMMERCE

1. Charter party2. Bill of lading3. Contract of transportation of

passengers on sea voyages4. Loan on bottomry

5. Loan on respondentia6. Marine insurance

CHARTER PARTY

A contract by virtue of which the owner oragent binds himself to transportmerchandise or persons for a fixed price.

A contract by which an entire ship, orsome principal part thereof is let/leased bythe owner to another person for a specified

time or use. (Planters Products, Inc. vs. CA,226 SCRA 476)Parties:1. Ship owner or ship agent


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CHARTER BILL OFPARTY LADING

An entire or More like acomplete private receiptcontract. which the

captain givesto accreditgoodsreceived frompersons

Consensual Real contract

contract

BAREBOAT CONTRACTOR DEMISE OFCHARTER AFFREIGHTM

ENT (TIME ORVOYAGE

CHARTER)Charterer Owner remainsbecomes liable liable as carrier

to others and mustcaused by its answer for anynegligence breach of dutyCharterer Charterer isregarded as not regardedowner pro hac as owner.vice for thevoyageOwner of The vesselvessel owner retains

relinquishes possession,possession, command andcommand and navigation ofnavigation to the ship

2. ChartererClasses:

1. Bareboat or demise The chartererprovides crew, food and fuel. The chartereris liable as if he were the owner, exceptwhen the cause arises from theunworthiness of the vessel. The shipownerleases to the charterer the whole vessel,transferring to the latter the entire command,possession and consequent control over thevessels navigation, including the masterand the crew, who thereby become thecharters servants. It transforms a commoncarrier into a private carrier.

The charterer becomes the owner ofthe vessel pro hac vice, just for that oneparticular purpose only. Because thecharterer is treated as owner pro hacvice, the charterer assumes thecustomary rights and liabilities of theshipowner to third persons and is heldliable for the expense of the voyage andthe wages of the seamen.

2. Contract of Affreightment A contractwhereby the owner of the vessel leases partor all of its space to haul goods for others.

The shipowner retains the possession,command and navigation of the ship, the

charterer merely having use of the spacein the vessel in return for his payment ofthe charter hired.

Kinds:a. Time charter vessel is chartered for

a fixed period of time or duration ofvoyage.

b. Voyage or trip charter the vessel is

leased for one or series of voyagesusually for purposes of transportinggoods for charterer.

If the leasedproperty issold to onewho knows ofthe existenceof the lease,the new ownermust respectthe lease.

Civil lawconcept

The newowner is notcompelled torespect thecharter partyso long as hecan load thevessel with hisown cargo.(Art. 689)Commerciallaw concept

LEASE CHARTERPARTY

If for a definiteperiod, lesseecannot give upthe lease by

paying aportion of theamount agreedupon.

Charterer mayrescind charterparty by payinghalf of the

freightageagreed upon.


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charterer

Commoncarrier isconverted to

private carrier.

Commoncarrier is notconverted to a

private carrier.

A stipulation ina charter partythat in case ofa maritimeaccident forwhich theshipowner isnotresponsible bylaw, contract

A clause in acharter partyproviding thatthe COGSAshall apply,even thoughthetransportationis domestic,subject to the

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

in whole or in majority part, who havelegal control and possession of thevessel

2. Charterer may subcharter entirevessel to 3rd person only if not

prohibited in original charter. (Art.679)3. Ship agent if authorized by the

owner/s or given such power in thecertificate of appointment. (Art.598)

4. Captain in the absence of the shipagent or consignee and only if he actsin accordance with the instructions ofthe agent or owner and protects thelattersinterests. (Art.609)

REQUISITES OF A VALID CHARTERPARTY

or otherwise,the cargoshippers,consignees orowners shallcontribute withthe shipownerin generalaverage.(Pandect ofCommercialLaw andJurisprudence,Justice JoseVitug, 1997ed.)

extent that anyterm of the billof lading isrepugnant tothe COGSA orapplicable law,then to theextent thereofthe provision ofthe bill oflading is void.(Pandect ofCommercialLaw andJurisprudence,Justice Jose

Vitug, 1997ed.)

