TRANSPORTATION AND PUBLIC UTILITY LAW REVIEWER | Prof. Ty PART ONE: PUBLIC UTILITIES I. General Discussion A.

What is a public utility? Munn v. Illinois Private property devoted to public use is subject to public regulation (ex. Common carriers are affected with public interest). Thus, warehouse monopoly can be regulated. Notes: Though theres deprivation of property, private property for public use subject to regulation -private right vs. public interest Munn (free market/ laissez faire) v. Illinois (regulation for publc) Luzon Stevedoring Co. v. PSC In public service, it is not necessary to hold self out as serving public. KMU Labor Center v. Garcia Public utilities are privately owned businesses whose services are essential to the general public, cater needs to public. Thus, DOTC and LTFRB Memos are void: 1)delegating to bus operators rate-fixing 2) creating presumption of public need for CPC Notes: Why is Maynilad, a water distribution company a public utility, while neighborhood refilling station is not? -Public necessity is not the test -Public consequence is the test Tests: 1. Public consequence 2. Own infrastructure- use impressed with public interest; end-user cant avail of it without using facilities Public service and public utility same Additional readings: Batson- The Economic Concept of a Public Utility Legal concept Political concept Economic concept Economic concept- narrower, political and legal wont apply on top -high fixed cost -economies of scale >can discriminate prices -surplus

Millar- Is Public Utility a Concept v. Gray- The Passing of the Public Utility Concept Gray- Public utility concept obsolete -not laissez faire -govtl intervention of different format of control 1) More positive regulation on public utilities 2) Creation of new institutions/ new institutional arrangements 3) Centralized economic planning avoid every man for himself/ NEDA *LUWA- authorizes local water districts -local water districts- GOCCs -example of new institutions Millar- public utility not obsolete, just deregulated Barriers -high threshold levels of investment -even if prices go up, demand same (inelastic) AT&T sued for anti-trust -diversification, modernization, consolidation and concentration B. What is public service? CA 146 or Public Service Act Sec 13(b) legal concept of public utility Public Utility: 1) Own, operate, manage/ control in the Phils 2) For hire/ compensation 3) General/limited clientele 4) Permanent, occasional, accidental 5) For general business purpose Differentiate public utility from public service? Same C. Legal Basis and Rationale for Regulation Legal basis = police power Rationale = common good Republic of the Phils v. Meralco Regulation of rates is founded on police power while regulation is for common good. Rate should not be too low to be confiscatory nor too high to be oppressive. D. Where does the Power to Regulate Public Utilities Reside? -Resides in Congress police power (inherent) Albano v. Reyes Law allows PPA to contract out management of port. Congress does not have to issue a franchise before every public utility may operate. Law has granted

certain administrative agencies the power to grant license/ authorize operation of public utilities. KMU Labor Center v. Garcia Law delegated to LTFRB the power to fix rates for public utilities but it cannot delegate to bus operators such power. Law delegated to administrative body. Agan v. Piatco SC invalidated contract to operate NAIA 3. Grant of exclusive right to operate doesnt exempt it from government regulation. Batangas CATV v. CA NTC with sole power to regulate CATV operators to exclusion of LGU. Regulatory power refers to those strictly within NTCs competence like rate-fixing. Sanggunian still with power to enact ordinances per general welfare clause. Despite GWC, power given to NTC specific Relate to Public Service Act 13(a) What happened to the Public Service Commission? KMU Labor Center v. Garcia (footnote #2) PSC Bureau of Land LTFRB Transportation Transportation Commission Bureau of NTC Communication Bureau of Power and Waterworks E. Not a Public Utility Nebba v. New York Milk industry is not a public utility in accepted sense. It has no franchise or monopoly. But it is still affected with public interest and so state can regulate prices. Tatad v. Garcia A mere owner and lessor of facilities used by a public utility is not a public utility. Private corp. doesnt need franchise because it wont operate LRT3 under BLT schemed. Teresa Electric & Power v. PSC Operation of electric plant exclusively for cement companys own use and for its EEs free of charge is not a public utility. Local or legislative franchise not needed before certificate of public convenience.

See Public Service Act Sec 14 for list of enterprises not covered by definition of public service (a) Warehouses; (b) Vehicles drawn by animals and bancas moved by oar or sail, and tugboats and lighters; (c) Airships within the Philippines except as regards the fixing of their maximum rates on freight and passengers; (d) Radio companies except with respect to the fixing of rates; (e) Public services owned or operated by any instrumentality of the National Government or by any government-owned or controlled corporation, except with respect to the fixing of rates. Not case anymore (ie radio)

Nature of concession agreements Freedom from Debt Coalition v. MWSS MWSS (govt corp) entered into concession agreement with private entities Maynilad and Manila Water to privatize waterworks and sewerage system. No ruling if MWSS is a public utility; concessionaires are agents/ contractors. - Concessionaires = public utilities II. Constitutional Provisions See Consti Art XII Sec 6, 11, 17, 18, 19 Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in

the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest. Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government. Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. a. Ownership Gamboa v. Teves (2011) Capital in Art XII Sec 11 refers only to shares of stock that can vote in election of directors. Full beneficial ownership and voting rights must be 60% Filipino in public utilities. Gamboa v. Teves (2012) 60% Filipino refers to voting control and beneficial ownership. Thus 60% must apply separately to each class of shares (ie. 60% Pinoy common, 60% Pinoy preferred) -Relate to Public Service Act Sec 16(a) and 20(i) Section 16. Proceedings of the Commission, upon notice and hearing. - The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary : (a) To issue certificates which shall be known as certificates of public convenience, authorizing the operation of public service within the Philippines whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-

stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years Section 20. Acts requiring the approval of the Commission. - Subject to established limitations and exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had (i) To sell, alienate or in any manner transfer shares of its capital stock to any alien if the result of that sale, alienation, or transfer in itself or in connection with another previous sale shall be the reduction to less than sixty per centum of the capital stock belonging to Philippine citizens. Such sale, alienation or transfer shall be void and of no effect and shall be sufficient cause for ordering the cancellation of the certificate. b. Exclusivity Metro Cebu Water v. Adala Provision in Local Water District Law granting exclusive franchise on local water districts, a public utility is unconstitutional. Tawang Multi-Purpose Cooperative v. La Trinidad Water District Upheld Adala case. PD 198 created indirectly exclusive franchises by allowing BOD of local water districts and LWUA to create exclusive franchises (prior approval to create water districts). c. Subject to Amendment RCPI v. NTC EO 546 creating NTC to replace PSC renders provisions exempting radio companies from public utility inapplicable/ suspended. Legislative franchise is not enough, need NTC to issue CPC. Relate to PSA Sec 16(m) (n) Section 16. Proceedings of the Commission, upon notice and hearing. - The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary : (m) To amend, modify or revoke at any time certificate

issued under the provisions of this Act, whenever the facts and circumstances on the strength of which said certificate was issued have been misrepresented or materially changed. (n) To suspend or revoke any certificate issued under the provisions of this Act whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order rule or regulation of the Commission or any provision of this Act: Provided, That the Commission, for good cause, may prior to the hearing suspend for a period not to exceed thirty days any certificate or the exercise of any right or authority issued or granted under this Act by order of the Commission, whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable damage or inconvenience to the public or to private interests. d. Take-over Power David v. Macapagal-Arroyo Though President alone can declare state of national emergency, President has no power to take over privately owned public utilities/businesses with public interest without authority from Congress. Agan v. Piatco Provision in contract for NAIA 3 giving PIATCO reasonable compensation for duration of temporary takeover is unconstitutional. It obligates government to compensate PIATCO for exercise of police power. e. Privatization of State-Operated Public Utilities (opposite: nationalization) Kuwait Airways v. PAL PAL not bound by international agreement bet. RP and Kuwait after it was privatized. Against due process and non-impairment of contract Notes: Aside from regulation, state can -operate (Art XII Sec 18) How government can own: 1. Sale- acquires interest in private corp. 2. Take-over (but not ownership) 3. Enact a law Government operated public utilities: MWSS (before), MRT, PAL (before), Water districts, PPA, PNR

Forms: 1. Legislative franchise 2. Administrative franchise (CPC, FOA/STOA) 3. Contract (ex: FOA/STOA franchise) Requisites to be PU 1. Citizen 2. Financially capable 3. Necessity 4. Capability III. Regulation of Public Utilities A. Authority to Operate

CPCN,

Albano v. Reyes Congress delegated to PPA power to operate/ contract out operation of Manila port. Legislative franchise not necessary for private company to operate PLDT v. NTC NTC can grant ETCI provisional authority to operate cellphone system and can mandate PLDT to interconnect with competitor. Intervention with property right is to ensure public access to widest area Francisco v. Toll Regulatory Board Franchises may also be granted by administrative agencies. Upon expiration of PNCCs legislative franchise, authority to construct tolls will be administrative franchises from Toll Regulatory Board. - there are still provisions in PNCC Charter still effective after expiration (i.e. assets turned over government holds it as trustee) Napocor v. CA PIA is a public utility. CPCN not needed for direct power connection from NPC. But authority to determine if private franchise holder (CEPALCO) or NPC should supply PIA with electric power vested with DOE (nonrate fixing function) Relate to Public Service Act Sec 16(a), Sec 18 Section 16. Proceedings of the Commission, upon notice and hearing. - The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary : (a) To issue certificates which shall be known as certificates of public convenience, authorizing the operation of public service within the Philippines

whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or jointstock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years. Section 18. It shall be unlawful for any individual, copartnership, association, corporation or joint-stock company, their lessees, trustees or receivers appointed by any court whatsoever, or any municipality, province, or other department of the Government of the Philippines to engage in any public service business without having first secured from the Commission a certificate of public convenience or certificate of public convenience and necessity as provided for in this Act, except grantees of legislative franchises expressly exempting such grantees from the requirement of securing a certificate from this Commission as well as concerns at present existing expressly exempted from the jurisdiction of the Commission, either totally or in part, by the provisions of section thirteen of this Act. i. General Qualifications Vda. De Lat v. PSC Requisites for CPCN: 1) Citizen/ corp. organized in Phils 60% stock belong to Phil. 2) Financially capable 3) Public utility will promote public interest in proper and suitable manner KMU Labor Center v. Garcia To grant CPC: public convenience and necessity. Proposed facility meets reasonable want of public and supply need which existing facilities dont adequately supply. ii. Revocation or Cancellation Divinagracia v. Consolidated Broadcasting System NTC no power to cancel CPCs it issued to legislative franchises of radio. Not covered by PSC because its radio. EO 546 didnt grant NTC power. Power to revoke will inhibit free press and must be subject to strict

scrutiny/ compelling state interest. Proper remedy: quo warranto (cant collaterally attack) - Quo warranto not only remedy- depends on power granted to admin agency Relate to PSA Sec 16 (m), supra. iii. CPC v. CPCN Traditional difference: CPCN CPC For PU that needs For PUs that dont legislative franchise legislative franchise See Public Service Act Sec 15 Section 15. With the exception of those enumerated in the preceding section, no public service shall operate in the Philippines without possessing a valid and subsisting certificate from the Public Service Commission known as "certificate of public convenience," or "certificate of public convenience and necessity," as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner. The Commission may prescribe as a condition for the issuance of the certificate provided in the preceding paragraph that the service can be acquired by the Republic of the Philippines or any instrumentality thereof upon payment of the cost price of its useful equipment, less reasonable depreciation; and likewise, that the certificate shall be valid only for a definite period of time; and that the violation of any of these conditions shall produce the immediate cancellation of the certificate without the necessity of any express action on the part of the Commission. In estimating the depreciation, the effect of the use of the equipment, its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration. The foregoing is likewise applicable to any extension or amendment of certificates actually in force and to those which may hereafter be issued, to permit to modify itineraries and time schedules of public services, and to authorizations to renew and increase equipment and properties. PAL v. CAB (1997) Necessity in CPC doesnt modify nature of certification. It is the law which determines requisites of the title. -abolished difference bet. CPC and CPCN -gleaned Congress intent no legislative franchise needed

RA9183 and RA 9517 (2003) Congress still has intent to require legislative franchise B. Rate Fixing See Public Service Act Secs 16 (c) and 20(a) Section 16. Proceedings of the Commission, upon notice and hearing c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed observed and followed thereafter by any public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates. Section 20. Acts requiring the approval of the Commission. - Subject to established limitations and exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had (a) To adopt, establish, fix, impose, maintain, collect or carry into effect any individual or joint rates, commutation, mileage or other special rate, toll, fare, charge, classification or itinerary. The Commission shall approve only those that are just and reasonable and not any that are unjustly discriminatory or unduly preferential, only upon reasonable notice to the public services and other parties concerned, giving them a reasonable opportunity to be heard and the burden of the proof to show that the proposed rates or regulations are just and reasonable shall be upon the public service proposing the same. Rate Fixing 1) PU files pleading before regulator for increase of rates 2) Publication and hearing Guidelines: -Reasonable- balance: affordable and not arbitrary/ oppressive (underlying conflict) -Inherent power to fix rates- Congress

-Reasonableness- regulatory boards quasi-judicial functions Padua v. Ranada TRB can grant provisional toll rate adjustments without hearing. Still subject to adjustment after final hearing Republic of the Phils v. Meralco Regulation of rates refers to police power. It must be just and reasonable- balance investor and public 1) rate of return- return on reasonable operating expenses 2) rate base- property used by public utility 3) return itself/ revenue KMU Labor Center v. Garcia Rate fixing must not be confiscatory (loss) and not too high (discriminatory). Cant relinquish rate-fixing power to public utilities. Hearing before regulatory board necessary. Francisco v. Toll Regulatory Board Initial toll rates (no hearing needed) v. Subsequent toll rate adjustment (hearing and publication) C. Approval of Sales of Public Utility Assets or Equity Public Service Act Sec 20 (g), (h) and (i) Section 20. Acts requiring the approval of the Commission. g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates, privileges, or rights or any part thereof; or merge or consolidate its property, franchises privileges or rights, or any part thereof, with those of any other public service. The approval herein required shall be given, after notice to the public and hearing the persons interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgaged or encumbrance, for liabilities of more than one year maturity, or the sale, alienation, lease, merger, or consolidation to be approved, and that the same are not detrimental to the public interest, and in case of a sale, the date on which the same is to be consummated shall be fixed in the order of approval: Provided, however, that nothing herein contained shall be construed to prevent the transaction from being negotiated or completed before its approval or to prevent the sale, alienation, or lease by any public service of any of its property in the ordinary course of its business. (h) To sell or register in its books the transfer or sale of shares of its capital stock, if the result of that sale in itself or in connection with another previous sale, shall

be to vest in the transferee more than forty per centum of the subscribed capital of said public service. Any transfer made in violation of this provision shall be void and of no effect and shall not be registered in the books of the public service corporation. Nothing herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by Com. Act No. 454.) (i) To sell, alienate or in any manner transfer shares of its capital stock to any alien if the result of that sale, alienation, or transfer in itself or in connection with another previous sale shall be the reduction to less than sixty per centum of the capital stock belonging to Philippine citizens. Such sale, alienation or transfer shall be void and of no effect and shall be sufficient cause for ordering the cancellation of the certificate. Approval of sale of PU- needs prior approval from PSC Rationale: public interest, public right to presume rgistered owner liable 20(h)- transfer >40% of stock rationale: controlling interest Y Transit v. NLRC Montoya v. Ignacio Lease of jeepney without approval of PSC is void. Lessor still its operator and liable for torts even if the lessee committed it. Perez v. Gutierrez Sale without PSC approval is void and not binding on public. Registered owner directly liable to passenger for torts but can recover from transferee. PLDT v. NTC Transfer of shares of more than 40% capital requires NTC approval while transfer of franchise requires Congress approval. In the CAB: transfer of shares approved by NTC D. Power to set fees and other charges Republic v. International Communications Corp. NTC with power to collect permit fee to issue CPCN even if RA 7921 doesnt include authorization expenses. However it cant be exorbitant. E. Other means of regulation See Sec 16 and 20

