Transportation Law Essentials

San Beda College of Law
54
MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ CARRIAGE
A 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
or compensation.
Classifications:
1. Common or Private
2. Goods or Passengers
. !or a fee "for hire# or Gratuitous
$. %and, &ater'maritime, or Air
(. )omestic'inter*island'coastwise or
+nternational'foreign
+t is a relationship which is imbued with the public
interest.
COMMON CARRIER
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.
1,2, Civil Code#.
Art. 1,2 of the -ew Civil Code avoids any
distinction between one whose principal business
activity is the carrying of persons or goods or both and
one who does such carrying only as an ancillary
activity "sideline#. +t also avoids a distinction between
a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled
basis.
-either does the law distinguish between a
carrier offering its services to the general public that is
the general community or population and one who
offers services or solicits business only from a narrow
segment of the general population.
A person or entity is a common carrier even if he
did not secure a Certificate of Public Convenience ")e
Gu.man vs. CA, 1/0 1C2A /12#.
+t ma3es no distinction as to the means of
transporting, as long as it is by land, water or air. +t
does not provide that the transportation should be by
motor vehicle. "!irst Philippine +ndustrial Corporation
vs. CA#
4ne is a common carrier even if he has no fi5ed
and publicly 3nown route, maintains no terminals, and
issues no tic3ets "Asia %ighterage 1hipping, +nc. vs.
CA#.
Ca!act"!istics:
1. 6nderta3es to carry for all people indifferently
and thus is liable for refusal without sufficient
reason "%astimoso vs. )oliente, 4ctober 27,
18/1#9
2. Cannot lawfully decline to accept a particular
class of goods for carriage to the prejudice of
the traffic in these goods9
. -o monopoly is favored ":atangas ;rans. vs.
4rlanes, (2 P<+% $((#9
$. Provides public convenience.
PRI#ATE CARRIER
4ne which, without being engaged in the business of
carrying as a public employment, underta3es to deliver
goods or passengers for compensation. "<ome
+nsurance Co. vs. American 1teamship Agency, 2
1C2A 2$#
TESTS W$ET$ER CARRIER IS COMMON OR
PRI#ATE:
;he 1C in !irst Philippine +ndustrial Corporation vs.
CA "188(# reiterated the following tests=
1. +t must be engaged in the business of
carrying goods for others as a public
employment and must hold itself out as
ready to engage in the transportation of
goods generally as a business and not as a
casual occupation9
2. +t must underta3e to carry goods of the 3ind
to which its business in confined9
. +t must underta3e to carry by the method by
which his business is conducted and over its
established roads9 and
$. ;he transportation must be for hire.
+n -ational 1teel Corp. vs. CA "188,# the 1C held
that the true test of a common carrier is the carriage of
goods or passengers provided it has space for all who
opt to avail themselves of its transportation for a fee.

COMMON CARRIER PRI#ATE
CARRIER
1. As to availability
<olds himself out for all
people indiscriminately
Contracts with particular
individuals or groups
only
2. As to re>uired diligence
?5traordinary diligence
is re>uired
4rdinary diligence is
re>uired
. As to regulation
1ubject to 1tate
regulation
-ot subject to 1tate
regulation
$. 1tipulation limiting liability
Parties may not agree
on limiting the carrier@s
liability e5cept when
provided by law
Parties may limit the
carrier@s liability,
provided it is not
contrary to law, morals
or good customs
(. ?5empting circumstance
Prove e5traordinary
diligence and Art. 1,,
-CC
caso fortuito, Art. 11,$
-CC
/.Presumption of negligence
;here is a presumption
of fault or negligence
-o presumption of fault
or negligence
,.Governing law
%aw on common carriers %aw on obligations and
contracts
GO#ERNING LAWS
A% Do&"stic/int"!'islan(/coast)is"
Applicable to %and, &ater, and Air transportation
1. Civil Code * primary
2. Code of Commerce "Arts. $8, ,8, (,*,$,
COMMERCIAL LAW COMMITTEE
C<A+2P?214-= Garny %uisa Alegre A11;. C<A+2P?214-= Aayson 4@1 2amos ?)P= :eatri5 +. 2amos 16:A?C; <?A)1=
Barichelle )e Cera "-egotiable +nstruments %aw#9 Aose !ernando %lave "+nsurance#9 Aldrich )el 2osario ";ransportation %aws#9
1hirley Bae ;abangcura, :on Cincent Agustin "Corporation %aw#9 Darl 1teven Co "1pecial %aws#9 Aohn %emuel Gatdula ":an3ing %aws#9
2obespierre C6 "%aw on +ntellectual Property#
55
(07, 07/*0$(# * suppletory
*% Int"!national/fo!"i+n/o,"!s"as -Fo!"i+n
co.nt!/ to Pili00in"s1
Applicable to &ater'maritime and Air transportation
;he law of the country of destination generally
applies.
1. Civil Code * primary
2. Code of Commerce * suppletory
. 4thers * suppletory
a. &ater'maritime= Carriage of Goods by
1ea Act "C4G1A#
b. Air= &arsaw Convention
I% NEW CI#IL CODE
-A!ts% 2345'23661
RE78IREMENT OF E9TRAORDINARY DILIGENCE
2endition of service with the greatest s3ill and
utmost foresight. ")avao 1tevedore Co. v. !ernande.#
Rationale:
1. !rom the nature of the business and for
reasons of public policy "Art. 1,#
2. 2elationship of trust
. :usiness is impressed with a special public
duty
$. Possession of the goods
(. Preciousness of human life
A common carrier is not an absolute insurer of all
ris3s of travel.
CO#ERAGE
1. Cigilance over goods "Arts. 1,$*1,($#9 and
2. 1afety of passengers "Arts. 1,((*1,/#.
PASSENGER
A person who has entered into a contract of
carriage, e5press or implied, with the carrier. ;hey are
entitled to e5traordinary diligence from the common
carrier.
;he following are not considered passengers, and
are entitled to ordinary diligence only=
a. 4ne who has not yet boarded any part of a
vehicle regardless of whether or not he has
purchased a tic3et9
b. 4ne who remains on a carrier for an
unreasonable length of time after he has
been afforded every safe opportunity to
alight9
c. 4ne who has boarded by fraud, stealth, or
deceit9
d. 4ne who attempts to board a moving
vehicle, although he has a tic3et, unless the
attempt be with the 3nowledge and consent
of the carrier9
e. 4ne who has boarded a wrong vehicle, has
been properly informed of such fact, and on
alighting, is injured by the carrier9
f. +nvited guests and accommodation
passengers. "%ara vs. Calencia#
g. 4ne who rides any part of the vehicle which
is unsuitable or dangerous or which he
3nows is not designed or intended for
passengers.
DEFENSES OF A COMMON CARRIER IN T$E
CARRIAGE OF GOODS
1. CA14 !42;6+;4'!42C? BAA?62?
R":.isit"s:
a. Bust be the pro5imate and only cause of the
loss
b. ?5ercise of due diligence to prevent or
minimi.e the loss before, during or after the
occurrence of the disaster "Art. 1,8#
c. Carrier has not negligently incurred in delay
in transporting the goods "Art. 1,$7#
!ire is not considered a natural disaster or calamity
as it arises almost invariably from some act of man.
"?astern 1hipping %ines +nc. vs. +AC#
Bechanical defects are not force majeure if the
same was discoverable by regular and ade>uate
inspections. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
ernando, R.P. !""# ed. p.$!"%$!!&
2. AC;1 4! P6:%+C ?-?BE
R":.isit"s:
a. Bust be the pro5imate and only cause of the
loss
b. ?5ercise of due diligence to prevent or
minimi.e the loss before, during or after the act
causing the loss, deterioration or destruction of
the goods "Art. 1,8#
. -?G%+G?-C? 4! ;<? 1<+PP?2 42 4&-?2
a. 1ole and pro5imate cause= absolute defense
b. Contributory= partial defense. "Art. 1,$1#
$. C<A2AC;?2 4! ;<? G44)1 42 )?!?C;1 +-
;<? PACD+-G 42 +- ;<? C4-;A+-?2
?ven if the damage should be caused by the
inherent defect'character of the goods, the common
carrier must e5ercise due diligence to forestall or
lessen the loss. "Art. 1,$2#
;he carrier which, 3nowing the fact of improper
pac3ing of the goods upon ordinary observation, still
accepts the goods notwithstanding such condition, is
not relieved of liability or loss or injury resulting
therefrom. "1outhern %ines, +nc. v. CA, $ 1C2A 2(0#
(. 42)?2 42 AC; 4! P6:%+C A6;<42+;E
1aid public authority must have the power to issue
the order "Art. 1,$#. Conse>uently, where the officer
acts without legal process, the common carrier will be
held liable. "Gan.on v. CA 1/1 1C2A /$/#
)iligence in the selection and supervision of
employees under Article 2107 of the Civil Code cannot
be interposed as a defense by the common carrier
because the liability of the carriers arises from the
breach of the contract of carriage. ;he defense under
said articles is applicable to negligence in >uasi*delicts
under Art. 21,/. ")el Prado v. Banila ?lectric Co., (2
Phil 877#
LIA*ILITY OF A COMMON CARRIER FOR
DEAT$ OR IN;8RIES TO PASSENGERS D8E TO
ACTS OF ITS EMPLOYEES AND OT$ER
PASSENGERS OR STRANGERS
56
FOR ACTS OF ITS
EMPLOYEES
FOR ACTS OF
OT$ER
PASSENGERS OR
STRANGERS
2e>uired diligence and defense
?5traordinary diligence 4rdinary diligence
-ature of liability
;ort9 however, -ot absolute9 limited by
;he employee must be
on duty at the time of the
act. "Baranan v. Pere.#
Art. 1,/
;he carrier is liable when its personnel allowed a
passenger to drive the vehicle causing it to collide with
another vehicle resulting to the injuries suffered by the
other passengers. "B22 vs. :allesteros, 1/ 1C2A
/$1#
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS
Pa!ti"s
1. Common carrier
2. 1hipper
. Consignee
1. Common carrier
2. Passenger
Ca.s" of lia<ilit/
)elay in delivery, loss, destruction, or deterioration of
the goods
)eath or injury to the passengers
D.!ation of lia<ilit/
!rom 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 the right to receive them. "Art. 1,/#
+t remains in full force and effect even when they are
temporarily unloaded or stored in transit unless the
shipper or owner has made use of the right of stoppage
in transitu. "Art. 1,,#
+t continues to be operative even during the time the
goods are stored in a warehouse of the carrier at the
place of destination until the consignee has bee
advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or
otherwise dispose of them. "Art. 1,0#
)elivery of goods to the custom authorities is not
delivery to the consignee. "%u )o v. :inamira, 171 Phil
127#
;he duty of a common carrier to provide safety to its
passengers so obligates it not only during the course
of the trip, but for so long as the passengers are within
its premises and where they ought to be in pursuance
to the contract of carriage. "%2;A v. -avidad, F277G#
All persons who remain on the premises within a
reasonable time after leaving the conveyance are to
be deemed passengers, and what is a reasonable
time or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare
for his departure. "%a Ballorca v. CA, 1, 1C2A ,8 9
Abioti. 1hipping Corporation v. CA, 1,8 1C2A 8(#
+t is the duty of common carriers of passengers to
stop their conveyances a reasonable length of time in
order to afford passengers an opportunity to enter,
and they are liable for injuries suffered from the
sudden starting up or jer3ing of their conveyances
while doing so. ;he duty which the carrier of
passengers owes to its patrons e5tends to persons
boarding the cars as well as to those alighting
therefrom ")angwa ;rans Co., +nc. vs. CA 272 1C2A
(,$#.
P!"s.&0tion of n"+li+"nc"
Art.1,( Civil Code
2eason= As to when and how goods were damaged in
transit is a matter peculiarly within the 3nowledge of the
carrier and its employees. "Birasol v. )ollar, ( P<+%
12$#
Bere proof of delivery of goods to a carrier in good
order and the subse>uent arrival of the same goods at
the place of destination in bad order ma3es for a prima
facie case against the carrier. "Coastwise %ighterage
Corp. v. CA, 2$( 1C2A ,8/#
Art.1,(( Civil Code
2eason= ;he contract between the passenger and the
carrier imposes on the latter the duty to transport the
passenger safely9 hence the burden of e5plaining
should fall on the carrier.
