TRANSPORTATION LAW

ARTICLES 1732 1745 NCC

TRANSPORTATION LAW1OUTLINEGeneral ProvisionsArticle 1732 - Definition of Common CarrierArticle 1733 - Diligence required for Common CarriersVigilance Over GoodsArticle 1734 - Defenses of Common CarriersArticle 1735 - Presumption of NegligenceArticle 1736 to 1738 - Duration of LiabilityArticle 1739 - Conditions in order for Natural Disasters & Acts of Public Enemy to be exempt from Common Carriers LiabilityCommon Carriers LiabilityArticle 1740 - Consequence of DelayArticle 1741 - Contributory Negligence of the ShipperArticle 1742 - Improper PackingArticle 1743 - Order of Public AuthorityArticle 1744 - Stipulation Limiting the Liability of the CarrierArticle 1745 - Invalid Stipulation

2Common CarrierDefinition (elements):persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

(Art. 1732 NCC)

3Common Carrier vs. Private CarrierCommonPrivateAs to availability:holds himself out for all people indiscriminatelyContracts with particular individuals or groups onlyAs to required diligence:Extraordinary diligence is requiredOrdinary diligence is requiredAs to regulation:Subject to state regulationNot subject to state regulationStipulation limiting liability:Parties may not agree on limiting the carriers liability except when provided by lawParties may limit the carriers liability, provided it is not contrary to law, morals or good customsExempting circumstance:Prove extraordinary diligence and Article 1734 NCCCaso fortuito, Article 1174 NCCPresumption of Negligence:There is a presumption of fault or negligenceNo presumption of fault or negligenceGoverning law:Law on common carriersLaw on obligations and contractss(from DIAZ) As to availability: 1732 makes no distinction:

between one whose principal business activity is the carrying of persons, goods or both, and one who does such carrying of persons or goods or both as ancillary activity.between persons/ enterprise offering transportation service on a regular/scheduled basis and one offering such service on an occasional/episodic or unscheduled basis.Between carrier offering services to the general public ( general community/population) and one who offers services or solicits business only from a narrow segment of the general population

A person/entity is a common carrier & has its obligations under the NCC EVEN IF he did not secure a CERTIFICATE OF PUBLIC CONVENIENCE (De Guzman vs CA)

NCC makes no distinction as to the means of transporting, as long as it is by land, water or air (First Phil Industrial Corp vs CA)

NCC does not provide that the transportation should be by motor vehicle (First Phil Industrial Corp vs CA)

A person/entity may become a common carrier EVEN if he DOES NOT HAVE FIXED/PUBLICLY KNOWN ROUTE, maintains no terminal and issues no ticket (Asia Lighterage & Shipping Inc vs CA)

A person/entity need not be engaged in the business of public transportation for the provisions of the NCC to apply (Fabre Jr. vs CA)

CHARTER PARTYa contract by which an entire ship or some principal part thereof, is left by the owner to another person for a specified time or useA contract of affreightment by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight

A charter party may transform a common carrier to a private carrierThe common carrier may not transform into a private carrier if the charter party is a contract of affreightment like a voyage charter or a time charterIn a voyage charter, the carrier is answerable to the loss of the goods received for transportation(planters Products vs CA)

PRIVATE CARRIER vs COMMON CARRIER

If a person agrees to acarry a person to the airport using his privately owned car that is meant for personal use, he will be considered a PRIVATE CARRIER)

The most typical form of private carrier is that of a charter party, a maritime contract by which the charterer, a party other than the ship owner obtains the use and services of all or some part of the ship for a period of time or a voyage or voyages.

COMMON CARRIERS ARE SUBJECT TO THE REGULATION OF THE STATE BECAUSE OF ITS NATURE OF BEING IMPRESSED WITH PUBLIC INTEREST AND CONCERN (Fisher vs Yangco)

4Test for Determining Whether a Party is a Common Carrier of GoodsHe must engaged in the business of carrying goods for others as a public employment and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation;He must undertake to carry goods of the kind to which his business is confined;He must undertake to carry by the method by which his business is conducted and over his established roads;The transportation must be for hire(First Phil. Industrial Corp vs CA, GR 125948)

In First Phil. Industrial Corp:-> The fact that the petitioner has a limited clientele does not exclude it from the definition of a common carrier