PLDT v. NTC Interconnection is a valid exercise of police power. Its a valid intervention with property right. Napocor v. CA Non-rate fixing functions of ERB transferred to Dept. of Energy. Determination of which 2 public utilities should supply electric power to an area lies with the Dept. of Energy, not supplier of power. -Napocor is not a public utility = just supplier PART TWO: TRANSPORTATION LAW I. General Discussion 1. Definition Transportation- person/ association of persons obligate themselves to transport persons, thing, news from one place to another -email is not transpo- something physical being transported 2. Relationship to a public utility- certain modes of transportation are public utilities 3. Nature of a Franchise Usual franchises CPC-water, land CPCN- air Franchise= privilege (govt can grant, revoke) Franchise owners with proprietary rights over them Raymundo v. Luneta Motor CPC is in the nature of a limited franchise. CPC is property which can be subject to attachment (w/ beneficial interest, can be sold for value) Cogeo-Cubao Operator and Driver Association v. CA CPC is property in the broad sense. For state: doesnt confer proprietary right/ interest/ franchise in the route covered. For third person: property represents right to operate facilities for public service. Covered by due process. Labor union violated right of corp. with CPC in taking over operations without PSC authorization. Y Transit Co. v. NLRC Franchise is personal in nature. Any transfer or lease needs BOT approval. Sale of buses without BOT approval is ineffective insofar as third persons. Court

can still levy on buses to satisfy sellers liability notwithstanding transfer. 4. Scope of a Franchise San Pablo v. Pantranco CPC as bus transportation cant be amended to include water service. Not a private ferry thats a continuation of highway but a coastwise/ interisland shipping service thats a common carrier. 5. Prior-operator rule Rationale: prevent ruinous competition (for publicdecrease price, decrease quality and safety) Protect investments of operator Is this monopoly? But State can regulate to curb evil of monopoly Rationale of prior operator rule v. exclusivity -dont grant exclusivity, just preference Batangas Transportation v. Orlanes Denied license to Orlanes because Batangas Transpo was the first in the field. So long as first licensee keeps conditions of license and meets demands of public, it has vested and preferential right over later licensee. 6. Kabit System -Contrary to public policy (Art 1409 NCC) not illegal per se Kabit v. Unregistered sale 1. There is registration 2. Liability to public: unregistered and kabit- same 3. Treatment of contract Kabit= contrary to public policy, void Unregisted transfer= valid between parties Teja v. IAC Kabit system- person granted certificate of public convenience allows another person who owns motor vehicles to operate under franchise for a fee. Not criminal but void for being against public policy. Sale under kabit = in pari delicto and neither can recover. Santos v. Sibug Kabit cant defeat levy on vehicle after it was registered in operators name and assert his ownership. Had kabit been impleaded in original case, hed be solidarily liable.

Lita Enterprises v. Second Civil Cases Division Kabit system is void for being against public policy. It is an abuse of special privilege of CPC. In pari delicto applies. Kabit cant ask for reconveyance and operator cant ask for money.

Lim v. Ca Kabit can recover damages from accident caused by third person. Thrust of the law in enjoining kabit is to identify the person liable in accident and protect public, inapplicable in the CAB. 1) Neither of parties in kabit are being held liable 2) Public not affected 3) No misrepresentation of ownership Baliwag Transit v. CA Possession of franchise to operate negates existence of kabit system even if one SSS ID No. and similar firm names. 7. Private nature; rights and obligation of parties inter se arising from transactions relating to transportation Private vehicle 1. Not for public use 2. Private vehicle 3. Not for hire a. Absent a transportation contract Lara v. Valencia Owner and driver only owe duty to exercise reasonable care to accommodation passengers/ invited guests. They were paid nothing for service. b. Liability of registered owner PCI Leasing v. UCPB General Insurance Registered owner of vehicle driven by negligent driver still liable if transferred to third person and unregistered transfer. Even if not common carriers. Public Service Act inapplicable but compulsory motor vehicle registration (RA 4136) and liabilities of employers for quasi-delict in NCC apply to protect public. II. Regulation of the Transportation Industry (inherent to legislature) Notes on regulation: -not all regulatory powers delegated to administrative agencies (ex: Water utilities- granted legislative

franchise despite LUWA, but agencies can regulate without Congress intervention) No legislative needed LTFRB franchise Legislative franchise needed CAB (debatable), licensing of air carriers, Electricity

-Why are land transportation regulators line agencies? Direct control and supervision of DOTC, land transportation must be regulated more: safety KMU Labor Center v. Garcia LTFRB is the regulatory body charged by the Legislature with power to fix rates for land transportation of motorized vehicles. It cant delegate that power. c. Water (i) Maritime Industry Authority (MARINA) 1. CPCN 2. Registration of vessels 3. Deregulation- no more rate fixing *Doesnt have jurisdiction over state maritime facilities unlike CAAP PPA with jurisdiction Other Regulators: (Report) 1. Power Power generation not public utilities (EPIRA law) -Why? Sell power wholesale, clientele are distributors Power distribution- public utility Power supply- not public utility 2. Water Who regulates? LUWRB Water Resource Regulator- all waters belong to the state a. Resource regulation- not limited to public utilities (ex. Farming), water permits b. Economic regulation- using water as a business (ex. Water distributors) How does LUWRB regulate economic aspect: -guidelines to creation -appellate body -grant permits -rate-fixing License to oprate: CPC, issued by LWRB LUWA- authorizes creation of water utilities (water district)- LGC MWSS used to be operator, later became regulator 3. Railroad -DOTC can authorize railroad operation without legislative franchise can issue CPC -not operated by State: Northrail 4. Ports PPA- not a public utility -regulator and operator of ports

Line agencies Attached agencies Under direct control and DOTC cant revoke/ supervision of DOTC amend decision LTO, LTFRB CAA, CAAB, MARINA 1. DOTC a. Air (i) Civil Aviation Authority of the Phils (CAA) 1. Issue airmans certificate (pilot) 2. Registration of aircraft 3. Jurisdiction over airport 4. Flying schools, private planes (ii) Civil Aeronautics Board (CAB) -economic aspect 1. Rate-fixing 2. Licensing Rationale provisional license: urgency (long process of licensing) PAL v. CAB CAB can grant provisional authority to operate or temporary permit before granting CPCN PAL v. CAB CAB can issue a CPCN/ temporary operating permit to domestic air transporter without legislative franchise but meets all requirements. Kuwait Airways v. PAL CAB with power to compel PAL to terminate commercial agreement with Kuwait Air because of CMU (Intl. Agreement with Kuwait). But CAB failed to exercise such regulatory authority. b. Land (i) Land Transportation Office (LTO) -private (not exclusive licensing of drivers, license plates) (ii) Land Transportation Franchising and Regulatory Board (LTFRB) -public utilities -CPC, CPCN, rates, routes

III. Common Carriers A. In General 1. Definition, essential elements Art 1732 NCC Art 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. Common carrier: 1. Engaged in business of carrying/transporting goods/ passengers 2. Land, water/ air 3. For compensation 4. Offered to public No distinction: 1. Principal/ ancillary 2. Regular/ schedule/ occasional (frequency) 3. Public/ narrow segment (market) How to hold self out as CC? advertising for hire NCC on common carriers = form of public utility regulation (cf. rate-fixing and licensing) 1. Liability 2. Quality of service US v. Tan Piaco Public use- open to indefinite public, public may enjoy it by right. Look at mode of doing business, public interest not enough. CAB: special contract to transport not public utility -not good law per De Guzman Home Insurance Co. v. American Steamship Common carrier carrying special cargo/ chartered to special person is private carrier. Stipulation exempting owner from liability for negligence of agent is void. De Guzman v. CA Common carrier (Art 1732 NCC) partially supplemented by public service (CA 1416) common carrier though ancillary activity/ sideline, narrow segment of population and occasional. CAB: load truck with cargo from different merchants Manila- Pangasinan, primarily scrap dealer Bascos v. CA Test if cc: undertaking is part of business engaged in by carrier which he held out to public as his occupation. Not quantity/ extent of business. CAB: admitted in trucking business. Not contract of lease.

Planters Products Inc. v. CA Shipowner is public/ common carrier despite charter of vessel if charter limited to ship only. Charter doesnt cover crew and shipowner retains control over them. *NOTE: Trend less strict in terms of classifying CCs Tan Piaco De Guzman Bascos Planters Products Fabre v. CA Dont have to be in business of public transportation to be common carrier. Can be ancillary per De Guzman. CAB: School bus hired for out of town. First Philippine Industrial Corp. v CA Common carrier holds self out to public as engaged in the business of transporting persons/ property for compensation offering services to public generally. Test: 1) Engaged in business of carrying goods/ holds self out ready to public 2) Goods to kind which business confined 3) Method business conducted 4) For hire CAB: pipeline concessionaire is a common carrier - Pipeline is common carrier for tax purpose, unsure for NCC purposes Asia Lighterage and Shipping v. CA Cited De Guzman and Bascos. Petitioner is a common carrier- principal business is shipping and lighterage, offers barges to public to transport goods by water for compensation, despite limited clientele Crisostomo v. CA Travel agent is not a common carrier. Extraordinary diligence is not required. Ordinary contract of services. (cf. Object of contract of carriage is transportation) Loadstar Shipping v. CA Vessel is a common carrier even if carrying cargo for one shipper and even carrying passengers. Home Insurance is not applicable and no undertaking to carry special cargo/ special person no charter party 2. Nature of Business; power of State to regulate Art 1765 Article 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section.

Pantranco v. PSC PSCs power to amend/ revoke CPC subject to grantees right to a hearing (present case and tribunal consider evidence) 3. Nature and Basis of Liability Art 1733 Article 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Cangco v. MRR Liability for breach of contract of carriage- direct and immediate. Employer directly liable for negligence of employees. Just prove contract and non-performance (cf QD-ER presumptive liability for negligence of EEs, rebut by diligence selection and supervision) Isaac v. A.L. Ammen Liability of common carrier (per NCC) 1) Liability contractual, failure to exert extraordinary diligence amounts to breach 2) Carry passenger with utmost diligence of very cautious person 3) CC presumed at fault in case of death/ injury to passenger 4) Not insurer against all risks Fores v. Miranda Gen: No moral damages for breach of contract unless CC guilty of malice/ bad faith X: Death of passenger (Art 1764) Phil. Rabbit v. IAC Breach of contract: Upon death/ injury CC presumed liable (X: Extraordinary diligence/ fortuitous event). Driver not solidarily liable with CC 1) Contract between carrier and passenger and cc liable even if negligence of driver 2) cc can recover whole amount paid not just share in solidary obligation LRTA v. Navidad CC bound by utmost diligence so long as passenger in premises in pursuance of contract of carriage. CC still liable for acts of independent contractor solidary liability Sarkies Tours Phils Inc. v. CA CC liable for loss of goods. Must exercise extraordinary diligence from the time unconditionally placed in possession until delivered actually or constructively to person with right thereto.

4. Classes of common carriers Art 1732, 1733, 1755 Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. Article 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. Article 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. 5. Law Applicable Art 1766, 1753 Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. Article 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration. National Devt. Co. v. CA Law of country where goods are to be transported governs liability of CC. Goods to be transported to Phils, though ships collided in Japan, Phil. law governs. Code of Commerce specifically regulates collision (not NCC/COGSA), carrier liable for negligence/ fault of captain. B. Common Carriage of Goods 1. Liability and presumption of negligence Art 1733, 1734, 1735 Article 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the

goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733. Ynchausti Steamship Co. v. Dexter Proof of delivery of goods to carrier in good order and arrival at destination in bad order is prima facie case against carrier. CC must prove that loss is due to accident/ not liable. Mirasol v. Dollar Goods delivered in ship in good order and shipowner delivers to shipper in bad order- upon shipowner to prove goods were damaged by fact which exempts him from liability. CAB: defendant admits goods damaged in his possession in transit, he has burden of proof to show exemption. Damage by sea water not evidence of force majeure 2. Exemption from liability (a) Natural disaster Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; Article 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be

exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in article 1734, No. 2. Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility. ARTICLE 361, Code of Commerce. The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been expressly stipulated. As a consequence, all the losses and deterioration which the goods may suffer during the transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the shipper. Proof of these accidents is incumbent upon the carrier. Tan Chiong v. Inchausti Per Art 361 Code of Commerce, damage of goods in transportation due to accident, force majeure, natural defect of articles- for account of shipper. Carrier exempt if it proves force majeure and that its not its negligence/ fault. Martini v. Macondray Shipper who consented to goods carried on deck takes risk upon self. Carrier is not liable for damage due to danger at sea when goods placed on deck. Eastern Shipping v. IAC Fire not natural disaster/ calamity per Art 1734 NCC. Usually caused by man. Even if natural disaster, must be proximate and only cause of loss and CC exercised due diligence to minimize/ prevent loss to exempt CC. Asia Lighterage v. CA CC failed to prove typhoon was the proximate and only cause of loss. Chain of events over several days, barge sank and hole patched before it continued voyage. (b) Act of public enemy Art 1734 (2) Act of the public enemy in war, whether international or civil; Article 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public

enemy referred to in article 1734, No. 2. (c) Act or omission of shipper Art 1734 (3) Act or omission of the shipper or owner of the goods; Article 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in article 1734, No. 2. (d) Character of goods, etc Art 1734(4) The character of the goods or defects in the packing or in the containers; Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss. ARTICLE 366, COC. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt. Government v. Ynchausti Carrier was able to prove: damage goods because of nature/ defect of articles (brittle tiles, no packaging). Consignee/ shipper failed to prove CCs negligence. Southern Lines v. CA If improper packaging known to carrier/ apparent and CC receives it, CC not relieved of liability for loss. Action for refund of amount paid in excess of delivery and not for damages- 24 hr rule in Art 366 doesnt apply. (e) Order of competent authority Art 1734 (5) Order or act of competent public authority. Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.

