Jhgkhgkho

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.
Cla!"#a$!on%
1. Common or Private
2. Goods or Passengers
. !or a fee "for hire# or Gratuitous
$. %and, &ater'maritime, or Air
(. )omestic'inter*island'coastwise or
+nternational'foreign
+t is a relationship which is imbued with the
public interest.
COMMON CARRIER
Persons, corporations, ,rms or associations
engaged in the business of carrying or
transporting passengers or goods or both, by
land, water, or air, for compensation, o-ering
their services to the public "Art. 1.2, Civil
Code#.
Art. 1.2 of the /ew Civil Code avoids any
distinction between one whose principal
business activity is the carrying of persons or
goods or both and one who does such
carrying only as an ancillary activity
"sideline#. +t also avoids a distinction
between a person or enterprise o-ering
transportation service on a regular or
scheduled basis and one o-ering such service
on an occasional, episodic or unscheduled
basis.
/either does the law distinguish between
a carrier o-ering its services to the general
public that is the general community or
population and one who o-ers services or
solicits business only from a narrow segment
of the general population.
A person or entity is a common carrier
even if he did not secure a Certi,cate of
Public Convenience ")e Gu0man vs. CA, 112
3C4A 112#.
+t ma5es no distinction as to the means of
transporting, as long as it is by land, water or
air. +t does not provide that the
transportation should be by motor vehicle.
"!irst Philippine +ndustrial Corporation vs. CA#
6ne is a common carrier even if he has no
,7ed and publicly 5nown route, maintains no
terminals, and issues no tic5ets "Asia
%ighterage 3hipping, +nc. vs. CA#.
C&a'a#$e'!$!#%
1. 8nderta5es to carry for all people
indi-erently and thus is liable for
refusal without su9cient reason
"%astimoso vs. )oliente, 6ctober 2:,
1;11#<
2. Cannot lawfully decline to accept a
particular class of goods for carriage
to the prejudice of the tra9c in these
goods<
. /o monopoly is favored "=atangas
>rans. vs. 6rlanes, (2 P?+% $((#<
$. Provides public convenience.
PRI(ATE CARRIER
6ne which, without being engaged in the
business of carrying as a public employment,
underta5es to deliver goods or passengers for
compensation. "?ome +nsurance Co. vs.
American 3teamship Agency, 2 3C4A 2$#
TESTS W)ET)ER CARRIER IS COMMON
OR PRI(ATE%
>he 3C in !irst Philippine +ndustrial
Corporation vs. CA "1;;(# 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
occupation<
2. +t must underta5e to carry goods of
the 5ind to which its business in
con,ned<
. +t must underta5e to carry by the
method by which his business is
conducted and over its established
roads< and
$. >he transportation must be for hire.
+n /ational 3teel Corp. vs. CA "1;;.# the 3C
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 reAuired diligence
B7traordinary
diligence is reAuired
6rdinary diligence is
reAuired
. As to regulation
3ubject to 3tate
regulation
/ot subject to 3tate
regulation
$. 3tipulation limiting liability
Parties may not agree
on limiting the
carrierCs liability
e7cept when provided
by law
Parties may limit the
carrierCs liability,
provided it is not
contrary to law,
morals or good
customs
(. B7empting circumstance
Prove e7traordinary
diligence and Art.
1., /CC
caso fortuito, Art.
11.$ /CC
1.Presumption of negligence
>here is a
presumption of fault
or negligence
/o presumption of
fault or negligence
..Governing law
COMMERCIAL LAW COMMITTEE
C?A+4PB436/@ Garny %uisa Alegre A33>. C?A+4PB436/@ Dayson 6C3 4amos B)P@ =eatri7 +. 4amos 38=DBC> ?BA)3@
Earichelle )e Fera "/egotiable +nstruments %aw#< Dose !ernando %lave "+nsurance#< Aldrich )el 4osario
">ransportation %aws#<
3hirley Eae >abangcura, =on Fincent Agustin "Corporation %aw#< Garl 3teven Co "3pecial %aws#< Dohn %emuel
Gatdula "=an5ing %aws#< 4obespierre C8 "%aw on +ntellectual Property#
55
%aw on common
carriers
%aw on obligations
and contracts
GO(ERNING LAWS
A* Do+e$!#/!n$e',!land/#oa$w!e
Applicable to %and, &ater, and Air
transportation
1. Civil Code * primary
2. Code of Commerce "Arts. $;, .;,
(.*.$, (2:, 2:1*2$(# * suppletory
B* In$e'na$!onal/fo'e!gn/o-e'ea
.Fo'e!gn #o/n$'0 $o P&!l!11!ne2
Applicable to &ater'maritime and Air
transportation
>he law of the country of destination
generally applies.
1. Civil Code * primary
2. Code of Commerce * suppletory
. 6thers * suppletory
a. &ater'maritime@ Carriage of Goods
by 3ea Act "C6G3A#
b. Air@ &arsaw Convention
I* NEW CI(IL CODE
.A'$* 3456,34772
RE89IREMENT OF E:TRAORDINARY
DILIGENCE
4endition of service with the greatest s5ill
and utmost foresight. ")avao 3tevedore Co. v.
!ernande0#
Rationale:
1. !rom the nature of the business and
for reasons of public policy "Art.
1.#
2. 4elationship of trust
. =usiness is impressed with a special
public duty
$. Possession of the goods
(. Preciousness of human life
A common carrier is not an absolute insurer
of all ris5s of travel.
CO(ERAGE
1. Figilance over goods "Arts. 1.$*1.($#<
and
2. 3afety of passengers "Arts. 1.((*1.1#.
PASSENGER
A person who has entered into a contract of
carriage, e7press or implied, with the carrier.
>hey are entitled to e7traordinary diligence
from the common carrier.
>he following are not considered
passengers, and are entitled to ordinary
diligence only@
a. 6ne who has not yet boarded any
part of a vehicle regardless of
whether or not he has purchased a
tic5et<
b. 6ne who remains on a carrier for an
unreasonable length of time after he
has been a-orded every safe
opportunity to alight<
c. 6ne who has boarded by fraud,
stealth, or deceit<
d. 6ne who attempts to board a
moving vehicle, although he has a
tic5et, unless the attempt be with
the 5nowledge and consent of the
carrier<
e. 6ne who has boarded a wrong
vehicle, has been properly informed
of such fact, and on alighting, is
injured by the carrier<
f. +nvited guests and accommodation
passengers. "%ara vs. Falencia#
g. 6ne who rides any part of the
vehicle which is unsuitable or
dangerous or which he 5nows is not
designed or intended for passengers.
DEFENSES OF A COMMON CARRIER IN
T)E CARRIAGE OF GOODS
1. CA36 !64>8+>6'!64CB EADB84B
Re;/!!$e%
a. Eust be the pro7imate and only
cause of the loss
b. B7ercise of due diligence to prevent
or minimi0e the loss before, during or
after the occurrence of the disaster "Art.
1.;#
c. Carrier has not negligently incurred
in delay in transporting the goods "Art.
1.$:#
!ire is not considered a natural disaster or
calamity as it arises almost invariably from
some act of man. "Bastern 3hipping %ines +nc.
vs. +AC#
Eechanical defects are not force majeure if
the same was discoverable by regular and
adeAuate inspections. (Notes and Cases on
the Law on Transportation and Public Utilities,
Aquino, T. & ernando, R.P. !""# ed. p.$!"%
$!!&
2. AC>3 6! P8=%+C B/BEH
Re;/!!$e%
a. Eust be the pro7imate and only
cause of the loss
b. B7ercise of due diligence to prevent
or minimi0e the loss before, during or
after the act causing the loss,
deterioration or destruction of the goods
"Art. 1.;#
. /BG%+GB/CB 6! >?B 3?+PPB4 64 6&/B4
a. 3ole and pro7imate cause@ absolute
defense
b. Contributory@ partial defense. "Art.
1.$1#
$. C?A4AC>B4 6! >?B G66)3 64 )B!BC>3
+/ >?B PACG+/G 64 +/ >?B C6/>A+/B4
Bven if the damage should be caused by the
inherent defect'character of the goods, the
common carrier must e7ercise due diligence
to forestall or lessen the loss. "Art. 1.$2#
>he carrier which, 5nowing the fact of
improper pac5ing of the goods upon ordinary
observation, still accepts the goods
notwithstanding such condition, is not
relieved of liability or loss or injury resulting
therefrom. "3outhern %ines, +nc. v. CA, $ 3C4A
2(2#
(. 64)B4 64 AC> 6! P8=%+C A8>?64+>H
57
3aid public authority must have the power
to issue the order "Art. 1.$#. ConseAuently,
where the o9cer acts without legal process,
the common carrier will be held liable.
"Gan0on v. CA 111 3C4A 1$1#
)iligence in the selection and supervision
of employees under Article 212: 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 Auasi*
delicts under Art. 21.1. ")el Prado v. Eanila
Blectric Co., (2 Phil ;::#
LIABILITY OF A COMMON CARRIER FOR
DEAT) OR IN<9RIES TO PASSENGERS D9E
TO ACTS OF ITS EMPLOYEES AND OT)ER
PASSENGERS OR STRANGERS
FOR ACTS OF ITS
EMPLOYEES
FOR ACTS OF
OT)ER
PASSENGERS OR
STRANGERS
4eAuired diligence and defense
B7traordinary
diligence
6rdinary diligence
/ature of liability
>ort< however,
>he employee must
be on duty at the
time of the act.