The operator of a beach resort that accepts clients by virtue of a tour package contracts that included transportation to and from the resort and the point of departure is CONSIDERED A COMMON CARRIER. (SC : its ferry services are intertwined with its main business as to be properly considered ancillary; these services are available to the public) (Spouses Cruz vs Sun Holidays)

NATURE OF THE BUSINESS:-Public Service; impressed with public interest and concern

REGISTERED OWNER RULE & KABIT SYSTEMREGISTERED OWNER RULE:-> A person who is the registered owner of a vehicle is liable for any damage caused by the negligent operation of the vehicle although the same is already sold or conveyed to another person at the time of the accident-> The registered owner is liable to the injured party subject to his right of recourse against the transferee or the buyer (Erezo vs Jepte)-> but a registered owner is NOT LIABLE if the vehicle was taken from his garage without his knowledge and consent (Duavit vs CA)-> The registered owner rule applies even if the registered owner leased the vehicle to another who is the actual operator; here, the registered owner is DIRECTLY LIABLE. In order for the lessor-owner to be free from liability, he should REGISTER the lease contract with the LTO (which means that the lease should be annotated in the certificate of registration in order that there will be notice to 3rd parties) (PCI Leasing and finance vs UCPB General Insurance)-> the failure to register a lease, sale, transfer or encumbrance, should not benefit the parties responsible to the prejudice of innocent victimes (PCI Leasing & Finance vs UCPB General Insurance)-> the registered owner rule apples in a financial lease-> if the registered owner is made liable despite the transfer of the vehicle, the transferee is liable to the registered owner for the damages caused to the passenger (Perez vs Guttierez)->the registered owner rule is APPLICABLE whenever the persons involved are ENGAGED IN KABIT SYSTEM

KABIT SYSTEM-> an arrangement whereby a person who has been granted a CPC allows other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of his earnings-> not outrightly penalized by law BUT is considered CONTRARY TO PUBLIC POLICY and thus VOID under Art. 1409 NCC (Abelardo Lim vs CA)->PARI DELICTO RULE: persons who are parties to the kabit system cannot invoke the same to escape liability (Lita Enterprises vs IAC)

BOUNDARY SYSTEM:When boundary system is implemented, common carrier CANNOT escape liability by claiming that the driver is a lessee; carrier CANNOT exempt himself on the ground that he is a lessorReason: to tolerate such position would not only abet flagrant violations of the Public Service Law but also to place the riding public at the mercy of the reckless and irresponsible drivers (Hernandez vs Dolor)

5Parties to the Contract of CarriageCarriage of passengers:

1. Common carrierPassengers

Carriage of goods:

1. CarrierShipperConsigneeParties Passenger one who travels in a public conveyance by virtue of contract, express or implied, with the carrier as to the payment of fare or that which is accepted as an equivalent thereof (Nueca v. Manila Railroad Co., G.R. 31731-R, Jan. 30, 1968) Common Carrier one that holds itself out as ready to engage in the transportation of goods for hire as a public employment and not as a casual occupation. (De Guzman v. CA, G.R. L-47822, Dec. 22, 1988) Shipper is the person who delivers the goods to the carrier for transportation. He is the person who pays the consideration or on whose behalf payment is made. Consignee is the person to whom the goods are to be delivered. The consignee may be the shipper himself or a third person who is not actually party to the contract.

INSTANCE WHEN A 3rd party consignee may be bound by the agreement between the shipper and the carrier:when the terms and conditions of the bill of lading established that the consignee accepted such and is trying to enforce the agreement (Everett Steamship Corporation vs. CA)

Gratuitous/Reduced Fare:a passenger is still considered as such even if he is being carried gratuitously or under reduced fare, but subject to the rule per Art 1758 stating that:when a passenger is carried gratuitously, a stipulation limiting the common carriers liability for negligence is VALID

PERFECTIONPerfection of contract of carriage of goods:Contract to carry: perfected by mere consentContract of carriage: perfected by the act of delivery (when the goods are unconditionally placed in the possession and control of the carrier, AND upon receipt by the carrier for transportation, Mauro Ganzon vs CA)