Ganzon v. CA CC not exempt from liability despite Acting Mayors command to dump goods. Failed to show he had power to issue order/ it was lawful/ issued under legal process. Acting Mayor had no valid authority. 3. Duration of Extraordinary Responsibility Art 1736-1738 Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738. Article 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu. Article 1738. The extraordinary liability of the common carrier 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 been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. Compania Maritima v. Insurance Company Complete contract of carriage: Shipper deliver cargo to CC who took possession by placing it on a lighter manned by its EE. Contract commenced on actual delivery/ receipt by authorized agent of CC. Bill of lading unncesessary Lu Do v. Biamira CC not liable for goods with arrastre operator because parties limited liability of CC through agreement: CC not liable when goods in custody of customs. CC loses control over goods APL v. Klepper CC liable for goods that fell while being unloaded from ship. Extraordinary liability lasts until goods are delivered actually or constructively to consignee/ person with right to receive. Samar Mining Co. v. Nordeutscher Lloyd CC not liable. Valid stipulation in bill of lading exempting carrier from liability for loss/ damage to goods not in his custody. From transshipment, not carrier anymore,

agent of consignee. From actual delivery in Manila, became agent of consignee. Eastern Shipping v. CA Carrier, arrastre and broker solidarily liable for goods damaged while in their successive custody. CC liableextraordinary diligence til goods delivered. 4. Agreement Limiting Liability (a) As to diligence required Art 1744, 1745, 1751 Article 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy. Article 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper; (2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; (3) That the common carrier need not observe any diligence in the custody of the goods; (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported; (5) That the common carrier shall not be responsible for the acts or omission of his or its employees; (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage. Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy. (b) As to amount of liability

Art 1749, 1750 Article 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. Heacock v. Macondray Stipulation in bill of lading: 1) Exempting carrier from any liability caused by negligence 2) Unqualified limitation of liability to agreed valuation 3) Limiting liability to agreed valuation unless shipper declares higher value and pays higher rate of freight 1 & 2: void, 3 (CAB): valid; CC gives shipper choice between 2 rates, lower one conditioned on agreeing to stipulated valuation of property in case of loss even by negligence Why? Protect CC and estoppel Shewaram v. PAL Pecuniary liability of CC may be limited to fixed amount by contract if reasonable and justly, fairly and freely agreed upon. CAB: Not fairly agreed because stipulation in ticket stub written at the back in small letters. Ong Yiu v. CA Stipulation at back of plane ticket limiting liability of CC for lost baggage is valid. Pet didnt claim higher value of luggage/ pay additional charge. Though passenger didnt sign ticket, bound by contract of adshesion, regardless of lack of knowledge/ assent/ Pan Am v. IAC Upheld Ong Yiu. Stipulation limiting liability valid. Shewaram inapplicable because print not small and is a failry agreed contract. Warsaw Convention is not against public policy. Cathay Pacific v. CA Though Warsaw Convention has force of law in the Philippines (treaty), not exclusive enumeration/ absolute limit of CC. Liability for breach of contract in NCC and other law still apply. (c) As to delay in delivery Maersk Line v. CA CC liable. Stipulation in bill of lading exempting CC from any delay in delivery void. Absurd situation: leaving date

of arrival to will of CC. Delivery must be made within reasonable time in absence of stipulation. (d) Factor affecting agreement Art 1746, 1747, 1748, 1751, 1752 Article 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation. Article 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods. Article 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid. Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy. Article 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration. 5. Applicable Law in Foreign Trade Article 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration. 6. Rules on Passenger Baggage Art 1754, 1998, 2000 to 2003 Article 1754. The provisions of articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable. Article 1998. The deposit of effects made by travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. Article 2000. The responsibility referred to in the two

preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him. (1784a) Article 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (n) Article 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel. (n) Article 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void. Checked-in baggage: common carriers Handcarried: law on deposit (ordinary diligence) CC liable for defects in parts defects apparent, discoverable Notes: Defenses of CC in carrige of goods: 1. Not a common carrier 2. Outside duration 3. No contract 4. Goods not to be transported to Phils 5. Art 1734 exemption 6. Stipulations limiting liability amount/ diligence required Hierarchy of laws: 1. NCC on Common Carriers 2. Code of Commerce 3. Special Laws C. Common Carriage of Passengers 1. Nature and extent of responsibility Art 1733, 1755 Article 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported

by them, according to all the circumstances of each case. Article 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Isaac v. AL Amnen Trans. Co. CC not liable. Observed ED/ utmost diligence of very cautious person in avoiding collision. Failure to observe same care of prudent man in sudden emergency not held to same degree of care. Contributory negligence of passenger in sticking out arm. Landingin v. Pantranco CC liable jumping passengers. Failed to observe utmost diligence of very cautious persons with due regard for all circumstances. Defect in cross-joint not fortuitous. Though inspected cross-joint before travel, CC didnt give regard for all circumstances (i.e. heavy load, traverse mountain) Landicho v. BTCo. CC not insurer against all risks, good source of stipend for family. It is enough to see passenger place self inside carefully. Necesito v. Paras CC liable for flaws in equipment if discoverable. Periodical visual inspection of steering knuckle doesnt measure up to standard of utmost diligence of very cautious persons as far as human care and foresight can provide. PAL v. CA CC liable. Duty of outmost diligence is for safety of passengers and members of crew, complement operating carrier. PAL liable for injury of co-pilot caused by pilot. Sulpicio v. CA CC liable for death of stevedores in barge. Contract of carriage called for their presence and CC consented to their presence. Japan Airlines v. CA Power to admit or not an alien into country is a sovereign act which cant be interfered with by CC. No breach of contract of carriage. 2. Duration of Responsibility Cf. Art 1736 NCC (by analogy) Article 1736. The extraordinary responsibility of the

common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738. Cangco v. MRR Watermelon case. Contract of carriage carries by implication duty to carry passenger in safety and provide means of entering and leaving trains. Plaintiff with right to assume platform was clear, CC failed to light platform contributory negligence. Del Prado v. Meralco Duty of CC to carry passengers safely extends to persons boarding and alighting. Breach of contract cant raise diligence of GF in selection and supervision of EEs. La Mallorca v. CA CC liable for death of daughter who followed dad in getting bayong he forgot in bus. Relation of CC and passenger doesnt cease when passenger alights at destination but until reasonable time/ opportunity to leave premises. Presence of girl near bus not unreasonable. Bataclan v. Medina CC liable- breach of contract. Proximate cause was overturning of bus, not fire. Negligence of driverspeeding, shouldve known gas spilled by its smell. Aboitiz v. CA CC liable to passenger waiting for baggage hit by crane. Contract of carriage continues until passenger with reasonable opportunity to leave carriers premises. Reasonable presence depends on nature of business, bulk of cargoes, customs of place, ships take longer. CC bound to give reasonable opportunity to claim baggage. PAL v. CA CC failed to exercise ED in leaving passenger in airport where battle between govt and Muslim rebels ongoing near. Though diversion of flight fortuitous, such didnt terminate contract of carriage. Contract continues until he landed at port of destination and left premises. 3. Presumption of Negligence Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as

prescribed in articles 1733 and 1755. 4. Force Majuere Art 1174 NCC- Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable Bachelor Express v. CA CC liable. Not enough proximate cause due to force majeure, must prove not negligent in causing injuries. Need to prove extraordinary diligence. Stampede in bus because passenger stabbed soldier. Yobido v. CA Tire blowout, though replaced recently not fortuitous event. Human factors involved: manufacturing defect, improperly mounted (accidents caused by defects in auto/ negligence of driver not FE). CC also negligentfast, wet roads, winding road 5. Limitation of Liability; validity of stipulations Art 1757, 1758 Article 1757. The responsibility of a common carrier for the safety of passengers as required in articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise. Article 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for wilful acts or gross negligence. The reduction of fare does not justify any limitation of the common carrier's liability. 6. Responsibility for acts of employees Arts 1759, 1760 Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees. Article 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise. De Gillaco v. MRR CC not liable for train guard who shot passenger 1) Fortuitous event- personal grudge 2) Stranger waiting to transport not EE- no duties yet as CCs agent because not on shift Maranan v. Perez CC liable for cab driver stabbing passenger, different from Gillaco 1) Killing in course of duty of EE 2) Per NCC (not Old as Gillaco) CC absolute liability for safety of passengers thru negligence of EEs though they acted beyond scope of authority/ violation of orders LRTA v. Navidad Independent contractor security agency wouldve been solidarily liable with CC if guard punched passenger who fell on train. Liability based on tort- 2180- rebutted by diligence in selection and supervision. But CAB: no evidence of negligence of EE 7. Responsibility for acts of strangers and co-passengers Art 1763 Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Pilapil v. CA CC not liable for stone-throwing by stander 1) Presumption of negligence rebutted- injury wholly arising from stranger over which CC has no control/ could prevent 2) Willful acts of strangers only degree of care: good father of family Bachelor Express Inc v. CA CC liable for passenger stabbing soldier. Though proximate cause is running amuck of passenger and so plaintiffs jumped (fortuitous event), but if failed to exercise ED in providing for safety (i.e. speeding) 8. Duty of passenger, effect of contributory negligence Art 1761, 1762 Article 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself. Article 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.

Cangco v. MRR Watermelons. No contributory negligence alighting from slowly moving train- not risky Isaac v. A.L. Amnen Protruding arm. Guilty of contributory negligence. Negligence per se for passenger to protrude arm. No recovery from CC despite Art 1762. Bus driver was a prudent man. Notes: Lesser diligence than extra-ordinary 1. Acts of strangers cause injury to passengers 2. Art 1734- floods, public officer etc and ordinary diligence during and after 3. Stipulation Defenses of CC: 1. EOD 2. Fortuitous event 3. Not insurer against all risks 4. Stipulations limiting liability 5. Damages liable only for certain types of damages D. Damages Recoverable from Common Carriers 1. In general 2. Actual or compensatory Arts. 2199, 2201, 2203, 1764, 2206 Article 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (1107a) Article 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this

Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Actual damages (1) pecuniary loss (2) duly proven Kinds of actual damages 1. Foregone income 2. Support 3. Medical and funeral expense 4. Death indemnity- P50K 5. Lost/ damaged goods

Cariaga v. LTBCo. And MRR Income 4th year med student would earn if he finished degree had accident not happened- could be reasonably foreseen at time he boarded bus. Part of compensatory damages. (Breached contract in good faith) Pan Am v. IAC CC not liable for lost profits when contracts to show films were cancelled coz of lost baggage. Must have notice of special circumstances requiring prompt delivery of luggage, otherwise not foreseeable Villa-Rey v. CA 2 factors determine amount of damages: (1) no. of years life expectancy (2) rate of damages deduct necessary living expenses from salary to compute damages to heirs

PAL v. CA Damages for loss of earning capacity of deceased- based on life expectancy of the deceased, not his beneficiary Victory Liner v. Gammad Breach of contract of carriage resulting in death of passenger, CC liable: (1) Indemnity for death: P50K per jurisprudence (2) Loss of earning capacity: documentary evidence needed; X: a) self-employed, below minimum wage b) daily wageworker, below minimum wage. If amount not proven: temperate damages (2) Actual damages: substantiated, proven expenses (through O.R.) 3. Moral Arts. 2217, 2216, 2219, 2220, 2206(3) Article 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Article 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. Article 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of

contract where the defendant acted fraudulently or in bad faith. Art 2206(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Fores v. Miranda To recover moral damages for breach of contract, one must prove CCs bad faith and malice X: Death of passenger (no BF needed) Air France v. Carrasco Breach of contract in BF: ejected Pinoy from first class to seat white man. Entitled to moral damages. BF: state of mind operating with furtive design/ ill-will/ selfinterest Lopez v. Pan Am Breached contract in BF= entitled to moral damages. BF: willful suppression of cancellation of 1st class reservation by airline EEs. Plaintiff is Senate President/ former VP- taken into consideration in amount. Ortigas v. Lufthansa Inattention or lack of care of CC resulting in passengers failure to be accommodated in class contracted for = BF/Fraud and entitled moral damages. Discriminated Pinoy, demoted to economy for Belgian. PAL v. Miano In contract of carriage, moral damages awarded only if CC fraudulent/ BF. Bad faith- breach of known duty through motive of interest or ill will CAB: no BF for lost baggage United Airlines v. CA BF: willful and deliberate overbooking of airline Civil Aeronautics Board Rule: willful and deliberateoverbook >10% seating capacity CAB: no BF, failed to prove overbooking more than 10%, no moral damages Cathay Pacific v. Vasquez Upgrading passengers to 1st class despite objections is breach of contract BUT no BF and so no moral damages Air France v. Gillego CC liable moral damage for lost baggage. No reason for delay in finding, ignoring passengers follow-up calls. BF= indifferent attitude enough, no need for discourteous EEs.

8. Exemplary Art 2229, 2232, 2233 Article 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Article 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Article 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. Mecenas v. CA Entitled to exemplary damages, sinking ship, death of parents. CC acted recklessly- with gross negligence. Captain was playing mahjong, failed to keep ship seaworthy, saw other ship and could prevent collision. Granted exemplary to deter maritime accidents of poor people. 9. Nominal, Temperate and Liquidated Art. 2221,2224, 2226 Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty. Article 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.

Saludo v. CA Entitled to nominal damages. Mix up of bodies of deceased and delayed delivery. No BF/ willful breach so no moral/ exemplary. But right of heirs to be treated with courtesy violated. Nominal: injury done without evidence of amount JAL v. CA Awarded nominal damages 100K per passenger. Eruption of Pinatubo, NAIA closed and stranded in Narita. JAL has no duty to pay for living expenses because FE but duty to transport passengers to first available flight. Nominal = to vindicate violated right, not indemnity, from any source of obligation per Art 1157 NCC. Savellano v. Northwest Entitled to nominal damage- plane emergency landed in Seattle. To go back to Manila, plane stopped over a lot without notice. Nominal- no actual or specific damage, amount is with discretion of court (inconveniences, business class, social standing) Victory Liner v. Gammad Awarded temperate damages for loss of earning capacity of deceased passenger. Loss established but not amount. Temperate: more than nominal, less than compensatory. Awarded 50K 6. Attorneys Fees and Interest Art. 2208, 2210 Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime;

Nominal Incapable of estimation

Temperate pecuniary Pecuniary loss but amount cant be proven with certainty

Alitalia v.AIC Entitled to nominal damages. Professor lost baggage, unable to read paper in conference. No BF in carriers EEs but special species of injury Nominal damages. Right of plaintiff violated may be vindicated, not for indemnity. Dont have to allege nominal damages in complaint.

