San Beda College of Law

54
MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ CARRIAGE
A contract whereby a person, natural or juridical,
obligates to transport persons, goods, or both, from one
place to another, by land, air or water, for a price or
compensation.
Cla!"#a$!on%
1. Common or Private
2. Goods or Passengers
. !or a fee "for hire# or Gratuitous
$. %and, &ater'maritime, or Air
(. )omestic'inter*island'coastwise or
+nternational'foreign
+t is a relationship which is imbued with the public
interest.
COMMON CARRIER
Persons, corporations, ,rms or associations engaged in
the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation,
o-ering their services to the public "Art. 1.2, Civil Code#.
Art. 1.2 of the /ew Civil Code avoids any distinction
between one whose principal business activity is the
carrying of persons or goods or both and one who does
such carrying only as an ancillary activity "sideline#. +t
also avoids a distinction between a person or enterprise
o-ering transportation service on a regular or scheduled
basis and one o-ering such service on an occasional,
episodic or unscheduled basis.
/either does the law distinguish between a carrier
o-ering its services to the general public that is the
general community or population and one who o-ers
services or solicits business only from a narrow segment
of the general population.
A person or entity is a common carrier even if he did
not secure a Certi,cate of Public Convenience ")e
Gu0man vs. CA, 112 3C4A 112#.
+t ma5es no distinction as to the means of transporting,
as long as it is by land, water or air. +t does not provide
that the transportation should be by motor vehicle. "!irst
Philippine +ndustrial Corporation vs. CA#
6ne is a common carrier even if he has no ,7ed and
publicly 5nown route, maintains no terminals, and issues
no tic5ets "Asia %ighterage 3hipping, +nc. vs. CA#.
C&a'a#$e'!$!#%
1. 8nderta5es to carry for all people indi-erently and
thus is liable for refusal without su9cient reason
"%astimoso vs. )oliente, 6ctober 2:, 1;11#<
2. Cannot lawfully decline to accept a particular class
of goods for carriage to the prejudice of the tra9c
in these goods<
. /o monopoly is favored "=atangas >rans. vs.
6rlanes, (2 P?+% $((#<
$. Provides public convenience.
PRI(ATE CARRIER
6ne which, without being engaged in the business of
carrying as a public employment, underta5es to deliver
goods or passengers for compensation. "?ome +nsurance
Co. vs. American 3teamship Agency, 2 3C4A 2$#
TESTS W)ET)ER CARRIER IS COMMON OR
PRI(ATE%
>he 3C in !irst Philippine +ndustrial Corporation vs. CA
"1;;(# reiterated the following tests@
1. +t must be engaged in the business of carrying
goods for others as a public employment and
must hold itself out as ready to engage in the
transportation of goods generally as a business
and not as a casual occupation<
2. +t must underta5e to carry goods of the 5ind to
which its business in con,ned<
. +t must underta5e to carry by the method by
which his business is conducted and over its
established roads< and
$. >he transportation must be for hire.
+n /ational 3teel Corp. vs. CA "1;;.# the 3C held that
the true test of a common carrier is the carriage of goods
or passengers provided it has space for all who opt to
avail themselves of its transportation for a fee.

COMMON CARRIER PRI(ATE
CARRIER
1. As to availability
?olds himself out for
all people
indiscriminately
Contracts with
particular individuals
or groups only
2. As to reAuired diligence
B7traordinary
diligence is reAuired
6rdinary diligence is
reAuired
. As to regulation
3ubject to 3tate
regulation
/ot subject to 3tate
regulation
$. 3tipulation limiting liability
Parties may not agree
on limiting the
carrierCs liability
e7cept when provided
by law
Parties may limit the
carrierCs liability,
provided it is not
contrary to law,
morals or good
customs
(. B7empting circumstance
Prove e7traordinary
diligence and Art.
1., /CC
caso fortuito, Art.
11.$ /CC
1.Presumption of negligence
>here is a
presumption of fault
or negligence
/o presumption of
fault or negligence
..Governing law
%aw on common
carriers
%aw on obligations
and contracts
GO(ERNING LAWS
A* Do+e$!#/!n$e',!land/#oa$w!e
Applicable to %and, &ater, and Air transportation
1. Civil Code * primary
2. Code of Commerce "Arts. $;, .;, (.*.$, (2:,
2:1*2$(# * suppletory
B* In$e'na$!onal/fo'e!gn/o-e'ea .Fo'e!gn #o/n$'0
$o P&!l!11!ne2
Applicable to &ater'maritime and Air transportation
>he law of the country of destination generally applies.