AIRCRAFT -> there is perfected contract even if there are no tickets issued AS LONG AS there was MEETING OF MINDS between the SUBJECT MATTER and CONSIDERATION (British Airways vs CA)-> there is a perfected contract of carriage if it is ESTABLISHED that the PASSENGER had:Checked in the departure areaPassed through the customs and immigrationBoarded the shuttle busProceeded to the ramp of the aircraftHis baggage already been loaded in the aircraft (Korean Airlines vs CA)

BUSES, JEEPNEYS AND STREET CARSOnce a public utility bus or jeepney stops, it is in effect making continuous offer to bus ridersThus it is the duty of the drivers to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter and they are liable for injuries suffered by boarding passengers resulting from sudden stop of the carrier

TRAINSOne is considered a passenger if:He purchased a ticket at a proper place and in a proper mannerWith bonafide intention to use the facilities of the carrier, possess sufficient fare and Present himself to the carrier for transportation (Jesusa vds de Nueca vs. Manila Railroad)

6Obligations of the CarrierTo accept passengers and goods without discrimination

To seasonably deliver the goods and bring the passengers to the destination

To deliver the goods to the proper person

To exercise extraordinary diligence in the performance of its duties(SOURCE: AQUINO BOOK on Transportation Law)

GROUNDS WHEN COMMON CARRIER MAY REFUSE TO ACCEPT GOODS:Goods sought to be transported are dangerous objects/substances including dynamites and other explosives Goods are UNFIT for transportation (Art 356 Code of Commerce)Acceptance would result to overloadingGoods are considered contrabands or illegal goodsGoods are injurious to healthGoods will be exposed to untoward danger like flood, capture by enemies and the likeGoods like livestock will be exposed to diseasesStrikeFailure to tender goods on time

7Diligence RequiredExtraordinary Diligence (Art. 1733)

Reason For Requiring Common Carriers To Observe Extraordinary Diligence

The nature of the business of common carriers and the exigencies of public policy demand that they observe extraordinary diligence.(Art. 1733)

EXTRAORDINARY DILIGENCE:It is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights. The law requires common carriers to render service with the greatest skill and utmost foresight.

The nature of the business is imbued with public interest and public policy; because of the exigencies of the business. The public has no choice but to trust on the skills of the employees of the common carrier. The goods and the life of the passenger are placed in the hands of the common carrier.8Extraordinary diligence in the vigilance over the goods:expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7,

Extraordinary diligence for the safety of the passengers:set forth in Articles 1755 and 1756.

(Art. 1733)9Extraordinary DiligenceRequirements of extraordinary diligence in carriage by seaWarranty of seaworthiness (TransAsia Shipping vs. CA)No Overloading. (Negros Navigation vs. CA)

Requirements of extraordinary diligence in carriage by landGood condition of the vehicle Compliance with traffic rules

For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew (Loadstar Shipping Co., Inc. vs CA and Manila Insurance Co, inc.)

SEAWORTHINESS:1st step that must be undertaken by the common carrierWARRANTY OF SEAWORTHINESS OF A SHIPA passenger or a shipper is under no obligation to conduct an inspection of the ship and its crewThe carrier is obliged by law to impliedly warrant its seaworthiness (Vector Shipping Corp vs Adelfo Macasa)the warranty is implied because the failure of the common carrier to maintain in seaworthy condition in a contract of carriage is a breach of its duty prescribed in Art. 1755 NCCWARRANTY UNDER SPECIAL LAW:Insurance LawCOGSA , sec 3(1) the carrier shall be bound before and at the beginning of the voyage to exercise due diligence toMake the ship seaworthyProperly man, equip and supply the shipMake the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried

DOMESTIC SHIPPING:Domestic Shipping Act of 2004, Sec.9 (Safety Standards)All vessels operate by domestic ship operators shall at all times be in seaworthy conditionProperly equipped with adequate life saving communication, safety and other equipment operated and maintained in accordance with the standards set by MARINA, and manned by duly licensed and competent vessel crewThe MARINA shall have the power to inspect vessels and all equipment on board to ensure compliance with the safety standardsThe passenger or shipper is not required to prove inceptively in case which he filed that the ship is seaworthy. Where the vessel is found unseaworthy, the shipowner is also presumed to be negligent since it is tasked with the maintenance of the ship (Aboitiz Shipping Corp vs New India Assurance Co.)