"Earanan v. Pere0#
/ot absolute< limited
by Art. 1.1
>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 su-ered by the other
passengers. "E44 vs. =allesteros, 11 3C4A
1$1#
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS
Pa'$!e
1. Common carrier
2. 3hipper
. Consignee
1. Common carrier
2. Passenger
Ca/e of l!a=!l!$0
)elay in delivery, loss, destruction, or
deterioration of the goods
)eath or injury to the passengers
D/'a$!on of l!a=!l!$0
!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. 1.1#
+t remains in full force and e-ect 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. 1.2#
)elivery of goods to the custom authorities is
not delivery to the consignee. "%u )o v.
=inamira, 1:1 Phil 12:#
>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. "%4>A v. /avidad, I2::J#
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 Eallorca v. CA, 1. 3C4A .; <
Abioti0 3hipping Corporation v. CA, 1.; 3C4A
;(#
+t is the duty of common carriers of
passengers to stop their conveyances a
reasonable length of time in order to a-ord
passengers an opportunity to enter, and they
are liable for injuries su-ered from the sudden
starting up or jer5ing of their conveyances
while doing so. >he duty which the carrier of
passengers owes to its patrons e7tends to
persons boarding the cars as well as to those
alighting therefrom ")angwa >rans Co., +nc. vs.
CA 2:2 3C4A (.$#.
54
P'e/+1$!on of negl!gen#e
Art.1.( Civil Code
4eason@ As to when and how goods were
damaged in transit is a matter peculiarly within
the 5nowledge of the carrier and its employees.
"Eirasol v. )ollar, ( P?+% 12$#
Eere proof of delivery of goods to a carrier in
good order and the subseAuent arrival of the
same goods at the place of destination in bad
order ma5es for a prima facie case against the
carrier. "Coastwise %ighterage Corp. v. CA, 2$(
3C4A .;1#
Art.1.(( Civil Code
4eason@ >he contract between the passenger
and the carrier imposes on the latter the duty
to transport the passenger safely< hence the
burden of e7plaining should fall on the carrier.
Defene
1. 6rdinary circumstance@ B7ercise of
e7traordinary diligence "Art. 1.(#
2. 3pecial circumstances@
a. !lood, storm, earthAua5e, lighting,
or other natural disaster or
calamity "plus force majeure#
b. Act of the public enemy in war,
whether international or civil
c. Act or omission of the shipper or
the owner of goods
d. >he character of the goods or
defects in the pac5ing or in the
containers
e. 6rder or act of competent public
authority "Art. 1.$#
1. B7ercise of e7traordinary diligence
"Art. 1.(1#
2. Caso fortuito
(al!d $!1/la$!on
1. 4eduction of degree of diligence to ordinary
diligence, provided it be@
a# +n writing, signed by the shipper or
owner<
b# 3upported by a valuable consideration
other than the service rendered by the
carriers< and
c# 4easonable, just and not contrary to
public policy. "Art. 1.$$#
2. !i7ed amount of liability@ A contract ,7ing the
sum to be recovered by the owner or shipper for
the loss, destruction or deterioration of the
goods, if it is reasonable and just under the
circumstances and has been fairly and freely
agreed upon. "Art. 1.(:#
. %imited liability for delay@ An agreement
limiting the common carrierCs liability for delay
on account of stri5es or riots "Art. 1.$2#
$. 3tipulation limiting liability to the value of the
goods appearing in the bill of lading, unless the
shipper or owner declares a greater value. "Art.
1.$;#
>he diligence reAuired in the carriage of the
goods may be reduced by only one degree, from
e7traordinary to ordinary diligence or diligence
of a good father of a family. "Art. 1.$$, Art.
1.$(, no. $#
3tipulation limiting liability when a passenger is
carried gratuitously, but not for willful acts or
gross negligence. "Art. 1.(2#
(o!d $!1/la$!on
1. >hat the goods are transported at the ris5
of the owner or shipper<
2. >hat carrier will not be liable for any loss,
destruction or deterioration of the goods<
)ispensing with or lessening the e7traordinary
responsibility of a common carrier for the
safety of passengers imposed by law by
stipulation, by posting of notices, by
5>
. >hat the carrier need not observe any
diligence in the custody of the goods<
$. >hat the carrier shall e7ercise a degree of
diligence less than that of a good father of a
family over the movable transported<
(. >hat the carrier shall not be responsible for
the acts or omissions of his or its employees<
1. >hat the carrierCs liability for acts
committed by thieves or robbers who do not
act with grave or irresistible threat, violence or
force is dispensed with or diminished<
.. >hat the carrier is not responsible for the
loss, destruction or deterioration of the goods
on account of the defective condition of the
car, vehicle, ship or other eAuipment used in
the contract of carriage. "Art. 1.$(#
statements on tic5ets or otherwise. "Art. 1.(.#
R9LES ON PASSENGERS? BAGGAGE
IN T)E C9STODY OF
T)E PASSENGERS
.)AND,CARRIED2
IN T)E C9STODY
OF T)E COMMON
CARRIER
.C)EC@ED,IN2
Legal na$/'e of $&e =aggage
/ecessary deposit Considered as
KgoodsL
Re;/!'ed d!l!gen#e =0 $&e #o++on
#a''!e'
)iligence of a
depositary "ordinary
diligence#
B7traordinary
diligence
A11l!#a=le '/le
Arts. 1;;2 and 2:::*
2::
Arts. 1.*1.(
CONC9RRING CA9SES OF ACTION
ARISING FROM T)E NEGLIGENT ACT OF
T)E COMMON CARRIER
1. Culpa contractual "breach of contract#
6nly the carrier is primarily liable and not
the driver, because there is no privity
between the driver and the passenger.
=asis@ Art.1.(;, /CC.
/o defense of due diligence in the selection
and supervision of employees.
2. Culpa aquiliana "Auasi*delict#
>he carrier and driver are solidarily liable as
joint tortfeasors.
=asis@ Art. 212:, /CC.
)efense of due diligence in the selection
and supervision of employees is available.
B7ception@ 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. 1::, 4PC.
+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 ma5es no di-erence
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
Auasi*delict. "!abre vs. CA#
LIMITATIONS AS TO CARRIER?S LIABILITY
IN(ALID AS BEING
CONTRARY TO
P9BLIC POLICY
(ALID A
ENFORCEABLE
1. 6ne e7empting the
carrier from any and
all liability for loss or
damage occasioned by
its own negligence.
2. An unAuali,ed
limitation of liability to
an agreed valuation.
1. 6ne limiting the
liability of the carrier
to an agreed
valuation, unless the
shipper declares a
higher value and
pays a higher rate of
freight
"?.B. ?eacoc5
Company vs.
Eacondray M
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.
"3hewaram vs. PA%, 1. 3C4A 1:1#
SPECIAL R9LES ON LIABILITES OF
AIRLINE CARRIERS
1. +n case of Night diversion due to bad
weather or other circumstances beyond the
pilotCs 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 carrierCs
premises. >he carrier should necessarily
e7ercise e7traordinary diligence in
safeguarding the comfort, convenience and
safety of its stranded passengers until they
have reached their ,nal destination.
"Philippine Airlines vs. CA, 221 3C4A $2#
2. Bven where overboo5ing of passengers is
allowed as a commercial practice, the airline
company would still be guilty of bad faith and
still be liable for damages if it did not properly
inform passenger that it could breach the
contract of carriage even if they were
con,rmed passengers. "Oalamea vs. CA, 222
3C4A 2#
. An open*dated tic5et constitutes a
complete contract between the carrier and
passenger. ?ence, the airline company is
liable if it refused to con,rm a passengerCs
Night reservation. "3ingson vs. CA, 222 3C4A
1$;#
$. An airline company which issued a
con,rmed tic5et to a passenger covering
successive trips on di-erent airlines can be
held liable for damages occasioned by
Kbumping o-L by one of the successive
airlines. "%ufthansa German Airlines vs. CA,
22 3C4A 2;:#
(. An airline tic5et providing that carriage by
successive air carriers is to be regarded as a
Ksingle operationL is to ma5e the issuing
carrier liable for the tortuous conduct of the
other carrier. A printed provision in the tic5et
limiting liability only to its own conduct is not
enough to rebut that liability. "G%E 4oyal
)utch Airlines vs. CA, 1( 3C4A 2.#
II* CODE OF COMMERCE
A* O(ERLAND TRANSPORTATION
.A'$* 54B,54B2
A11l!#a=!l!$0
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. 6bligations of the carrier
. 4ight of abandonment
$. /otice of damage
(. Combined carrier agreement
BILL OF LADING
>he written ac5nowledgment of receipt of
goods and agreement to transport them to a
speci,c place to a person named or to his
order.
Rules:
1. +t is not indispensable for the creation of a
contract of carriage. "Compania Earitima vs.
+nsurance Company of /orth America, 12
3C4A 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 ma5ing a
claim for loss on the basis of said bill of
lading. "3ea*%and 3ervices +nc. vs. +AC#
$. >he right of a party to recover for loss of
shipment consigned to him under a bill of
lading drawn up only by and between the
shipper and the carrier, springs from either a
relation of agency between him and the
shipper, or his status as stranger in whose
favor some stipulation is made in said
contract, and who becomes a party thereto
when he demands ful,llment of that
stipulation. "Art. 111 "2#, "Eendo0a vs. PA%
+nc.#
(. Acceptance of the bill of lading without
dissent raises the presumption that all the
terms therein where brought to the
5nowledge of the shipper and agreed to by
him and, in the absence of fraud or mista5e<
he is estopped from thereafter denying that
he assented to such terms. (Notes and Cases
on the Law on Transportation and Public
Utilities, Aquino, T. & ernando, R.P. !""# ed.
p.!0$&
@!nd%
1. 1n board * issued when the goods
have been actually placed aboard the
ship with very reasonable e7pectation
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.
$. Non%ne,otiable * 6ne in which it is
stated that the goods referred to
therein will be delivered to a speci,ed
person.
(. Clean 2 6ne which does not indicate
any defect in the goods.