53
D"f"ns"s
1. 4rdinary circumstance= ?5ercise of
e5traordinary diligence "Art. 1,(#
2. 1pecial circumstances=
a. !lood, storm, earth>ua3e, lighting, or
other natural disaster or calamity "plus
force majeure#
b. Act of the public enemy in war,
whether international or civil
c. Act or omission of the shipper or the
owner of goods
d. ;he character of the goods or defects
in the pac3ing or in the containers
e. 4rder or act of competent public
authority "Art. 1,$#
1. ?5ercise of e5traordinary diligence "Art.
1,(/#
2. Caso fortuito
#ali( sti0.lations
1. 2eduction of degree of diligence to ordinary
diligence, provided it be=
a# +n writing, signed by the shipper or owner9
b# 1upported by a valuable consideration other
than the service rendered by the carriers9
and
c# 2easonable, just and not contrary to public
policy. "Art. 1,$$#
2. !i5ed amount of liability= A contract fi5ing the sum to
be recovered by the owner or shipper for the loss,
destruction or deterioration of the goods, if it is
reasonable and just under the circumstances and has
been fairly and freely agreed upon. "Art. 1,(7#
. %imited liability for delay= An agreement limiting the
common carrier@s liability for delay on account of stri3es
or riots "Art. 1,$0#
$. 1tipulation limiting liability to the value of the goods
appearing in the bill of lading, unless the shipper or
owner declares a greater value. "Art. 1,$8#
;he diligence re>uired in the carriage of the goods
may be reduced by only one degree, from
e5traordinary to ordinary diligence or diligence of a
good father of a family. "Art. 1,$$, Art. 1,$(, no. $#
1tipulation limiting liability when a passenger is carried
gratuitously, but not for willful acts or gross
negligence. "Art. 1,(0#
#oi( sti0.lations
2. ;hat carrier will not be liable for any loss,
destruction or deterioration of the goods9
. ;hat the carrier need not observe any diligence
in the custody of the goods9
$. ;hat the carrier shall e5ercise a degree of
diligence less than that of a good father of a family
over the movable transported9
(. ;hat the carrier shall not be responsible for the
acts or omissions of his or its employees9
/. ;hat the carrier@s liability for acts committed by
thieves or robbers who do not act with grave or
irresistible threat, violence or force is dispensed with
or diminished9
,. ;hat the carrier is not responsible for the loss,
)ispensing with or lessening the e5traordinary
responsibility of a common carrier for the safety of
passengers imposed by law by stipulation, by posting
of notices, by statements on tic3ets or otherwise. "Art.
1,(,#
5=
destruction or deterioration of the goods on account
of the defective condition of the car, vehicle, ship or
other e>uipment used in the contract of carriage. "Art.
1,$(#
R8LES ON PASSENGERS> *AGGAGE
IN T$E C8STODY OF
T$E PASSENGERS
-$AND'CARRIED1
IN T$E C8STODY
OF T$E COMMON
CARRIER
-C$EC?ED'IN1
L"+al nat.!" of t" <a++a+"
-ecessary deposit Considered as
HgoodsI
R":.i!"( (ili+"nc" </ t" co&&on ca!!i"!
)iligence of a depositary
"ordinary diligence#
?5traordinary
diligence
A00lica<l" !.l"s
Arts. 1880 and 2777*277 Arts. 1,*1,(
CONC8RRING CA8SES OF ACTION ARISING
FROM T$E NEGLIGENT ACT OF T$E COMMON
CARRIER
1. Culpa contractual "breach of contract#
4nly the carrier is primarily liable and not the driver,
because there is no privity between the driver and the
passenger.
:asis= Art.1,(8, -CC.
-o defense of due diligence in the selection and
supervision of employees.
2. Culpa aquiliana ">uasi*delict#
;he carrier and driver are solidarily liable as joint
tortfeasors.
:asis= Art. 2107, -CC.
)efense of due diligence in the selection and
supervision of employees is available. ?5ception=
maritime tort resulting in collision. "'ee notes on
Collision#
. Culpa cri(inal "criminal negligence#
;he driver is primarily liable. ;he carrier is
subsidiarily liable only if the driver is convicted and
declared insolvent.
:asis= Art. 177, 2PC.
+n case of injury to a passenger due to the
negligence of the driver of the bus on which he is
riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly
and severally liable for damages. +t ma3es no
difference that the liability of the bus driver and owner
springs from contract while that of the owner and
driver of the other vehicle arises from >uasi*delict.
"!abre vs. CA#
LIMITATIONS AS TO CARRIER>S LIA*ILITY
IN#ALID AS *EING
CONTRARY TO P8*LIC
POLICY
#ALID @
ENFORCEA*LE
1. 4ne e5empting the
carrier from any and all
liability for loss or damage
occasioned by its own
negligence.
2. An un>ualified
limitation of liability to an
agreed valuation.
1. 4ne limiting the
liability of the carrier to
an agreed valuation,
unless the shipper
declares a higher value
and pays a higher rate
of freight
"<.?. <eacoc3
Company vs.
Bacondray J Company
+nc.#
<owever, the carrier cannot limit its liability for injury
to, or loss of, goods shipped where such injury or loss
was caused by its own negligence.
"1hewaram vs. PA%, 1, 1C2A /7/#
SPECIAL R8LES ON LIA*ILITES OF AIRLINE
CARRIERS
1. +n case of flight diversion due to bad weather or
other circumstances beyond the pilot@s control, the
relation between the carrier and the passenger
continues until the latter has been landed at the port of
destination and has left the carrier@s premises. ;he
carrier should necessarily e5ercise e5traordinary
diligence in safeguarding the comfort, convenience
and safety of its stranded passengers until they have
reached their final destination. "Philippine Airlines vs.
CA, 22/ 1C2A $2#
2. ?ven where overboo3ing of passengers is allowed
as a commercial practice, the airline company would
still be guilty of bad faith and still be liable for damages
if it did not properly inform passenger that it could
breach the contract of carriage even if they were
confirmed passengers. "Kalamea vs. CA, 220 1C2A
2#
. An open*dated tic3et constitutes a complete
contract between the carrier and passenger. <ence,
the airline company is liable if it refused to confirm a
passenger@s flight reservation. "1ingson vs. CA, 202
1C2A 1$8#
$. An airline company which issued a confirmed tic3et
to a passenger covering successive trips on different
airlines can be held liable for damages occasioned by
Hbumping offI by one of the successive airlines.
"%ufthansa German Airlines vs. CA, 20 1C2A 287#
(. An airline tic3et providing that carriage by
successive air carriers is to be regarded as a Hsingle
operationI is to ma3e the issuing carrier liable for the
tortuous conduct of the other carrier. A printed
provision in the tic3et limiting liability only to its own
conduct is not enough to rebut that liability. "D%B
2oyal )utch Airlines vs. CA, /( 1C2A 2,#
II% CODE OF COMMERCE
A% O#ERLAND TRANSPORTATION
-A!ts% 44A'43A1
A00lica<ilit/
1. )omestic land and water'maritime transportation.
(Pandect o) Co((ercial Law and *urisprudence,
*ustice *ose +itu,, $--. ed.&
2. )omestic Air ;ransportation. (Co((ercial Law
Re/iew, Cesar +illanue/a, !""# ed.&

IMPORTANT CONCEPTS:
1. :ill of lading
2. 4bligations of the carrier
. 2ight of abandonment
$. -otice of damage
(. Combined carrier agreement
*ILL OF LADING
;he written ac3nowledgment of receipt of goods and
agreement to transport them to a specific place to a
person named or to his order.
Rules:
1. +t is not indispensable for the creation of a contract
of carriage. "Compania Baritima vs. +nsurance
Company of -orth America, 12 1C2A 21#
2. Ambiguity is construed against the carrier, the
contract being one of adhesion.
. ;he consignee, although the instrument is
oftentimes drawn up only by the consignor and carrier,
becomes bound by all the stipulations contained
therein by ma3ing a claim for loss on the basis of said
bill of lading. "1ea*%and 1ervices +nc. vs. +AC#
$. ;he right of a party to recover for loss of shipment
consigned to him under a bill of lading drawn up only
by and between the shipper and the carrier, springs
from either a relation of agency between him and the
shipper, or his status as stranger in whose favor some
stipulation is made in said contract, and who becomes
a party thereto when he demands fulfillment of that
stipulation. "Art. 111 "2#, "Bendo.a vs. PA% +nc.#
(. Acceptance of the bill of lading without dissent
raises the presumption that all the terms therein where
brought to the 3nowledge of the shipper and agreed to
by him and, in the absence of fraud or mista3e9 he is
estopped from thereafter denying that he assented to
such terms. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
ernando, R.P. !""# ed. p.!0$&
?in(s:
1. 1n board * issued when the goods have been
actually placed aboard the ship with very
reasonable e5pectation that the shipment is as
good as on its way.
2. Recei/ed * one in which it is stated that the
goods have been received for shipment with or
without specifying the vessel by which the
goods are to be shipped.
. Ne,otiable * one in which it is stated that the
goods referred to therein will be delivered to
the bearer or to the order of any person named
therein.
$. Non%ne,otiable * 4ne in which it is stated that
the goods referred to therein will be delivered
to a specified person.
(. Clean 2 4ne which does not indicate any
defect in the goods.
/. 3oul L 4ne which contains a notation thereon
indicating that the goods covered by it are in
bad condition.
,. 'pent L 4ne which covers goods that already
have been delivered by the carrier without a
surrender of a signed copy of the bill.
0. Throu,h L 4ne issued by the carrier who is
obliged to use the facilities of other carriers as
well as his own facilities for the purpose of
transporting the goods from the city of the
seller to the city of the buyer, which bill of
lading is honored by the second and other
interested carriers who do not issue their own
bills.
8. Custod4 L 4ne wherein the goods are already
received by the carrier but the vessel indicated
therein has not yet arrived in the port.
17. Port L 4ne which is issued by the carrier to
whom the goods have been delivered, and the
vessel indicated in the bill of lading by which
the goods are to be shipped is already in the
port where the goods are held for shipment.
F.nctions:
1. :est evidence of the e5istence of the contract
of carriage of cargo "Art. (#
2. )ocument of title
. 2eceipt of cargo
$. Contract to transport and deliver goods as
stipulated
(. 1ymbol of the goods
O*LIGATIONS OF T$E CARRIER
A% D.t/ to acc"0t t" +oo(s
56N6RAL RUL6: A common carrier cannot
ordinarily refuse to carry a particular class of goods.
67C6PT81N: !or some sufficient reason the
discrimination against the traffic in such goods is
reasonable and necessary. "!isher vs. Eangco
1teamship Co. 1 Phil 1#.
+nstances when the carrier may validly refuse to
accept the goods include the ff=
1.# Goods sought to be transported are dangerous
objects, or substances including dynamite and other
e5plosives
2.# Goods are unfit for transportation
.# Acceptance would result in overloading
$.# Contrabands or illegal goods
(.# Goods are injurious to health
/.# Goods will be e5posed to untoward danger li3e
flood, capture by enemies and the li3e
,.# Goods li3e livestoc3 will be e5posed to disease
0.# 1tri3e
8.# !ailure to tender goods on time. (Notes and Cases
on the Law on Transportation and Public Utilities,
Aquino, T. & ernando, R.P. !""# ed. p.09&
+n case of carriage by railway, the carrier is
e5empted from liability if carriage is insisted upon by
the shipper, provided its objections are stated in the
bill of lading.
<owever, when a common carrier accepts cargo for
shipment for valuable consideration, it ta3es the ris3 of
delivering it in good condition as when it was loaded.
"PA% vs. CA#
*% D.t/ to ("li,"! t" +oo(s
-ot only to transport the goods safely but to the
person indicated in the bill of lading. ;he goods
should be delivered to the consignee or any other
person to whom the bill of lading was validly
transferred or negotiated.