meaning of seaworthiness:-that strength, durability and engineering skill made part of a ships construction and continued maintenance, together with a competent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonably be expected or encountered during her voyage without loss or damage to her particular cargo (Standard Vacuum Oil Co. vs Luzon Stevedoring Co)

CARGOWORTHINESS:Even if the vessel was properly maintained and is free from defect, the carrier must not accept goods that cannot be properly transported in the shipThe ship must be fit to carry the cargo as a carrying receptacleMeaning: the vessel must be sufficiently strong and equipped to carry the particular kind of cargo which she had contracted to carry and her cargo must be so loaded that it is safe for her to proceed her own voayage (Lord chorley and OC Giles Shipping Law)A ship may be unfit to carry the contemplated cargo because she has no sufficient means of ventilation and yet be quite fit tom ake the contemplated voyage as a ship

10Carriage of PassengersCommon carrier bound to carry passengers safely as far as human care and foresight can provideUsing utmost diligence of very cautious personsWith due regard for all circumstances(Art. 1755)

11Duration of LiabilityWhen does the duty to exercise extraordinary diligence start and end with respect to carriage of goods?It lasts: from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them,without prejudice to the provisions of Article 1738 (Art. 1736)12When are the goods deemed delivered to the carrier?

When the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them.

When such delivery has been accepted by the carrier, the liability of such carrier commences eo instanti ( Saludo, Jr. vs CA)

EO instanti - instantly/immediatelyRP vs Lorenzo Shipping corp:The obligation of the carrier can also be considered terminated despite the non surrender of the bill of ladingThe surrender of bill on lading is NOT necessary for the discharge of the obligations of the carrierArticle 353 of code of commerce:After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him but if the bill of lading cannot be returned, the consignee must give a receipt for the goods deliveredQ: What is a bill of lading?A: It is a written acknowledgement of receipt of goods and agreement to transport them to a specific place and to a named person or to his order.Q: What is the twofold character of a bill of lading?A: A bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a receipt, it recites the date and place of shipment, describes the goods as to quantity, weight, dimensions, identification marks and condition, quality, and value. As a contract, it names the contracting parties, which include the consignee, fixes the route, destination, and freight rate or charges, and stipulates the rights and obligations assumed by the parties. (Phoenix Assurance Co., Ltd. v. United States Lines, G.R. No. L24033, Feb. 22, 1968)Q: What are the three functions of Bill of Lading?A: It is a receipt for the goods shipped It is a contract by which the three parties namely the shipper, carrier and consignee undertake specific responsibilities and assume stipulated obligations; and It is a legal evidence of the contract between the shipper and the carrier. As evidence, its contents shall decide all disputes which may arise with regard to their execution and fulfillment.NOTE: In the absence of a bill of lading, their respective claims may be determined by legal proofs which each of the contracting parties may present in conformity with law.

Regional Container Lines vs Netherlands Insurance Co:Under maritime jurisprudence, cargoes, while being unloaded generally remains under the custody of the carrier13Duration of LiabilityTo whom should delivery be made?

It must be delivered, actually or constructively, to the consignee or to the person who has a right to receive them.(Art. 1736)

Note: Delivery of the cargo to the customs authorities is not delivery to the consignee, or to the person who has a right to receive them. (Lu Do & Lu Ym Corp. v. Binamira)Q: What is constructive delivery?A: It is a delivery of a representation of property (as a written instrument) or means of possession (as a key) that is construed by a court as sufficient to show the transferor's intent or to put the property under the transferee's control14Duration of LiabilityQ: What is the rule as to unloading, storage and stoppage in transitu?

General Rule: The common carriers duty to observe extraordinary diligence in the vigilance over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit.Exception: When the shipper or owner has made use of the right of stoppage in transitu.15What is the diligence required in exercising the right of stoppage in transitu?