(10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of litigation must be reasonable. Article 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract. Attorneys fees: species of actual damages have to be duly proven Circumstances to take into account in awarding damages: 1. Social status of plaintiff 2. Political standing 3. Economic standing IV. Code of Commerce Provisions on Overland Transportation A. Scope of Overland Transportation B. Nature of Contract Art. 349 Code of Commerce ARTICLE 349. A contract of transportation by land or water ways of any kind shall be considered commercial: 1. When it has for its object merchandise or any article of commerce. 2. When, whatever its object may be, the carrier is a merchant or is habitually engaged in transportation for the public. C. Effect of Civil Code Art 1766, 2270 NCC Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. Article 2270. The following laws and regulations are hereby repealed: (1) Those parts and provisions of the Civil Code of 1889 which are in force on the date when this new Civil Code becomes effective: (2) The provisions of the Code of Commerce governing sales, partnership, agency, loan, deposit and guaranty; (3) The provisions of the Code of Civil Procedure on prescription as far as inconsistent with this Code; and (4) All laws, Acts, parts of Acts, rules of court, executive orders, and administrative regulations which are inconsistent with this Code. (n) D. Contract of Carriage

1. Bill of Lading a) Definition, subject matter Art 352 ARTICLE 352. The bills of lading, or tickets in cases of transportation of passengers, may be diverse, some for persons and others for baggage; but all of them shall bear the name of the carrier, the date of shipment, the points of departure and arrival, the cost, and, with respect to the baggage, the number and weight of the packages, with such other manifestations which may be considered necessary for their easy identification. b) Form, Contents Art 350, 351 ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually demand that a bill of lading be made, stating: 1. The name, surname and residence of the shipper. 2. The name, surname and residence of the carrier. 3. The name, surname and residence of the person to whom or to whose order the goods are to be sent or whether they are to be delivered to the bearer of said bill. 4. The description of the goods, with a statement of their kind, of their weight, and of the external marks or signs of the packages in which they are contained. 5. The cost of transportation. 6. The date on which shipment is made. 7. The place of delivery to the carrier. 8. The place and the time at which delivery to the consignee shall be made. 9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter. ARTICLE 351. In transportation made by railroads or other enterprises subject to regulation rate and time schedules, it shall be sufficient for the bills of lading or the declaration of shipment furnished by the shipper to refer, with respect to the cost, time and special conditions of the carriage, to the schedules and regulations the application of which he requests; and if the shipper does not determine the schedule, the carrier must apply the rate of those which appear to be the lowest, with the conditions inherent thereto, always including a statement or reference to in the bill of lading which he delivers to the shipper. c) Function, Art 353 ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material error in the drafting. After the contract has been complied with, the bill of

lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with the exception of that provided for in Article 366. In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. 2. Refusal to Transport ARTICLE 356. Carriers may refuse packages which appear unfit for transportation; and if the carriage is to be made by railway, and the shipment is insisted upon, the company shall transport them, being exempt from all responsibility if its objections, is made to appear in the bill of lading. 3. Doubtful declaration of contents, Art 357 ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or consignee in attendance. If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who shall prepare a memorandum of the result of the investigation, for such purpose as may be proper. If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper. 4. No bill of lading, Art 354, 51 ARTICLE 354. In the absence of a bill of lading, disputes shall be determined by the legal proofs which the parties may present in support of their respective claims, according to the general provisions established in this Code for commercial contracts. E. Responsibility of the Carrier 1. When it commences, Art 355 ARTICLE 355. The responsibility of the carrier shall commence from the moment he receives the merchandise, personally or through a person charged for the purpose, at the place indicated for receiving them.

2. Route Art 359 ARTICLE 359. If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this cause, he shall be liable for all the losses which the goods he transports may suffer from any other cause, beside paying the sum which may have been stipulated for such case. When on account of said cause of force majeure, the carrier had to take another route which produced an increase in transportation charges, he shall be reimbursed for such increase upon formal proof thereof. 3. Care of Goods, Art 361, 362 ARTICLE 361. The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been expressly stipulated. As a consequence, all the losses and deterioration which the goods may suffer during the transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the shipper. Proof of these accidents is incumbent upon the carrier. ARTICLE 362. Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes mentioned in the preceding article if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take the precautions which usage has established among careful persons, unless the shipper has committed fraud in the bill of lading, representing the goods to be of a kind or quality different from what they really were. If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost, on account of their nature or by reason of unavoidable accident, there being no time for their owners to dispose of them, the carrier may proceed to sell them, placing them for this purpose at the disposal of the judicial authority or of the officials designated by special provisions. Arts. 1734, 1735 NCC Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733. 4. Delivery a) Condition of Goods, Art 363 to 367 ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods shipped in the same condition in which, according to the bill of lading, they were found at the time they were received, without any damage or impairment, and failing to do so, to pay the value which those not delivered may have at the point and at the time at which their delivery should have been made. If those not delivered form part of the goods transported, the consignee may refuse to receive the latter, when he proves that he cannot make use of them independently of the others. ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a diminution in the value of the goods, the obligation of the carrier shall be reduced to the payment of the amount which, in the judgment of experts, constitutes such difference in value. ARTICLE 365. If, in consequence of the damage, the goods are rendered useless for sale and consumption for the purposes for which they are properly destined, the consignee shall not be bound to receive them, and he may have them in the hands of the carrier, demanding of the latter their value at the current price on that day. If among the damaged goods there should be some pieces in good condition and without any defect, the foregoing provision shall be applicable with respect to those damaged and the consignee shall receive those which are sound, this segregation to be made by distinct and separate pieces and without dividing a single object, unless the consignee proves the impossibility of conveniently making use of them in this form. The same rule shall be applied to merchandise in bales or packages, separating those parcels which appear sound. ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon

opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 367. If doubts and disputes should arise between the consignee and the carrier with respect to the condition of the goods transported at the time their delivery to the former is made, the goods shall be examined by experts appointed by the parties, and, in case of disagreement, by a third one appointed by the judicial authority, the results to be reduced to writing; and if the interested parties should not agree with the expert opinion and they do not settle their differences, the merchandise shall be deposited in a safe warehouse by order of the judicial authority, and they shall exercise their rights in the manner that may be proper.

b) To Whom Delivery Made Art 368 ARTICLE 368. The carrier must deliver to the consignee, without any delay or obstruction, the goods which he may have received, by the mere fact of being named in the bill of lading to receive them; and if he does not do so, he shall be liable for the damages which may be caused thereby. c) When to be made Art 370, 358 ARTICLE 370. If a period has been fixed for the delivery of the goods, it must be made within such time, and, for failure to do so, the carrier shall pay the indemnity stipulated in the bill of lading, neither the shipper nor the consignee being entitled to anything else. If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the carrier shall be liable for the damages which the delay may have caused. ARTICLE 358. If there is no period fixed for the delivery of the goods the carrier shall be bound to forward them in the first shipment of the same or similar goods which he may make point where he must deliver them; and should he not do so, the damages caused by the delay should be for his account. F. Rights and Obligations of Shipper and/or Consignee 1. Right to Damages a) Condition imposed on right, Art 366, 357

ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or consignee in attendance. If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who shall prepare a memorandum of the result of the investigation, for such purpose as may be proper. If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper. b) Amount of damages for loss, Art 732, Art 1744 NCC ARTICLE 372. The appraisement of the goods which the carrier must pay in case of their being lost or mislaid shall be fixed in accordance with what is stated in the bill of lading, no proofs being allowed on the part of the shipper that there were among the goods declared therein articles of greater value, and money. Horses, vehicles, vessels, equipment, and all the other principal and accessory means of transportation, shall be especially obligated in favor of the shipper, although with relation to railroads said obligation shall be subordinated to the provisions of the laws of concession with regard to property and to those of this Code with regard to the manner and form of making attachments and retentions against the said companies. Article 1744, NCC. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy.

c) Amount of damages for delay, Art 371 (3) ARTICLE 371. In case of delay through the fault of the carrier, referred to in the preceding articles, the consignee may leave the goods transported in the hands of the former, advising him thereof in writing before their arrival at the point of destination. When this abandonment takes place, the carrier shall pay the full value of the goods as if they had been lost or mislaid. If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot exceed the current price which the goods transported would have had on the day and at the place in which they should have been delivered; this same rule is to be observed in all other cases in which this indemnity may be due.

2. Right to abandon, Art 371, 360, 365, 363 Art 371, supra ARTICLE 360. The shipper, without changing the place where the delivery is to be made, may change the consignment of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee the bill of lading signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract appears. The expenses which this change of consignment occasions shall be for the account of the shipper. ARTICLE 365. If, in consequence of the damage, the goods are rendered useless for sale and consumption for the purposes for which they are properly destined, the consignee shall not be bound to receive them, and he may have them in the hands of the carrier, demanding of the latter their value at the current price on that day. If among the damaged goods there should be some pieces in good condition and without any defect, the foregoing provision shall be applicable with respect to those damaged and the consignee shall receive those which are sound, this segregation to be made by distinct and separate pieces and without dividing a single object, unless the consignee proves the impossibility of conveniently making use of them in this form. The same rule shall be applied to merchandise in bales or packages, separating those parcels which appear sound. ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods shipped in the same

condition in which, according to the bill of lading, they were found at the time they were received, without any damage or impairment, and failing to do so, to pay the value which those not delivered may have at the point and at the time at which their delivery should have been made. If those not delivered form part of the goods transported, the consignee may refuse to receive the latter, when he proves that he cannot make use of them independently of the others. 3. Right to change consignment, Art 360 ARTICLE 360. supra. 4. Obligation to pay transportation charges, Art 376, Art 2241 (9) NCC ARTICLE 376. The preference of the carrier to the payment of what is owed him for the transportation and expenses of the goods delivered to the consignee shall not be cut off by the bankruptcy of the latter, provided it is claimed within the eight days mentioned in the preceding article. Article 2241. With reference to specific movable property of the debtor, the following claims or liens shall be preferred: (9) Credits for transportation, upon the goods carried, for the price of the contract and incidental expenses, until their delivery and for thirty days thereafter; 5. Obligation to return bill of lading, art 353(2) ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material error in the drafting. After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with the exception of that provided for in Article 366. In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. G. Applicability of Provisions, Art 379 ARTICLE 379. The provisions contained in Articles 349

and following shall be understood as equally applicable to those who, although they do not personally effect the transportation of the merchandise, contract to do so through others, either as contractors for a particular and definite operation, or as agents for transportations and conveyances. In either case they shall be subrogated in the place of the carriers themselves, with respect to the obligations and responsibility of the latter, as well as with regard to their rights.

V. Admiralty and Maritime Commerce A. Concept of Admiralty, Jurisdiction over Admiralty Cases BP129, Sec 19 (3), Sec 33(1), as amended by RA 7691 RTC MTC MM Outside MM Outside >400K >300K <400K < 300K

International Harvester v. Aragon Admiralty- jurisdiction over all maritime contracts depends on subject matter (maritime service/ transaction) not where executed or performed CFI (RTC) with jurisdiction over admiralty, Justice of Peace (MTC) without jurisdiction CAB: contract of affreightment, lost goods at sea = maritime B. Vessels 1. Meaning Lopez v. Duruelo Small motorboat to carry passengers from port to boat is not a vessel. No protest required before filing the case. Vessel: merchant ships, not accessory, transport passenger/ freight from one port to another, sea-going, run my masters trained with crew 2. Nature and acquisition of Arts. 573, 583 CoC, Art 712 NCC ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by any of the means recognized by law. The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if

not recorded in the mercantile registry. The ownership of a vessel shall also be acquired by the possession thereof in good faith for three years, with a good title duly recorded. In the absence of any of these requisites, uninterrupted possession for ten years shall be necessary in order to acquire ownership. A captain can not acquire by prescription the ship of which he is in command. ARTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Spanish * territory, and otherwise to the consul of Spain, * should there be one, and, in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contracted. The judge or court, the consul or the local authority as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness. The lack of this formality shall make the captain personally liable to the creditors who may be prejudiced through his fault. Article 712. Ownership is acquired by occupation and by intellectual creation. Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition. They may also be acquired by means of prescription 3. Registration; certificates issued; distinctions RA 9295 Sec 10(1) SEC. 10. Jurisdiction; Power; and Duties of MARINA. The MARINA shall have the power and authority to: (1) Register vessels; 4. Significance of registration of transactions affecting vessels Arroyo v. Yu Chattel mortgage of vessels must be recorded with collector of customs at port of entry (not with Register of Deeds). If unrecorded, only valid between parties but

not third persons or creditors. Execution holder with better right over mortagee of unregistered mortgage But CAB: non-recording was fault of collector of customs, mortgagees title cured, with better right (registered contracting first) Rubiso v. Rivera First to register acquisition of vessel with collector of customs with better right even if acquired it later. 2 sales of 1 vessel C. Persons Participating in Maritime Commerce 1.Shipowners and ship agents Arts. 586 to 608, 618 ARTICLE 586. The owner of a vessel and the agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested therein. By agent is understood the person intrusted with the provisioning of a vessel, or who represents her in the port in which she happens to be. ARTICLE 587. The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the voyage. ARTICLE 588. Neither the owner of the vessel nor the agent shall be liable for the obligations contracted by the captain if the latter exceeds his powers and privileges which are his by reason of his position or have been conferred upon him by the former. However, if the amounts claimed were made use of for the benefit of the vessel, the owner or agent shall be liable. ARTICLE 589. If two or more persons should be part owners of a merchant vessel, an association shall be presumed as established by the part owners. This association shall be governed by the resolutions of a majority of the members. A majority shall be the relative majority of the voting members. If there should be only two part owners, in case of disagreement the vote of the member having the largest interest shall be decisive. If the interests are equal, it shall be decided by lot. The representation of the smallest part in the ownership shall have one vote; and proportionately the other part owners as many votes as they have parts

equal to the smallest one. aisadc A vessel can not be detained, attached or levied upon execution in her entirety for the private debts of a part owner, but the proceedings shall be limited to the interest the debtor may have in the vessel, without interfering with her navigation. ARTICLE 590. The owners of a vessel shall be civilly liable in the proportion of their contribution to the common fund, for the results of the acts of the captain, referred to in Article 587. Each part owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belonging to him. ARTICLE 591. All the part owners shall be liable, in proportion to their respective ownership, for the expenses of repairs to the vessel, and for other expenses which are incurred by virtue of a resolution of the majority. They shall likewise be liable in the same proportion for the expenses of maintenance, equipment, and provisioning of the vessel, necessary for navigation. ARTICLE 592. The resolutions of the majority with regard to the repair, equipment, and provisioning of the vessel in the port of departure shall bind the majority unless the partners in the minority renounce their participation therein, which must be acquired by the other part owners after a judicial appraisement of the value of the portion or portions assigned. The resolutions of the majority relating to the dissolution of the association and sale of the vessel shall also be binding on the minority. The sale of the vessel must take place at a public auction, subject to the provisions of the law of civil procedure unless the part owners unanimously agree otherwise, the right of option to purchase and to withdraw mentioned in Article 575 being always reserved in favor of said part owners. ARTICLE 593. The owners of a vessel shall have preference in her charter to other persons, offering equal conditions and price. If two or more of the former should claim said right the one having greater interest shall be preferred, and should they have an equal interest it shall be decided by lot. ARTICLE 594. The part owners shall elect the manager who is to represent them in the capacity of agent. The appointment of director or agent shall be revocable at the will of the members. ARTICLE 595. The agent, be he at the same time an owner of a vessel or a manager for an owner or for an association of co-owners, must be qualified to trade and must be recorded in the merchant's registry of the province. The agent shall represent the ownership of the vessel,