Ti&" of ("li,"!/
Sti0.lat"( in
Cont!act/*ill of La(in+
No sti0.lation
1. Carrier is bound to 1. &ithin a reasonable
fulfill the contract and is
liable for any delay9 no
matter from what cause
it may have arisen.
time.
2. Carrier is bound to
forward them in the 1
st
shipment of the same or
similar goods which he
may ma3e to the point of
delivery. "A2;. (0
Code of Commerce#
Eff"cts of ("la/
a. Berely suspends and generally does not
terminate the contract of carriage
b. Carrier remains duty bound to e5ercise
e5traordinary diligence
c. -atural disaster shall not free the carrier from
responsibility "Art.1,$7#
d. +f delay is without just cause, the contract limiting
the common carrier@s liability cannot be availed of in
case of loss or deterioration of the goods "Art.1,$,#
RIG$T OF CONSIGNEE TO A*ANDON GOODS
Instanc"s:
1. Partial non*delivery, where the goods are useless
without the others "Art. /#9
2. Goods are rendered useless for sale or
consumption for the purposes for which they are
properly destined "Art. /(#9 and
. +n case of delay through the fault of the carrier
"Art. ,1#.
NOTICE OF DAMAGE -ART% 4661
R":.isit"s fo! a00lica<ilit/:
1. )omestic'inter*island'coastwise transportation
2. %and'water'air transportation
. Carriage of goods
$. Goods shipped are damaged
R.l"s:
a. Patent damage= shipper must file a claim against
the carrier immediately upon delivery "it may be
oral or written#
b. %atent damage= shipper should file a claim against
the carrier within 2$ hours from delivery.
Not": ;hese rules does not apply to misdelivery of
goods. "2oldan vs. %im Pon.o#
Purpose o) notice: ;o inform the carrier that the
shipment has been damaged, and it is charged with
liability therefore, and to give it an opportunity to ma3e
an investigation and fi5 responsibility while the matter
is fresh.
;he filing of notice of claim is a condition precedent
for recovery.
1horter period may be stipulated by the parties
because it merely affects the shipper@s remedy and
does not affect the liability of the carrier. "P<+%ABG?-
vs. 1weetlines, +nc.#
P!"sc!i0ti," P"!io(
-ot provided by Article //. ;hus, in such absence,
Civil Code rules on prescription apply.
+f despite the notice of claim, the carrier refuses to
pay, action must be filed in court.
1. -o bill of lading was issued= within
6 /"a!s
2. :ill of lading was issued= within 2B
/"a!s%
ARTICLE 466 COGSA S"c%4 -61
A00lica<ilit/
1. )omestic'inter*
island'coastwise
transportation
2. %and, water, air
transportation
. Carriage of goods
1. +nternational'
overseas'foreign "from
foreign country to
Phils.#
-ote= subject to the rule
on Paramount Clause
2. &ater'maritime
transportation
. Carriage of goods
Notic" of (a&a+"
1. Condition precedent
2. 2$*hour period for
claiming latent damage
1. -ot a condition
precedent
2. *day period for
claiming latent damage
P!"sc!i0ti," 0"!io(
-one provided9 Civil
Code applies.
4ne year from the date
of delivery "delivered
but damaged goods#, or
date when the vessel
left port or from the
date of delivery to the
arrastre "non*delivery
or loss#.
COM*INED CARRIER AGREEMENT -ART% 4341
56N6RAL RUL6: +n case of a contract of
transportation of several legs, each carrier is
responsible for its particular leg in the contract.
67C6PT81N: A combined carrier agreement where
a carrier ma3es itself liable assuming the obligations
and ac>uiring as well the rights and causes of action of
those which preceded it.
A% MARITIME COMMERCE
-A!ts% 534'=6A1
IMPORTANT CONCEPTS:
1. Berchant vessel
2. Baritime lien and Preference of Credit
. )octrine of limited liability
$. Causes of revocation of voyage
(. Participants in maritime commerce
/. Charter party
,. %oans on bottomry and respondentia
0. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
+t is the system of laws which particularly relates to
the affairs and business of the sea, to ships, their
crews and navigation, and to maritime conveyance of
persons and property. (Notes and Cases on the Law
on Transportation and Public Utilities, Aquino &
ernando, citin, 3rancisco, p.!:#&
Baritime laws apply only to maritime trade and sea
voyages. (Pandect o) Co((ercial Law and
*urisprudence, *ustice *ose +itu,, $--. ed.&
Arrastre service is not maritime in character. +t
refers to a contract for the unloading of goods from a
vessel. "+C;1+ vs. Prudential Guarantee, 27 1C2A
2$$#
C$ARACTERISTICS OF MARITIME TRANSACTION
1. Real * similar to transactions over real property with
respect to effectivity against third persons which is
done through registration. "2ubiso vs. 2ivera, , Phil.
,2#. ;he evidence of real nature is shown by= 1# the
limitation of the liability of the agents to the actual
value of the vessel and the freight money9 and 2# the
right to retain the cargo and embargo and detention of
the vessel "%u.on 1tevedoring Corp v. CA, 1(/ 1C2A
1/8#9
2. 4pothecar4 * the liability of the owner of the value
of the vessel is limited to the vessel itself (;octrine o)
Li(ited Liabilit4&.
;he real and hypothecary nature of maritime law
simply means that the liability of the carrier in
connection with losses related to maritime contracts is
confined to the vessel, which stands as the guaranty
for their settlement. "Aboiti. 1hipping Corp. vs.
General Accident !ire and %ife Assurance Corp. 21,
1C2A (8#.
MERC$ANT #ESSEL
Cessel engaged in maritime commerce, whether
foreign or otherwise. (<ar Re/iew =aterials in
Co((ercial Law, *or,e =ira/ite, !""! ed.&
Constitutes property which may be ac>uired and
transferred by any of the means recogni.ed by law.
;hey shall continue to be considered as personal
property. "Arts. (,, (0(#
;hey are susceptible to (ariti(e liens such as for
the repair, e>uipping and provisioning of the vessel in
the preparation of a voyage, as well as mortgage
liabilities, in satisfaction of which a vessel may be
validly arrested and sold. "1hip Bortgage )ecree of
18,0#
MARITIME LIEN
+t constitutes a present right of property in the ship, a
jus in re, to be afterward enforced in admiralty by
process in rem. "P-: vs. CA, , 1C2A 01#
+f the maritime lien arose prior to the recording of a
preferred mortgage, it shall have priority over the said
mortgage lien. "P-: vs. CA, , 1C2A 01#
ORDER OF PREFERENCE IN CASE OF SALE OF
#ESSEL
R%A% 62B6 P%D% 2552
Eff"cti,it/ (at"
18/8 18,0
A00lica<ilit/
4verseas shipping only :oth domestic and
overseas shipping
?in( of sal"
Audicial Audicial and
e5trajudicial
O!("! of P!"f"!"nc"
A preferred mortgage
shall have priority over
all claims against the
vessel, e5cept the
;he preferred mortgage
lien shall have priority
over all claims against
the vessel, e5cept the
following preferences in
the order stated=
1. Audicial costs of the
proceedings9
2. ;a5es due the
Philippine Government9
. 1alaries and wages
of the Captain and
Crew of the vessel
during its last voyage9
$. General average or
salvage including
contract salvage,
bottomry loans, and
indemnity due shippers
for the value of goods
transported but which
were not delivered to
the consignee9
(. Costs of repair and
e>uipment of the
vessel, and
provisioning of food,
supplies and fuel during
its last voyage9 and
/. Preferred mortgages
registered prior in time.
following preferences in
the order stated=
1. ?5penses and fees
allowed and costs
ta5ed by the court and
ta5es due to the
Government9
2. Crew@s wages9
. General average9
$. 1alvage, including
contract salvage9
(. Baritime liens arising
prior in time to the
recording of the
preferred mortgage9
/. )amages arising out
of tort9 and
,. Preferred mortgage
registered prior in time.
?ffect of sale= All pre*e5isting claims in the vessel
are terminated. ;hey will then be satisfied from the
proceeds of the sale subject to the order of preference.
DOCTRINE OF LIMITED LIA*ILITY
-$YPOT$ECARY R8LE1
Cases where applicable=
1. Art. (0, L civil liability for indemnities to third
persons
2. Art. (87 L indemnities from negligent acts of
the captain "not the shipowner or ship agent#
. Art. 0, L collision
$. Art. /$ L liability for wages of the captain
and the crew and for advances made by the
ship agent if the vessel is lost by shipwrec3
or capture
56N6RAL RUL6: ;he liability of shipowner and ship
agent is limited to the amount of interest in said vessel
such that where vessel is entirely lost, the obligation is
e5tinguished. "%u.on 1tevedoring v. ?scano, 1(/
1C2A 1/8# ;he interest e5tends to= 1# the vessel
itself9 2# e>uipments9 # freightage9 and $# insurance
proceeds. "Chua v. +AC, 1// 1C2A 10#
67C6PT81N':
1. Claims under &or3men@s Compensation "Abueg
vs. 1an )iego ,, Phil ,7#9
2. +njury or damage due to shipowner or to the
concurring negligence of the shipowner and the
captain9
. ;he vessel is insured "Cas>ue. vs. CA 10
1C2A ((#.
$. ?5penses for repair on vessel completed before
loss9
(. +n case there is no total loss and the vessel is not
abandoned9
/. Collision between two negligent vessels9
Abandonment of the vessel is necessary to limit the
liability of the shipowner. ;he only instance were
abandonment is dispensed with is when the vessel is
entirely lost "%u.on 1tevedoring vs. CA 1(/ 1C2A
1/8#.
RIG$T OF S$IPOWNER OR S$IP AGENT TO
A*ANDON #ESSEL
+nstances=
1. +n case of civil liability from indemnities to third
persons "Art. (0,#9
2. +n case of lea3age of at least M of the contents of a
cargo containing li>uids "Art. /0,#9 and
. +n case of constructive loss of the vessel "1ec. 10,
+nsurance Code#.
RIG$T OF A*ANDONMENT
S$IPOWNER OR S$IP
AGENT
CONSIGNEE
Wat &a/ <" a<an(on"(
Cessel Goods shipped
Instanc"s
1. +n case of civil liability
from indemnities to third
persons "Art. (0,#9
2. 1ec. 10, +nsurance
Code9
. +n case of lea3age of
at least M of the
contents of a cargo
containing li>uids "Art.
/0,#
1. Partial non*delivery,
where the goods are
useless without the
others "Art. /#9
2. Goods are rendered
useless for sale or
consumption for the
purposes for which they
are properly destined
"Art. /(#9 and
. +n case of delay
through the fault of the
carrier "Art. ,1#.
Eff"cts
1. ;ransfer of ownership
of the vessel from the
shipowner to the
shippers or insurer.
2. +n case of "2#, the
insurer must pay the
insured as if there was
actual total loss of the
vessel.
1. ;ransfer of
ownership on the goods
from the shipper to the
carrier.
2. Carrier should pay
the shipper the mar3et
value of the goods at
the point of destination.
CA8SES OF RE#OCATION OF #OYAGE
1. &ar or interdiction of commerce9
2. :loc3ade9
. Prohibition to receive cargo at destination9
$. ?mbargo9
(. +nability of the vessel to navigate. "Art. /$7#
T"!&s:
1. +nterdiction of commerce L A governmental
prohibition of commercial intercourse intended to
bring about an entire cessation for the time being
of all trade whatever.
2. :loc3ade L A sort of circumvallation of a place by
which all foreign connection and correspondence
is, as far as human power can effect it, to be cut
off.
. ?mbargo L A proclamation or order of a state,
usually issued in time of war or threatened
hostilities, prohibiting the departure of ships or
goods from some or all the ports of such state
until further order.
PARTICIPANTS IN MARITIME COMMERCE
A. 1hipowners and ship agents
:. Captains and masters of the vessel
C. 4fficers and crew of the vessel
). 1upercargoes
?. Pilot
A% S$IPOWNERS AND S$IP AGENTS
Si0o)n"! -0!o0!i"ta!io1
Person who has possession, control and
management of the vessel and the conse>uent right to
direct her navigation and receive freight earned and
paid, while his possession continues.