Ordinary diligence because of the following:It is holding the goods in the capacity of an ordinary bailee or warehouseman and not as a carrier;There is a change of contract from a contract of carriage to a contract of deposit;

Note: If the seller instructs to deliver it somewhere else, a new contract of carriage is formed and the carrier must be paid accordingly.16DEFENSES OF COMMON CARRIERThe common carrier is NOT the insurer of the passengers safetyHis liability rests upon:his negligenceHis failure to exercise the utmost diligence that the law requiresBy Article 1756, in case of a passengers death or injury the carrier bears the burden of satisfying the court that he has duly discharged the duty of prudence required)(Necisito vs. Paras)Under NCC:Defenses in carriage of goods: Art. 1734, 1742 & 1743Defenses in carriage of passengers: Art 1756PROXIMATE CAUSATIONCommon carrier is presumed negligent the moment he fails to deliver the goods to its destination or the moment the passenger did not reach his destination while riding the carrier (Calalas vs CA)the doctrine of proximate cause is inapplicable in the contract of carriageThe injured passenger or owner need not prove causation to establish the case. The presumption arises upon the happening of the accident (Calalas vs CA)the carrier can prove that the proximate cause of the loss is not any act or omission of the said carrier because he exercised extraordinary diligence.

DOCTRINE OF LASE CLEAR CHANCEWhen both parties involved in the accident were both negligent, the negligence of the party will not be considered the proximate cause if the other party has the last clear chance of avoiding the injuryHowever, the doctrine of the last clear chance will not be applicable if the case is between a passenger and the carrier and the concurrent negligence of the carrier and a 3r party are the proximate causes of the injury17Vigilance Over GoodsCommon Carrier:

Duty to exercise extraordinary diligence in the vigilance of goods (Art. 1733)Responsible for the loss, destruction destruction, or deterioration of the goods (Art. 1734 [General Rule])A disputable presumption of fault or negligence against the carrierThe law, in creating such a presumption merely relieves the owner of the goods, for the time being, from introducing evidence to fasten the negligence on the former, because the presumption stands in the place of evidence.18Exempting Causes (Where Common Carriers are not held responsible for the loss/destruction/Deterioration)

Flood, storm, earthquake, lightning or other natural disaster or calamity;Act of the public enemy in war whether international or civil;Act of omission of the shipper or owner of the goods;The character of the goods or defects in the packaging or in the containers; andOrder or act of the competent public authority

(Art. 1734 [Exceptions to the General Rule]))

19Presumption of NegligenceGENERAL RULE:Common Carriers are presumed to have been at fault or to have acted negligently:In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of Article 1734if the goods are lost, destroyed or deterioratedEXCEPTIONIf Common Carriers prove that they observed extraordinary diligence as required in Article 1733 and 1755.(Article 1735)PRESUMPTION OF NEGLIGENCEIn case of loss of effects or cargo or passengers or death or injuries to passengers, the common carrier is presumed to be at fault or have aced negligently UNLESS he had observed EXTRAORDINARY DILIGENCE in the vigilance thereof (Regional Container Lines of Singapore vs The Netherlands Insurance Co.)

the court need not make an express finding of fault or negligence of common carriers, the law imposes liability upon common carriers as long as it is shown that:There exists a contract between the passenger or shipper and the common carrierThe loss, deterioration, injury or death took place during the existence of the contract

Mere proof of delivery of the goods in good order to the common carrier and their arrival in bad order at their destination or failure to transport passengers safely, constitutes a PRIMA FACIE case of fault or negligence against the carrier (Belgian Overseas Chartering and Shipping v. Phil. First Insurance Co.)

20Notes on Articles 1734 & 1735:

The exempting causes under article 1734 is a closed list. Causes falling outside the list even if they constitute a specie of force majeure, fall within the scope of Article 1735. Thus, if goods are lost, destroyed or deteriorated other than those exempting causes under 1734, common carrier must present CLEAR & CONVINCING EVIDENCE that they are NOT NEGLIGENT.21General Rule for Fortuitous Events:No person shall be responsible for those events which could not be foreseen, or which thought foreseen, were inevitable.Exception:In cases provided by lawWhen it is otherwise declared by stipulationWhen nature of the obligation requires the assumption of risk(Article 1174, NCC)

22Requisites in order for an obligor to be exempted from breach of obligation due to caso fortuito (acts of God)/ (requisites of absence of negligence)The cause of the breach of obligation must be independent of the will of the debtorThe event must be unforeseen or unavoidableThe event must be such as to render it impossible for the debtor to fulfill his obligation in a normal mannerThe debtor must be free from any participation in or aggravation of the injury to the creditor.Caso Fortuito as an Exempting CauseConditions/Requisites in order to be considered as an exempting cause:

Natural disaster was the proximate and only cause (Art. 1739)

Carrier exercised diligence to prevent or minimize loss before, during and after the occurrence of the natural disaster; (Art. 1739)

The common carrier has not negligently incurred delay in transporting the goods. (Art. 1740)

CASO FORTUITO (Flood, storm, earthquake, lightning or other natural disaster or calamity

*Fire is not within the ambit of natural disaster or calamity. (Eastern Shipping lines vs. Nisshin Fire and Marine Insurance and Dowa Fire and Marine Insurance)*Calamity includes thunderstorm.*mechanical defect is not within the ambit of the natural disaster; it is within the control of the common carrier.