1. Civil Code * primary
2. Code of Commerce * suppletory
. 6thers * suppletory
a. &ater'maritime@ Carriage of Goods by 3ea Act
"C6G3A#
b. Air@ &arsaw Convention
San Beda College of Law
55
MEMORY AID IN COMMERCIAL LAW
I* NEW CI(IL CODE
.A'$* 3456,34772
RE89IREMENT OF E:TRAORDINARY DILIGENCE
4endition of service with the greatest s5ill and utmost
foresight. ")avao 3tevedore Co. v. !ernande0#
Rationale:
1. !rom the nature of the business and for reasons
of public policy "Art. 1.#
2. 4elationship of trust
. =usiness is impressed with a special public duty
$. Possession of the goods
(. Preciousness of human life
A common carrier is not an absolute insurer of all ris5s of
travel.
CO(ERAGE
1. Digilance over goods "Arts. 1.$*1.($#< and
2. 3afety of passengers "Arts. 1.((*1.1#.
PASSENGER
A person who has entered into a contract of carriage,
e7press or implied, with the carrier. >hey are entitled to
e7traordinary diligence from the common carrier.
>he following are not considered passengers, and are
entitled to ordinary diligence only@
a. 6ne who has not yet boarded any part of a
vehicle regardless of whether or not he has
purchased a tic5et<
b. 6ne who remains on a carrier for an
unreasonable length of time after he has been
a-orded every safe opportunity to alight<
c. 6ne who has boarded by fraud, stealth, or deceit<
d. 6ne who attempts to board a moving vehicle,
although he has a tic5et, unless the attempt be
with the 5nowledge and consent of the carrier<
e. 6ne who has boarded a wrong vehicle, has been
properly informed of such fact, and on alighting,
is injured by the carrier<
f. +nvited guests and accommodation passengers.
"%ara vs. Dalencia#
g. 6ne who rides any part of the vehicle which is
unsuitable or dangerous or which he 5nows is not
designed or intended for passengers.
DEFENSES OF A COMMON CARRIER IN T)E
CARRIAGE OF GOODS
1. CA36 !64>8+>6'!64CB EAFB84B
Re;/!!$e%
a. Eust be the pro7imate and only cause of the loss
b. B7ercise of due diligence to prevent or minimi0e
the loss before, during or after the occurrence of the
disaster "Art. 1.;#
c. Carrier has not negligently incurred in delay in
transporting the goods "Art. 1.$:#
!ire is not considered a natural disaster or calamity as it
arises almost invariably from some act of man. "Bastern
3hipping %ines +nc. vs. +AC#
Eechanical defects are not force majeure if the same
was discoverable by regular and adeAuate inspections.
(Notes and Cases on the Law on Transportation and Public
Utilities, Aquino, T. & ernando, R.P. !""# ed. p.$!"%$!!&
2. AC>3 6! P8=%+C B/BEG
Re;/!!$e%
a. Eust be the pro7imate and only cause of the loss
b. B7ercise of due diligence to prevent or minimi0e
the loss before, during or after the act causing the
loss, deterioration or destruction of the goods "Art.
1.;#
. /BG%+GB/CB 6! >?B 3?+PPB4 64 6&/B4
a. 3ole and pro7imate cause@ absolute defense
b. Contributory@ partial defense. "Art. 1.$1#
$. C?A4AC>B4 6! >?B G66)3 64 )B!BC>3 +/ >?B
PACH+/G 64 +/ >?B C6/>A+/B4
Bven if the damage should be caused by the inherent
defect'character of the goods, the common carrier must
e7ercise due diligence to forestall or lessen the loss. "Art.
1.$2#
>he carrier which, 5nowing the fact of improper pac5ing
of the goods upon ordinary observation, still accepts the
goods notwithstanding such condition, is not relieved of
liability or loss or injury resulting therefrom. "3outhern
%ines, +nc. v. CA, $ 3C4A 2(2#
(. 64)B4 64 AC> 6! P8=%+C A8>?64+>G
3aid public authority must have the power to issue the
order "Art. 1.$#. ConseAuently, where the o9cer acts
without legal process, the common carrier will be held
liable. "Gan0on v. CA 111 3C4A 1$1#
)iligence in the selection and supervision of employees
under Article 212: of the Civil Code cannot be interposed
as a defense by the common carrier because the liability
of the carriers arises from the breach of the contract of
carriage. >he defense under said articles is applicable to
negligence in Auasi*delicts under Art. 21.1. ")el Prado v.
Eanila Blectric Co., (2 Phil ;::#
LIABILITY OF A COMMON CARRIER FOR
DEAT) OR IN<9RIES TO PASSENGERS D9E TO ACTS
OF ITS EMPLOYEES AND OT)ER PASSENGERS OR
STRANGERS
FOR ACTS OF ITS
EMPLOYEES
FOR ACTS OF
OT)ER
PASSENGERS OR
STRANGERS
4eAuired diligence and defense
B7traordinary
diligence
6rdinary diligence
/ature of liability
>ort< however,
>he employee must
be on duty at the
time of the act.