Si0 a+"nt -na,i"!o1
Person entrusted with provisioning and representing
the vessel in the port in which it may be found9 also
includes the shipowner.
-ot a mere agent under civil law9 he is solidarily
liable with the ship owner.
Powers and functions=
1. Capacity to trade9
2. )ischarge duties of the captain, subject to
Art./789
. Contract in the name of the owners with respect
to repairs, details of e>uipment, armament,
provisions of food and fuel, and freight of the
vessel, and all that relate to the re>uirements of
navigation9
$. 4rder a new voyage, ma3e a new charter or
insure the vessel after obtaining authori.ation
from the shipowner or if granted in certificate of
appointment.
Ci,il Lia<iliti"s of t" Si0o)n"! An( Si0 A+"nt
1. All contracts of the captain, whether authori.ed or
not, to repair, e>uip and provision the vessel9 "Art.
(0/#
2. %oss and damage to the goods loaded on the
vessel without prejudice to their right to free
themselves from liability by abandoning the
vessel to the creditors. "Art. (0,#
D.t/ of Si0 A+"nt to Disca!+" t" Ca0tain an(
M"&<"!s of t" C!")
+f the seamen contract is not for a definite period or
voyage, he may discharge them at his discretion. "Art.
/7#
+f for a definite period, he may not discharge them
until after the fulfillment of their contracts, e5cept on
the following grounds=
a. +nsubordination in serious matters9
b. 2obbery9
c. ;heft9
d. <abitual drun3enness9
e. )amage caused to the vessel or to its cargo
through malice or manifest or proven negligence.
"Art. /7(#
*% CAPTAINS AND MASTERS
;hey are the chiefs or commanders of ships.
;he terms have the same meaning, but are
particularly used in accordance with the si.e of the
vessel governed and the scope of transportation, i.e.,
large and overseas, and small and coastwise,
respectively.
-ature of position "*fold character#=
1. General agent of the shipowner9
2. ;echnical director of the vessel9
. 2epresentative of the government of the
country under whose flag he navigates.
Nualifications=
1. !ilipino citi.en9
2. %egal capacity to contract9
. Bust have passed the re>uired physical and
mental e5aminations re>uired for licensing
him as such. "Art. /78#
+nherent powers=
1. Appoint crew in the absence of ship agent9
2. Command the crew and direct the vessel to
its port of destination9
. +mpose correctional punishment on those
who, while on board vessel, fail to comply
with his orders or are wanting in discipline9
$. Ba3e contracts for the charter of vessel in
the absence of ship agent.
(. 1upply, e>uip, and provision the vessel9 and
/. 4rder repair of vessel to enable it to
continue its voyage. "Art. /17#
1ources of funds to comply with the inherent powers
of the captain "in successive order#=
1. !rom the consignee of the vessel9
2. !rom the consignee of the cargo9
. :y drawing on the ship agent9
$. :y a loan on bottomry9
(. :y sale of part of the cargo. "Art. /11#
)uties=
1. :ring on board the proper certificate and
documents and a copy of the Code of
Commerce9
2. Deep a %og :oo3, Accounting :oo3 and
!reight :oo39
. ?5amine the ship before the voyage9
$. 1tay on board during the loading and
unloading of the cargo9
(. :e on dec3 while leaving or entering the
port9
/. Protest arrivals under stress and in case of
shipwrec39
,. !ollow instructions of and render an
accounting to the ship agent9
0. %eave the vessel last in case of wrec39
8. <old in custody properties left by deceased
passengers and crew members9
17. Comply with the re>uirements of customs,
health, etc. at the port of arrival9
11. 4bserve rules to avoid collision9
12. )emand a pilot while entering or leaving a
port. "Art. /12#
A ship@s captain must be accorded a reasonable
measure of discretionary authority to decide what the
safety of the ship and of its crew and cargo specifically
re>uires on a stipulated ocean voyage "+nter*4rient
Baritime ?nterprises +nc. vs. CA#.
-o liability for the following=
1. )amages caused to the vessel or to the
cargo by force majeure9
2. 4bligations contracted for the repair,
e>uipment, and provisioning of the vessel
unless he has e5pressly bound himself
personally or has signed a bill of e5change
or promissory note in his name. "Art. /27#
Soli(a!/ Lia<iliti"s of t" Si0 A+"nt/Si0o)n"!
fo! Acts Don" </ t" Ca0tain to)a!(s Pass"n+"!s
an( Ca!+o"s
1. )amages to vessel and to cargo due to lac3
of s3ill and negligence9
2. ;hefts and robberies of the crew9
. %osses and fines for violation of laws9
$. )amages due to mutinies9
(. )amages due to misuse of power9
/. !or deviations9
,. !or arrivals under stress9
0. )amages due to non*observance of marine
regulations. "Art. /10#
C% OFFICERS AND CREW
1. 1ailing Bate'!irst Bate
2. 1econd Bate
. ?ngineers
$. Crew
-o liability under the following circumstances=
1. +f, before beginning voyage, captain attempts to
change it, or a naval war with the power to which
the vessel was destined occurs9
2. +f a disease brea3s out and be officially declared
an epidemic in the port of destination9
. +f the vessel should change owner or captain.
"Art. /$,#
Sailin+ Mat"/Fi!st Mat"
1econd chief of the vessel who ta3es the place of
the captain in case of absence, sic3ness, or death and
shall assume all of his duties, powers and
responsibilities. "Art. /2,#
)uties=
1. Provide himself with maps and charts with
astronomical tables necessary for the
discharge of his duties9
2. Deep the :innacle :oo39
. Change the course of the voyage on
consultation with the captain and the officers
of the boat, following the decision of the
captain in case of disagreement9
$. 2esponsible for all the damages caused to
the vessel and the cargo by reason of his
negligence. "Arts. /20 * /1#
S"con( Mat"
;a3es command of the vessel in case of the inability
or dis>ualification of the captain and the sailing mate,
assuming in such case their powers and
responsibilities.
;hird in command
)uties=
1. Preserve the hull and rigging of the vessel9
2. Arrange well the cargo9
. )iscipline the crew9
$. Assign wor3 to crew members9
(. +nventory the rigging and e>uipment of the
vessel, if laid up. "Art. /2#
En+in""!s
4fficers of the vessel but have no authority e5cept in
matters referring to the motor apparatus. &hen two or
more are hired, one of them shall be the chief
engineer.
)uties=
1. +n charge of the motor apparatus, spare
parts, and other instruments pertaining to
the engines9
2. Deep the engines and boilers in good
condition9
. -ot to change or repair the engine without
authority of the captain9
$. +nform the captain of any damage to the
motor apparatus9
(. Deep an ?ngine :oo39
/. 1upervise all personnel maintaining the
engine. "Art. /2#
C!")
;he aggregate of seamen who man a ship, or the
ship@s company.
<ired by the ship agent, where he is present and in
his absence, the captain hires them, preferring
!ilipinos, and in their absence, he may ta3e in
foreigners, but not e5ceeding 1'( of the crew. "Art.
/$#
Class"s of S"a&an>s Cont!acts
1. :y the voyage9
2. :y the month9 and
. :y share of profits or freightage.
;.st Ca.s"s fo! t" Disca!+" of S"a&an Wil"
Cont!act S.<sists
1. Perpetration of a crime9
2. 2epeated insubordination, want of discipline9
. 2epeated incapacity and negligence9
$. <abitual drun3enness9
(. Physical incapacity9
/. )esertion. "Art. /,#
R.l"s in cas" of D"at of a S"a&an
;he seaman@s heirs are entitled to payment as
follows=
1. +f death is natural=
a. compensation up to time of death if engaged
on wage
b. if by voyage * half of amount if death occurs
on voyage out9 and full, if on voyage in
c. if by shares * none, if before departure9 full,
if after departure
2. if death is due to defense of vessel * full payment9
. if captured in defense of vessel * full payment9
$. if captured due to carelessness * wages up to the
date of the capture. "Art. /$(#
Co&0l"&"nt of t" #"ss"l
All persons on board, from the captain to the cabin
boy, necessary for the management, maneuvers, and
service, thus including the crew, the sailing mates,
engineers, sto3ers and other employees on board not
having specific designations.
)oes not include the passengers or the persons
whom the vessel is transporting.
D% S8PERCARGOES
Persons who discharges administrative duties
assigned to him by ship agent or shippers, 3eeping an
account and record of transaction as re>uired in the
accounting boo3 of the captain. "Art. /$8#
E% PILOT
A person duly >ualified, and licensed, to conduct a
vessel into or out of ports, or in certain waters.
;he term generally connotes a person ta3en on
board at a particular place for the purpose of
conducting a ship through a river, road or channel, or
from a port.
Baster pro hac /ice for the time being in the
command and navigation of the ship.
&hile in e5ercising his functions a pilot is in sole
command of the ship and supersedes the master for
the time being in the command and navigation of the
ship, the master does not surrender his vessel to the
pilot and the pilot is not the master. ;here are
occasions when the master may and should interfere
and even displace the pilot, as when the pilot is
obviously incompetent or into5icated "!ar ?astern
1hipping Company vs. CA#.
Compulsory Pilotage L 1tates possessing harbors
have enacted laws or promulgated rules re>uiring
vessels approaching their ports to ta3e on board pilots
licensed under the local laws. (Notes and Cases on
the Law on Transportation and Public Utilities, Aquino,
T. & ernando, R.P. !""# ed. p. :$9&
Lia<lit/ of Pilot
56N6RAL RUL6= 4n compulsory pilotage grounds,
the <arbor Pilot is responsible for damage to a vessel
or to life or property due to his negligence.
67C6PT:
1. Accident caused by force majeure or natural
calamity provided the pilot e5ercised prudence and
e5tra diligence to prevent or minimi.e damages.
2. Countermand or overrule by the master of the
vessel in which case the registered owner of the
vessel is liable. "1ec.11, Art.+++ PPA Admin 4rder 7*
0(#
SPECIAL CONTRACTS OF MARITIME COMMERCE
1. Charter party
2. :ill of lading
. Contract of transportation of passengers on
sea voyages
$. %oan on bottomry
(. %oan on respondentia
/. Barine insurance
C$ARTER PARTY
A contract by virtue of which the owner or agent
binds himself to transport merchandise or persons for
a fi5ed price.
A contract by which an entire ship, or some principal
part thereof is let'leased by the owner to another
person for a specified time or use. "Planters Products,
+nc. vs. CA, 22/ 1C2A $,/#
Pa!ti"s:
1. 1hip owner or ship agent
2. Charterer
Class"s:
1. :areboat or demise L ;he charterer provides crew,
food and fuel. ;he charterer is liable as if he were the
owner, e5cept when the cause arises from the
unworthiness of the vessel. ;he shipowner leases to
the charterer the whole vessel, transferring to the latter
the entire command, possession and conse>uent
control over the vessel@s navigation, including the
master and the crew, who thereby become the
charter@s servants. +t transforms a common carrier into
a private carrier.
;he charterer becomes the owner of the
vessel pro hac vice, just for that one particular
purpose only. :ecause the charterer is treated
as owner pro hac /ice, the charterer assumes the
customary rights and liabilities of the shipowner to
third persons and is held liable for the e5pense of
the voyage and the wages of the seamen.
2. Contract of Affreightment C A contract whereby the
owner of the vessel leases part or all of its space to
haul goods for others.
;he shipowner retains the possession,
command and navigation of the ship, the
charterer merely having use of the space in the
vessel in return for his payment of the charter
hired.
Dinds=
a. ;ime charter L vessel is chartered for a fi5ed
period of time or duration of voyage.
b. Coyage or trip charter L the vessel is leased
for one or series of voyages usually for
purposes of transporting goods for charterer.
LEASE C$ARTER PARTY
+f for a definite period,
lessee cannot give up
the lease by paying a
portion of the amount
agreed upon.
Charterer may rescind
charter party by paying
half of the freightage
agreed upon.
+f the leased property is
sold to one who 3nows
of the e5istence of the
lease, the new owner
must respect the lease.
;he new owner is not
compelled to respect the
charter party so long as
he can load the vessel
with his own cargo. "Art.