FIRE

24Are mechanical defects considered fortuitous events?.No. Mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier from responsibility. (Sweet Lines, Inc. v. CA)Illustrations:1. Tire blowout of a jeep is not a fortuitous event where there exists a specific act of negligence by the carrier consisting of the fact that the jeepney was overloaded and speeding at the time of the incident. (Juntilla v. Fontanar)2. Defective brakes cannot be considered fortuitous in character. (Vergara v. CA, G.R. No. 77679)Is fire considered a natural disaster?No. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier (Eastern Shipping Lines v. IAC)

Note: In case that the goods have been already deposited in the warehouse of Bureau of Customs then the goods was destroyed by fire, the carrier is not anymore liable (Sevando vs. Philippine Steam Navigation)Is the occurrence of a typhoon a fortuitous event?

General Rule: Yes, if all the elements of a natural disaster or calamity concur. This holds true especially if the vessel was seaworthy at the time it undertook that fateful voyage and that it was confirmed with the Coast Guard that the weather condition would permit safe travel of the vessel to its destination. (Phil. American Gen. Ins. Co., Inc. v. MGG Marine Services, Inc)Exception: If a vessel sank due to a typhoon, and there was failure to ascertain the direction of the storm and the weather condition of the path they would be traversing, it constitutes lack of foresight and minimum vigilance over its cargoes taking into account the surrounding circumstances of the case. Thus, the common carrier will still be liable. (Arada v. CA, G.R. No. 98243, July 1, 1992)Q: What are the implied warranties in marine insurance?

A: Seaworthiness. (Sec. 113) Nondeviation from the agreed voyage. (Secs. 123, 124, 125) Nonengagement from illegal venture. Warranty of neutrality the ship will carry neutrality of the ship or cargo where such nationality or neutrality is expressly warranted. (Sec. 120) Presence of insurable interest

Q: What is seaworthiness?

A: It is a relative term depending upon the nature of the ship, voyage, service and goods denoting in general, a ships fitness to perform the service and to encounter the ordinary perils of the voyage, contemplated by the parties to the policy. (Sec. 114)

Q: When is the warranty of seaworthiness complied with?A: GR: The warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk. (Sec. 115) There is no implied warranty that the vessel will remain in seaworthy condition throughout the life of the policy.XPN: 1. In the case of time policy the ship must be seaworthy at the commencement of every voyage she may undertake. (Sec. 115 [a])2. In the case of cargo policy each vessel upon which cargo is shipped or transshipped must be seaworthy at the commencement of each particular voyage. (Sec. 115 [b])3. In the case of voyage policy contemplating a voyage in different stages the ship must be seaworthy at the commencement of each portion. (Sec. 117)

Q: What is the effect of the admission of seaworthiness by the insurer?A: If the policy provides that the seaworthiness of the vessel as between insured and insurer is admitted, the issue of seaworthiness cannot be raised by the insurer without showing concealment or misrepresentation by the insured. (Phil. American General Insurance Co. v. CA, G.R. No. 116940, June 11, 1997)

Q: What does the admission of seaworthiness by the insurer mean?A: It may mean:1. That the warranty of seaworthiness is to be taken as fulfilled; or2. That the risk of unseaworthiness is assumed by the insurer. (Philippine American General Insurance Co., Inc. v CA, GR No. 116940. June 11, 1997)

Q: What is the effect if unseaworthiness is unknown to the owner of the cargo?A: It is immaterial in ordinary marine insurance and may not be used by him as a defense in order to recover on the marine insurance policy. It becomes the obligation of a cargo owner to look for a reliable common carrier, which keeps its vessels in seaworthy conditions. The shipper may have no control over the vessel but he has control in the choice of the common carrier that will transport his goods. (Roque v. IAC, G.R. No. L 66935, Nov. 11, 1985)