1. 3oul P 6ne which contains a notation
thereon indicating that the goods
covered by it are in bad condition.
.. 'pent P 6ne which covers goods that
already have been delivered by the
carrier without a surrender of a signed
copy of the bill.
2. Throu,h P 6ne issued by the carrier
who is obliged to use the facilities of
other carriers as well as his own
facilities for the purpose of
transporting the goods from the city of
the seller to the city of the buyer,
which bill of lading is honored by the
second and other interested carriers
who do not issue their own bills.
;. Custod4 P 6ne wherein the goods are
already received by the carrier but the
vessel indicated therein has not yet
arrived in the port.
1:. Port P 6ne which is issued by the
carrier to whom the goods have been
delivered, and the vessel indicated in
the bill of lading by which the goods
are to be shipped is already in the port
where the goods are held for shipment.
F/n#$!on%
1. =est evidence of the e7istence of the
contract of carriage of cargo "Art. (#
2. )ocument of title
. 4eceipt of cargo
$. Contract to transport and deliver goods
as stipulated
(. 3ymbol of the goods
OBLIGATIONS OF T)E CARRIER
A* D/$0 $o a##e1$ $&e good
56N6RAL RUL6: A common carrier cannot
ordinarily refuse to carry a particular class of
goods.
67C6PT81N: !or some su9cient reason the
discrimination against the tra9c in such
goods is reasonable and necessary. "!isher vs.
Hangco 3teamship Co. 1 Phil 1#.
+nstances when the carrier may validly
refuse to accept the goods include the -@
1.# Goods sought to be transported are
dangerous objects, or substances including
dynamite and other e7plosives
2.# Goods are un,t for transportation
.# Acceptance would result in overloading
$.# Contrabands or illegal goods
(.# Goods are injurious to health
1.# Goods will be e7posed to untoward danger
li5e Nood, capture by enemies and the li5e
..# Goods li5e livestoc5 will be e7posed to
disease
2.# 3tri5e
;.# !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
e7empted 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 ta5es the ris5 of delivering it in good
condition as when it was loaded. "PA% vs. CA#
B* D/$0 $o del!-e' $&e good
/ot only to transport the goods safely but to
the person indicated in the bill of lading. >he
goods should be delivered to the consignee or
any other person to whom the bill of lading
was validly transferred or negotiated.
T!+e of del!-e'0
S$!1/la$ed !n
Con$'a#$/B!ll of
Lad!ng
No $!1/la$!on
1. Carrier is bound to
ful,ll the contract
and is liable for any
delay< no matter
from what cause it
may have arisen.
1. &ithin a
reasonable time.
2. Carrier is bound to
forward them in the
1
st
shipment of the
same or similar
goods which he may
ma5e to the point of
delivery. "A4>. (2
Code of Commerce#
ECe#$ of dela0
a. Eerely suspends and generally does not
terminate the contract of carriage
b. Carrier remains duty bound to e7ercise
e7traordinary diligence
c. /atural disaster shall not free the carrier
from responsibility "Art.1.$:#
d. +f delay is without just cause, the
contract limiting the common carrierCs liability
cannot be availed of in case of loss or
deterioration of the goods "Art.1.$.#
RIG)T OF CONSIGNEE TO ABANDON
GOODS
In$an#e%
1. Partial non*delivery, where the goods are
useless without the others "Art. 1#<
2. Goods are rendered useless for sale or
consumption for the purposes for which they
are properly destined "Art. 1(#< and
. +n case of delay through the fault of the
carrier "Art. .1#.
NOTICE OF DAMAGE .ART* 5772
Re;/!!$e fo' a11l!#a=!l!$0%
1. )omestic'inter*island'coastwise
transportation
2. %and'water'air transportation
. Carriage of goods
$. Goods shipped are damaged
R/le%
a. Patent damage@ shipper must ,le a claim
against the carrier immediately upon
delivery "it may be oral or written#
b. %atent damage@ shipper should ,le a claim
against the carrier within 2$ hours from
delivery.
No$e% >hese rules does not apply to
misdelivery of goods. "4oldan vs. %im Pon0o#
Purpose o) notice: >o inform the carrier that
the shipment has been damaged, and it is
charged with liability therefore, and to give it
an opportunity to ma5e an investigation and
,7 responsibility while the matter is fresh.
>he ,ling of notice of claim is a condition
precedent for recovery.
3horter period may be stipulated by the
parties because it merely a-ects the
shipperCs remedy and does not a-ect the
liability of the carrier. "P?+%AEGB/ vs.
3weetlines, +nc.#
P'e#'!1$!-e Pe'!od
/ot provided by Article 11. >hus, in such
absence, Civil Code rules on prescription
apply.
+f despite the notice of claim, the carrier
refuses to pay, action must be ,led in court.
1. /o bill of lading was issued@
within 7 0ea'
2. =ill of lading was issued@
within 3D 0ea'*
ARTICLE 577 COGSA Se#*5 .72
A11l!#a=!l!$0
1. )omestic'inter*
island'coastwise
transportation
2. %and, water, air
transportation
. Carriage of goods
1. +nternational'
overseas'foreign
"from foreign
country to Phils.#
/ote@ subject to the
rule on Paramount
Clause
2. &ater'maritime
transportation
. Carriage of goods
No$!#e of da+age
1. Condition
precedent
2. 2$*hour period for
claiming latent
damage
1. /ot a condition
precedent
2. *day period for
claiming latent
damage
P'e#'!1$!-e 1e'!od
/one provided< Civil
Code applies.
6ne 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#.
COMBINED CARRIER AGREEMENT .ART*
5452
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 ma5es itself liable assuming
the obligations and acAuiring as well the
rights and causes of action of those which
preceded it.
6* M
A
R
I
T
I
M
E
C
O
M
M
E
R
C
E
.A'$* 545,>7B2
IMPORTANT CONCEPTS%
1. Eerchant vessel
2. Earitime lien and Preference of
Credit
. )octrine of limited liability
$. Causes of revocation of voyage
(. Participants in maritime commerce
1. Charter party
.. %oans on bottomry and respondentia
2. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
+t is the system of laws which particularly
relates to the a-airs 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.!:#&
Earitime 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>3+ vs.
Prudential Guarantee, 2: 3C4A 2$$#
C)ARACTERISTICS OF MARITIME
TRANSACTION
1. Real * similar to transactions over real
property with respect to e-ectivity against
third persons which is done through
registration. "4ubiso vs. 4ivera, . 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
money< and 2# the right to retain the cargo
and embargo and detention of the vessel
"%u0on 3tevedoring Corp v. CA, 1(1 3C4A
11;#<
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 con,ned to the
vessel, which stands as the guaranty for their
settlement. "Aboiti0 3hipping Corp. vs.
General Accident !ire and %ife Assurance
Corp. 21. 3C4A (;#.
MERC)ANT (ESSEL
Fessel 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 acAuired
and transferred by any of the means
recogni0ed by law. >hey shall continue to be
considered as personal property. "Arts. (.,
(2(#
>hey are susceptible to (ariti(e liens such
as for the repair, eAuipping 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. "3hip Eortgage )ecree of 1;.2#
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,
. 3C4A 21#
+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, . 3C4A 21#
ORDER OF PREFERENCE IN CASE OF SALE
OF (ESSEL
R*A* 73D7 P*D* 3563
ECe#$!-!$0 da$e
1;1; 1;.2
A11l!#a=!l!$0
6verseas shipping
only
=oth domestic and
overseas shipping
@!nd of ale
Dudicial Dudicial and
e7trajudicial
O'de' of P'efe'en#e
A preferred
mortgage shall have
priority over all
claims against the
vessel, e7cept the
following
preferences in the
order stated@
1. Dudicial costs of
the proceedings<
2. >a7es due the
Philippine
Government<
. 3alaries and
wages of the
Captain and Crew of
the vessel during its
last voyage<
$. General average
or salvage including
contract salvage,
bottomry loans, and
indemnity due
>he preferred
mortgage lien shall
have priority over all
claims against the
vessel, e7cept the
following
preferences in the
order stated@
1. B7penses and
fees allowed and
costs ta7ed by the
court and ta7es due
to the Government<
2. CrewCs wages<
. General average<
$. 3alvage, including
contract salvage<
(. Earitime liens
arising prior in time
to the recording of
the preferred
mortgage<
1. )amages arising
shippers for the
value of goods
transported but
which were not
delivered to the
consignee<
(. Costs of repair
and eAuipment of
the vessel, and
provisioning of food,
supplies and fuel
during its last
voyage< and
1. Preferred
mortgages
registered prior in
time.
out of tort< and
.. Preferred
mortgage registered
prior in time.
B-ect of sale@ All pre*e7isting claims in the
vessel are terminated. >hey will then be
satis,ed from the proceeds of the sale subject
to the order of preference.
DOCTRINE OF LIMITED LIABILITY
.)YPOT)ECARY R9LE2
Cases where applicable@
1. Art. (2. P civil liability for
indemnities to third persons
2. Art. (;: P indemnities from negligent
acts of the captain "not the
shipowner or ship agent#
. Art. 2. P collision
$. Art. 1$ P liability for wages of the
captain and the crew and for
advances made by the ship agent if
the vessel is lost by shipwrec5 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 e7tinguished.
"%u0on 3tevedoring v. Bscano, 1(1 3C4A 11;#
>he interest e7tends to@ 1# the vessel itself< 2#
eAuipments< # freightage< and $# insurance
proceeds. "Chua v. +AC, 111 3C4A 12#
67C6PT81N':
1. Claims under &or5menCs Compensation
"Abueg vs. 3an )iego .. Phil .:#<
2. +njury or damage due to shipowner or to
the concurring negligence of the
shipowner and the captain<
. >he vessel is insured "FasAue0 vs. CA 12
3C4A ((#.