/08#
Civil law concept Commercial law concept
C$ARTER PARTY *ILL OF LADING
An entire or complete
contract.
Bore li3e a private
receipt which the
captain gives to accredit
goods received from
persons
Consensual contract 2eal contract
*ARE*OAT OR
DEMISE C$ARTER
CONTRACT OF
AFFREIG$TMENT
-TIME OR #OYAGE
C$ARTER1
Charterer becomes
liable to others caused
by its negligence
4wner remains liable as
carrier and must answer
for any breach of duty
Charterer regarded as
owner pro hac vice for
the voyage
Charterer is not
regarded as owner.
4wner of vessel
relin>uishes possession,
command and
navigation to charterer
;he vessel owner
retains possession,
command and
navigation of the ship
Common carrier is
converted to private
carrier.
Common carrier is not
converted to a private
carrier.
PERSONS W$O MAY MA?E A C$ARTER
1. 4wner or owners of the vessel, either in
whole or in majority part, who have legal
control and possession of the vessel
2. Charterer may subcharter entire vessel to
rd
person only if not prohibited in original
charter. "Art./,8#
. 1hip agent if authori.ed by the owner's or
given such power in the certificate of
appointment. "Art.(80#
$. Captain in the absence of the ship agent or
consignee and only if he acts in accordance
with the instructions of the agent or owner
and protects the latter@s interests. "Art./78#
RE78ISITES OF A #ALID C$ARTER PARTY
1. Consent of the contracting parties
2. ?5isting vessel which should be placed at
the disposition of the shipper
. !reight
$. Compliance with Art. /(2 of the Code of
Commerce
Cla.s"s Wic Ma/ *" Incl.("( In a Ca!t"! Pa!t/
;ason cla.s" Cla.s" 0a!a&o.nt o!
0a!a&o.nt cla.s"
A stipulation in a charter
party that in case of a
maritime accident for
which the shipowner is
not responsible by law,
contract or otherwise,
the cargo shippers,
consignees or owners
shall contribute with the
shipowner in general
average. "Pandect of
Commercial %aw and
Aurisprudence, Austice
Aose Citug, 188, ed.#
A clause in a charter
party providing that the
C4G1A shall apply,
even though the
transportation is
domestic, subject to the
e5tent that any term of
the bill of lading is
repugnant to the
C4G1A or applicable
law, then to the e5tent
thereof the provision of
the bill of lading is void.
"Pandect of Commercial
%aw and Aurisprudence,
Austice Aose Citug, 188,
ed.#
Ri+ts an( O<li+ations of Pa!ti"s
S$IPOWNER OR S$IP
AGENT
C$ARTERER
1. +f the vessel is
chartered wholly, not to
accept cargo from
others9
2. ;o observe
represented capacity9
. ;o unload cargo
clandestinely placed
$. ;o substitute
another vessel if load is
less than '( of
capacity9
(. ;o leave the port if
the charterer does not
bring the cargo within
the lay days and e5tra
lay days allowed9
/. ;o place in a
vessel in a condition to
navigate9
,. to bring cargo to
nearest neutral port in
case of war or bloc3ade.
"Arts. //8*/,0#
1. ;o pay the agreed
charter price9
2. ;o pay freightage
on unboarded cargo9
. ;o pay losses to
others for loading
uncontracted cargo and
illicit cargo9
$. ;o wait if the
vessel needs repair9
(. ;o pay e5penses
for deviation. "Arts.
/,8*/0,#
R"scission of a Ca!t"! Pa!t/
At ca!t"!"!>s
!":."st
-A!t 6==1
At
si0o)n"!>s
!":."st
-A!t% 6=A1
Fo!t.ito.s
ca.s"s
-A!t% 6AB1
1. :y
abandoning
the charter and
paying half of
the freightage9
2. ?rror in
1. +f the e5tra
lay days
terminate
without the
cargo being
placed
1. &ar or
interdiction of
commerce9
2. :loc3ade9
. Prohibition
to receive
tonnage or
flag9
. !ailure to
place the
vessel at the
charterer@s
disposal9
$. 2eturn of
the vessel due
to pirates,
enemies or
bad weather9
(. Arrival at a
port for repairs.
alongside the
vessel9
2. 1ale by the
owner of the
vessel before
loading by the
charterer9
cargo9
$. ?mbargo9
and
(. +nability of
the vessel to
navigate.
T"!&s:
1. Primage * bonus to be paid to the captain after
the successful voyage.
2. )emurrage L the sum fi5ed in the charter party as
a remuneration to the owner of the ship for the
detention of his vessel beyond the number of
days allowed by the charter party for loading or
unloading or for sailing.
. )eadfreight L the amount paid by or recoverable
from a charterer of a ship for the portion of the
ship@s capacity the latter contracted for but failed
to occupy.
$. %ay )ays * days allowed to charter parties for
loading and unloading the cargo.
(. ?5tra %ay )ays C days which follow after the lay
days have elapsed.
8S8AL FORMS OF CONS8MMATING CONTRACTS
1. C.+.!. L cost, insurance and freight9
2. !.4.:. * free on board9
. !.A.1. * free alongside ship9 and
$. C. J !. * cost and freight.
TRANSS$IPMENT OF GOODS
;he act of ta3ing cargo out of one ship and loading it
in another, or the transfer of goods from the vessel
stipulated in the contract of affreightment to another
vessel before the place of destination named in the
contract has been reached, or the transfer for further
transportation from one ship or conveyance to another.
+t is not dependent on the ownership of the
transporting ships or in the change of carriers, but
rather on the fact of actual physical transfer of cargo
from one vessel to another.
+f done without legal e5cuse, however competent
and safe the vessel into which the transfer is made, is
a violation of contract and infringement of right of
shipper and subjects carrier to liability if freight is lost
event by cause otherwise e5cepted. "Bagellan
Banufacturing vs. CA, 271 1C2A 172#
LOAN ON *OTTOMRY AND RESPONDENTIA
A real, unilateral, aleatory contract, by virtue of
which one person lends to another a certain amount of
money or goods on things e5posed to maritime ris3s,
which amount, with its earnings, is to be returned if the
things are safely transported, and which is lost if the
latter are lost.
LOAN ON
*OTTOMRY
LOAN ON
RESPONDENTIA
)efinition
%oan made by
shipowner or ship
agent guaranteed by
vessel itself and
repayable upon arrival
of vessel at destination.
"Art. ,18#
%oan ta3en on security
of the cargo laden on a
vessel, and repayable
upon safe arrival of
cargo at destination.
"Art. ,18#
&ho may contract
1hipowner or ship
agent. 4utside of the
residence of the
owners * the captain.
4nly the owner of the
cargo.
Common elements=
1. ?5posure of security to marine peril9
2. 4bligation of the debtor conditioned only
upon safe arrival of the security at the point
of destination.
!orms=
1. Public instrument
2. Policy signed by the contracting parties and
the bro3er ta3ing part therein
. Private instrument "Art. ,27#
Contents=
1. Dind, name and registry of the vessel9
2. -ame, surname and domicile of the captain9
. -ames, surnames and domiciles of the
borrower and the lender9
$. Amount of the loan and the premium
stipulated9
(. ;ime for repayment9
/. Goods pledged to secure repayment9
,. Coyage during which the ris3 is run "Art.,21#
*OTTOMRY/
RESPONDENTIA
ORDINARY LOAN
-M8T88M1
-ot subject to 6sury
%aw
1ubject to 6sury %aw
%iability of the borrower
is contingent on the
safe arrival of the
vessel or cargo at
destination
-ot subject to any
contingency "absolute
liability#
;he last lender is a
preferred creditor
;he first lender is a
preferred creditor
W$EN LOAN ON *OTTOMRY OR RESPONDENTIA
REGARDED AS SIMPLE LOAN
1. %ender loaned an amount larger than the
value of the object due to fraudulent means
employed by the borrower. "A2;.,2/#
2. !ull amount of the loan is not used for the
cargo or given on the goods if all of them
could not have been loaded, the balance will
be considered a simple loan. "A2;.,2,#
. +f the effects on which the money is ta3en is
not subjected to any ris3. "A2;.,28#
Not"= 6nder e5isting laws, the parties to a loan,
whether ordinary or maritime, may agree on any rate
of interest. "C: Circular 87(#
MARINE INS8RANCE LOAN ON
*OTTOMRY OR
RESPONDENTIA
+ndemnity is paid after the
loss has occurred
+ndemnity is paid in
advance by way of
a loan
+n case of loss of the vessel
due to a ris3 insured
against, the obligation of
the insurer becomes
absolute
+n case of loss of
the vessel due to a
marine peril, the
obligation of the
borrower to pay is
e5tinguished
Consensual contract 2eal contract
$/0ot"ca!/ Nat.!" of *otto&!// R"s0on("ntia
56N6RAL RUL6: ;he obligation of the borrower to
pay the loan is e5tinguished if the goods given as
security are absolutely lost by reason of an accident of
the sea, during the voyage designated, and if it is
proven that the goods were on board.
67C6PT81N':
1. %oss due to inherent defect9
2. %oss due to the barratry on the part of the
captain9
. %oss due to the fault or malice of the borrower9
$. ;he vessel was engaged in contraband9 and
(. ;he cargo loaded on the vessel be different in
from that agreed upon.
Conc.!!"nc" of Ma!in" Ins.!anc" an( Loan on
*otto&!//R"s0on("ntia
1. ;he insurable interest of the owner of a ship
hypothecated by bottomry is only the e5cess
of the value over the amount secured by
bottomry. "1ec. 171, +nsurance Code#
2. ;he value of what may be saved in case of
shipwrec3 shall be divided between the
lender and the insurer in proportion to the
interest of each one. "Art. ,(#
-ote= +f a vessel is hypothecated by bottomry only the
e5cess is insurable, since a loan on bottomry parta3es
of the nature li3ewise of an insurance coverage to the
e5tent of the loan accommodation. ;he same rule
would apply to the hypothecation of the cargo by
respondentia. (Pandect o) Co((ercial Law and
*urisprudence, *ustice *ose +itu,, $--. ed.&
ACCIDENTS IN MARITIME COMMERCE
1. Averages
2. Arrival 6nder 1tress
. Collision
$. 1hipwrec3
A#ERAGE
An e5traordinary or accidental e5pense incurred
during the voyage in order to preserve the cargo,
vessel or both, and all damages or deterioration
suffered by the vessel from departure to the port of
destination, and to the cargo from the port of loading to
the port of consignment. "Art. 07/#
;he person whose property has been saved must
contribute to reimburse the damage caused or
e5pense incurred if the situation constitutes general
average.
Classes=
1. Particular or 1imple Average
2. Gross or General Average
&here both vessel and cargo are saved, it is
general average9 where only the vessel or only the
cargo is saved, it is particular average.
?5penses incurred to refloat a vessel, which
accidentally ran aground, in order to continue its
voyage, do not constitute general average. -ot only is
there absence of a marine peril, common safety factor,
and deliberateness. +t is the safety of the property, and
not the voyage, which constitutes the true foundation
of general average. "A. Bagsaysay, +nc. vs. Agan,
G.2.-o. %*/8, Aan. 1, 18((#
PARTIC8LAR OR
SIMPLE
GROSS OR GENERAL
D"finition
)amages or e5penses
caused to the vessel or
cargo that did not inure
to the common benefit,
and borne by respective
owners. "Art. 078#
)amages or e5penses
deliberately caused in
order to save the
vessel, its cargo or both
from real and 3nown
ris3. "Art. 011#
R":.isit"s
1. common danger9
2. deliberate
sacrifice9
. success9
$. proper formalities
and legal steps.
Lia<ilit/
;he owner of the goods
which gave rise to the
e5pense or suffered the
damage shall bear this
average. "Art. 017#
All the persons having
an interest in the vessel
and the cargo therein at
the time of the
occurrence of the
average shall contribute
to satisfy this average.
"Art. 012#
;he insurers
"Art.0(8# and lenders
on bottomry and
respondentia shall
li3ewise contribute.
"Art.,2#.