and may in his own name and in such capacity take judicial and extrajudicial steps in all that relates to commerce. ARTICLE 596. The agent may discharge the duties of captain of the vessel, subject, in every case, to the provisions contained in Article 609. If two or more co-owners request the position of captain, the disagreement shall be decided by a vote of the members; and if the vote should result in a tie, the position shall be given to the part owner having the larger interest in the vessel. If the interest of the petitioners should be the same, and there should be a tie, the matter shall be decided by lot. ARTICLE 597. The agent shall select and come to an agreement with the captain, and shall contract in the name of the owners, who shall be bound in all that refers to repairs, details of equipment, armament, provisions, fuel, and freight of the vessel, and, in general, in all that relates to the requirements of navigation. ARTICLE 598. The agent can not order a new voyage, nor make contracts for a new charter, nor insure the vessel, without the authority of her owner or by virtue of a resolution of the majority of the co-owners, unless these privileges were granted him in the certificate of his appointment. cdasia If he should insure the vessel without authority therefor he shall be secondarily liable for the solvency of the underwriter. ARTICLE 599. The managing agent of an association, shall give his co- owners an account of the results of each voyage of the vessel, without prejudice to always having the books and correspondence relating to the vessel and to its voyages at the disposal of the same. ARTICLE 600. After the account of the managing agent has been approved by a relative majority, the coowners shall satisfy the expenses in proportion to their interest, without prejudice to the civil or criminal actions which the minority may deem fit to institute afterwards. In order to enforce the payment, the managing agent shall have a right of action to secure execution, which shall be instituted by virtue of a resolution of the majority, and without further proceedings than the acknowledgment of the signatures of the persons who voted the resolution. ARTICLE 601. Should there be any profits, the co-owners may demand of the managing agent the amount due them, by means of an executory action without further requisites than the acknowledgment of the signatures of the instrument approving the account. ARTICLE 602. The agent shall indemnify the captain for

all the expenses he may have incurred from his own funds or from those of other persons, for the benefit of the vessel. ARTICLE 603. Before a vessel goes out to sea the agent shall have at his discretion, a right to discharge the captain and members of the crew whose contract did not state a definite period nor a definite voyage, paying them the salaries earned according to their contracts, and without any indemnity whatsoever, unless there is a special and specific agreement in respect thereto. ARTICLE 604. If the captain or any other member of the crew should be discharged during the voyage, they shall receive their salary until the return to the place where the contract was made, unless there are good reasons for the discharge, all in accordance with Articles 636 et seq. of this Code. ARTICLE 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they can not be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence. ARTICLE 606. If the captain should be a part owner in the vessel, he can not be discharged without the agent returning him the amount of his interest therein, which, in the absence of an agreement between the parties, shall be appraised by experts appointed in the manner established in the law of civil procedure. ARTICLE 607. If the captain who is a part owner should have obtained the command of the vessel by virtue of a special agreement contained in the articles of copartnership, he can not be deprived thereof except for the reasons mentioned in Article 605. ARTICLE 608. In case of the voluntary sale of the vessel, all contracts between the agent and captain shall terminate, the right to proper indemnity being reserved in favor of the captain, according to the agreements made with the agent. They vessel sold shall remain subject to the security of the payment of said indemnity if, after the action against the vendor has been instituted, the latter should be insolvent. ARTICLE 618. The captain shall be civilly liable to the agent, and the latter to the third persons who may have made contracts with the former 1. For all the damages suffered by the vessel and his cargo by reason of want of skill or negligence on his part. If a misdemeanor or crime has been committed he shall be liable in accordance with the Penal Code. cda 2. For all the thefts committed by the crew, reserving his right of action against the guilty parties.

3. For the losses, fines, and confiscations imposed an account of violation of the laws and regulations of customs, police, health, and navigation. 4. For the losses and damages caused by mutinies on board the vessel, or by reason of faults committed by the crew in the service and defense of the same, if he does not prove that he made full use of his authority to prevent or avoid them. 5. For those arising by reason of an undue use of powers and non-fulfillment of the obligations which are his in accordance with Articles 610 and 612. 6. For those arising by reason of his going out of his course or taking a course which he should not have taken without sufficient cause, in the opinion of the officers of the vessel, at a meeting with the shippers or supercargoes who may be on board. No exception whatsoever shall exempt him from this obligation. 7. For those arising by reason of his voluntarily entering a port other than his destination, with the exception of the cases or without the formalities referred to in Article 612. 8. For those arising by reason of the non-observance of the provisions contained in the regulations for lights and evolutions for the purpose of preventing collisions. Standard Oil v. Castelo Shipper whose goods jettisoned by order of captain may bring action against ship owner (captain: representative of owner). Owner with recourse against the captain. (a) Responsibilities and liabilities Yu Con v. Ipil Ship owner civilly liable for loss due to misdemeanors/ crimes committed by captain or crew CAB: Theft presumably committed by crew members/ master. Master and supercargo liable for loss- own negligence or fault Manila Steamship v. Abdulhaman Collision- fault of both; Shipowner A: liable for acts of captain to third persons, cant invoke diligence of good father in selection and supervision in maritime tort; Shipowner B: liable despite abandonment unlicensed master Wing Kee Compadoring Co. v. Bark Mononhaela Seller with option to go after ship owner/ ship agent for payment of goods supplied to vessel Extent of Liability of Shipowner: 1. Vessel 2. Equipment

3. Freight 4. Insurance (b) The doctrine of limited liability, Art 587 Art 587, supra. Real and Hypothecary Real = similar to right of parties in a real contract Hypothecary- akin to pledge but good not delivered to creditor Manila Steamship v. Abdulhaman Right of abandonment to limit ship owners liability doesnt apply if average is fault of ship owner CAB: Unlicensed master, still liable even if ship sank after collision Yangco v. Laserna Real and hypothecary nature of maritime law -liability of ship owner is limited to the value of vessel, freight, insurance -total loss of ship = abandonment -ship owner absolved from liability for death of passenger Note: doctrine was upheld even if captain was negligent Abueg v. San Diego Real and hypothecary rule in Code of Commerce doesnt apply to claims under Workmens Compensation Act liability created by statute to compensate EEs for injury while at work Aboitiz Shipping v. General Accident Fire and Life Assurance Only time limited liability rule doesnt apply- actual finding of negligence on vessel owner/ agent. No negligence in CAB. Execution of action must be stayed until all claims for ships sinking was settled. Note: Creditors cant go after personal assets of ship owner -Collate all claims, pro-rate (c) Specific rights and prerogatives Arts. 575, 593, 594, 596, 601 ARTICLE 575. Part owners of vessels shall enjoy the right of option of purchase and withdrawal in the sales made to strangers; but they can only exercise it within the nine days following the record of the sale in the registry and by delivering the price at once. Art 593, supra. Art 594, supra. Art 596, supra. Art 601, supra.

2. Captains and Master (a) Qualifications and Licensing RA 5173, Sec 3 Section 3. Specific Functions. The Philippine Coast Guard shall perform the following functions: (e) To issue licenses and certificates to officers, pilots, major and minor patrons and seamen, as well as suspend and revoke such licenses and certificates; Art. 609 ARTICLE 609. Captains and masters of vessels must be Spaniards * having legal capacity to bind themselves in accordance with this Code, and must prove that they have the skill, capacity, and qualifications required to command and direct the vessel, as established by marine laws, ordinances, or regulations, or by those of navigation, and that they are not disqualified according to the same for the discharge of the duties of that position. cdt If the owner of a vessel desires to be the captain thereof and does not have the legal qualifications therefor, he shall limit himself to the financial administration of the vessel, and shall intrust her navigation to a person possessing the qualifications required by said ordinances and regulations. (b) Powers and duties Art 610, 611, 612, 622, 624, 625 ARTICLE 610. The following powers are inherent in the position of captain or master of a vessel: 1. To appoint or make contracts with the crew in the absence of the agent and propose said crew, should said agent be present; but the agent shall not be permitted to employ any member against the captain's express refusal. 2. To command the crew and direct the vessel to the port of its destination, in accordance with the instructions he may have received from the agent. 3. To impose, in accordance with the agreements and the laws and regulations of the merchants marine, on board the vessel, correctional punishment upon those who do not comply with his orders or who conduct themselves against discipline, holding a preliminary investigation on the crimes committed on board the vessel on the high seas, which shall be turned over to the authorities, who are to take cognizance thereof, at the first port touched. 4. To make contracts for the charter of the vessel in the absence of the agent or of her consignee, acting in accordance with the instructions received and protecting the interests of the owner most carefully.

5. To adopt all the measures which may be necessary to keep the vessel well supplied and equipped, purchasing for the purpose all that may be necessary, provided there is no time to request instructions of the agent. 6. To make, in similar urgent cases and on a voyage, the repairs to the hull and engines of the vessel and to her rigging and equipment which are absolutely necessary in order for her to be able to continue and conclude her voyage; but if she should arrive at a point where there is a consignee of the vessel, he shall act in concurrence with the latter. ARTICLE 611. In order to comply with the obligations mentioned in the foregoing article, the captain, when he has no funds and does not expect to receive any from the agent, shall procure the same in the successive order stated below: 1. By requesting said funds of the consignees or correspondents of a vessel. 2. By applying to the consignees of the cargo or to the persons interested therein. 3. By drawing on the agent. 4. By borrowing the amount required by means of a bottomry bond. 5. By selling a sufficient amount of the cargo to cover the amount absolutely necessary to repair the vessel, and to equip her to pursue the voyage. cd In the two latter cases he must apply to the judicial authority of the port, if in Spain * and to the Spanish * consul, if in a foreign country; and where there should be none, to the local authority, proceeding in accordance with the prescriptions of Article 583, and with the provisions of the law of civil procedure. ARTICLE 612. The following obligations are inherent in the office of captain: 1. To have on board before starting on a voyage a detailed inventory of the hull, engines, rigging, tackle, stores, and other equipments of the vessel; the navigation certificate; the roll of the persons who make up the crew of the vessel, and the contracts entered into with the crew; the list of passengers; the health certificate; the certificate of the registry proving the ownership of the vessel, and all the obligations which encumber the same up to that date; the charters or authenticated copies thereof; the invoices or manifest of the cargo, and the instrument of the expert visit or inspection, should it have been made at the port of departure. 2. To have a copy of this Code on board. 3. To have three folioed and stamped books, placing at the beginning of each one a note of the number of folios it contains, signed by the maritime official, and in his absence by the competent authority. In the first book, which shall be called "log book," he

shall enter every day the condition of the atmosphere, the prevailing winds, the course sailed, the rigging carried, the horsepower of the engines, the distance covered, the maneuvers executed, and other incidents of navigation. He shall also enter the damage suffered by the vessel in her hull, engines, rigging, and tackle, no matter what is its cause, as well as the imperfections and averages of the cargo, and the effects and consequence of the jettison, should there be any; and in cases of grave resolutions which require the advice or a meeting of the officers of the vessel, or even of the passengers and crew, he shall record the decision adopted. For the informations indicated he shall make use of the binnacle book, and of the steam or engine book kept by the engineer. In the second book, called the "accounting book," he shall enter all the amounts collected and paid for the account of the vessel, entering specifically article by article, the sources of the collection, and the amounts invested in provisions, repairs, acquisition of rigging or goods, fuel, outfits, wages, and all other expenses. He shall furthermore enter therein a list of all the members of the crew, stating their domiciles, their wages and salaries, and the amounts they may have received on account, either directly or by delivery to their families. In the third book, called "freight book," he shall record the entry and exit of all the goods, stating their marks and packages, names of the shippers and of the consignees, ports of loading and unloading, and the freight earned. In the same book he shall record the names and places of sailing of the passengers and the number of packages of which their baggage consists, and the price of the passage. 4. To make, before receiving the freight, with the officers of the crew, and the two experts, if required by the shippers and passengers, an examination of the vessel, in order to ascertain whether she is watertight, and whether the rigging and engines are in good condition; and if she has the equipment required for good navigation, preserving a certificate of the memorandum of this inspection, signed by all the persons who may have taken part therein, under their liability. The experts shall be appointed one by the captain of the vessel and the other one by the persons who request the examination, and in case of disagreement a third shall be appointed by the marine authority of the port. 5. To remain constantly on board the vessel with the crew during the time the freight is taken on board and carefully watch the stowage thereof; not to consent to any merchandise or goods of a dangerous character to be taken on, such as inflammable or explosive

substances, without the precautions which are recommended for their packing, management and isolation; not to permit that any freight be carried on deck which by reason of its disposition, volume, or weight makes the work of the sailors difficult, and which might endanger the safety of the vessel; and if, on account of the nature of the merchandise, the special character of the shipment, and principally the favorable season it takes place, he allows merchandise to be carried on deck, he must hear the opinion of the officers of the vessel, and have the consent of the shippers and of the agent. 6. To demand a pilot at the expense of the vessel whenever required by navigation, and principally when a port, canal, or river, or a roadstead or anchoring place is to be entered with which neither he, the officers nor the crew are acquainted. 7. To be on deck at the time of sighting land and to take command on entering and leaving ports, canals, roadsteads, and rivers, unless there is a pilot on board discharging his duties. He shall not spend the night away from the vessel except for serious causes or by reason of official business. cdtai 8. To present himself, when making a port in distress, to the maritime authority if in Spain * and to the Spanish * consul if in a foreign country, before twenty-four hours have elapsed, and make a statement of the name, registry, and port of departure of the vessel, of its cargo, and reason of arrival, which declaration shall be vised by the authority or by the consul if after examining the same it is found to be acceptable, giving the captain the proper certificate in order to show his arrival under stress and the reasons therefor. In the absence of marine officials or of the consul, the declaration must be made before the local authority. 9. To take the steps necessary before the competent authority in order to enter in the certificate of the Commercial Registry of the vessel the obligations which he may contract in accordance with Article 583. 10. To put in a safe place and keep all the papers and belongings of any members of the crew who might die on the vessel, drawing up a detailed inventory, in the presence of passengers as witnesses, and, in their absence, of members of the crew. 11. To conduct himself according to the rules and precepts contained in the instructions of the agent, being liable for all that he may do in violation thereof. 12. To give an account to the agent from the port where the vessel arrives, of the reason thereof, taking advantage of the semaphore, telegraph, mail, etc., according to the cases; notify him the freight he may have received, stating the name and domicile of the

shippers, freight earned, and amounts borrowed on bottomry bond, advise him of his departure, and give him any information and data which may be of interest. 13. To observe the rules on the situation of lights and evolutions to prevent collisions. 14. To remain on board in case of danger to the vessel, until all hope to save her is lost, and before abandoning her to hear the officers of the crew, abiding by the decision of the majority; and if he should have to take a boat he shall take with him, before anything else, the books and papers, and then the articles of most value, being obliged to prove in case of the loss of the books and papers that he did all he could to save them. 15. In case of wreck he shall make the proper protest in due form at the first port reached, before the competent authority or the Spanish * consul, within twenty-four hours, stating therein all the incidents of the wreck, in accordance with case 8 of this article. 16. To comply with the obligations imposed by the laws and rules of navigation, customs, health, and others. Inter Orient v. NLRC Captain has 3 roles: 1. General agent of ship owner (sign bills of lading, carry good, deal with freight earned, agree upon rates, take upon cargo) 2. Commander and technical director of vessel 3. Representative of country whose flag he navigates (ie. Solemnize marriages) Licensed by Phil. Coast Guard (c) Prohibited acts and transactions Arts 613, 614, 615, 617, 621, 583 ARTICLE 613. A captain who navigates for freight in common or on shares can not make any transaction for his exclusive account, and should he do so the profit shall belong to the other persons in interest, and the losses shall be for his own exclusive account. ARTICLE 614. A captain who, having made an agreement to make a voyage, should not fulfill his obligation, without being prevented by an accident case or by force majeure, shall pay for all the losses his action may cause, without prejudice to criminal penalties which may be proper. ARTICLE 615. Without the consent of the agent, the captain can not have himself substituted by another person; and should he do so, besides being liable for all the acts of the substitute and bound to the indemnities mentioned in the foregoing article, the substitute as well as the captain may be discharged by the agent. ARTICLE 616. If the provisions and fuel of the vessel are

consumed before arriving at the port of destination, the captain shall decide, with the consent of the officers of the same, to make the nearest port to get a supply of either; but if there are persons on board who have provisions of their own he may force them to turn said provisions over for the common consumption of all persons on board, paying the price thereof immediately, or at the latest, at the first port reached. ARTICLE 617. The captain can not contract loans on respondentia, and should he do so the contracts shall be void. Neither can he borrow money on bottomry for his own transactions, except on the portion of the vessel he owns, provided no money has been previously borrowed on the whole vessel, and provided there does not exist any other kind of lien or obligation thereon. When he is permitted to do so, he must necessarily state what interest he has in the vessel. In case of violation of this article the principal, interest, and costs shall be charged to the private account of the captain, and the agent may furthermore have the right to discharge him. ARTICLE 621. A captain who borrows money on bottomry, or who pledges or sells merchandise or provisions in other cases and without the formalities prescribed in this Code, shall be liable for the principle, interest, and costs, and shall indemnify for the damages he may cause. The captain who commits fraud in his accounts shall reimburse the amount defrauded, and shall be subject to the provisions contained in the Penal Code. RTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Spanish * territory, and otherwise to the consul of Spain, * should there be one, and, in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contracted. The judge or court, the consul or the local authority as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness. 3. Other Officers and Crew