1. Consent of the contracting parties2. Existing vessel which should be

Rights and Obligations of Parties

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

of Commerce

Clauses Which May Be Included In aCharter Party

Jason clause Clauseparamount or

paramountclause

SHIPOWNEROR SHIPAGENT

1. If the vesselis charteredwholly, not toaccept cargofrom others;2. To observerepresentedcapacity;3. To unloadcargoclandestinelyplaced4.

To

substituteanother vesselif load is less

CHARTERER

1. To pay theagreed charterprice;2. To payfreightage onunboardedcargo;3. To paylosses toothers forloadinguncontracted

cargo andillicit cargo;4. To wait ifthe vessel


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than 3/5 ofcapacity;5. To leavethe port if thecharterer doesnot bring thecargo withinthe lay daysand extra laydays allowed;6. To place ina vessel in acondition tonavigate;7. to bringcargo to

needs repair;5. To payexpenses fordeviation.(Arts. 679-687)

sdisposal;4. Returnof thevesseldue topirates,enemiesor badweather;5. Arrivalat a portforrepairs.

Terms:

; navigate.

nearest neutralport in case ofwar orblockade.(Arts. 669-678)

Rescission of a Charter Party

1. Primage - bonus to be paid to the captainafter the successful voyage.

2. Demurrage the sum fixed in the charterparty as a remuneration to the owner ofthe ship for the detention of his vesselbeyond the number of days allowed bythe charter party for loading or unloadingor for sailing.

Atchartere

rs

request(Art 688)

1. Byabandoning thecharterandpaying

half ofthefreightage;2. Errorintonnageor flag;3. Failureto place

thevessel atthecharterer

Atshipown

ers

request(Art.689)

1. If theextra laydaysterminatewithoutthe cargo

beingplacedalongside thevessel;2. Saleby theowner ofthevessel

beforeloadingby thecharterer

Fortuitous

causes(Art.690)

1. War orinterdiction ofcommerce;2.

Blockade;3.Prohibition toreceivecargo;4.Embargo; and

5.Inabilityof thevessel to

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

4. Lay Days - days allowed to charterparties for loading and unloading thecargo.

5. Extra Lay Days days which follow afterthe lay days have elapsed.

USUAL FORMS OF CONSUMMATINGCONTRACTS

1. 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 goodsfrom the vessel stipulated in the contract ofaffreightment to another vessel before the

place of destination named in the contracthas been reached, or the transfer for furthertransportation from one ship or conveyanceto another.


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BOTTOMRY/ ORDINARYRESPONDEN LOAN

TIA (MUTUUM)

Not subject to Subject toUsury Law Usury Law

Liability of the Not subject toborrower is any

contingent on contingencythe safe (absolutearrival of the liability)vessel orcargo atdestination

The last The firstlender is a lender is apreferred preferredcreditor creditor

It is not dependent on the ownership ofthe transporting ships or in the change ofcarriers, but rather on the fact of actualphysical transfer of cargo from one vessel toanother. If done without legal excuse, howevercompetent and safe the vessel into whichthe transfer is made, is a violation of contractand infringement of right of shipper andsubjects carrier to liability if freight is lostevent by cause otherwise excepted.(Magellan Manufacturing vs. CA, 201 SCRA102)

LOAN ON BOTTOMRY ANDRESPONDENTIA

A real, unilateral, aleatory contract, byvirtue of which one person lends to anothera certain amount of money or goods onthings exposed to maritime risks, whichamount, with its earnings, is to be returned ifthe things are safely transported, and whichis lost if the latter are lost.