$. B7penses for repair on vessel completed
before loss<
(. +n case there is no total loss and the
vessel is not abandoned<
1. Collision between two negligent vessels<
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 "%u0on
3tevedoring vs. CA 1(1 3C4A 11;#.
RIG)T OF S)IPOWNER OR S)IP AGENT
TO ABANDON (ESSEL
+nstances@
1. +n case of civil liability from indemnities to
third persons "Art. (2.#<
2. +n case of lea5age of at least Q of the
contents of a cargo containing liAuids "Art.
12.#< and
. +n case of constructive loss of the vessel
"3ec. 12, +nsurance Code#.
RIG)T OF ABANDONMENT
S)IPOWNER OR
S)IP AGENT
CONSIGNEE
W&a$ +a0 =e a=andoned
Fessel Goods shipped
In$an#e
1. +n case of civil
liability from
indemnities to third
persons "Art. (2.#<
2. 3ec. 12,
+nsurance Code<
. +n case of lea5age
of at least Q of the
contents of a cargo
containing liAuids
"Art. 12.#
1. Partial non*
delivery, where the
goods are useless
without the others
"Art. 1#<
2. Goods are
rendered useless for
sale or consumption
for the purposes for
which they are
properly destined
"Art. 1(#< and
. +n case of delay
through the fault of
the carrier "Art.
.1#.
ECe#$
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
mar5et value of the
goods at the point of
destination.
CA9SES OF RE(OCATION OF (OYAGE
1. &ar or interdiction of commerce<
2. =loc5ade<
. Prohibition to receive cargo at
destination<
$. Bmbargo<
(. +nability of the vessel to navigate. "Art.
1$:#
Te'+%
1. +nterdiction of commerce P A
governmental prohibition of commercial
intercourse intended to bring about an
entire cessation for the time being of all
trade whatever.
2. =loc5ade P A sort of circumvallation of a
place by which all foreign connection and
correspondence is, as far as human
power can e-ect it, to be cut o-.
. Bmbargo P 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. 3hipowners and ship agents
=. Captains and masters of the vessel
C. 69cers and crew of the vessel
). 3upercargoes
B. Pilot
A* S)IPOWNERS AND S)IP AGENTS
S&!1owne' .1'o1'!e$a'!o2
Person who has possession, control and
management of the vessel and the
conseAuent right to direct her navigation and
receive freight earned and paid, while his
possession continues.
S&!1 agen$ .na-!e'o2
Person entrusted with provisioning and
representing the vessel in the port in which it
may be found< also includes the shipowner.
/ot a mere agent under civil law< he is
solidarily liable with the ship owner.
Powers and functions@
1. Capacity to trade<
2. )ischarge duties of the captain, subject
to Art.1:;<
. Contract in the name of the owners with
respect to repairs, details of eAuipment,
armament, provisions of food and fuel,
and freight of the vessel, and all that
relate to the reAuirements of navigation<
$. 6rder a new voyage, ma5e a new charter
or insure the vessel after obtaining
authori0ation from the shipowner or if
granted in certi,cate of appointment.
C!-!l L!a=!l!$!e of $&e S&!1owne' And
S&!1 Agen$
1. All contracts of the captain, whether
authori0ed or not, to repair, eAuip and
provision the vessel< "Art. (21#
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. (2.#
D/$0 of S&!1 Agen$ $o D!#&a'ge $&e
Ca1$a!n and Me+=e' of $&e C'ew
+f the seamen contract is not for a de,nite
period or voyage, he may discharge them at
his discretion. "Art. 1:#
+f for a de,nite period, he may not discharge
them until after the ful,llment of their
contracts, e7cept on the following grounds@
a. +nsubordination in serious matters<
b. 4obbery<
c. >heft<
d. ?abitual drun5enness<
e. )amage caused to the vessel or to
its cargo through malice or manifest or
proven negligence. "Art. 1:(#
B* 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 si0e
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 shipowner<
2. >echnical director of the vessel<
. 4epresentative of the government of
the country under whose Nag he
navigates.
Ruali,cations@
1. !ilipino citi0en<
2. %egal capacity to contract<
. Eust have passed the reAuired
physical and mental e7aminations
reAuired for licensing him as such.
"Art. 1:;#
+nherent powers@
1. Appoint crew in the absence of ship
agent<
2. Command the crew and direct the
vessel to its port of destination<
. +mpose correctional punishment on
those who, while on board vessel,
fail to comply with his orders or are
wanting in discipline<
$. Ea5e contracts for the charter of
vessel in the absence of ship agent.
(. 3upply, eAuip, and provision the
vessel< and
1. 6rder repair of vessel to enable it to
continue its voyage. "Art. 11:#
3ources of funds to comply with the inherent
powers of the captain "in successive order#@
1. !rom the consignee of the vessel<
2. !rom the consignee of the cargo<
. =y drawing on the ship agent<
$. =y a loan on bottomry<
(. =y sale of part of the cargo. "Art.
111#
)uties@
1. =ring on board the proper certi,cate
and documents and a copy of the
Code of Commerce<
2. Geep a %og =oo5, Accounting =oo5
and !reight =oo5<
. B7amine the ship before the voyage<
$. 3tay on board during the loading and
unloading of the cargo<
(. =e on dec5 while leaving or entering
the port<
1. Protest arrivals under stress and in
case of shipwrec5<
.. !ollow instructions of and render an
accounting to the ship agent<
2. %eave the vessel last in case of
wrec5<
;. ?old in custody properties left by
deceased passengers and crew
members<
1:. Comply with the reAuirements of
customs, health, etc. at the port of
arrival<
11. 6bserve rules to avoid collision<
12. )emand a pilot while entering or
leaving a port. "Art. 112#
A shipCs captain must be accorded a
reasonable measure of discretionary authority
to decide what the safety of the ship and of
its crew and cargo speci,cally reAuires on a
stipulated ocean voyage "+nter*6rient
Earitime Bnterprises +nc. vs. CA#.
/o liability for the following@
1. )amages caused to the vessel or to
the cargo by force majeure<
2. 6bligations contracted for the repair,
eAuipment, and provisioning of the
vessel unless he has e7pressly
bound himself personally or has
signed a bill of e7change or
promissory note in his name. "Art.
12:#
Sol!da'0 L!a=!l!$!e of $&e S&!1
Agen$/S&!1owne' fo' A#$ Done =0 $&e
Ca1$a!n $owa'd Paenge' and
Ca'goe
1. )amages to vessel and to cargo due
to lac5 of s5ill and negligence<
2. >hefts and robberies of the crew<
. %osses and ,nes for violation of laws<
$. )amages due to mutinies<
(. )amages due to misuse of power<
1. !or deviations<
.. !or arrivals under stress<
2. )amages due to non*observance of
marine regulations. "Art. 112#
C* OFFICERS AND CREW
1. 3ailing Eate'!irst Eate
2. 3econd Eate
. Bngineers
$. 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 occurs<
2. +f a disease brea5s out and be o9cially
declared an epidemic in the port of
destination<
. +f the vessel should change owner or
captain. "Art. 1$.#
Sa!l!ng Ma$e/F!'$ Ma$e
3econd chief of the vessel who ta5es the
place of the captain in case of absence,
sic5ness, or death and shall assume all of his
duties, powers and responsibilities. "Art. 12.#
)uties@
1. Provide himself with maps and
charts with astronomical tables
necessary for the discharge of his
duties<
2. Geep the =innacle =oo5<
. Change the course of the voyage on
consultation with the captain and the
o9cers of the boat, following the
decision of the captain in case of
disagreement<
$. 4esponsible for all the damages
caused to the vessel and the cargo
by reason of his negligence. "Arts.
122 * 11#
Se#ond Ma$e
>a5es command of the vessel in case of the
inability or disAuali,cation 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
vessel<
2. Arrange well the cargo<
. )iscipline the crew<
$. Assign wor5 to crew members<
(. +nventory the rigging and eAuipment
of the vessel, if laid up. "Art. 12#
Eng!nee'
69cers of the vessel but have no authority
e7cept 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 engines<
2. Geep the engines and boilers in good
condition<
. /ot to change or repair the engine
without authority of the captain<
$. +nform the captain of any damage to
the motor apparatus<
(. Geep an Bngine =oo5<
1. 3upervise all personnel maintaining
the engine. "Art. 12#
C'ew
>he aggregate of seamen who man a ship,
or the shipCs 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 ta5e in foreigners, but not e7ceeding 1'(
of the crew. "Art. 1$#
Clae of Sea+an? Con$'a#$
1. =y the voyage<
2. =y the month< and
. =y share of pro,ts or freightage.
</$ Ca/e fo' $&e D!#&a'ge of Sea+an
W&!le Con$'a#$ S/=!$
1. Perpetration of a crime<
2. 4epeated insubordination, want of
discipline<
. 4epeated incapacity and negligence<
$. ?abitual drun5enness<
(. Physical incapacity<
1. )esertion. "Art. 1.#
R/le !n #ae of Dea$& of a Sea+an
>he seamanCs 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 out< and full, if on
voyage in
c. if by shares * none, if before
departure< full, if after departure
2. if death is due to defense of vessel * full
payment<
. if captured in defense of vessel * full
payment<
$. if captured due to carelessness * wages
up to the date of the capture. "Art. 1$(#
Co+1le+en$ of $&e (eel
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, sto5ers
and other employees on board not having
speci,c designations.
)oes not include the passengers or the
persons whom the vessel is transporting.
D* S9PERCARGOES
Persons who discharges administrative
duties assigned to him by ship agent or
shippers, 5eeping an account and record of
transaction as reAuired in the accounting
boo5 of the captain. "Art. 1$;#
E* PILOT
A person duly Auali,ed, and licensed, to
conduct a vessel into or out of ports, or in
certain waters.