(a) Contracts and formalities, Art 634 ARTICLE 634. The captain may make up his crew with the number he may consider advisable, and in the absence of Spanish * sailors he may ship foreigners residing in the country, the number thereof not to exceed one-fifth of the total crew. If in foreign ports the captain should not find a sufficient number of Spanish * sailors, he may make up the crew with foreigners, with the consent of the consul or marine authorities. The agreements which the captain may make with the members of the crew and others who go to make up the complement of the vessels, to which reference is made in Article 612, must be reduced to writing in the account book without the intervention of a notary public or clerk, signed by the parties thereto, and vised by the marine authority if they are executed in Spanish * territory, or by the consuls or consular agents of Spain * if executed abroad, stating therein all the obligations which each one contracts and all the rights they acquire, said authorities taking care that these obligations and rights are recorded in a concise and clear manner, which will not give rise to doubts or claims. cd The captain shall take care to read to them the articles of this Code, which concern them, stating that they were read in the said document. If the book includes the requisites prescribed in Article 612, and there should not appear any signs of alterations in its clauses, it shall be admitted as evidence in questions which may arise between the captain and the crew with regard to the agreements contained therein and the amounts paid on account of the same. Every member of the crew may request a copy of the captain, signed by the latter, of the agreement and of the liquidation of his wages, as they appear in the book. (b) Duties and liabilities, Art 635 ARTICLE 635. A sailor who has been contracted to serve on a vessel can not rescind his contract nor fail to comply therewith except by reason of a legitimate impediment which may have occurred. Neither can he pass from the service of one vessel to another without obtaining the written consent of the vessel on which he may be. If, without obtaining said permission, the sailor who has signed for one vessel should sign for another one, the second contract shall be void, and the captain may choose between forcing him to fulfill the service to which he first bound himself or look for a person to substitute him at his expense.

Said sailor shall furthermore lose the wages earned on his first contract to the benefit of the vessel for which he may have signed. A captain who, knowing that a sailor is in the service of another vessel, should have made a new agreement with him, without having requested the permission referred to in the foregoing paragraphs, shall be personally liable to the captain of the vessel to which the sailor first belonged for that part of the indemnity, referred to in the third paragraph of this article, which the sailor could not pay. (c) Rights, Arts 636 to 647 ARTICLE 636. Should a fixed period for which a sailor has signed not be stated, he can not be discharged until the end of the return voyage to the port where he enrolled. ARTICLE 637. Neither can the captain discharge a sailor during the time of his contract except for sufficient cause, the following being considered as such: 1. The perpetration of a crime which disturbs order on the vessel. 2. Repeated offenses of insubordination, against discipline, or against the fulfillment of the service. 3. Repeated incapacity or negligence in the fulfillment of the service to be rendered. 4. Habitual drunkenness. 5. Any occurrence which incapacitates the sailor to carry out the work under his charge, with the exception of the provisions contained in Article 644. 6. Desertion. The captain may, however, before setting out on a voyage and without giving any reason whatsoever, refuse to permit a sailor he may have engaged from going on board and may leave him on land, in which case he will be obliged to pay him his wages as if he had rendered services. This indemnity shall be paid from the funds of the vessel if the captain should have acted for reasons of prudence and in the interest of the safety and good service of the former. Should this not be the case, it shall be paid by the captain personally. aisadc After the vessel has sailed, and during the voyage and until the conclusion thereof, the captain can not abandon any member of his crew on land or on the sea, unless, by reason of being guilty of some crime, his imprisonment and delivery to the competent authority is proper in the first port touched, which will be obligatory on the captain. ARTICLE 638. If, the crew having been engaged, the voyage is revoked by the will of the agent or of the charterers before or after the vessel has put to sea or if the vessel is in the same manner given a different

destination than that fixed in the agreement with the crew, the latter shall be indemnified because of the rescission of the contract according to the case, viz: 1. If the revocation of the voyage should be decided before the departure of the vessel from the port, each sailor engaged shall be given one month's salary, besides what may be due him in accordance with his contract, for the services rendered to the vessel up to the date of the revocation. 2. If the agreement should have been for a fixed amount for the whole voyage, there shall be graduated what may be due for said month and days, calculating the same in proportion to the estimated duration of the voyage, in the judgment of experts, in the manner established in the law of civil procedure; and if the proposed voyage should be of such short duration that it is calculated at one month more or less, the indemnity shall be fixed for fifteen days, discounting in all cases the sums advanced. 3. If the revocation should take place after the vessel has put to sea, the sailors engaged for a fixed amount for the voyage shall receive the salary which may have been offered them in full as if the voyage had terminated, and those engaged by the month shall receive the amount corresponding to the time they might have been on board and to the time they may require to arrive at the port of destination, the captain being obliged, furthermore, to pay said 4. If the sailors the passage to the said port or to the port of sailing of the vessel, as may be convenient for them. agent or the charterers of the vessel should give said vessel a destination other than that fixed in the agreement, and the members of the crew should not agree thereto, they shall be given by way of indemnity half the amount fixed in case No. 1, besides what may be owed them for the part of the monthly wages corresponding to the days which have elapsed from the date of their agreements. If they accept the change, and the voyage, on account of the greater distance or for other reasons, should give rise to an increase of wages, the latter shall be privately regulated, or through amicable arbitrators in case of disagreement. Even though the voyage may be to a nearer point, this shall not give rise to a reduction in the wages agreed upon. If the revocation or change of the voyage should originate from the shippers or charterers, the agent shall have a right to demand of them the indemnity which is justly due. ARTICLE 639. If the revocation of the voyage should arise from a just cause independent of the will of the agent or charterers, and the vessel should not have left

the port, the members of the crew shall not have any other right than to receive the wages earned up to the day on which the revocation took place. ARTICLE 640. The following shall be just causes for the revocation of the voyage: 1. A declaration of war or interdiction of commerce with the power to whose territory the vessel was bound. 2. The blockade of the port of destination or the breaking out of an epidemic after the agreement. 3. The prohibition to receive in said port the goods which make up the cargo of the vessel. 4. The detention or embargo of the same by order of the Government, or for any other reason independent of the will of the agent. 5. The inability of the vessel to navigate. cdasia ARTICLE 641. If, after a voyage has been begun, any of the first three causes mentioned in the foregoing article should occur, the sailors shall be paid at the port the captain may deem it advisable to make for the benefit of the vessel and cargo, according to the time they may have served thereon; but if the vessel is to continue the voyage, the captain and the crew may mutually demand the enforcement of the contract. In case of the occurrence of the fourth cause, the crew shall continue to be paid half wages, if the agreement is by month but if the detention should exceed three months, the engagement shall be rescinded and the crew shall be paid what they should have earned, according to the contract, if the voyage had been made. And if the agreement had been made for a fixed sum for the voyage, the contract must be complied within the terms agreed upon. In the fifth case, the crew shall not have any other right than be entitled to recover the wages earned; but if the disability of the vessel should have been caused by the negligence or lack of skill of the captain, engineer, or sailing mate, they shall indemnify the crew for the loss suffered, always reserving the criminal liability which may be proper. ARTICLE 642. If the crew has been engaged to work on shares they shall not be entitled, by reason of the revocation, delay, or greater extension of the voyage, to anything but the proportionate part of the indemnity paid into the common funds of the vessel by the persons liable for said occurrences. ARTICLE 643. If the vessel and her freight should be totally lost, by reason of capture or wreck, all rights of the crew to demand any wages whatsoever shall be extinguished, as well as that of the agent for the recovery of the advances made. If a portion of the vessel or freight should be saved, or part of either, the crew engaged on wages, including the captain, shall retain their rights on the salvage, so

far as they go, on the remainder of the vessel as well as value of the freightage or the cargo saved; but sailors who are engaged on shares shall not have any right whatsoever to the salvage of the hull, but only on the portion of the freightage saved. If they should have worked to collect the remainder of the ship-wrecked vessel, they shall be given an award in proportion to the efforts made and to the risks encountered in order to accomplish the salvage. ARTICLE 644. A sailor who falls sick shall not lose his right to wages during the voyage, unless the sickness is the result of his own fault. At any rate, the costs of the attendance and cure shall be defrayed from the common funds, in the form of a loan. If the sickness should be caused by an injury received in the service or defense of the vessel the sailor shall be attended and cured from the common funds, there being deducted before anything else from the proceeds of the freight, the cost of the attendance and cure. ARTICLE 645. If a sailor should die during the voyage his heir shall be given the wages earned and not received, according to his engagement and the reason for his death, namely If he should have died a natural death and should have been engaged on wages there shall be paid what may have been earned up to the date of his death. If the engagement had been made for a fixed sum for the whole voyage there shall be paid half the amount earned if the sailor died on the voyage out, and the whole amount if he died on the return voyage. And if the engagement had been made on shares and the death should have occurred after the voyage was begun, the heirs shall be paid the entire portion due the sailor; but should the latter have died before the departure of the vessel from the port, the heirs shall not be entitled to claim anything. If the death should have occurred in the defense of the vessel, the sailor shall be considered as living, and his heirs shall be paid, at the end of the voyage, the full amount of wages or the full part of the profits due him as to the others of his grade. The sailor shall likewise be considered as present in the event of his capture when defending the vessel, in order to enjoy the same benefits as the rest; but should he have been captured on account of carelessness or other accident not related to the service, he shall only receive the wages due up to the day of his capture. ARTICLE 646. The vessel with her engines, rigging, equipment, and freights shall be liable for the wages earned by the crew engaged per month or for the trip, the liquidation and payment ought to take place between one voyage and the other. After a new voyage has been undertaken, credits such

as the former shall lose their right of preference. ARTICLE 647. The officers and the crew of the vessel shall be exempted from all obligations contracted, if they deem it proper, in the following cases: 1. If, before the beginning of the voyage, the captain attempts to change it, or there occurs a naval war with the power to which the vessel was destined. 2. If a disease should break out and be officially declared epidemic in the port of destination. 3. If the vessel should change owner or captain. Crew and complement not mutually exclusive Ex: 2nd mate- complement and crew but cook and cabin boy- complement but not crew 1st mate: 2nd in command if no captain 2nd mate: 3rd in command 4. Supercargoes, Art 649-651 ARTICLE 649. Supercargoes shall discharge on board the vessel the administrative duties which the agent or shippers may have assigned them; they shall keep an account and record of their transactions in a book which shall have the same conditions and requisites as required for the accounting book of the captain, and shall respect the latter in his duties as chief of the vessel. cdta The powers and liabilities of the captain shall cease, when there is a supercargo, with regard to that part of the administration legitimately conferred upon the latter, but shall continue in force for all acts which are inseparable from his authority and office. ARTICLE 650. All the provisions contained in the second section of Title III, Book II, with regard to qualifications, manner of making contracts, and liabilities of factors shall be applicable to supercargoes. ARTICLE 651. Supercargoes can not, without special authorization or agreement, make any transaction for their own account during the voyage, with the exception of the ventures which, in accordance with the custom of the port of destination, they are permitted to do. Neither shall they be permitted to invest in the return trip more than the profits from the ventures, unless there is a special authorization thereto from the principals.

ARTICLE 806. For the purposes of this Code the following shall be considered averages: 1. All extraordinary or accidental expenses which may be incurred during the navigation for the preservation of the vessel or cargo, or both. 2. All damages or deterioration the vessel may suffer from the time she puts to sea from the port of departure until she casts anchor in the port of destination, and those suffered by the merchandise from the time it is loaded in the port of shipment until it is unloaded in the port of consignment. ARTICLE 807. The petty and ordinary expenses of navigation, such as pilotage of coasts and ports, lighterage and towage, anchorage dues, inspection, health, quarantine, lazaretto, and other so-called port expenses, costs of barges, and unloading, until the merchandise is placed on the wharf, and any other expenses common to navigation shall be considered ordinary expenses to be defrayed by the shipowner, unless there is a special agreement to the contrary. ARTICLE 808. Averages shall be: 1. Simple or particular. 2. General or gross. (1) Simple or Particular (a) Defined, Art 809 ARTICLE 809. Simple or particular averages shall be, as a general rule, all the expenses and damages caused to the vessel or to her cargo which have not redounded to the benefit and common profit of all the persons interested in the vessel and her cargo, and especially the following: 1. The damages suffered by the cargo from the time of its embarkation until it is unloaded, either on account of the nature of the goods or by reason of an accident at sea or force majeure, and the expenses incurred to avoid and repair the same. 2. The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the same causes and reasons, from the time she puts to sea from the port of departure until she anchored in the port of destination. 3. The damages suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it. 4. The wages and victuals of the crew when the vessel should be detained or embargoed by a legitimate order or force majeure, if the charter should have been for a fixed sum for the voyage. 5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions. 6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to cover any other requirement of the vessel against which the proper

D. Accidents and Damages in Maritime Commerce 1. Averages (a) Nature and Kinds, Art 806 to 808

amount shall be charged. 7. The victuals and wages of the crew during the time the vessel is in quarantine. 8. The damage suffered by the vessel or cargo by reason of an impact or collision with another, if it were accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the damage caused. 9. Any damage suffered by the cargo through the faults, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freight. (b) Effects, Art 810 ARTICLE 810. The owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular averages. (2) Gross or General (a) Defined, Art 811, 817, 818 ARTICLE 811. General or gross averages shall be, as a general rule, all the damages and expenses which are deliberately caused in order to save the vessel, her cargo, or both at the same time, from a real and known risk, and particularly the following: 1. The goods or cash invested in the redemption of the vessel or cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the arrangement or redemption is taking place. 2. The goods jettisoned to lighten the vessel, whether they belong to the vessel, to the cargo, or to the crew, and the damage suffered through said act by the goods kept. 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned in order to save the cargo, the vessel, or both. 4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place her in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred. 5. The damage suffered by the goods of the cargo through the opening made in the vessel in order to drain her and prevent her sinking. 6. The expenses caused through floating a vessel intentionally stranded for the purpose of saving her. 7. The damage caused to the vessel which it is necessary to break open, scuttle, or smash in order to save the cargo.