2. Obligation of the debtorconditioned only upon safearrival of the security at thepoint of destination.

Forms:1. Public instrument2. Policy signed by the

contracting parties and thebroker taking part therein

3. Private instrument (Art.720)

Contents:1. Kind, name and registry of

the vessel;2. Name, surname and

domicile of the captain;3. Names, surnames and

domiciles of the borrowerand the lender;

4. Amount of the loan and thepremium stipulated;

5. Time for repayment;6. Goods pledged to secure

repayment;7. Voyage during which the

LOAN ON

BOTTOMRY

LOAN ON

RESPONDENTIA

risk is run (Art.721)

DefinitionLoan made byshipowner orship agentguaranteed byvessel itselfand repayableupon arrival of

vessel atdestination.(Art. 719)

Loan taken onsecurity of thecargo ladenon a vessel,and repayableupon safearrival of

cargo atdestination.(Art. 719)

Who may contractShipowner orship agent.Outside of theresidence ofthe owners -

the captain.

Only theowner of thecargo.

Common elements:1. Exposure of security to

marine peril;


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WHEN LOAN ON BOTTOMRY ORRESPONDENTIA REGARDED AS SIMPLELOAN

1. Lender loaned an amount larger thanthe value of the object due tofraudulent means employed by theborrower. (ART.726)

2. Full amount of the loan is not used forthe cargo or given on the goods if allof them could not have been loaded,the balance will be considered asimple loan. (ART.727)

3. If the effects on which the money istaken is not subjected to any risk.(ART.729)

Note: Under existing laws, the parties to aloan, whether ordinary or maritime, mayagree on any rate of interest. (CB Circular905)

MARINE LOAN ONINSURANCE BOTTOMR

Y ORRESPONDENTIA

Indemnity is paid Indemnity isafter the loss paid inhas occurred advance by

way of aloan

In case of loss of In case ofthe vessel due to loss of thea risk insured vessel dueagainst, the to a marine

obligation of the peril, theinsurer becomes obligation ofabsolute the

borrower topay isextinguished

Consensual Realcontract contract

Hypothecary Nature of Bottomry/Respondentia

GENERAL RULE: The obligation of theborrower to pay the loan is extinguished if

the goods given as security are absolutelylost by reason of an accident of the sea,during the voyage designated, and if it isproven that the goods were on board.

EXCEPTIONS:1. Loss due to inherent defect;2. Loss due to the barratry on the part of the

captain;3. Loss due to the fault or malice of the

borrower;4. The vessel was engaged in contraband;

and5. The cargo loaded on the vessel be

different in from that agreed upon.

Concurrence of Marine Insurance andLoan on Bottomry/Respondentia

1. The insurable interest of the owner ofa ship hypothecated by bottomry isonly the excess of the value over theamount secured by bottomry. (Sec.101, Insurance Code)

2. The value of what may be saved incase of shipwreck shall be dividedbetween the lender and the insurer inproportion to the interest of each one.(Art. 735)

Note: If a vessel is hypothecated bybottomry only the excess is insurable, sincea loan on bottomry partakes of the naturelikewise of an insurance coverage to theextent of the loan accommodation. Thesame rule would apply to the hypothecationof the cargo by respondentia. (Pandect ofCommercial Law and Jurisprudence, Justice

Jose Vitug, 1997 ed.)

ACCIDENTS IN MARITIME COMMERCE1. Averages2. Arrival Under Stress3. Collision4. Shipwreck

AVERAGE

An extraordinary or accidental expense

incurred during the voyage in order topreserve the cargo, vessel or both, and alldamages or deterioration suffered by thevessel from departure to the port of


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destination, and to the cargo from the port ofloading to the port of consignment. (Art. Liability

steps.

806)The person whose property has beensaved must contribute to reimburse thedamage caused or expense incurred if thesituation constitutes general average.

asses:1. Particular or Simple Average2. Gross or General Average

Where both vessel and cargo are saved,it is general average; where only the vesselor only the cargo is saved, it is particularaverage.