>he term generally connotes a person ta5en
on board at a particular place for the purpose
of conducting a ship through a river, road or
channel, or from a port.
Easter pro hac /ice for the time being in the
command and navigation of the ship.
&hile in e7ercising 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 into7icated "!ar
Bastern 3hipping Company vs. CA#.
Compulsory Pilotage P 3tates possessing
harbors have enacted laws or promulgated
rules reAuiring vessels approaching their
ports to ta5e 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&
L!a=l!$0 of P!lo$
56N6RAL RUL6@ 6n 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 e7ercised
prudence and e7tra diligence to prevent or
minimi0e damages.
2. Countermand or overrule by the master of
the vessel in which case the registered owner
of the vessel is liable. "3ec.11, Art.+++ PPA
Admin 6rder :*2(#
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
1. Earine insurance
C)ARTER PARTY
A contract by virtue of which the owner or
agent binds himself to transport merchandise
or persons for a ,7ed price.
A contract by which an entire ship, or some
principal part thereof is let'leased by the
owner to another person for a speci,ed time
or use. "Planters Products, +nc. vs. CA, 221
3C4A $.1#
Pa'$!e%
1. 3hip owner or ship agent
2. Charterer
Clae%
1. =areboat or demise P >he charterer
provides crew, food and fuel. >he charterer is
liable as if he were the owner, e7cept 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 conseAuent
control over the vesselCs navigation, including
the master and the crew, who thereby
become the charterCs 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 e7pense of the voyage and
the wages of the seamen.
2. Contract of A-reightment E 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.
Ginds@
a. >ime charter P vessel is chartered for
a ,7ed period of time or duration of
voyage.
b. Foyage or trip charter P 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 de,nite
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
5nows of the
e7istence of the
lease, the new owner
must respect the
>he new owner is not
compelled to respect
the charter party so
long as he can load
the vessel with his
own cargo. "Art. 12;#
lease.
Civil law concept Commercial law
concept
C)ARTER PARTY BILL OF LADING
An entire or complete
contract.
Eore li5e a private
receipt which the
captain gives to
accredit goods
received from
persons
Consensual contract 4eal contract
BAREBOAT OR
DEMISE C)ARTER
CONTRACT OF
AFFREIG)TMENT
.TIME OR (OYAGE
C)ARTER2
Charterer becomes
liable to others
caused by its
negligence
6wner 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.
6wner of vessel
relinAuishes
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. 6wner 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.1.;#
. 3hip agent if authori0ed by the
owner's or given such power in the
certi,cate of appointment. "Art.(;2#
$. 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 latterCs interests.
"Art.1:;#
RE89ISITES OF A (ALID C)ARTER PARTY
1. Consent of the contracting parties
2. B7isting vessel which should be
placed at the disposition of the
shipper
. !reight
$. Compliance with Art. 1(2 of the
Code of Commerce
Cla/e W&!#& Ma0 Be In#l/ded In a
C&a'$e' Pa'$0
<aon #la/e Cla/e 1a'a+o/n$
o' 1a'a+o/n$
#la/e
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
Durisprudence, Dustice
Dose Fitug, 1;;. ed.#
A clause in a charter
party providing that
the C6G3A shall
apply, even though
the transportation is
domestic, subject to
the e7tent that any
term of the bill of
lading is repugnant to
the C6G3A or
applicable law, then
to the e7tent thereof
the provision of the
bill of lading is void.
"Pandect of
Commercial %aw and
Durisprudence, Dustice
Dose Fitug, 1;;. ed.#
R!g&$ and O=l!ga$!on of Pa'$!e
S)IPOWNER OR
S)IP AGENT
C)ARTERER
1. +f the vessel is
chartered wholly, not
to accept cargo from
others<
2. >o observe
represented capacity<
. >o unload cargo
clandestinely placed
$. >o substitute
another vessel if load
is less than '( of
capacity<
(. >o leave the port
if the charterer does
not bring the cargo
within the lay days
and e7tra lay days
allowed<
1. >o place in a
vessel in a condition
to navigate<
.. to bring cargo to
nearest neutral port
in case of war or
bloc5ade. "Arts. 11;*
1.2#
1. >o pay the
agreed charter price<
2. >o pay
freightage on
unboarded cargo<
. >o pay losses to
others for loading
uncontracted cargo
and illicit cargo<
$. >o wait if the
vessel needs repair<
(. >o pay e7penses
for deviation. "Arts.
1.;*12.#
Re#!!on of a C&a'$e' Pa'$0
A$
#&a'$e'e'?
'e;/e$
.A'$ 7>>2
A$
&!1owne'?
'e;/e$
.A'$* 7>B2
Fo'$/!$o/
#a/e
.A'$* 7BD2
1. =y 1. +f the e7tra 1. &ar or
abandoning
the charter
and paying
half of the
freightage<
2. Brror in
tonnage or
Nag<
. !ailure to
place the
vessel at the
chartererCs
disposal<
$. 4eturn of
the vessel
due to
pirates,
enemies or
bad weather<
(. Arrival at a
port for
repairs.
lay days
terminate
without the
cargo being
placed
alongside the
vessel<
2. 3ale by
the owner of
the vessel
before
loading by
the
charterer<
interdiction
of commerce<
2. =loc5ade<
. Prohibition
to receive
cargo<
$. Bmbargo<
and
(. +nability of
the vessel to
navigate.
Te'+%
1. Primage * bonus to be paid to the captain
after the successful voyage.
2. )emurrage P the sum ,7ed 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 P the amount paid by or
recoverable from a charterer of a ship for
the portion of the shipCs capacity the
latter contracted for but failed to occupy.
$. %ay )ays * days allowed to charter
parties for loading and unloading the
cargo.
(. B7tra %ay )ays E days which follow after
the lay days have elapsed.
9S9AL FORMS OF CONS9MMATING
CONTRACTS
1. C.+.!. P cost, insurance and freight<
2. !.6.=. * free on board<
. !.A.3. * free alongside ship< and
$. C. M !. * cost and freight.
TRANSS)IPMENT OF GOODS
>he act of ta5ing cargo out of one ship and
loading it in another, or the transfer of goods
from the vessel stipulated in the contract of
a-reightment 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 e7cuse, 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 e7cepted. "Eagellan
Eanufacturing vs. CA, 2:1 3C4A 1:2#
LOAN ON BOTTOMRY 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
e7posed to maritime ris5s, 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
BOTTOMRY
LOAN ON
RESPONDENTIA
)e,nition
%oan made by
shipowner or ship
agent guaranteed
by vessel itself and
repayable upon
arrival of vessel at
destination. "Art.
.1;#
%oan ta5en on
security of the cargo
laden on a vessel,
and repayable upon
safe arrival of cargo
at destination. "Art.
.1;#
&ho may contract
3hipowner or ship
agent. 6utside of
the residence of the
owners * the
captain.
6nly the owner of
the cargo.
Common elements@
1. B7posure of security to marine peril<
2. 6bligation 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 bro5er ta5ing part therein
. Private instrument "Art. .2:#
Contents@
1. Gind, name and registry of the vessel<
2. /ame, surname and domicile of the
captain<
. /ames, surnames and domiciles of the
borrower and the lender<
$. Amount of the loan and the premium
stipulated<
(. >ime for repayment<
1. Goods pledged to secure repayment<
.. Foyage during which the ris5 is run
"Art..21#
BOTTOMRY/
RESPONDENTIA
ORDINARY LOAN
.M9T99M2
/ot subject to 8sury
%aw
3ubject to 8sury
%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 ,rst lender is a
preferred creditor
W)EN LOAN ON BOTTOMRY 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. "A4>..21#
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. "A4>..2.#
. +f the e-ects on which the money is
ta5en is not subjected to any ris5.
"A4>..2;#
No$e@ 8nder e7isting laws, the parties to a
loan, whether ordinary or maritime, may
agree on any rate of interest. "C= Circular
;:(#
MARINE INS9RANCE LOAN ON
BOTTOMRY 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 ris5
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
e7tinguished
Consensual contract 4eal contract
)01o$&e#a'0 Na$/'e of Bo$$o+'0/
Re1onden$!a
56N6RAL RUL6: >he obligation of the
borrower to pay the loan is e7tinguished 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 defect<
2. %oss due to the barratry on the part of
the captain<
. %oss due to the fault or malice of the
borrower<
$. >he vessel was engaged in contraband<
and
(. >he cargo loaded on the vessel be
di-erent in from that agreed upon.
Con#/''en#e of Ma'!ne In/'an#e and
Loan on Bo$$o+'0/Re1onden$!a
1. >he insurable interest of the owner
of a ship hypothecated by bottomry
is only the e7cess of the value over
the amount secured by bottomry.
"3ec. 1:1, +nsurance Code#
2. >he value of what may be saved in
case of shipwrec5 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 e7cess is insurable, since a loan on
bottomry parta5es of the nature li5ewise of an
insurance coverage to the e7tent 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 8nder 3tress
. Collision
$. 3hipwrec5
A(ERAGE
An e7traordinary or accidental e7pense
incurred during the voyage in order to
preserve the cargo, vessel or both, and all
damages or deterioration su-ered 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. 2:1#
>he person whose property has been saved
must contribute to reimburse the damage
caused or e7pense incurred if the situation
constitutes general average.
Classes@
1. Particular or 3imple Average
2. Gross or General Average
&here both vessel and cargo are saved, it
is general average< where only the vessel or
only the cargo is saved, it is particular
average.
B7penses incurred to reNoat 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. Eagsaysay, +nc. vs. Agan,
G.4./o. %*1;, Dan. 1, 1;((#
PARTIC9LAR OR
SIMPLE
GROSS OR
GENERAL
De"n!$!on
)amages or e7penses
caused to the vessel
or cargo that did not
inure to the common
bene,t, and borne by
respective owners.