N.&<"! of int"!"sts in,ol,"(
4nly one interest
involved
1everal interests
involved
Sa!" in t" (a&a+" o! "D0"ns"
177O share +n proportion to the
value of the owner@s
property saved
Ri+t to !"co,"!
-o reimbursement ;here may be
reimbursement
?in(s -not "Dcl.si,"1
Art. 078 Art. 011
P!oc"(.!" fo! !"co,"!/
1. Assembly and
deliberation
2. 2esolution of the
captain
. ?ntry of the
resolution in the
logboo3
$. )etailed minutes
(. )elivery of the
minutes to the maritime
judicial authority of the
first port, within 2$
hours from arrival,
/. 2atification by
captain under oath.
"Arts. 01*01$#
GOODS NOT CO#ERED *Y GENERAL A#ERAGE
E#EN IF SACRIFICED
1. Goods carried on dec3. "A2;.0((#
2. Goods not recorded in the boo3s or records
of the vessel. "A2;.0(( "2##
. !uel for the vessel if there is more than
sufficient fuel for the voyage. "2ule +P,
Eor3*Antwerp 2ule#
;"ttison
Act of throwing cargo overboard in order to lighten
the vessel.
4rder of goods to be cast overboard=
1. ;hose which are on the dec3, preferring the
heaviest one with the least utility and value9
2. ;hose which are below the upper dec3,
beginning with the one with greatest weight
and smallest value. "Art. 01(#
Aettisoned goods are not res nullius nor deemed
HabandonedI within the meaning of civil law so as to be
the object of occupation by salvage. (Pandect o)
Co((ercial Law and *urisprudence, *ustice *ose
+itu,, $--. ed.&
+n order that the jettisoned goods may be included
in the gross or general average, the e5istence of the
cargo on board should be proven by means of the bill
of lading. "Art. 01/#
Yo!E'Ant)"!0 -Y'A1 R.l"s on D"t"!&inin+ Lia<ilit/
fo! A,"!a+"s Wit R"+a!( To D"cE Ca!+o
1. )ec3 cargo is allowed only in
domestic'coastwise'inter*island shipping, and is
prohibited in international'overseas'foreign shipping.
2. +f dec3 cargo is loaded with the consent of the
shipper on overseas trade, it must always contribute to
general average, but should the same be jettisoned, it
would not be entitled to reimbursement because there
is violation of the E*A 2ules.
. +f dec3 cargo is loaded with the consent of the
shipper on coastwise shipping, it must always
contribute to general average and if jettisoned would
be entitled to reimbursement.
2eason= +n domestic shipping, voyages are usually
short and the seas are generally not rough. +n
overseas shipping, the vessel is e5posed for many
days to perils of the sea.
DOMESTIC INTERNATIONAL
)ec3 cargo is allowed )ec3 cargo is not
allowed
&ith shipper@s consent
General average Particular average
&ithout shipper@s consent
Captain is liable Captain is liable
ARRI#AL 8NDER STRESS -ARRI*ADA1
;he arrival of a vessel at the nearest and most
convenient port instead of the port of destination, if
during the voyage the vessel cannot continue the trip
to the port of destination.
W"n la)f.l W"n
.nla)f.l
Wo <"a!s
"D0"ns"s:
;he inability to
continue
voyage is due
to lac3 of
provisions,
well*founded
fear of sei.ure,
privateers,
pirates, or
accidents of
the sea
disabling it to
navigate. "Art.
018#
1. %ac3 of
provisions due
to negligence to
carry according
to usage and
customs9
2. 2is3 of
enemy not well
3nown or
manifest
. )efect of
vessel due to
improper repair9
and
$. Balice,
negligence,
lac3 of foresight
or s3ill of
captain. "Art.
027#
;he shipowner
or ship agent is
liable in case of
unlawful arrival
under stress.
:ut they shall
not be liable for
the damages
caused by
reason of a
lawful arrival.
"Art. 021#
+t is the duty of the captain to continue the voyage
without delay after the cause of the arrival under stress
has ceased failing in such duty renders him liable.
<owever, in case the cause has been ris3 of enemies,
there must first be an assembly before departure. "Art.
02(#
1teps=
1. Captain should determine during the voyage
if there is well founded fear of sei.ure,
privateers and other valid grounds9
2. Captain shall assemble the officers and
summon the persons interested in the cargo
who may attend the meeting but without a
right to vote9
. ;he officers shall determine and agree if
there is well*founded reason after e5amining
the circumstances. ;he captain shall have
the deciding vote9
$. ;he agreement shall be drafted and the
proper minutes shall be signed and entered
in the log boo39
(. 4bjections and protests shall li3ewise be
entered in the minutes.
COLLISION
+mpact of two vessels both of which are moving.
Allision
+mpact between a moving vessel and a stationary
one.
Na.tical R.l"s to D"t"!&in" N"+li+"nc"
1. &hen two vessels are about to enter a port, the
farther one must allow the nearer to enter first9 if
they collide, the fault is presumed to be imputable
to the one who arrived later, unless it can be
proved that there was no fault on its part.
2. &hen two vessels meet, the smaller should give
the right of way to the larger one.
. A vessel leaving port should leave the way clear
for another which may be entering the same port.
$. ;he vessel which leaves later is presumed to
have collided against one which has left earlier.
(. ;here is a presumption against the vessel which
sets sail in the night.
/. ;here is a presumption against the vessel with
spread sails which collides with another which is
at anchor and cannot move, even when the crew
of the latter has received word to lift anchor, when
there was not sufficient time to do so or there was
fear of a greater damage or other legitimate
reason.
,. ;here is a presumption against an improperly
moored vessel.
0. ;here is a presumption against a vessel which
has no buoys to indicate the location of its
anchors to prevent damage to vessels which may
approach it.
8. Cessels must have Hproper loo3*outsI or persons
trained as such and who have no other duty aside
therefrom. "1mith :ell v. CA#
Na.tical R.l"s as to Sailin+ #"ss"l an( St"a&si0
1. &here a steamship and a sailing vessel are
approaching each other from opposite directions,
or on intersecting lines, the steamship from the
moment the sailing vessel is seen, shall watch
with the highest diligence her course and
movements so as to be able to adopt such timely
means of precaution as will necessarily prevent
the two boats from coming in contact.
2. ;he sailing vessel is re>uired to 3eep her course
unless the circumstances re>uire otherwise.
Fon"s of Ti&" in t" Collision of #"ss"ls
1. 3irst >one L all time up to the moment when ris3 of
collision begins.
-o rule is as yet applicable for none is necessary.
2. 'econd >one L time between moment when ris3 of
collision begins and moment it becomes a practical
certainty.
+t is in this period where conduct of the vessels is
primordial. +t is in this .one that vessels must strictly
observe nautical rules, unless a departure therefrom
becomes necessary to avoid imminent danger.
. Third >one L time when collision is certain and time
of impact.
An error in this .one would no longer be legally
conse>uential.
6rror in 6?tre(is * sudden movement made by a
faultless vessel during the third .one of collision with
another vessel which is at fault during the 2nd .one.
?ven if such sudden movement is wrong, no
responsibility will fall on said faultless vessel. "6rrutia
and Co. v. :aco 2iver Plantation Co., 2/ P<+% /2#
Cas"s Co,"!"( */ Collision an( Allision
$. 1ne /essel at )ault
Cessel at fault is liable for damage caused to
innocent vessel as well as damages suffered by the
owners of cargo of both vessels. "Art. 02/#
2. <oth /essels at )ault
?ach vessel must bear its own loss, but the shippers
of both vessels may go against the shipowners who
will be solidarily liable. "Art. 02,#
. +essel at )ault not @nown
?ach vessel must bear its own loss, but the shippers
of both vessels may go against the shipowners who
will be solidarily liable. "Art. 020#
;octrine o) 8nscrutable 3ault L +n case of
collision where it cannot be determined which
between the two vessels was at fault, both
vessels bear their respective damage, but both
should be solidarily liable for damage to the cargo
of both vessels.
#. Third /essel at )ault
;he third vessel will be liable for losses and
damages. "Art. 01#
:. 3ortuitous e/entA)orce (aBeure
-o liability. ?ach bears its own loss. "Art. 07#
;he doctrine of res ipsa lo>uitur applies in case a
moving vessel stri3es a stationary object, such as a
bridge post, doc3, or navigational aid. "!ar ?astern
1hipping v. CA, %u.on 1tevedoring vs. CA#
?ven if the cause of action against the common
carrier is based on >uasi*delict, the defense of due
diligence in the selection and supervision of
employees is unavailing in case of a maritime tort
resulting in collision. +t is not a civil tort governed by
the Civil Code but a maritime one governed by Arts.
02/*08 of the Code of Commerce. "Banila 1teamship
vs. +nsa Abdulhaman#
)octrine of %ast Clear Chance and 2ule on
Contributory -egligence cannot be applied in collision
cases because of Art.02, of the Code of Commerce.
(Notes and Cases on the Law on Transportation and
Public Utilities, Aquino, T. & ernando, R.P. !""# ed.&
MARITIME PROTEST
Condition precedent or prere>uisite to recovery of
damages arising from collisions and other maritime
accidents.
+t is a written statement made under oath by the
captain of a vessel after the occurrence of an accident
or disaster in which the vessel or cargo is lost or
damaged, with respect to the circumstances attending
such occurrence, for the purpose of recovering losses
and damages.
?5cuses for not filing protest= 1# where the
interested person is not on board the vessel9 and 2# on
collision time, need not be protested. "Art. 0/#
Cases applicable=
1. Collision "Art. 0(#9
2. Arrival under stress "Art. /12"0##9
. 1hipwrec3s "Arts. /12"1(#, 0$#9
$. &here the vessel has gone through a
hurricane or when the captain believes that
the cargo has suffered damages or
averages "Art. /2$#.
&ho ma3es= Captain
&hen made= within 2$ hours from the time the
collision too3 place.
:efore whom made= competent authority at the point
of collision or at the first port of arrival, if in the
Philippines and to the Philippine consul, if the collision
too3 place abroad. "Art. 0(#
S$IPWREC?
+t is the loss of the vessel at sea as a conse>uence
of its grounding, or running against an object in sea or
on the coast. +t occurs when the vessel sustains
injuries due to a marine peril rendering her incapable
of navigation.
+f the wrec3 was due to malice, negligence or lac3 of
s3ill of the captain, the owner of the vessel may
demand indemnity from said captain. "Art. 0$1#
;he rules on collision or allision, as may be
pertinent, can e>ually apply to shipwrec3s.
SPECIAL CONCEPTS
ARRASTRE SER#ICE
A contract for the unloading of goods from a vessel.
A00lica<ilit/: 1/erseas trade only. (Co((ercial
Law Re/iew, C. +illanue/a, !""# ed.&
Si+nificanc": &hen a person brings in cargo from
abroad, he cannot unload and deliver the cargo by
himself. ;he unloading must be done by the arrastre
operator, which will then deliver the cargo to the
importer. (Co((ercial Law Re/iew, C. +illanue/a,
!""# ed.&
Nat.!" of <.sin"ss: +t is a public utility, discharging
functions which are heavily invested with public
interest.
Lia<ilit/:
1. 1imilar to a warehouseman "%ua Dian v. Banila
2ailroad#
2. 1imilar to a common carrier "-orthern Botors v.