Expenses incurred to refloat a vessel,which accidentally ran aground, in order to

continue its voyage, do not constitutegeneral average. Not only is there absenceof a marine peril, common safety factor, anddeliberateness. It is the safety of theproperty, and not the voyage, whichconstitutes the true foundation of generalaverage. (A. Magsaysay, Inc. vs. Agan,G.R.No. L-6393, Jan. 31, 1955)

The owner ofthe goodswhich gaverise to theexpense orsuffered thedamage shallbear thisaverage. (Art.810)

All thepersonshaving aninterest in thevessel and thecargo thereinat the time oftheoccurrence ofthe averageshallcontribute tosatisfy thisaverage. (Art.812)

Theinsurers(Art.859) andlenders onbottomry andrespondentiashall likewisecontribute.(Art.732).

PARTICULAR GROSS OR Number of interests involvedOR SIMPLE GENERAL Only one Several

Definition interest interests

Damages or Damages or involved involved

expensescaused to thevessel or cargothat did notinure to thecommon

benefit, andborne by

expensesdeliberatelycaused inorder to savethe vessel, itscargo or both

from real andknown risk.

Share in the damage orexpense

100% share In proportionto the value ofthe ownersproperty

savedRight to recover

respectiveowners. (Art.809)

(Art. 811) Noreimbursement

There may bereimbursement

Requisites1. common

danger;2. deliberate

sacrifice;

3. success;4. proper

formalitiesand legal

Kinds (not exclusive)Art. 809 Art. 811

Procedure for recovery1.Assemblyand

deliberation2.Resolutionof the captain3.Entry of the


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resolution inthe logbook4.Detailedminutes5.Delivery ofthe minutes tothe maritimejudicialauthority ofthe first port,within 24hours fromarrival,6.Ratificationby captainunder oath.(Arts. 813-814)

GOODS NOT COVERED BY GENERALAVERAGE EVEN IF SACRIFICED

1. 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)

816)

York-Antwerp (Y-A) Rules on DeterminingLiability for Averages With Regard ToDeck Cargo1. Deck cargo is allowed only indomestic/coastwise/inter-island shipping,

and is prohibited ininternational/overseas/foreign shipping.2. If deck cargo is loaded with the consentof the shipper on overseas trade, it mustalways contribute to general average, butshould the same be jettisoned, it would notbe entitled to reimbursement because thereis violation of the Y-A Rules.3. If deck cargo is loaded with the consentof the shipper on coastwise shipping, it mustalways contribute to general average and ifjettisoned would be entitled toreimbursement.

Reason: In domestic shipping, voyagesare usually short and the seas are generallynot rough. In overseas shipping, the vesselis exposed for many days to perils of thesea.

DOMESTIC INTERNATIONALJettison

of throwing cargo overboard in order toDeck cargo isallowed

Deck cargo isnot allowed

lighten the vessel. With shippersconsent

rder of goods to be cast overboard:1. Those which are on the deck,

Generalaverage

Particularaverage

preferring the heaviest one with the Without shippersconsentleast utility and value;

2. Those which are below the upper

deck, beginning with the one with

Captain isliable

Captain isliable

greatest weight and smallest value.(Art. 815)

Jettisoned goods are not res nullius nordeemed abandoned within the meaning ofcivil law so as to be the object of occupationby salvage. (Pandect of Commercial Law

ARRIVAL UNDER STRESS (ARRIBADA)

The arrival of a vessel at the nearestandmost convenient port instead of the port ofdestination, if during the voyage the vesselcannot continue the trip to the port ofdestination.

and Jurisprudence, Justice Jose Vitug, 1997ed.)

In order that the jettisoned goods may beincluded in the gross or general average, theexistence of the cargo on board should beproven by means of the bill of lading. (Art.