"Art. 2:;#
)amages or
e7penses
deliberately caused
in order to save the
vessel, its cargo or
both from real and
5nown ris5. "Art.
211#
Re;/!!$e
1. common
danger<
2. deliberate
sacri,ce<
. success<
$. proper
formalities and
legal steps.
L!a=!l!$0
>he owner of the
goods which gave
rise to the e7pense or
su-ered the damage
shall bear this
average. "Art. 21:#
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.
212#
>he insurers
"Art.2(;# and
lenders on bottomry
and respondentia
shall li5ewise
contribute.
"Art..2#.
N/+=e' of !n$e'e$ !n-ol-ed
6nly one interest
involved
3everal interests
involved
S&a'e !n $&e da+age o' eF1ene
1::S share +n proportion to the
value of the ownerCs
property saved
R!g&$ $o 'e#o-e'
/o reimbursement >here may be
reimbursement
@!nd .no$ eF#l/!-e2
Art. 2:; Art. 211
P'o#ed/'e fo' 'e#o-e'0
1. Assembly and
deliberation
2. 4esolution of the
captain
. Bntry of the
resolution in the
logboo5
$. )etailed minutes
(. )elivery of the
minutes to the
maritime judicial
authority of the ,rst
port, within 2$ hours
from arrival,
1. 4ati,cation by
captain under oath.
"Arts. 21*21$#
GOODS NOT CO(ERED BY GENERAL
A(ERAGE E(EN IF SACRIFICED
1. Goods carried on dec5. "A4>.2((#
2. Goods not recorded in the boo5s or
records of the vessel. "A4>.2(( "2##
. !uel for the vessel if there is more
than su9cient fuel for the voyage.
"4ule +T, Hor5*Antwerp 4ule#
<e$$!on
Act of throwing cargo overboard in order to
lighten the vessel.
6rder of goods to be cast overboard@
1. >hose which are on the dec5,
preferring the heaviest one with the
least utility and value<
2. >hose which are below the upper
dec5, beginning with the one with
greatest weight and smallest value.
"Art. 21(#
Dettisoned goods are not res nullius nor
deemed KabandonedL 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,, $--. ed.&
+n order that the jettisoned goods may be
included in the gross or general average, the
e7istence of the cargo on board should be
proven by means of the bill of lading. "Art.
211#
Yo'G,An$we'1 .Y,A2 R/le on De$e'+!n!ng
L!a=!l!$0 fo' A-e'age W!$& Rega'd To
De#G Ca'go
1. )ec5 cargo is allowed only in
domestic'coastwise'inter*island shipping, and
is prohibited in international'overseas'foreign
shipping.
2. +f dec5 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 H*A 4ules.
. +f dec5 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.
4eason@ +n domestic shipping, voyages are
usually short and the seas are generally not
rough. +n overseas shipping, the vessel is
e7posed for many days to perils of the sea.
DOMESTIC INTERNATIONAL
)ec5 cargo is allowed )ec5 cargo is not
allowed
&ith shipperCs consent
General average Particular average
&ithout shipperCs consent
Captain is liable Captain is liable
ARRI(AL 9NDER STRESS .ARRIBADA2
>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&en
lawf/l
W&en
/nlawf/l
W&o =ea'
eF1ene%
>he inability
to continue
voyage is
due to lac5
of provisions,
well*founded
fear of
sei0ure,
privateers,
pirates, or
accidents of
the sea
1. %ac5 of
provisions
due to
negligence to
carry
according to
usage and
customs<
2. 4is5 of
enemy not
well 5nown or
manifest
>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
disabling it
to navigate.
"Art. 21;#
. )efect of
vessel due to
improper
repair< and
$. Ealice,
negligence,
lac5 of
foresight or
s5ill of
captain. "Art.
22:#
lawful arrival.
"Art. 221#
+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 ris5 of enemies, there must
,rst be an assembly before departure. "Art.
22(#
3teps@
1. Captain should determine during the
voyage if there is well founded fear
of sei0ure, privateers and other valid
grounds<
2. Captain shall assemble the o9cers
and summon the persons interested
in the cargo who may attend the
meeting but without a right to vote<
. >he o9cers shall determine and
agree if there is well*founded reason
after e7amining the circumstances.
>he captain shall have the deciding
vote<
$. >he agreement shall be drafted and
the proper minutes shall be signed
and entered in the log boo5<
(. 6bjections and protests shall
li5ewise be entered in the minutes.
COLLISION
+mpact of two vessels both of which are
moving.
All!!on
+mpact between a moving vessel and a
stationary one.
Na/$!#al R/le $o De$e'+!ne Negl!gen#e
1. &hen two vessels are about to enter a
port, the farther one must allow the
nearer to enter ,rst< 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.
$. >he vessel which leaves later is
presumed to have collided against one
which has left earlier.
(. >here is a presumption against the vessel
which sets sail in the night.
1. >here is a presumption against the vessel
with spread sails which collides with
another which is at anchor and cannot
move, even when the crew of the latter
has received word to lift anchor, when
there was not su9cient time to do so or
there was fear of a greater damage or
other legitimate reason.
.. >here is a presumption against an
improperly moored vessel.
2. >here is a presumption against a vessel
which has no buoys to indicate the
location of its anchors to prevent damage
to vessels which may approach it.
;. Fessels must have Kproper loo5*outsL or
persons trained as such and who have no
other duty aside therefrom. "3mith =ell v.
CA#
Na/$!#al R/le a $o Sa!l!ng (eel and
S$ea+&!1
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 reAuired to 5eep her
course unless the circumstances reAuire
otherwise.
Hone of T!+e !n $&e Coll!!on of (eel
1. 3irst >one P all time up to the moment
when ris5 of collision begins.
/o rule is as yet applicable for none is
necessary.
2. 'econd >one P time between moment
when ris5 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 0one that
vessels must strictly observe nautical rules,
unless a departure therefrom becomes
necessary to avoid imminent danger.
. Third >one P time when collision is certain
and time of impact.
An error in this 0one would no longer be
legally conseAuential.
6rror in 6?tre(is * sudden movement made
by a faultless vessel during the third 0one of
collision with another vessel which is at fault
during the 2nd 0one. Bven if such sudden
movement is wrong, no responsibility will fall
on said faultless vessel. "8rrutia and Co. v.
=aco 4iver Plantation Co., 21 P?+% 12#
Cae Co-e'ed B0 Coll!!on and All!!on
$. 1ne /essel at )ault
Fessel at fault is liable for damage caused to
innocent vessel as well as damages su-ered
by the owners of cargo of both vessels. "Art.
221#
2. <oth /essels at )ault
Bach vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. "Art.
22.#
. +essel at )ault not @nown
Bach vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. "Art.
222#
;octrine o) 8nscrutable 3ault P +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. 21#
:. 3ortuitous e/entA)orce (aBeure
/o liability. Bach bears its own loss. "Art.
2:#
>he doctrine of res ipsa loAuitur applies in
case a moving vessel stri5es a stationary
object, such as a bridge post, doc5, or
navigational aid. "!ar Bastern 3hipping v. CA,
%u0on 3tevedoring vs. CA#
Bven if the cause of action against the
common carrier is based on Auasi*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. 221*2; of
the Code of Commerce. "Eanila 3teamship vs.
+nsa Abdulhaman#
)octrine of %ast Clear Chance and 4ule on
Contributory /egligence cannot be applied in
collision cases because of Art.22. 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 prereAuisite 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.
B7cuses for not ,ling protest@ 1# where the
interested person is not on board the vessel<
and 2# on collision time, need not be
protested. "Art. 21#
Cases applicable@
1. Collision "Art. 2(#<
2. Arrival under stress "Art. 112"2##<
. 3hipwrec5s "Arts. 112"1(#, 2$#<
$. &here the vessel has gone through a
hurricane or when the captain
believes that the cargo has su-ered
damages or averages "Art. 12$#.
&ho ma5es@ Captain
&hen made@ within 2$ hours from the time
the collision too5 place.
=efore whom made@ competent authority at
the point of collision or at the ,rst port of
arrival, if in the Philippines and to the
Philippine consul, if the collision too5 place
abroad. "Art. 2(#
S)IPWREC@
+t is the loss of the vessel at sea as a
conseAuence 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 wrec5 was due to malice, negligence
or lac5 of s5ill of the captain, the owner of the
vessel may demand indemnity from said
captain. "Art. 2$1#
>he rules on collision or allision, as may be
pertinent, can eAually apply to shipwrec5s.
SPECIAL CONCEPTS
ARRASTRE SER(ICE
A contract for the unloading of goods from a
vessel.
A11l!#a=!l!$0% 1/erseas trade only.
(Co((ercial Law Re/iew, C. +illanue/a, !""#
ed.&
S!gn!"#an#e% &hen a person brings in
cargo from abroad, he cannot unload and
deliver the cargo by himself. >he unloading
must be done by the arrastre operator, which
will then deliver the cargo to the importer.
(Co((ercial Law Re/iew, C. +illanue/a, !""#
ed.&
Na$/'e of =/!ne% +t is a public utility,
discharging functions which are heavily
invested with public interest.
L!a=!l!$0%
1. 3imilar to a warehouseman "%ua Gian v.
Eanila 4ailroad#
2. 3imilar to a common carrier "/orthern
Eotors v. Prince %ine#
. 3olidary liability with the common carrier
No$e% +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.
B. 4a0on, +nc.#
STE(EDORING SER(ICE
>he carriage of goods from the warehouse
or pier to the holds of the vessel. "Chief of
3ta- vs. C+4#
As understood in the port business, the term
consists of the handling of cargo from the
hold of the ship to the doc5, in case of pier*
side unloading< or to a barge, in case of
unloading at sea. "Anglo*!il >rading Corp. vs.