8. The expenses of curing and maintaining the members of the crew who may have been wounded or crippled in defending or saving the vessel. 9. The wages of any member of the crew detained as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it. 10. The wages and victuals of the crew of a vessel chartered by the month during the time it should be embargoed or detained by force majeure or by order of the Government, or in order to repair the damage caused for the common good. 11. The loss suffered in the value of the goods sold at arrivals under stress in order to repair the vessel because of gross average. 12. The expenses of the liquidation of the average. ARTICLE 817. If in lightening a vessel on account of a storm, in order to facilitate her entry into a port or roadstead, part of her cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss has originated from a gross average, the amount thereof being distributed between the entire vessel and cargo which caused the same. If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability can be demanded of the salvage. ARTICLE 818. If, as a necessary measure to extinguish a fire in a port; roadstead; creek, or bay, it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute. (b) Essential Requisites, Arts 813, 814, 860 ARTICLE 813. In order to incur the expenses and cause the damages corresponding to gross average, a previous resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and with a hearing of the persons interested in the cargo who may be present, shall be required. If the latter shall object, and the captain and officers, or a majority, or the captain, if opposed to the majority, should consider certain measures necessary, they may be executed under his liability, without prejudice to the freighters exercising their rights against the captain before the judge or court of competent jurisdiction, if they can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on the vessel, should not be heard, they shall not contribute to the gross average, which contribution shall be paid by the captain, unless the urgency of the case should be

such that the time necessary for previous deliberation was lacking. ARTICLE 814. The resolution adopted to cause the damages which constitute a general average must necessarily be entered in the log book, stating the motives and reasons therefor, the votes against it, and the reasons for the disagreement should there be any, and the irresistible and urgent causes which moved the captain if he acted of his own accord. In the first case the minutes shall be signed by all the persons present who could do so before taking action if possible, and if not at the first opportunity; in the second case by the captain and by the officers of the vessel. In the minutes and after the resolution there shall be stated in detail all the goods cast away, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these minutes to the maritime judicial authority of the first port he may make within twenty-four hours after his arrival, and to ratify it immediately by an oath. ARTICLE 860. If, notwithstanding the jettison of the merchandise, breakage of masts, ropes, and equipment, the vessel should be lost running said risk, no contribution whatsoever by reason of gross average shall be proper. The owners of the goods saved shall not be liable for the indemnity of those jettisoned, lost, or damaged. Magsaysay Inc. v. Agan Expenses to refloat vessel after it was accidentally stranded not general but particular average Defendant cargo owner not liable Requisites of general average: 1) Common danger to ship and cargo, imminent or reasonably so 2) For common safety vessel and cargo, part is sacrificed deliberately 3) Successful saving 4) After proper legal steps and authority CAB: no imminent danger, just to get to destination (c) Effects, Art 812 ARTICLE 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute. (d) Jettison, Arts 815, 816 ARTICLE 815. The captain shall supervise the jettison, and shall order the goods cast overboard in the following order: 1. Those which are on deck, beginning with those which

embarrass the handling of the vessel or damage her, preferring, if possible, the heaviest ones and those of least utility and value. cda 2. Those in the hold, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable. ARTICLE 816. In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary in so far as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory made up before the departure, in accordance with the first paragraph of Article 612. (e) Jason Clauses (See York-Antwerp Rules, Rule D) Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure; but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault. Average: expense or damage not average if: necessary, ordinary/ petty 2. Arrival under stress (a) Causes, Arts 819 and 820 ARTICLE 819. If the captain during the navigation should believe that the vessel can not continue the voyage to the port of destination on account of the lack of provisions, well founded fear of seizure, privateers or pirates, or by reason of any accident of the sea disabling her to navigate, he shall assemble the officers and shall call the persons interested in the cargo who may be present, and who may attend the meeting without the right to vote; and if, after examining the circumstances of the case, the reasons should be considered well founded, it shall be decided to make the nearest and most convenient port drafting and entering in the log book the proper minutes, which shall be signed by all. The captain shall have the deciding vote and the persons interested in the cargo may make the objections and protests they may deem proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable. ARTICLE 820. The arrival under stress shall not be considered legal in the following cases: 1. If the lack of provisions should arise from the failure to take the necessary provisions for the voyage,

according to usage and custom, or if they should have been rendered useless or lost through bad stowage or negligence in their care. 2. If the risk of enemies, privateers, or pirates should not have been well known, manifest, and based on positive and justifiable facts. 3. If the injury to the vessel should have been caused by reason of her not being repaired, rigged, equipped, and arranged in a convenient manner for the voyage, or by reason of some erroneous order of the captain. 4. Whenever malice, negligence, want of foresight, or lack of skill on the part of the captain is the reason for the act causing the damage. (b) Formalities, Art 819, 822 Art 819, supra. ARTICLE 822. If in order to make repairs to the vessel or because there should be danger of the cargo suffering damage it should be necessary to unload, the captain must request authorization of the judge or court of competent jurisdiction to lighten the vessel, and do so with the knowledge of the person interested or representative of the cargo, should there be one. In a foreign port, it shall be the duty of the Spanish * consul, where there is one, to give the authorization. In the first case, the expenses shall be defrayed by the ship agent or owner, and in the second, they shall be for the account of the owners of the merchandise, for whose benefit the act took place. If the unloading should take place for both reasons, the expenses shall be defrayed in proportion to the value of the vessel and that of the cargo. (c) Expenses, Arts 821, 822 ARTICLE 821. The expenses caused by the arrival under stress shall always be for the account of the shipowner or agent, but the latter shall not be liable for the damage which may be caused the shippers by reason of the arrival under stress, provided the latter is legitimate. Otherwise, the shipowner or agent and the captain shall be jointly liable. Art 822, supra. (d) Responsibility of Captain, Arts 823-825 ARTICLE 823. The care and preservation of the cargo which has been unloaded shall be in charge of the captain, who shall be responsible for the same, except in cases of force majeure. ARTICLE 824. If the entire cargo or part thereof should appear to be damaged, or there should be imminent danger of its being damaged, the captain may request

of the judge or court of competent jurisdiction or the consul, in a proper case, the sale of all or of part of the former, and the person taking cognizance of the matter shall authorize it after an examination and declaration of experts, advertisements, and other formalities required by the case and an entry in the book, in accordance with the provisions of Article 624. The captain shall, in a proper case, justify the legality of the procedure, under the penalty of answering to the shipper for the price the merchandise would have brought if it should have arrived at the port of its destination in good condition. ARTICLE 825. The captain shall answer for the damages caused by his delay, if the reason for the arrival under stress having ceased, he should not continue the voyage. If the reason for said arrival should have been the fear of enemies, privateers, or pirates, before sailing, a discussion and resolution of a meeting of the officers of the vessel and persons interested in the cargo who may be present shall take place, in accordance with the provisions contained in Article 819. Arrival under stress: 1. Lack of provisions 2. Well founded fear of seizure, privateers/ pirates 3. Accident of the sea disabling it to navigate 3. Collisions (a) Classes and Effects (1) Fortuitous, Arts 830, 832 ARTICLE 830. If a vessel should collide with another by reason of an accident or through force majeure, each vessel and her cargo shall be liable for their own damage. ARTICLE 832. If, by reason of a storm or other cause of force majeure, a vessel which is properly anchored and moored should collide with those in her immediate vicinity, causing them damage, the injury occasioned shall be looked upon as particular average to the vessel run into. 2 (2) Culpable, Arts 826, 827, 831 ARTICLE 826. If a vessel should collide with another through the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert appraisal. aisadc ARTICLE 827. If both vessels may be blamed for the

collision, each one shall be liable for his own damages, and both shall be jointly responsible for the losses and damages suffered by their cargoes. ARTICLE 831. If a vessel should be forced to collide with another one by a third vessel, the owner of the third vessel shall indemnify for the losses and damages caused, the captain thereof being civilly liable to said owner. (3) Inscrutable Fault, Art 828 ARTICLE 828. The provisions of the foregoing article are applicable to the case in which it can not be decided which of the two vessels was the cause of the collision.

4. cant be determined- solidarily liable to third person (someone was at fault) Loss of ship no longer liable (doctrine of limited liability) 4. Shipwrecks, Arts 840-843 ARTICLE 840. The losses and deteriorations suffered by a vessel and her cargo by reason of shipwreck or stranding shall be individually for the account of the owners, the part of the wreck which may be saved belonging to them in the same proportion. ARTICLE 841. If the wreck or stranding should arise through the malice, negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and prepared, the owner or the freighters may demand indemnity of the captain for the damages caused to the vessel or cargo by the accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621. ARTICLE 842. The goods saved from the wreck shall be specially liable for the payment of the expenses of the respective salvage, and the amount thereof must be paid by the owners of the former before they are delivered to them, and with preference to any other obligation, if the merchandise should be sold. cd05LET ARTICLE 843. If several vessels navigate under convoy, and any of them should be wrecked, the cargo saved shall be distributed among the rest in the proportion to the amount each one can receive. If any captain should refuse, without sufficient cause, to receive what may correspond to him, the captain of the wrecked vessel shall enter a protest against him before two sea officials of the losses and damages resulting therefrom, ratifying the complaint within twenty-four hours after arrival at the first port, and including it in the proceedings he must institute in accordance with the provisions contained in Article 612. Should it not be possible to transfer to the other vessels the entire cargo of the one wrecked, the goods of the highest value and smallest volume shall be saved first, the designation thereof being made by the captain, in concurrence with the officers of his vessel. (a) Salvage Law (Act No. 2616) SECTION 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or shall have been abandoned by them, and picked up and conveyed to a safe place by other persons, the latter shall be entitled to a reward for the salvage. Those who, not being included in the above paragraph,

G. Urrutia and Co v. Baco River Plantation In collision between steamship and sailing ship, when risk appears, steamship with duty to avoid and sailing ship must keep its course. If collision is imminent because of fault of steamship, error done in extremis by sail ship (ie. Turning around) wont make it liable. Steamship liable. National Devt. Comp. v. CA Collisions: Code of Commerce applies, not COGSA (if goods to be transported to the Phils per NCC) even if collision in foreign waters. If collision due to fault or negligence of captain, ship owner is primarily liable. Captain is mere representative of owner with actual or constructive control. Government v. Philippine Steamship Co. Inc. Negligence both vessels (Ship A: allowing dangerous proximity, Ship B: negligence right before collision). If both to blame, both solidarily liable for damage to cargo. But Ship B totally sank so only Ship A liable Smith Bell and Comp. v. CA Collision between Philippine and Japanese powerdriven vessels. Proximate cause- negligence of Philippine vessel 1) Failed to comply with International Rules of Road- 2 power driven vessels risk of collision, should turn starboard (right) but in this case turned portside 2) No proper lookout 3) only 2nd mate and not captain at helm without reason, 2nd mate inexprerienced. Urrutia inapplicable- not 1 sailing and 1 steam ship. Jap vessel took all last minute precautions. Phil vessel liable. Collisions: 1. both at fault- solidarily liable to 3P 2. one at fault- ship owner liable 3. force majeure- no one liable

assist in saving a vessel or its cargo from shipwreck, shall be entitled to a like reward. SECTION 2. If the captain of the vessel, or the person acting in his stead, is present, no one shall take from the sea, or from the shores or coast merchandise or effects proceeding from a shipwreck or proceed to the salvage of the vessel, without the consent of such captain or person acting in his stead. SECTION 3. He who shall save or pick up a vessel or merchandise at sea, in the absence of the captain of the vessel, owner, or a representative of either of them, they being unknown, shall convey and deliver such vessel or merchandise, as soon as possible, to the Collector of Customs, if the port has a collector, and otherwise to the provincial treasurer or municipal mayor. SECTION 4. After the salvage is accomplished, the owner or his representative shall have a right to the delivery of the vessel or things saved, provided that he pays, or gives a bond to secure, the expenses and the proper reward. The amount and sufficiency of the bond, in the absence of agreement, shall be determined by the Collector of Customs or by the Judge of the Court of First Instance of the province in which the things saved may be found. SECTION 5. The Collector of Customs, provincial treasurer, or municipal mayor, to whom a salvage is reported, shall order: a. That the things saved be safeguard and inventoried. b. The sale at public auction of the things saved which may be in danger of immediate loss or of those whose conservation is evidently prejudicial to the interests of the owner, when no objection is made to such sale. c. The advertisement within the thirty days subsequent to the salvage, in one of the local newspapers or in the nearest newspaper published, of all the details of the disaster, with a statement of the mark and number of the effects requesting all interested persons to make their claims. SECTION 6. If, while the vessel or things saved are at the disposition of the authorities, the owner or his representative shall claim them, such authorities shall order their delivery to such owner or his representative, provided that there is no controversy over their value,

and a bond is given by the owner or his representative to secure the payment of the expenses and the proper reward. Otherwise, the delivery shall nor be made until the matter is decided by the Court of First Instance of the province. SECTION 7. No claim being presented in the three months subsequent to the publication of the advertisement prescribed in sub-section (c) of Section five, the things save shall be sold at public auction, and their proceeds, after deducting the expenses and the proper reward shall be deposited in the insular treasury. If three years shall pass without anyone claiming it, onehalf of the deposit shall be adjudged to him who saved the things, and the other half to the insular government. SECTION 8. The following shall have no right to a reward for salvage or assistance: a. The crew of the vessel shipwrecked or which was is danger of shipwreck; b. He who shall have commenced the salvage in spite of opposition of the captain or his representative; and c. He who shall have failed to comply with the provisions of Section three. SECTION 9. If, during the danger, an agreement is entered into concerning the amount of the reward for salvage or assistance, its validity may be impugned because it is excessive, and it may be required to be reduced to an amount proportionate to the circumstances. SECTION 10. In a case coming under the last preceding section, as well as in the absence of an agreement, the reward for salvage or assistance shall be fixed by the Court of First Instance of the province where the things salvaged are found, taking into account principally the expenditures made to recover or save the vessel or the cargo or both, the zeal demonstrated, the time employed, the services rendered, the excessive express occasioned the number of persons who aided, the danger to which they and their vessels were exposed as well as that which menaced the things recovered or salvaged, and the value of such things after deducting the expenses. SECTION 11. From the proceeds of the sale of the things saved shall be deducted, first, the expenses of their custody, conservation, advertisement, and auction, as

well as whatever taxes or duties they should pay for their entrance; then there shall be deducted the expenses of salvage; and from the net amount remaining shall be taken the reward for the salvage or assistance which shall not exceed fifty per cent of such amount remaining. SECTION 12. If in the salvage or in the rendering of assistance different persons shall have intervened the reward shall be divided between them in proportion to the services which each one may have rendered, and, in case of doubt, in equal parts. Those who, in order to save persons, shall have been exposed to the same dangers shall also have a right to participation in the reward. SECTION 13. If a vessel or its cargo shall have been assisted or saved, entirely or partially, by another vessel, the reward for salvage or for assistance shall be divided between the owner, the captain, and the remainder of the crew of the latter vessel, so as to give the owner a half, the captain a fourth, and all the remainder of the crew the other fourth of the reward, in proportion to their respective salaries, in the absence of an agreement to the contrary. The express of salvage, as well as the reward for salvage or assistance, shall be a charge on the things salvaged on their value.