Whenlawful

Whenunlawful

Whobears

expenses:


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

are approaching each other fromopposite directions, or on intersectinglines, the steamship from the moment the

sailing vessel is seen, shall watch withthe highest diligence her course andmovements so as to be able to adoptsuch timely means of precaution as willnecessarily prevent the two boats fromcoming in contact.

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

Zones of Time in the Collision of Vessels1. First zone all time up to the momentwhen risk of collision begins.

No rule is as yet applicable for none isnecessary.2. Second zone time between momentwhen risk of collision begins and moment itbecomes a practical certainty.

It is in this period where conduct of the

vessels is primordial. It is in this zone thatvessels must strictly observe nautical rules,unless a departure therefrom becomesnecessary to avoid imminent danger.3. Third zone time when collision iscertain and time of impact.

An error in this zone would no longer belegally consequential.Error in Extremis - sudden movementmade by a faultless vessel during the third

zone of collision with another vessel which isat fault during the 2nd zone. Even if suchsudden movement is wrong, noresponsibility will fall on said faultless vessel.(Urrutia and Co. v. Baco River PlantationCo., 26 PHIL 632)

Cases Covered By Collision and Allision1. One vessel at fault

Vessel at fault is liable for damage caused

to innocent vessel as well as damagessuffered by the owners of cargo of bothvessels. (Art. 826)2. Both vessels at fault

Each vessel must bear its own loss, butthe shippers of both vessels may go againstthe shipowners who will be solidarily liable.(Art. 827)3. Vessel at fault not known

Each vessel must bear its own loss, butthe shippers of both vessels may go againstthe shipowners who will be solidarily liable.(Art. 828)

Doctrine of Inscrutable Fault In caseof collision where it cannot be determinedwhich between the two vessels was atfault, both vessels bear their respectivedamage, but both should be solidarilyliable for damage to the cargo of bothvessels.

4. Third vessel at faultThe third vessel will be liable for lossesand damages. (Art. 831)5. Fortuitous event/force majeure

No liability. Each bears its own loss. (Art.830)

The doctrine of res ipsa loquitur applies incase a moving vessel strikes a stationaryobject, such as a bridge post, dock, or

navigational aid. (Far Eastern Shipping v.CA, Luzon Stevedoring vs. CA)

Even if the cause of action against thecommon carrier is based on quasi-delict, thedefense of due diligence in the selection andsupervision of employees is unavailing incase of a maritime tort resulting in collision.It is not a civil tort governed by the CivilCode but a maritime one governed by Arts.

826-839 of the Code of Commerce. (ManilaSteamship vs. Insa Abdulhaman)

Doctrine of Last Clear Chance and Ruleon Contributory Negligence cannot beapplied in collision cases because of Art.827of the Code of Commerce. (Notes andCases on the Law on Transportation andPublic Utilities, Aquino, T. & Hernando, R.P.2004 ed.)

MARITIME PROTEST

Condition precedent or prerequisite torecovery of damages arising from collisions


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and other maritime accidents.

It is a written statement made under oathby the captain of a vessel after theoccurrence of an accident or disaster inwhich the vessel or cargo is lost ordamaged, with respect to the circumstancesattending such occurrence, for the purposeof recovering losses and damages.Excuses for not filing protest: 1) wherethe interested person is not on board thevessel; and 2) on collision time, need not beprotested. (Art. 836)

ases 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 ahurricane or when the captainbelieves that the cargo has suffereddamages or averages (Art. 624).

Who makes:CaptainWhen made: within 24 hours from the time

the collision took place.

Before whom made: competent authorityat the point of collision or at the first port ofarrival, if in the Philippines and to the

Philippine consul, if the collision took placeabroad. (Art. 835)

SHIPWRECKIt is the loss of the vessel at sea as a

consequence of its grounding, or runningagainst an object in sea or on the coast. Itoccurs when the vessel sustains injuries dueto a marine peril rendering her incapable ofnavigation.