%a0aro#
>he loading on the ship of outgoing cargo
is also part of stevedoring wor5. "+bid.#
CONTAINERIHATION/ ISAID,TO,
CONTAINJ/ IS)IPPER?S LOAD AND
CO9NTJ SYSTEM
3ystem 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. "83 %ines v. Comm. 6f Customs,
+C>3+ v. Prudential Guarantee#
>he matter of Auantity, description and
conditions of the cargo inside the container is
the sole responsibility of the shipper, unless
there is stipulation to the contrary. "83 %ines
vs. Comm. 6f Customs, 4eyma =ro5erage v.
Phil. ?ome Assurance#
No$e% +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. "=an5ers vs. CA#

III* CARRIAGE OF GOODS BY SEA
ACT/COGSA .C*A* No* 752
APPLICABILITY
>he transportation must be@
1. &ater'maritime transportation<
2. for the carriage of goods< 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 FEAT9RES%
1. Amount of carrierCs liability
2. /otice of damage
. Prescriptive period
AMO9NT OF CARRIER?S LIABILITY
8nder the 3ec. $"(#, the liability limit is set
at U(:: per pac5age 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. "Bastern 3hipping vs. +AC,
1(: 3C4A $1#
/ote that Art. 1.$;, /CC applies to
domestic'inter*island'coastwise trade.
NOTICE OF DAMAGE .SEC* 5.722
R/le%
a. Patent damage@ shipper should ,le a
claim with the carrier immediately upon
delivery
b. %atent damage@ shipper should ,le a
claim with the carrier within three days
from delivery.
No$e@ >he ,ling 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#< or
b. >he date when the goods should
have been delivered "non*delivery#.
"3ec. I1J#
K%oss or )amageL as applied to the C6G3A
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 e7istence is un5nown or they cannot be
recovered. >hus, it is inapplicable in case of
misdelivery or conversion. "Ang vs. American
3teamship Agencies +nc.# and damage arising
from delay or late delivery "Eitsui 6.3.G. %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 e7press agreement of the
parties "8niversal 3hipping %ines,
+nc. vs. +AC, 122 3C4A 1.:#
2. >he ,ling of an action in court until it
is dismissed. "3tevens M Co. vs.
/ordeutscher %loyd, 1 3C4A 12:#
>he one*year period shall run from delivery
of the last pac5age and is not suspended by
e7trajudicial demand. ")ole Phils.,+nc. vs.
Earitime Co.,1$2 3C4A 112#
>he one*year period shall run from delivery
to the arrastre operator and not to the
consignee. "8nion Carbide Phils, +nc. vs.
Eanila 4ailroad Co.,3C4A (;#
>he insurer e7ercising 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. Eerchants +ns. Co.
vs. Alejandro< Eayer 3teel Pipe Corp. vs. CA#
I(* WARSAW CON(ENTION OF 3B6B .WC2
P9RPOSE% >o protect the emerging air
transportation industry and to secure the
uniformity of recovery by the passengers.
APPLICABILITY
>he transportation must be@
1. +nternational transportation<
2. Air transportation< 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 brea5 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.
"Kround tripL, Am. Dur.#
>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, su0erainty, mandate, or
authority of the same ?igh Contracting Party.
"Art. 1 3ec.#
W)EN INAPPLICABLE
1. &hen public policy is contradicted<
2. +f the reAuirements under the
Convention are not complied with.
IMPORTANT CONCEPTS%
1. >ransportation documents
a. Passenger tic5et
b. =aggage chec5
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
. 3uccessive carrier agreement
$. Durisdiction
(. Combined transportation agreement
PASSENGER
TIC@ET
BAGGAGE
C)EC@
AIR
WAYBILL
Passenger Chec5ed*in
baggage
Goods to be
shipped
LIABILITY OF CARRIER FOR DAMAGES
1. )eath or injury of a passenger if the
accident causing it too5 place on board the
aircraft or in the course of its operations of
embar5ing or disembar5ing< "Art. 1.#
2. )estruction, loss or damage to any
baggage or goods, if it too5 place during the
Ktransportation by airL< "Art. 12# and
Transportation b4 air P >he period during
which the baggage or goods are in the charge
of the carrier, whether in an airport or on
board an aircraft, or, in case of a landing
outside an airport, in any place whatsoever.
+t includes any transportation by land or
water outside an airport if such ta5es place in
the performance of a contract for
transportation by air, for the purpose of
loading, delivery, or transshipment.
. )elay in the transportation of passengers,
baggage or goods. "Art. 1;#
No$e@ >he ?ague Protocol amended the &C
by removing the provision that if the airline
too5 all necessary steps to avoid the damage,
it could e7culpate itself completely "Art.
2:"1##. "Alitalia vs. +AC, 1;2 3C4A ;#
LIMIT OF LIABILITY .A'$* 66K a a+ended
=0 G/a$e+ala P'o$o#olK 3B43L Al!$al!a -*
IAC2
3* Paenge'
56N6RAL RUL6: U1::,::: per passenger
67C6PT81N: Agreement to a higher limit
6* C&e#Ged,!n =aggage
56N6RAL RUL6: U2: per 5ilogram
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.
5* )and,#a''!ed =aggage
U1:::'passenger
4* Good $o =e &!11ed
56N6RAL RUL6: U2: per 5ilogram
67C6PT81N: +n case of special declaration of
value and payment of a supplementary sum
by consignor, carrier is liable to not more than
the declared sum unless it proves the sum is
greater than actual value.
An agreement relieving the carrier from
liability or ,7ing a lower limit is null and void.
"Art. 2#
Carrier is not entitled to the foregoing limit
if the damage is caused by willful misconduct
or default on its part. "Art. 2(#
>hus, the &C does not operate as an
e7clusive enumeration of the instances of an
absolute limit of the e7tent of liability. +t does
not preclude the application of the Civil Code
and other pertinent local laws. +t does not
regulate or e7clude liability for other breaches
of contract by the carrier, or misconduct of its
employees, or for some particular or
e7ceptional type of damage. "Alitalia vs. CA#
+n PanAm v. +AC, the &C was applied as
regards the limitation on the carrierCs liability,
there being a simple loss of baggage without
any improper conduct on the part of the
o9cials or employees of the airline or other
special injury sustained by the passenger.
+n G%E 4oyal v. >uller, the &C has
invariably been held inapplicable, or as not
restrictive of the carrierCs liability, where
there was satisfactory evidence of malice or
bad faith attributable to its o9cers and
employees. "Alitalia vs. +AC#
ACTION FOR DAMAGES
1. /otice of claim
A written complaint must me made within@
a. days from receipt of baggage
b. . days from receipt of goods
c. +n case of delay, 1$ days from
receipt of baggage'goods
>he complaint is a condition precedent.
&ithout the complaint, the action is barred
e7cept in case of fraud on the part of the
carrier. "Art. 21#
2. Prescriptive period
Action must be ,led within 2 years from@
a. date of arrival at the destination
b. date of e7pected arrival
c. date on which the transportation
stopped. "Art. 2;#
+n 8nited Airlines vs. 8y the two*year
prescriptive period was not applied where the
airline employed delaying tactics.
R9LE IN CASE OF (ARIO9S S9CCESSI(E
CARRIERS
1. Carriage of passengers
56N6RAL RUL6: Action is ,led only against
the carrier in which the accident or delay
occurred.
67C6PT81N: Agreement or contract whereby
the ,rst carrier assumed liability for the whole
journey.
2. Carriage of baggage or goods
a. Passenger or consignor can ,le an
action against the Crst carrier and
the carrier in which the damage
occurred
b. Passenger or consignee can ,le an
action against the last carrier and
the carrier in which the damage
occurred.
>hese carriers are jointly and severally
liable. "Art. :#
A contract of international carriage by air,
although performed by di-erent carriers
under a series of airline tic5ets constitutes a
single operation. Eembers 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 tic5ets to contracted
passengers to boost tic5et 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#
8nder a general pool partnership
agreement, the tic5et*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 Night but on that of another airline which
had underta5en to carry the passengers to
one of their destinations. "China Airlines vs.
Chio5#
<9RISDICTION
At the option of the plainti-, the action for
damages may be ,led in the@
a. Court of domicile of the carrier<
b. Court of its principal place of
business<
c. Court where it has a place of business
through which the contract has been
made< or
d. Court of the place of destination. "Art.
22"1##
NOTE% +t is the passengerCs Kultimate
destinationL not Kan agreed stopping placeL
that determines the country where suit is to
be ,led.
>he forum of action provided in Art. 22"1#
is a matter of jurisdiction rather than of
venue. "3antos +++ vs. /orthwest< 2A C.D.3.#
(* SAL(AGE LAW .A#$ No* 67372
SAL(AGE
Two #on#e1$%
1. 3ervices one person renders to the owner
of a ship or goods, by his own labor,
preserving the goods or the ship which the
owner or those entrusted with the care of
them have either abandoned in distress at
sea, or are unable to protect or secure.
2. Compensation allowed to persons by
whose voluntary assistance a ship at sea or
her cargo or both have been saved in whole
or in part from impending sea peril, or such
property recovered from actual peril or loss,
as in cases of shipwrec5, derelict or
recapture.
Re;/!!$e%
1. Falid object of salvage<
2. 6bject must have been e7posed to
marine peril "not perils of the ship#<
. 3ervices rendered voluntarily
"neither an e7isting duty nor out of a
pre*e7isting contract#<
$. 3ervices are successful, total or
partial.