Barrios v. Go Thong Not salvage if no marine peril. Contract of towage exists when vessel consented to pets offer to tow. But in towage, only owner of towing vessel and not captain/ crew entitled to enumeration, captain cant recover 3 Concepts of Salvage 1. Service/ act 2. Goods rescued 3. Compensation Requirements: 1. Marine peril 2. Voluntary 3. Success 4. Derelict E. Special Contracts of Marine Commerce 1. Charter Parties a. Definition b. Kinds Planters Products v. CA/Coastwise Lighterage Corp. v. CA Charter party: contract where entire ship/ principal part is let by owner for specified time/ use Types: 1. Contract of affreightment- lease of shipping space to carry goods a) Time charter for fixed period b) Voyage charter- for 1 voyage 2. Charter by demise or bareboat- whole vessel is let with transfer of entire command and possession, control over navigation -owner must completely and exclusively relinquish command, possession and navigation to charterer; anything short of complete transfer is affreightment Affreightment= common carrier Bareboat= private Caltex Phils. v. Sulpicio Lines Charterer with duty to observe ordinary diligence to contract with good common carrier; no duty to see if CC complies with all legal requirments

G. Urrutia & Co. v. Pasig Steamer and Lighter Co. Towage of vessel in peril when its unable by itself to reach safe place = service of salvage not towage. Pay compensation/ reward to labor. Erlanger & Galinger v. Swedish East Asiatic Co. Elements of Salvage 1) Marine peril 2) Service voluntarily rendered 3) Success Ship abandoned (Derelict) though with intent of captain to save it. Abandonment by all on board when vessel in peril- justifies third person in taking possession with bona fide intention of saving it

Atlantic Gulf & Pacific Comp. v. Uchida Kisen Kaisha To determine reward for salvage, consider: Depth of water, time spent salvaging, if vessel never in danger of loss, simplicity of salvage, danger to lives of others, value of equipment, salvors energy and promptness. CAB: 5K reward

2. Loans on Bottomry and Respondentia a. Loan on Bottomry, defined A loan secured by the ship owner or ship agent guaranteed by the vessel itself and payable only upon arrival of the vessel at destination. This can also be secured by the captain outside the residence of the ship owner or ship agent.

b. Loan on Respondentia, defined A loan secured by the owner of the cargo payable upn safe arrival of the cargo at destination. The ship owner, agent or captain cannot secure the loan. c. Character of Loan, Art. 719 ARTICLE 719. A loan on bottomry or respondentia shall be considered that which the repayment of the sum loaned and the premium stipulated, under any condition whatsoever, depends on the safe arrival in port of the goods on which it is made, or of their value in case of accident. Note: uncommon now, other ways to finance with less risk to lender F. Bill of Lading 1. Contents Art 706, 707, 713, 714 ARTICLE 706. The captain and the freighter of the vessel are obliged to draft the bill of lading, in which there shall be stated: 1. The name, registry, and tonnage of the vessel. 2. The name of the captain and his domicile. 3. The port of loading and that of unloading. 4. The name of the shipper. 5. The name of the consignee, if the bill of lading is issued to order. 6. The quantity, quality, number of packages, and marks of the merchandise. 7. The freight and the primage stipulated. The bill of lading may be issued to bearer, to order, or in the name of a specific person, and must be signed within twenty-four hours after the cargo has been received on board, the freighter being able to request the unloading thereof at the expense of the captain should he not sign it, and in every case indemnity for the losses and damages suffered thereby. cdasia ARTICLE 707. Four true copies of the original bill of lading shall be made, all of which shall be signed by the captain and by the freighter. Of these copies the freighter shall keep one and send another to the consignee; the captain shall take two, one for himself and another for the agent. There may, furthermore, be made as many copies of the bill of lading as may be considered necessary by the persons interested; but when they are issued to order or to the bearer there shall be stated in all the copies, be they either of the first four or of the subsequent ones, the destination of each one, stating whether it is

for the agent, for the captain, for the freighter, or for the consignee. If the copy sent to the latter should be duplicated there must be stated in said duplicate this fact, and that it is not valid except in case of the loss of the first one. ARTICLE 713. If before delivering the cargo a new bill of lading should be demanded of the captain, it being alleged that the previous ones are not presented on account of their loss or for any other sufficient cause, he shall be obliged to issue it, provided security for the value of the cargo is given to his satisfaction; but without changing the consignment and stating therein the circumstances prescribed in the last paragraph of Article 707, when the bills of lading referred to therein are in question, under the penalty otherwise to be liable for said cargo if not properly delivered through his fault. ARTICLE 714. If before the vessel puts to sea the captain should die or should discontinue in his position through any accident, the freighters shall have a right to demand of the new captain the ratification of the first bills of lading, and the latter must do so, provided all the copies previously issued be presented or returned to him, and it should appear from an examination of the cargo that they are correct. The expenses arising from the examination of the cargo shall be defrayed by the agent, without prejudice to the right of action of the latter against the first captain, if he ceased to be such through his own fault. Should said examination not be made, it shall be understood that the new captain accepts the cargo as it appears from the bills of lading issued. 2. Probative Value, Arts, 709, 710 ARTICLE 709. A bill of lading drawn up in accordance with the provisions of this title shall be proof as between all those interested in the cargo and between the latter and the underwriters, proof to the contrary being reserved by the latter. ARTICLE 710. Should the bills of lading not agree, and there should not be observed any correction or erasure in any of them, those possessed by the freighter or consignee signed by the captain shall be proof against the captain or agent in favor of the consignee or freighter; and those possessed by the captain or agent signed by the freighter shall be proof against the freighter or consignee in favor of the captain or agent. G. Passenger on Sea Voyage 1. Nature of Contracts, Art 695 ARTICLE 695. The right to passage, if issued to a specified person, can not be transferred without the consent of the captain or of the consignee.

2. Obligations of Passengers, Arts 693, 699, 704, 694, 700 ARTICLE 693. Should the passage price not have been agreed upon, the judge or court shall summarily fix it, after a statement of experts. ARTICLE 699. After the contract has been rescinded, before or after the commencement of the voyage, the captain shall have a right to claim payment for what he may have furnished the passengers. ARTICLE 704. The captain, in order to collect the price of the passage and expenses of maintenance, may retain the goods belonging to the passenger, and in case of the sale of the same he shall be given preference over the other creditors, acting in the same way as in the collection of freight. ARTICLE 694. Should the passenger not arrive on board at the time fixed, or should leave the vessel without permission from the captain, when the latter is ready to leave the port, the captain may continue the voyage and demand the full passage price. ARTICLE 700. In all that relates to the preservation of order and police on board the vessel the passengers shall conform to the orders given by the captain, without any distinction whatsoever. 3. Rights of Passengers, Arts. 697, 698 ARTICLE 697. If before beginning the voyage it should be suspended through the sole fault of the captain or agent, the passengers shall be entitled to have their passage refunded and to recover for losses and damages; but if the suspension was due to an accidental cause, or to force majeure, or to any other cause beyond the control of the captain or agent, the passengers shall only be entitled to the return of the passage money. cd ARTICLE 698. In case a voyage already begun should be interrupted the passengers shall be obliged only to pay the passage in proportion to the distance covered, and shall not be entitled to recover for losses and damages if the interruption is due to an accidental cause or to force majeure, but have a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be by reason of the disability of the vessel, and the passenger should agree to await her repair, he can not be required to pay any increased price of passage, but his living expenses during the delay shall be for his own account. In case the departure of the vessel is delayed the passengers have a right to remain on board and to be furnished with food for the account of the vessel, unless the delay is due to an accidental cause or to force

majeure. If the delay should exceed ten days, the passengers who request it shall be entitled to the return of the passage; and if it were due exclusively to the captain or agent they may furthermore demand indemnity for losses and damages. A vessel which is exclusively destined to the transportation of passengers must take them directly to the port or ports of destination, no matter what the number of passengers may be, making all the stops indicated in her itinerary. Suspension Delay Passengers not yet Passengers onboard and announce board later departure

already

on

Sweet Lines v. CA Without force majeure/ fortuitous event, passenger with right to indemnity against captain who fails to fulfill undertaking/ interruption caused by captain. Shipowner and ship agent liable for acts of captain. CAB: by-passed Catbalogan and went to Tacloban Trans-Asia Shipping v. CA If delay incurred after voyage commence, Art 698 of Code of Commerce applies- failure to observe ED liable for indemnity (read Code of Commerce with NCC). Liable for loss of profits/ pecuniary loss duly proven, it assumes passenger on vessel when delayed. CAB: passenger disembarked, he caused own delay J. Carriage of Goods by Sea Act (CA No. 65; Public Act No. 521, 74th US Congres) See Beda/Quimbo COGSA Application. Hierarchy per Art 1766 1. NCC 2. Code of Commerce 3. COGSA Ang v. American Steamship Agencies 1 year prescription for suit only applies to loss/ damage not misdelivery (deliver to wrong person) or conversion of goods. Apply NCC: 10 years- written contract, 4 years- tort F.H. Stevens v. Nordeutscher If action duly filed within 1 year from notice of delivery is dismissed for lack of jurisdiction. Period to file action for loss/ damage renewed for 1 more year starting from date after dismissal. VI. Air Transportation

1. Constitutionality Santos v. Northwest Warsaw Convention is constitutional. It is a treaty adhered to by the Phils. and has force of law in the Phils. It was not renounced by the Phils despite changes in airline industry after Convention. Rebus sic stanibus (unforeseen vital changes) inapplicable 2. When applicable, Art. 1(1) 1. This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking 2. For the purposes of this Convention the expression "international carriage" means any carriage in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention. A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention 3. A carriage to be performed by several successive air carriers is deemed, for the purposes of this Convention, to be one undivided carriage, if it has been regarded by the parties as a single operation, whether it had been agreed upon under the form of a single contract or of a series of contracts, and it does 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, suzerainty, mandate or authority of the same High Contracting Party. -both High Contracting Parties -Which prevails, NCC or Warsaw? If facts show international air carriage, Warsaw applies first (per jurisprudence) 3. Liabilities under the Convention, Art 17, 18, 19 Article 17 The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the

operations of embarking or disembarking. Article 18 1. The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air. 2. The carriage by air within the meaning of the preceding paragraph comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever. 3. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air. Article 19 The carrier is liable for damage occasioned by delay in the carriage by air of passengers, luggage or goods. Northwest v. Cuenca Art 17-19 of Warsaw doesnt exclude liability for other breaches of contract. CAB: Bumping 1st class passengers to tourist class, delegate of RP Alitalia v. IAC Warsaw not exclusive enumeration of airlines liability/ limit of liability. Not applicable if theres bad fatih/ improper conduct of airline. CAB: even if no BF, still award nominal damages beyond limit- damages not for lost baggage but for special injury (not read paper in conference because of baggage was lost) 4. Limitations on Liability, Art 22 Article 22 1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of 125,000 francs. Where, in accordance with the law of the Court seised of the case, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed 125,000 francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability. 2. In the carriage of registered luggage and of goods, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the consignor has made, at

the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery. 3. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to 5,000 francs per passenger. 4. The sums mentioned above shall be deemed to refer to the French franc consisting of 65 milligrams gold of millesimal fineness 900. These sums may be converted into any national currency in round figures. Pan Am v. IAC Printed stipulation at back of ticket limiting liability of airline for lost baggage per Warsaw at $20 per kilo (checked bag)- valid. Passenger bound by contract, contract of adhesion (can reject or declare higher value and pay) Limitations: Passenger: $100,000 Checked baggage: $20 per kilo Unchecked: $1,000 max 5. When limitations unavailable, Art 3, 25 Article 3 1. For the carriage of passengers the carrier must deliver a passenger ticket which shall contain the following particulars:(a) the place and date of issue; (b) the place of departure and of destination; (c) the agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity, and that if he exercises that right, the alteration shall not have the effect of depriving the carriage of its international character; (d) the name and address of the carrier or carriers; (e) a statement that the carriage is subject to the rules relating to liability established by this Convention. 2. The absence, irregularity or loss of the passenger ticket does not affect the existence or the validity of the contract of carriage, which shall none the less be subject to the rules of this Convention. Nevertheless, if the carrier accepts a passenger without a passenger ticket having been delivered he shall not be entitled to avail himself of those provisions of this Convention which exclude or limit his liability. Article 25 1. The carrier shall not be entitled to avail himself of the provisions of this Convention which exclude or limit his

liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the Court seised of the case, is considered to be equivalent to wilful misconduct. 2. Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused as aforesaid by any agent of the carrier acting within the scope of his employment. TWA v. CA Awarded moral and exemplary damages beyond Warsaw limits. 1st class passenger discriminated and downgraded to economy, switched to smaller plan prejudice 1st class. Bad faith of airline- moral damages 6. Conditions on Imposition of Liability, Art 26, 28, 29 Article 26 1. Receipt by the person entitled to delivery of luggage or goods without complaint is prima facie evidence that the same have been delivered in good condition and in accordance with the document of carriage. 2. In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within three days from the date of receipt in the case of luggage and seven days from the date of receipt in the case of goods. In the case of delay the complaint must be made at the latest within fourteen days from the date on which the luggage or goods have been placed at his disposal. 3. Every complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the times aforesaid. 4. Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part. Article 28 1. An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the Court having jurisdiction at the place of destination. 2. Questions of procedure shall be governed by the law of the Court seised of the case. Article 29 1. The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

2. The method of calculating the period of limitation shall be determined by the law of the Court seised of the case.

Santos v. Northwest Phils. no jurisdiction per Art 28(1) of Waarsaw. Must be: 1) Domicile of CC (Minn) 2) Principal place of business (Minn) 3) Place of business where contract was entered into (SanFo) 4) Place of destination (SanFo) CAB: SanFo-Tokyo-Mla-Tokyo-SAnFo. Ultimate destination SanFo, Manila just stopping place Luna v. CA Failure to file claim with CC within period in Warsaw not ground for summary dismissal. CC can still be liable for breach of other laws with different period. Warsaw not exclusive enumeration of liability of airline Lhuillier v. British Airways Art 28 (1) of Warsaw applies and Makati RTC without jurisdiction 1) Domicile (UK) 2) Principal place of business (UK) 3) Contract (Italy) 4) Destinaiton (Italy) Warsaw applies even if cause of action based on tort (not breach of contract) PAL v. Savillo Not covered by Warsaw, hence prescription 2 years doesnt apply. Negligence of PAL didnt occur during contract of carriage but days before flight- failed to endorse ticket for plaintiff to board Sing Air. Action based on tort- NCC prescription. (cf. If claims incidental to dely in transportation- Warsaw) United Airlines v. Uy Court didnt apply 2 year prescriptive period in Warsaw. 1st cause of action (humiliating treatment of EEs in airport) outside Warsaw coverage, 2nd cause of action (theft/damage to baggage) within Warsaw, 2 year limitation absolute bar and not tolled by extrajudicial demand per law of forum But in CAB: CCs fault why plaintiff didnt file on time B. Passenger Rights Joint DOTC-DTI Administrative Order No. 01, Series 2012