If the wreck was due to malice,negligence or lack of skill of the captain, theowner of the vessel may demand indemnityfrom said captain. (Art. 841)The rules on collision or allision, as maybe pertinent, can equally apply toshipwrecks.

SPECIALCONCEPTSARRASTRE SERVICE

A contract for the unloading of goods froma vessel.

Applicability: Overseas trade only.

(Commercial Law Review, C. Villanueva,2004 ed.)

Significance: When a person brings incargo from abroad, he cannot unload anddeliver the cargo by himself. The unloadingmust be done by the arrastre operator,which will then deliver the cargo to theimporter. (Commercial Law Review, C.Villanueva, 2004 ed.)

Nature of business: It is a public utility,discharging functions which are heavilyinvested with 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 maybe held liable, the consignee must provethat the damage was due to the negligenceand while the goods are in the custody of thearrastre operator. (Hartford Fire Insurance v.E. Razon, Inc.)

STEVEDORING SERVICEThe carriage of goods from the warehouseor pier to the holds of the vessel. (Chief ofStaff vs. CIR)

As understood in the port business, theterm consists of the handling of cargo fromthe hold of the ship to the dock, in case ofpier-side unloading; or to a barge, in case ofunloading at sea. (Anglo-Fil Trading Corp.vs. Lazaro)

The loading on the ship of outgoing cargois also part of stevedoring work. (Ibid.)

CONTAINERIZATION/ SAID-TO-CONTAIN/ SHIPPERS LOAD ANDCOUNT SYSTEM

System whereby the shipper loads hiscargoes in a specially designed container,seals the container and delivers it to thecarrier for transportation. The carrier does

not participate in the counting of themerchandise for loading into the container,the actual loading, and the sealing of thecontainer. (US Lines v. Comm. Of Customs,


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ICTSI v. Prudential Guarantee)

The matter of quantity, description andconditions of the cargo inside the containeris the sole responsibility of the shipper,unless there is stipulation to the contrary.(US Lines vs. Comm. Of Customs, ReymaBrokerage v. Phil. Home Assurance)

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 SEAACT/COGSA (C.A. No. 65)

APPLICABILITY

The transportation mustbe: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 seatransportation if agreed upon by the parties.(Clause paramount orparamount clause)

IMPORTANT FEATURES:1. Amount of carriersliability2. Notice of damage3. Prescriptive period

AMOUNT OF CARRIERSLIABILITY

Under the Sec. 4(5), the liability limit is setat $500 per package or customary freightunit unless the nature and value of suchgoods is declared by the shipper. This is

deemed incorporated in the bill of ladingeven if not mentioned in it. (EasternShipping 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 daysfrom delivery.

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

PRESCRIPTIVE PERIOD

Action for loss or damage to the cargoshould be brought within one year after:

a. Delivery of the goods (delivered butdamaged goods); or

b. The date when the goods should havebeen delivered (non-delivery). (Sec.3[6])

Loss or Damage as applied to theCOGSA contemplates a situation where nodelivery at all was made by the shipper of

the goods because the same had perished,gone out of commerce, or disappeared insuch a way that their existence is unknownor they cannot be recovered. Thus, it isinapplicable in case of misdelivery orconversion. (Ang vs. American SteamshipAgencies Inc.) and damage arising fromdelay or late delivery (Mitsui O.S.K. LinesLtd. vs. CA). In such instance the, Civil Coderules on prescription shall apply.

The one-year prescriptive period issuspended by:

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 fromdelivery of the last package and is notsuspended by extrajudicial demand. (DolePhils.,Inc. vs. Maritime Co.,148 SCRA 118)

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

The insurer exercising its right ofsubrogation is bound by the one-yearprescriptive period. However, it does notapply to the claim against the insurer for the


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insurance proceeds. (Fil. Merchants Ins.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 theuniformity of recovery by the passengers.APPLICABILITY

The 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 air

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

transportation enterprise.