S/=Me#$ of Sal-age%
1. 3hip itself<
2. Detsam P goods which are cast into the sea,
and there sin5 and remain under water<
. !loatsam or !lotsam P goods which Noat
upon the sea when cast overboard<
$. %igan or %agan P goods cast into the sea
tied to a buoy, so that they may be found
again by the owners (p.$.D, *ud,e ;ia>&.
Pe'on w&o &a-e no '!g&$ $o a 'ewa'd
fo' al-age@
1. Crew of the vessel saved<
2. Person who commenced 3alvage in spite
of opposition of the Captain or his
representative<
. +n accordance with 3ec. of the 3alvage
%aw, a person who fails to deliver a salvaged
vessel or cargo to the Collector of Customs.
Derelict P 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 Auitted the property with the intention of
,nally leaving it, it is derelict and a change of
their intention and an attempt to return will
not change its nature "Brlanger M Galinger vs.
3wedish Bast 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
motori0ed, 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. 2111#
Governed by Civil
Code on contract of
lease
4eAuires success,
otherwise no
payment
3uccess is not
reAuired
Eust be done with
the consent of the
captain'crewmen
6nly the consent of
the tugboat owner
is needed
Fessel must be
involved in an
accident
Fessel need not be
involved in an
accident
!ees distributed
among crewmen
!ees belong to the
tugboat owner
R9LES ON SAL(AGE REWARD
1. >he reward is ,7ed by the 4>C judge in
the absence of agreement or where the
latter is e7cessive. "3ec. ;#
2. >he reward should constitute a su9cient
compensation for the outlay and e-ort of
the salvors and should be liberal enough
to o-er 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 e7penses and the
salvage claim, shall go to the owner< if
the latter does not claim it within years,
(:S of the said proceeds shall go to the
salvors, who shall divide it eAuitably, and
the other half to the government. "3ecs.
11*12#
$. +f a vessel is the salvor, the reward shall
be distributed as follows@
a. (:S to the shipowner<
b. 2(S to the captain< and
c. 2(S to the o9cers and crew in
proportion to their salaries. "3ec. 1#
>a5ing passengers from a sin5ing ship,
without rendering any service in rescuing the
vessel, is not a salvage service, being a duty
of humanity and not for reward.
(I* P9BLIC SER(ICE ACT
.C*A* No* 3472
P9RPOSES%
1. >o secure adeAuate, sustained
service for the public at the least
possible cost<
2. >o protect the public against
unreasonable charges and poor,
ine9cient service<
. >o protect and secure investments in
public services<
$. >o prevent ruinous competition.
A9T)ORITY TO OPERATE P9BLIC
SER(ICES
56N6RAL RUL6: /o public service shall
operate without having been issued a
certi,cate of public convenience or a
certi,cate of public convenience and
necessity.
67C6PT81N':
1. &arehouses<
2. Animal drawn vehicles and bancas
moved by oar or sail<
. Airships, e7cept for the ,7ing of
ma7imum rates for fare and freight<
$. 4adio companies, e7cept for rates
,7ing<
(. Public services owned or operated by
the government, e7cept as to rates
,7ing<
1. +ce plants< and
.. Public mar5ets.

P9BLIC 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.
"3ec. 1b, CA 1$1#
A casual or incidental service devoid of
public character and interest is not brought
within the category. >he Auestion depends on
such factors as the e7tent 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.
"%u0on 3tevedoring vs. P3C#
NOTE@ >he Public 3ervice Commission
created under the Public 3ervice %aw has
already been abolished under P.). /o. 1 and
other issuances. +t has been replaced by the
following government agencies@ %>6< %>!4=<
A>6< =6B< />C< /BA< B4=< /&4C< CA=< and
E+A.
CERTIFICATE OF
P9BLIC
CON(ENIENCE
.CPC2
CERTIFICATE OF
P9BLIC
CON(ENIENCE
AND NECESSITY
.CPCN2
An authori0ation
issued by the
appropriate
government agency
for the operation of
public services for
which no franchise,
either municipal or
legislative, is
reAuired by law,
e.g., common
carriers.
An authori0ation
issued by the
appropriate
government agency
for the operation of
public service for
which a prior
franchise is reAuired
by law< 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 certi,cate does not acAuire 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. 4evocation of this certi,cate
deprives him of no vested right. /ew and
additional burdens, alteration of the
certi,cate, or even revocation or annulment
thereof is reserved to the 3tate. "%uAue vs.
Fillegas, : 3C4A $:2#
+t is a KpropertyL and has a considerable
value and can be the subject of sale or
attachment. "Cogeo*Cubao 6perators and
)rivers Assn. vs. CA, 2:. 3C4A $,
4aymundo vs. %uneta Eotor Co.#
RE89REMENTS FOR GRANTING CPC OR
CPCN
1. Applicant must be a citi0en of the
Philippines or a corporation or entity 1:S
of the capital of which is owned by such
citi0ens<
2. Applicant must prove public necessity<
. Applicant must prove that the operation
of the public service proposed and the
authori0ation to do business will promote
the public interest on a proper and
suitable manner<
$. Applicant must have su9cient ,nancial
capability to underta5e the proposed
services and meeting the responsibilities
incident to its operation.
POWERS
RE89IRING
PRIOR NOTICE
AND )EARING
POWERS
E:ERCISABLE
WIT)O9T PRIOR
NOTICE AND
)EARING
1. +ssuance of
CPC or CPC/<
2. !i7ing of rates,
tolls, and charges<
. 3etting up of
standards and
classi,cations<
$. Bstablishment
of rules to secure
accuracy of all
1. +nvestigation
any matter
concerning public
service<
2. 4eAuiring
operators to furnish
safe, adeAuate, and
proper service<
. 4eAuiring public
services to pay
meters and all
measuring
appliances<
(. +ssuance of
orders reAuiring
establishment or
maintenance of
e7tension of
facilities<
1. 4evocation, or
modi,cation of CPC
or CPC/<
.. 3uspension of
CPC or CPC/,
e7cept when it is
necessary to avoid
serious and
irreparable damage
or inconvenience
to the public or
private interest, in
which case, a
suspension not
more than : days
may be ordered,
prior to the
hearing. "3oriano v.
Eedina, 11$ 3C4A
1#
e7penses of
investigation<
$. Faluation of
properties of public
utilities<
(. B7amination
and test of
measuring
appliances<
1. Grant of special
permits to ma5e
e7tra or special trips
in territories
speci,ed in the
certi,cate<
.. 8niform
accounting system
and furnishing of
annual reports<
2. Compelling
compliance with the
laws and
regulations.
9NLAWF9L ACTS OF P9BLIC 9TILITY
COMPANIES
1. Bngagement in public service business
without ,rst securing the proper
certi,cate<
2. Providing or maintaining unsafe,
improper or inadeAuate service as
determined by the proper authority<
. Committing any act of unreasonable and
unjust preferential treatment to any
particular person, corporation or entity as
determined by the proper authority<
$. 4efusing or neglecting to carry public
mail upon reAuest. "3ecs. 12 and 1;#
ACTS RE89IRING PRIOR APPRO(AL
1. Bstablish and maintain individual or joint
rates<
2. Bstablish and operate new units<
. +ssue free tic5ets<
$. +ssue any stoc5 or stoc5 certi,cates
representing an increase of capital<
(. Capitali0e any franchise in e7cess of the
amount actually paid to the Government<
1. 3ell, alienate, mortgage or lease
property, certi,cates or franchise.
8nder 3ec. 2:"g# of C.A. /o. 1$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 R9LE
>he rule allowing an e7isting franchised
operator to invo5e a preferential right within
the authori0ed territory as long as he renders
satisfactory and economical service.
>he policy is not to issue a certi,cate to a
second operator to cover the same ,eld and
in competition with a ,rst operator who is
rendering su9cient, adeAuate and
satisfactory service. >he prior operator must
,rst be given an opportunity to improve its
service, if inadeAuate or de,cient.
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 ,rst applicant priority only if
things and circumstances are eAual.
&here the operator either fails or neglects
to ma5e the improvement or e-ect 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 R9LE
Presupposes a situation when two interested
persons apply for a certi,cate to operate a
public utility in the same community over
which no person has as yet granted any
certi,cate. +f it turns out, after the hearing,
that the circumstances between the two
applicants are more or less eAual, then the
applicant who applied ahead of the other, will
be granted the certi,cate.
RATE,FI:ING POWER
>he rate to be ,7ed 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 reAuirements@
1. 6ne which yields to the carrier a fair
return upon the value of the property
employed in performing the service<
and
2. 6ne which is fair to the public for the
service rendered.
REGISTERED OWNER R9LE
>he registered owner of a certi,cate of
public convenience is liable to the public for
the injuries or damages su-ered 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 inde,nite person, or to
one who possesses no property with which to
respond ,nancially for the damage or injury
done. "Bre0o, et al. vs. Depte 1:2 Phil 1:#.
@ABIT SYSTEM
A system whereby a person who has been
granted a certi,cate 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
ine7istent under Art. 1$:;, Civil Code.
ECe#$%
1. >he transfer, sale, lease or assignment of
the privilege granted is valid between the
contracting parties but not upon the
public or third persons. "Gelisan vs.
Alday, 1($ 3C4A 22#
2. >he registered owner is primarily liable
for all the conseAuences Nowing 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
di9cult and often impossible, as a
practical matter, for the public to enforce
their rights of action that they may have
for injuries inNicted by the vehicle i) the4
should be required to pro/e who the
actual owner is. "=enedicto vs. +AC, 12.
3C4A ($.#
. >he thrust of the law in enjoining the
5abit system is to identify the person
upon whom responsibility may be ,7ed
with the end in view of protecting the
riding public "%im vs. CA . 3C4A ;$#.
$. >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
Ear5eting 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. "Oamboanga >ransportation
Co. vs. CA#

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