Q: What is the scope of the seaworthiness of a vessel?A: A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurtenances and equipment, such as ballasts, cables and anchors, cordage and sails, food, water, fuel and lights, and other necessary or proper stores and implements for the voyage. (Sec. 116)27Act Of The Public Enemy In War As An Exempting CauseConditions/Requisites in order to be considered as an exempting cause:

Act was the proximate and only cause; (Art. 1739)

Carrier exercised diligence to prevent or minimize loss before, during and after the act; and (Art. 1739)

No delay. (Art. 1740, NCC)

Act or omission of the shipper or owner of the goodsThe act or omission of the shipper/owner of goods must be the proximate and only cause of the loss/ destruction/ deterioration of the goods in order for the common carrier to be exempted of the liability.

29Effect if :the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, andthe proximate cause is the negligence of the common carrier

the common carrier shall be liable in damages, but shall be equitably reduced

(Act/omission of the shipper/as contributory negligence, Article 1741)Negligence of shipper or passenger:The obligation to exercise due diligence is not limited to the carrier. Shipper is obliged to exercise due diligence in AVOIDING DAMAGE to the goods that are being shipped or injury to his personThis obligation to exercise due care is basic in ALL forms of obligations

CONTRIBUTORY NEGLIGENCE OF THE SHIPPERis not a defense that will excuse the carrier from the liabilityIt will only MITIGATE such liability30The character of the goods or defects in the packing or in the containersBecomes an exempting cause on the part of the common carrier, provided:carrier exercised due diligence to forestall or prevent loss (Art 1742)

Note: If the fact of improper packing is known to the carrier or its servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved from responsibility for loss or injury resulting therefrom. (Southern Lines Inc., v. CA, G.R. No. L16629, Jan. 31, 1962)COGSA (sec. 4(2) m,n,o):the carrier shall not be liable for:Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of goodsInsufficiency of packagingInsufficiency or inadequacy of the marksLatent defects not discoverable by due diligence

Defect:Want or absence of something necessary for completeness or perfectionLack of something essential to completenessDeficiency in something essential to the proper use for the purpose for which the thing is used Defectiveness is NOT SYNONYMOUS with INFERIORITY (iferior means poor quality, mediocre or second rate)(Phil. Charter Insurance Corp. vs Unknown owner of vessel M/V National Honor)

the carrier would be liable if the damage to the packaging which resulted in the cargos unfitness for transport, was made when the same was in the custody of the carrier (Sulpicio lines vs First lepanto Taisho Insurance)31Order or act of competent authorityRelieves the common carrier from the responsibility, provided:the authority is with power to issue order (Art. 1743).

NOTE: If the officer acts without legal process, the common carrier will be held liable (Ganzon vs. CA, GR No. L48757, May 30, 1988).COGSA Sec. 4(2):Neither the carrier not the ship shall be responsible for loss or damage resulting from arrest or restraint of princes, rulers, or people or seizure under legal process and from quarantine restrictions32Stipulation for Limitation of LiabilityStipulations between the common carrier and the shipper/owner LIMITING THE LIABILITY of the former for the loss, destruction, or deterioration of the goods TO A DEGREE LESS THAN EXTRAORDINARY DILIGENCE shall be valid

Requisites in order for the stipulation to be valid:In WRITING, signed by the shipper or owner;with valuable CONSIDERATION other than the service rendered by the common carrier; and Reasonable, just and not contrary to public policy. (Article 1744)

Example of consideration: reduction of fare

Why should it be in writing? : in order to prevent ABUSE on the part of the common carrier33Invalid Stipulations(stipulations considered as unreasonable, unjust and contrary to public policy):That the goods are transported at the risk of the owner or shipper; That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; That the common carrier need not observe any diligence in the custody of the goods; That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported; 34That the common carrier shall not be responsible for the acts or omission of his or its employees; That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

35General Rule: The degree of diligence may be loweredException: Not lower than that of a good father of a family.

General Rule: stipulations exempting from liability acts committed by robbers and thieves WHO DO NOT ACT with grave threat or irresistible threats are not valid.Exception: In case the robbers or thieves used grave threat or irresistible threats.

In this case, the presumption of negligence is still applicable, the stipulation only affects the outcome of the case.

36Thank You