International transportation - anytransportation in which the place ofdeparture and the place of destination aresituated either:

1. Within the territories of two High

PASSENGER

TICKETPassenger

BAGGAGE

CHECK

Checked-inbaggage

AIRWAYBIL

LGoods tobeshipped

Contracting Parties regardless of whether

or not there be a break in thetransportation or transshipment, or2. Within the territory of a single HighContracting Party, if there is an agreedstopping place within a territory subject tothe sovereignty, mandate or authority ofanother power, even though that power isnot a party to the Convention. (roundtrip, Am. Jur.)

Transportation to be performed by severalsuccessive air carriers shall be deemed tobe one undivided transportation, if it hasbeen regarded by the parties as a singleoperation, whether it has been agreed uponunder the form of a single contract or of aseries of contracts, and it shall not lose itsinternational character merely because onecontract or a series of contracts is to beperformed entirely within a territory subject

to the sovereignty, suzerainty, mandate, orauthority of the same High ContractingParty. (Art. 1 Sec.3)

LIABILITY OF CARRIER FOR DAMAGES

1. Death or injury of a passenger if theaccident causing it took place on board theaircraft or in the course of its operations ofembarking or disembarking; (Art. 17)2. Destruction, loss or damage to anybaggage or goods, if it took place during thetransportation by air; (Art. 18) and

Transportation by air The period duringwhich the baggage or goods are in thecharge of the carrier, whether in an airport or

on board an aircraft, or, in case of a landingoutside an airport, in any place whatsoever.It includes any transportation by land or

water outside an airport if such takes placein the performance of a contract fortransportation by air, for the purpose ofloading, delivery, or transshipment.3. Delay in the transportation of passengers,baggage or goods. (Art. 19)

Note: The Hague Protocol amended the WCby removing the provision that if the airlinetook all necessary steps to avoid the


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damage, it could exculpate itself completely(Art. 20(1)). (Alitalia vs. IAC, 192 SCRA 9)

LIMIT OF LIABILITY (Art. 22, as amendedby Guatemala Protocol, 1971; Alitalia vs.IAC)1. Passengers

GENERAL RULE: $100,000 perpassenger

EXCEPTION:Agreement to a higher limit

2. Checked-in baggage

GENERAL RULE: $20 per kilogramEXCEPTION: In case of special

declaration of value and payment of asupplementary sum by consignor, carrier isliable to not more than the declared sumunless it proves the sum is greater thanactual value.3. Hand-carried baggage

$1000/passenger4. Goods to be shipped

GENERAL RULE: $20 per kilogramEXCEPTION: In case of special

declaration of value and payment of asupplementary sum by consignor, carrier isliable to not more than the declared sumunless it proves the sum is greater thanactual value.

An agreement relieving the carrier fromliability or fixing a lower limit is null and void.(Art. 23)Carrier is not entitled to the foregoing limit

if the damage is caused by willfulmisconduct or default on its part. (Art. 25)

Thus, the WC does not operate as anexclusive enumeration of the instances of anabsolute limit of the extent of liability. It doesnot preclude the application of the CivilCode and other pertinent local laws. It doesnot regulate or exclude liability for otherbreaches of contract by the carrier, ormisconduct of its employees, or for someparticular or exceptional type of damage.(Alitalia vs. CA)

In PanAm v. IAC, the WC was applied asregards the limitation on the carriersliability,there being a simple loss of baggage withoutany improper conduct on the part of theofficials or employees of the airline or otherspecial injury sustained by the passenger.

In KLM Royal v. Tuller, the WC hasinvariably been held inapplicable, or as notrestrictive of the carriers liability, wherethere was satisfactory evidence of malice orbad faith attributable to its officers andemployees. (Alitalia vs. IAC)

ACTION FOR DAMAGES1. Notice of claim

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/goods

The complaint is a condition precedent.Without the complaint, the action is barred

except in case of fraud on the part of thecarrier. (Art. 26)

2. Prescriptive period

on 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-yearprescriptive period was not applied wherethe airline employed delaying tactics.