Prince %ine#
. 1olidary liability with the common carrier
Not": +n order that the arrastre operator may be held
liable, the consignee must prove that the damage was
due to the negligence and while the goods are in the
custody of the arrastre operator. "<artford !ire
+nsurance v. ?. 2a.on, +nc.#
STE#EDORING SER#ICE
;he carriage of goods from the warehouse or pier to
the holds of the vessel. "Chief of 1taff vs. C+2#
As understood in the port business, the term
consists of the handling of cargo from the hold of the
ship to the doc3, in case of pier*side unloading9 or to a
barge, in case of unloading at sea. "Anglo*!il ;rading
Corp. vs. %a.aro#
;he loading on the ship of outgoing cargo is also
part of stevedoring wor3. "+bid.#
CONTAINERIFATION/ GSAID'TO'CONTAINH/
GS$IPPER>S LOAD AND CO8NTH SYSTEM
1ystem whereby the shipper loads his cargoes in a
specially designed container, seals the container and
delivers it to the carrier for transportation. ;he carrier
does not participate in the counting of the merchandise
for loading into the container, the actual loading, and
the sealing of the container. "61 %ines v. Comm. 4f
Customs, +C;1+ v. Prudential Guarantee#
;he matter of >uantity, description and conditions of
the cargo inside the container is the sole responsibility
of the shipper, unless there is stipulation to the
contrary. "61 %ines vs. Comm. 4f Customs, 2eyma
:ro3erage v. Phil. <ome Assurance#
Not": +n order to attribute to the carrier any damage to
the shipment that may be found, inspection o) the
,oods should be done at pier%side. ":an3ers vs. CA#

III% CARRIAGE OF GOODS *Y SEA ACT/COGSA
-C%A% No% 651
APPLICA*ILITY
;he transportation must be=
1. &ater'maritime transportation9
2. for the carriage of goods9 and
. overseas'international'foreign "from foreign
port to Philippine port#.
+t can be applied in domestic sea transportation if
agreed upon by the parties. "Clause para(ount or
para(ount clause#
IMPORTANT FEAT8RES:
1. Amount of carrier@s liability
2. -otice of damage
. Prescriptive period
AMO8NT OF CARRIER>S LIA*ILITY
6nder the 1ec. $"(#, the liability limit is set at Q(77
per pac3age or customary freight unit unless the
nature and value of such goods is declared by the
shipper. ;his is deemed incorporated in the bill of
lading even if not mentioned in it. "?astern 1hipping
vs. +AC, 1(7 1C2A $/#
-ote that Art. 1,$8, -CC applies to domestic'inter*
island'coastwise trade.
NOTICE OF DAMAGE -SEC% 4-611
R.l"s:
a. Patent damage= shipper should file a claim with
the carrier immediately upon delivery
b. %atent damage= shipper should file a claim with
the carrier within three days from delivery.
Not"= ;he filing of a notice of claim is not a condition
precedent.
PRESCRIPTI#E PERIOD
Action for loss or damage to the cargo should be
brought within one year after=
a. )elivery of the goods "delivered but
damaged goods#9 or
b. ;he date when the goods should have been
delivered "non*delivery#. "1ec. F/G#
H%oss or )amageI as applied to the C4G1A
contemplates a situation where no delivery at all was
made by the shipper of the goods because the same
had perished, gone out of commerce, or disappeared
in such a way that their e5istence is un3nown or they
cannot be recovered. ;hus, it is inapplicable in case of
misdelivery or conversion. "Ang vs. American
1teamship Agencies +nc.# and damage arising from
delay or late delivery "Bitsui 4.1.D. %ines %td. vs. CA#.
+n such instance the, Civil Code rules on prescription
shall apply.
;he one*year prescriptive period is suspended by=
1. ;he e5press agreement of the parties
"6niversal 1hipping %ines, +nc. vs. +AC, 100
1C2A 1,7#
2. ;he filing of an action in court until it is
dismissed. "1tevens J Co. vs. -ordeutscher
%loyd, / 1C2A 107#
;he one*year period shall run from delivery of the
last pac3age and is not suspended by e5trajudicial
demand. ")ole Phils.,+nc. vs. Baritime Co.,1$0 1C2A
110#
;he one*year period shall run from delivery to the
arrastre operator and not to the consignee. "6nion
Carbide Phils, +nc. vs. Banila 2ailroad Co.,1C2A (8#
;he insurer e5ercising its right of subrogation is
bound by the one*year prescriptive period. <owever, it
does not apply to the claim against the insurer for the
insurance proceeds. "!il. Berchants +ns. Co. vs.
Alejandro9 Bayer 1teel Pipe Corp. vs. CA#
I#% WARSAW CON#ENTION OF 2A5A -WC1
P8RPOSE: ;o protect the emerging air transportation
industry and to secure the uniformity of recovery by
the passengers.
APPLICA*ILITY
;he transportation must be=
1. +nternational transportation9
2. Air transportation9 and
. Carriage of passengers, baggage or goods.
;he &C shall also apply to fortuitous transportation
by aircraft performed by an air transportation
enterprise.
8nternational transportation * any transportation in
which the place of departure and the place of
destination are situated either=
1. &ithin the territories of two <igh Contracting
Parties regardless of whether or not there be a
brea3 in the transportation or transshipment, or
2. &ithin the territory of a single <igh Contracting
Party, if there is an agreed stopping place within
a territory subject to the sovereignty, mandate or
authority of another power, even though that
power is not a party to the Convention. "Hround
tripI, Am. Aur.#
;ransportation to be performed by several
successive air carriers shall be deemed to be one
undivided transportation, if it has been regarded by the
parties as a single operation, whether it has been
agreed upon under the form of a single contract or of a
series of contracts, and it shall not lose its international
character merely because one contract or a series of
contracts is to be performed entirely within a territory
subject to the sovereignty, su.erainty, mandate, or
authority of the same <igh Contracting Party. "Art. 1
1ec.#
W$EN INAPPLICA*LE
1. &hen public policy is contradicted9
2. +f the re>uirements under the Convention
are not complied with.
IMPORTANT CONCEPTS:
1. ;ransportation documents
a. Passenger tic3et
b. :aggage chec3
c. Air way bill
2. %iability of the carrier for damages
a. )eath or injury to passengers
b. %oss or damage to baggage or goods
c. )elay
. 1uccessive carrier agreement
$. Aurisdiction
(. Combined transportation agreement
PASSENGER
TIC?ET
*AGGAGE
C$EC?
AIR WAY*ILL
Passenger Chec3ed*in
baggage
Goods to be
shipped
LIA*ILITY OF CARRIER FOR DAMAGES
1. )eath or injury of a passenger if the accident
causing it too3 place on board the aircraft or in the
course of its operations of embar3ing or disembar3ing9
"Art. 1,#
2. )estruction, loss or damage to any baggage or
goods, if it too3 place during the Htransportation by airI9
"Art. 10# and
Transportation b4 air L ;he period during which the
baggage or goods are in the charge of the carrier,
whether in an airport or on board an aircraft, or, in
case of a landing outside an airport, in any place
whatsoever.
+t includes any transportation by land or water
outside an airport if such ta3es place in the
performance of a contract for transportation by air, for
the purpose of loading, delivery, or transshipment.
. )elay in the transportation of passengers, baggage
or goods. "Art. 18#
Not"= ;he <ague Protocol amended the &C by
removing the provision that if the airline too3 all
necessary steps to avoid the damage, it could
e5culpate itself completely "Art. 27"1##. "Alitalia vs.
+AC, 182 1C2A 8#
LIMIT OF LIA*ILITY -A!t% 55I as a&"n("( </
G.at"&ala P!otocolI 2A32J Alitalia ,s% IAC1
2% Pass"n+"!s
56N6RAL RUL6: Q177,777 per passenger
67C6PT81N: Agreement to a higher limit
5% C"cE"('in <a++a+"
56N6RAL RUL6: Q27 per 3ilogram
67C6PT81N: +n case of special declaration of value
and payment of a supplementary sum by consignor,
carrier is liable to not more than the declared sum
unless it proves the sum is greater than actual value.
4% $an('ca!!i"( <a++a+"
Q1777'passenger
4% Goo(s to <" si00"(
56N6RAL RUL6: Q27 per 3ilogram
67C6PT81N: +n case of special declaration of value
and payment of a supplementary sum by consignor,
carrier is liable to not more than the declared sum
unless it proves the sum is greater than actual value.
An agreement relieving the carrier from liability or
fi5ing a lower limit is null and void. "Art. 2#
Carrier is not entitled to the foregoing limit if the
damage is caused by willful misconduct or default on
its part. "Art. 2(#
;hus, the &C does not operate as an e5clusive
enumeration of the instances of an absolute limit of the
e5tent of liability. +t does not preclude the application
of the Civil Code and other pertinent local laws. +t
does not regulate or e5clude liability for other breaches
of contract by the carrier, or misconduct of its
employees, or for some particular or e5ceptional type
of damage. "Alitalia vs. CA#
+n PanAm v. +AC, the &C was applied as regards
the limitation on the carrier@s liability, there being a
simple loss of baggage without any improper conduct
on the part of the officials or employees of the airline
or other special injury sustained by the passenger.
+n D%B 2oyal v. ;uller, the &C has invariably been
held inapplicable, or as not restrictive of the carrier@s
liability, where there was satisfactory evidence of
malice or bad faith attributable to its officers and
employees. "Alitalia vs. +AC#
ACTION FOR DAMAGES
1. -otice of claim
A written complaint must me made within=
a. days from receipt of baggage
b. , days from receipt of goods
c. +n case of delay, 1$ days from receipt of
baggage'goods
;he complaint is a condition precedent. &ithout the
complaint, the action is barred e5cept in case of fraud
on the part of the carrier. "Art. 2/#
2. Prescriptive period
Action must be filed within 2 years from=
a. date of arrival at the destination
b. date of e5pected arrival
c. date on which the transportation stopped.
"Art. 28#
+n 6nited Airlines vs. 6y the two*year prescriptive
period was not applied where the airline employed
delaying tactics.
R8LE IN CASE OF #ARIO8S S8CCESSI#E
CARRIERS
1. Carriage of passengers
56N6RAL RUL6: Action is filed only against the
carrier in which the accident or delay occurred.
67C6PT81N: Agreement or contract whereby the
first carrier assumed liability for the whole journey.
2. Carriage of baggage or goods
a. Passenger or consignor can file an action
against the )irst carrier and the carrier in
which the damage occurred
b. Passenger or consignee can file an action
against the last carrier and the carrier in
which the damage occurred.
;hese carriers are jointly and severally liable.
"Art. 7#
A contract of international carriage by air, although
performed by different carriers under a series of airline
tic3ets constitutes a single operation. Bembers of the
+nternational Air ;ransportation Association "+A;A# are
under a general pool partnership agreement wherein
they act as agent of each other in the issuance of
tic3ets to contracted passengers to boost tic3et sales
worldwide and at the same time provide passengers
easy access to airlines which are otherwise
inaccessible in some parts of the world. "American
Airlines vs. CA#
6nder a general pool partnership agreement, the
tic3et*issuing airline is the principal in a contract of
carriage while the endorsee*airline is the agent. ;he
obligation of the former remained and did not cease
even when the breach occurred not on its own flight
but on that of another airline which had underta3en to
carry the passengers to one of their destinations.
"China Airlines vs. Chio3#
;8RISDICTION
At the option of the plaintiff, the action for damages
may be filed in the=
a. Court of domicile of the carrier9
b. Court of its principal place of business9
c. Court where it has a place of business
through which the contract has been made9 or
d. Court of the place of destination. "Art. 20"1##
NOTE: +t is the passenger@s Hultimate destinationI not
Han agreed stopping placeI that determines the country
where suit is to be filed.
;he forum of action provided in Art. 20"1# is a
matter of jurisdiction rather than of venue. "1antos +++
vs. -orthwest9 2A C.A.1.#
#% SAL#AGE LAW -Act No% 56261
SAL#AGE
T)o conc"0ts:
1. 1ervices one person renders to the owner of a
ship or goods, by his own labor, preserving the goods
or the ship which the owner or those entrusted with the
care of them have either abandoned in distress at sea,
or are unable to protect or secure.
2. Compensation allowed to persons by whose
voluntary assistance a ship at sea or her cargo or both
have been saved in whole or in part from impending
sea peril, or such property recovered from actual peril
or loss, as in cases of shipwrec3, derelict or recapture.
R":.isit"s:
1. Calid object of salvage9
2. 4bject must have been e5posed to marine
peril "not perils of the ship#9
. 1ervices rendered voluntarily "neither an
e5isting duty nor out of a pre*e5isting
contract#9
$. 1ervices are successful, total or partial.
S.<K"cts of Sal,a+":
1. 1hip itself9
2. Aetsam L goods which are cast into the sea, and
there sin3 and remain under water9
. !loatsam or !lotsam L goods which float upon the
sea when cast overboard9
$. %igan or %agan L goods cast into the sea tied to a
buoy, so that they may be found again by the owners
(p.$.C, *ud,e ;ia>&.