RULE IN CASE OF VARIOUSSUCCESSIVE CARRIERS1. Carriage of passengers

GENERAL RULE: Action is filed onlyagainst the carrier in which the accident ordelay occurred.

EXCEPTION: Agreement or contractwhereby the first carrier assumed liability forthe whole journey.2. Carriage of baggage or goods


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is a matter of jurisdiction rather than of abandoned and deserted at sea by those

a. Passenger or consignor can file anaction against the first carrier and thecarrier in which the damage occurred

b. Passenger or consignee can file anaction against the last carrier and thecarrier in which the damage occurred.

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

A contract of international carriage by air,although performed by different carriersunder a series of airline tickets constitutes asingle operation. Members of theInternational Air Transportation Association(IATA) are under a general pool partnershipagreement wherein they act as agent ofeach other in the issuance of tickets tocontracted passengers to boost ticket salesworldwide and at the same time providepassengers easy access to airlines whichare otherwise inaccessible in some parts ofthe world. (American Airlines vs. CA)

Under a general pool partnershipagreement, the ticket-issuing airline is theprincipal in a contract of carriage while the

endorsee-airline is the agent. The obligationof the former remained and did not ceaseeven when the breach occurred not on itsown flight but on that of another airline whichhad undertaken to carry the passengers toone of their destinations. (China Airlines vs.Chiok)

JURISDICTION

At the option of the plaintiff, the action for

damages 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 businessthrough which the contract has beenmade; or

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

NOTE: It is the passengers ultimatedestination not an agreed stopping place

that determines the country where suit is tobe filed.

The forum of action provided in Art. 28(1)

venue. (Santos III vs. Northwest; 2A C.J.S.)

V. SALVAGE LAW (Act No. 2616)

SALVAGETwoconcepts:

1. Services one person renders to theowner of a ship or goods, by his own labor,preserving the goods or the ship which theowner or those entrusted with the care ofthem have either abandoned in distress atsea, or are unable to protect or secure.2. Compensation allowed to persons bywhose voluntary assistance a ship at sea orher cargo or both have been saved in wholeor in part from impending sea peril, or suchproperty recovered from actual peril or loss,as in cases of shipwreck, derelict orrecapture.

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-existing contract);

4. Services are successful, total orpartial.Subjects of Salvage:

1. Ship itself;2. Jetsam goods which are cast into thesea, and there sink and remain under water;3. Floatsam or Flotsam goods which floatupon the sea when cast overboard;4. Ligan or Lagan goods cast into the seatied to a buoy, so that they may be found

again by the owners (p.173, Judge Diaz).Persons who have no right to a reward

for salvage:1. Crew of the vessel saved;2. Person who commenced Salvage in spiteof opposition of the Captain or hisrepresentative;

3. In accordance with Sec. 3 of theSalvage Law, a person who fails to deliver asalvaged vessel or cargo to the Collector of

Customs.

Derel ict a ship or her cargo which is


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SALVAGE TOWAGEGoverned by Governed byspecial law Civil Code on(Act No. contract of2616) leaseRequires Success is

success, not requiredotherwise nopaymentMust be done Only thewith the consent of theconsent of the tugboat ownercaptain/crew is neededmenVessel must Vessel needbe involved in not be

an accident involved in anaccident

Fees Fees belongdistributed to the tugboat

who are in charge of it, without any hope ofrecovering it, or without any intention ofreturning to it.

amongcrewmen

owner

The intention of those in charge must beascertained. If those in charge left with theintention of returning, or of procuringassistance, the property is not derelict, but ifthey quitted the property with the intention offinally leaving it, it is derelict and a change oftheir intention and an attempt to return

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209540904 Transportation Law Reviewer SAN BEDA

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