P"!sons )o a," no !i+t to a !")a!( fo!
sal,a+"=
1. Crew of the vessel saved9
2. Person who commenced 1alvage in spite of
opposition of the Captain or his representative9
. +n accordance with 1ec. of the 1alvage %aw, a
person who fails to deliver a salvaged vessel or cargo
to the Collector of Customs.
Derelict L a ship or her cargo which is abandoned
and deserted at sea by those who are in charge of it,
without any hope of recovering it, or without any
intention of returning to it.
;he intention of those in charge must be
ascertained. +f those in charge left with the intention of
returning, or of procuring assistance, the property is
not derelict, but if they >uitted the property with the
intention of finally leaving it, it is derelict and a change
of their intention and an attempt to return will not
change its nature "?rlanger J Galinger vs. 1wedish
?ast Asiatic Co. %td.#.
+f it is clear that the intention to return is slight, the
salvage which was done thereafter is considered valid.
(Notes and Cases on the Law on Transportation and
Public Utilities, Aquino, T. & ernando, R.P. !""# ed.
p. 0$0&
CONTRACT OF TOWAGE
A contract whereby one vessel, usually motori.ed,
pulls another, whether loaded or not with merchandise,
from one place to another, for a compensation. +t is a
contract for services rather than a contract of carriage.
SAL#AGE TOWAGE
Governed by special
law "Act -o. 2/1/#
Governed by Civil
Code on contract of
lease
2e>uires success,
otherwise no payment
1uccess is not
re>uired
Bust be done with the
consent of the
captain'crewmen
4nly the consent of the
tugboat owner is
needed
Cessel must be
involved in an accident
Cessel need not be
involved in an accident
!ees distributed
among crewmen
!ees belong to the
tugboat owner
R8LES ON SAL#AGE REWARD
1. ;he reward is fi5ed by the 2;C judge in the
absence of agreement or where the latter is
e5cessive. "1ec. 8#
2. ;he reward should constitute a sufficient
compensation for the outlay and effort of the
salvors and should be liberal enough to offer an
inducement to others to render services in similar
emergencies in the future.
. +f sold "no claim being made within months from
publication#, the proceeds, after deducting
e5penses and the salvage claim, shall go to the
owner9 if the latter does not claim it within
years, (7O of the said proceeds shall go to the
salvors, who shall divide it e>uitably, and the
other half to the government. "1ecs. 11*12#
$. +f a vessel is the salvor, the reward shall be
distributed as follows=
a. (7O to the shipowner9
b. 2(O to the captain9 and
c. 2(O to the officers and crew in proportion to
their salaries. "1ec. 1#
;a3ing passengers from a sin3ing ship, without
rendering any service in rescuing the vessel, is not a
salvage service, being a duty of humanity and not for
reward.
#I% P8*LIC SER#ICE ACT
-C%A% No% 2461
P8RPOSES:
1. ;o secure ade>uate, sustained service for
the public at the least possible cost9
2. ;o protect the public against unreasonable
charges and poor, inefficient service9
. ;o protect and secure investments in public
services9
$. ;o prevent ruinous competition.
A8T$ORITY TO OPERATE P8*LIC SER#ICES
56N6RAL RUL6: -o public service shall operate
without having been issued a certificate of public
convenience or a certificate of public convenience and
necessity.
67C6PT81N':
1. &arehouses9
2. Animal drawn vehicles and bancas moved
by oar or sail9
. Airships, e5cept for the fi5ing of ma5imum
rates for fare and freight9
$. 2adio companies, e5cept for rates fi5ing9
(. Public services owned or operated by the
government, e5cept as to rates fi5ing9
/. +ce plants9 and
,. Public mar3ets.

P8*LIC SER#ICE
A person who owns, operates, manages or controls
in the Philippines for hire or compensation, with
general or limited clientele, whether permanent,
occasional or accidental, and done for general
business purposes, any common carrier or public
utility, ice plants, power and water supplies,
communication and similar public services. "1ec. 1b,
CA 1$/#
A casual or incidental service devoid of public
character and interest is not brought within the
category. ;he >uestion depends on such factors as
the e5tent of services, whether such person or
company has held himself or itself out as ready to
serve the public or a portion of the public generally.
"%u.on 1tevedoring vs. P1C#
NOTE= ;he Public 1ervice Commission created under
the Public 1ervice %aw has already been abolished
under P.). -o. 1 and other issuances. +t has been
replaced by the following government agencies= %;49
%;!2:9 A;49 :4?9 -;C9 -?A9 ?2:9 -&2C9 CA:9
and B+A.
CERTIFICATE OF
P8*LIC
CON#ENIENCE
-CPC1
CERTIFICATE OF
P8*LIC
CON#ENIENCE AND
NECESSITY -CPCN1
An authori.ation
issued by the
appropriate
government agency for
the operation of public
services for which no
franchise, either
municipal or
legislative, is re>uired
by law, e.g., common
carriers.
An authori.ation
issued by the
appropriate
government agency for
the operation of public
service for which a
prior franchise is
re>uired by law9 e.g.
telephone and other
services.
A CPC or a CPC- constitutes neither a franchise
nor a contract, confers no property right, and is a mere
license or a privilege. ;he holder of said certificate
does not ac>uire a property right in the route covered
thereby. -or does it confer upon the holder any
proprietary right or interest or franchise in the public
highways. 2evocation of this certificate deprives him of
no vested right. -ew and additional burdens, alteration
of the certificate, or even revocation or annulment
thereof is reserved to the 1tate. "%u>ue vs. Cillegas,
7 1C2A $70#
+t is a HpropertyI and has a considerable value and
can be the subject of sale or attachment. "Cogeo*
Cubao 4perators and )rivers Assn. vs. CA, 27,
1C2A $, 2aymundo vs. %uneta Botor Co.#
RE78REMENTS FOR GRANTING CPC OR CPCN
1. Applicant must be a citi.en of the Philippines or a
corporation or entity /7O of the capital of which is
owned by such citi.ens9
2. Applicant must prove public necessity9
. Applicant must prove that the operation of the
public service proposed and the authori.ation to
do business will promote the public interest on a
proper and suitable manner9
$. Applicant must have sufficient financial capability
to underta3e the proposed services and meeting
the responsibilities incident to its operation.
POWERS
RE78IRING PRIOR
NOTICE AND
$EARING
POWERS
E9ERCISA*LE
WIT$O8T PRIOR
NOTICE AND
$EARING
1. +ssuance of CPC
or CPC-9
2. !i5ing of rates,
tolls, and charges9
. 1etting up of
standards and
classifications9
$. ?stablishment of
rules to secure
accuracy of all meters
and all measuring
appliances9
(. +ssuance of
orders re>uiring
establishment or
maintenance of
e5tension of facilities9
/. 2evocation, or
modification of CPC
or CPC-9
,. 1uspension of CPC
or CPC-, e5cept
when it is necessary
to avoid serious and
irreparable damage or
inconvenience to the
public or private
interest, in which
case, a suspension
not more than 7
days may be ordered,
prior to the hearing.
"1oriano v. Bedina,
1. +nvestigation any
matter concerning
public service9
2. 2e>uiring
operators to furnish
safe, ade>uate, and
proper service9
. 2e>uiring public
services to pay
e5penses of
investigation9
$. Caluation of
properties of public
utilities9
(. ?5amination and
test of measuring
appliances9
/. Grant of special
permits to ma3e e5tra
or special trips in
territories specified in
the certificate9
,. 6niform
accounting system and
furnishing of annual
reports9
0. Compelling
compliance with the
laws and regulations.
1/$ 1C2A /#
8NLAWF8L ACTS OF P8*LIC 8TILITY
COMPANIES
1. ?ngagement in public service business without
first securing the proper certificate9
2. Providing or maintaining unsafe, improper or
inade>uate service as determined by the proper
authority9
. Committing any act of unreasonable and unjust
preferential treatment to any particular person,
corporation or entity as determined by the proper
authority9
$. 2efusing or neglecting to carry public mail upon
re>uest. "1ecs. 10 and 18#
ACTS RE78IRING PRIOR APPRO#AL
1. ?stablish and maintain individual or joint rates9
2. ?stablish and operate new units9
. +ssue free tic3ets9
$. +ssue any stoc3 or stoc3 certificates representing
an increase of capital9
(. Capitali.e any franchise in e5cess of the amount
actually paid to the Government9
/. 1ell, alienate, mortgage or lease property,
certificates or franchise.
6nder 1ec. 27"g# of C.A. -o. 1$/, the sale, etc. may
be negotiated and completed before the approval by
the proper authority. +ts approval is not a condition
precedent to the validity of the contract. ;he approval
is necessary only to protect public interest.
PRIOR OPERATOR/OLD OPERATOR R8LE
;he rule allowing an e5isting franchised operator to
invo3e a preferential right within the authori.ed
territory as long as he renders satisfactory and
economical service.
;he policy is not to issue a certificate to a second
operator to cover the same field and in competition
with a first operator who is rendering sufficient,
ade>uate and satisfactory service. ;he prior operator
must first be given an opportunity to improve its
service, if inade>uate or deficient.
Purpose= ;o prevent ruinous and wasteful
competition in order that the interests of the public
would be conserved and preserved.
+t subordinates the prior applicant rule which gives
the first applicant priority only if things and
circumstances are e>ual.
&here the operator either fails or neglects to ma3e
the improvement or effect the increase in services,
especially when given the opportunity, new operators
should be given the chance to give the services
needed by the public.
PRIOR APPLICANT R8LE
Presupposes a situation when two interested
persons apply for a certificate to operate a public utility
in the same community over which no person has as
yet granted any certificate. +f it turns out, after the
hearing, that the circumstances between the two
applicants are more or less e>ual, then the applicant
who applied ahead of the other, will be granted the
certificate.
RATE'FI9ING POWER
;he rate to be fi5ed must be just, founded upon
conditions which are fair and reasonable to both the
owner and the public.
A rate is just and reasonable if it conforms to the
following re>uirements=
1. 4ne which yields to the carrier a fair return
upon the value of the property employed in
performing the service9 and
2. 4ne which is fair to the public for the service
rendered.
REGISTERED OWNER R8LE
;he registered owner of a certificate of public
convenience is liable to the public for the injuries or
damages suffered by third persons caused by the
operation of said vehicle, even though the same had
been transferred to a third person.
;he registered owner is not allowed to escape
responsibility by proving that a third person is the
actual and real owner Reason= +t would be easy for
him, by collusion with others or otherwise, to transfer
the responsibility to an indefinite person, or to one who
possesses no property with which to respond
financially for the damage or injury done. "?re.o, et al.
vs. Aepte 172 Phil 17#.
?A*IT SYSTEM
A system whereby a person who has been granted a
certificate of public convenience allows other persons
who own motor vehicles to operate under such
license, for a fee or percentage of such earnings. +t is
void and ine5istent under Art. 1$78, Civil Code.
Eff"cts:
1. ;he transfer, sale, lease or assignment of the
privilege granted is valid between the contracting
parties but not upon the public or third persons.
"Gelisan vs. Alday, 1($ 1C2A 00#
2. ;he registered owner is primarily liable for all the
conse>uences flowing from the operations of the
carrier.
;he public has the right to assume that the
registered owner is the actual or lawful owner
thereof. +t would be very difficult and often
impossible, as a practical matter, for the public to
enforce their rights of action that they may have
for injuries inflicted by the vehicle i) the4 should
be required to pro/e who the actual owner is.
":enedicto vs. +AC, 10, 1C2A ($,#
. ;he thrust of the law in enjoining the 3abit system
is to identify the person upon whom responsibility
may be fi5ed with the end in view of protecting
the riding public "%im vs. CA , 1C2A 8$#.
$. ;he registered owner cannot recover from the
actual owner and the latter cannot obtain transfer
of the vehicle to himself, both being in pari
delicto. ";eja Bar3eting vs. +AC#
(. !or the better protection of the public, both the
registered owner and the actual owner are jointly
and severally liable with the driver. "Kamboanga
;ransportation Co. vs. CA#

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