"Earanan v. Pere0#
/ot absolute< limited
by Art. 1.1
>he carrier is liable when its personnel allowed a
passenger to drive the vehicle causing it to collide with
another vehicle resulting to the injuries su-ered by the
other passengers. "E44 vs. =allesteros, 11 3C4A 1$1#
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS
Pa'$!e
1. Common carrier
2. 3hipper
. Consignee
1. Common carrier
2. Passenger
San Beda College of Law
57
MEMORY AID IN COMMERCIAL LAW
Ca/e of l!a=!l!$0
)elay in delivery, loss, destruction, or
deterioration of the goods
)eath or injury to the passengers
D/'a$!on of l!a=!l!$0
!rom the time the goods are unconditionally
placed in the possession of, and received by the
carrier for transportation until the same are
delivered actually or constructively by the
carrier to the consignee or to the person who
has the right to receive them. "Art. 1.1#
+t remains in full force and e-ect even when
they are temporarily unloaded or stored in
transit unless the shipper or owner has made
use of the right of stoppage in transitu. "Art.
1..#
+t continues to be operative even during the
time the goods are stored in a warehouse of the
carrier at the place of destination until the
consignee has bee advised of the arrival of the
goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose
of them. "Art. 1.2#
)elivery of goods to the custom authorities is
not delivery to the consignee. "%u )o v.
=inamira, 1:1 Phil 12:#
>he duty of a common carrier to provide safety
to its passengers so obligates it not only during
the course of the trip, but for so long as the
passengers are within its premises and where
they ought to be in pursuance to the contract
of carriage. "%4>A v. /avidad, I2::J#
All persons who remain on the premises within
a reasonable time after leaving the conveyance
are to be deemed passengers, and what is a
reasonable time or a reasonable delay within
this rule is to be determined from all the
circumstances, and includes a reasonable time
to see after his baggage and prepare for his
departure. "%a Eallorca v. CA, 1. 3C4A .; <
Abioti0 3hipping Corporation v. CA, 1.; 3C4A
;(#
+t is the duty of common carriers of
passengers to stop their conveyances a
reasonable length of time in order to a-ord
passengers an opportunity to enter, and they
are liable for injuries su-ered from the sudden
starting up or jer5ing of their conveyances
while doing so. >he duty which the carrier of
passengers owes to its patrons e7tends to
persons boarding the cars as well as to those
alighting therefrom ")angwa >rans Co., +nc. vs.
CA 2:2 3C4A (.$#.
P'e/+1$!on of negl!gen#e
Art.1.( Civil Code
4eason@ As to when and how goods were
damaged in transit is a matter peculiarly within
the 5nowledge of the carrier and its employees.
"Eirasol v. )ollar, ( P?+% 12$#
Eere proof of delivery of goods to a carrier in
good order and the subseAuent arrival of the
same goods at the place of destination in bad
order ma5es for a prima facie case against the
carrier. "Coastwise %ighterage Corp. v. CA, 2$(
3C4A .;1#
Art.1.(( Civil Code
4eason@ >he contract between the passenger
and the carrier imposes on the latter the duty
to transport the passenger safely< hence the
burden of e7plaining should fall on the carrier.
Defene
1. 6rdinary circumstance@ B7ercise of
e7traordinary diligence "Art. 1.(#
2. 3pecial circumstances@
a. !lood, storm, earthAua5e, lighting,
or other natural disaster or
calamity "plus force majeure#
b. Act of the public enemy in war,
whether international or civil
c. Act or omission of the shipper or
the owner of goods
d. >he character of the goods or
defects in the pac5ing or in the
containers
e. 6rder or act of competent public
authority "Art. 1.$#
1. B7ercise of e7traordinary diligence
"Art. 1.(1#
2. Caso fortuito
San Beda College of Law
54
MEMORY AID IN COMMERCIAL LAW
(al!d $!1/la$!on
1. 4eduction of degree of diligence to ordinary
diligence, provided it be@
a# +n writing, signed by the shipper or
owner<
b# 3upported by a valuable consideration
other than the service rendered by the
carriers< and
c# 4easonable, just and not contrary to
public policy. "Art. 1.$$#
2. !i7ed amount of liability@ A contract ,7ing the
sum to be recovered by the owner or shipper for
the loss, destruction or deterioration of the
goods, if it is reasonable and just under the
circumstances and has been fairly and freely
agreed upon. "Art. 1.(:#
. %imited liability for delay@ An agreement
limiting the common carrierCs liability for delay
on account of stri5es or riots "Art. 1.$2#
$. 3tipulation limiting liability to the value of the
goods appearing in the bill of lading, unless the
shipper or owner declares a greater value. "Art.
1.$;#
>he diligence reAuired in the carriage of the
goods may be reduced by only one degree, from
e7traordinary to ordinary diligence or diligence
of a good father of a family. "Art. 1.$$, Art.
1.$(, no. $#
3tipulation limiting liability when a passenger is
carried gratuitously, but not for willful acts or
gross negligence. "Art. 1.(2#
(o!d $!1/la$!on
1. >hat the goods are transported at the ris5
of the owner or shipper<
2. >hat carrier will not be liable for any loss,
destruction or deterioration of the goods<
. >hat the carrier need not observe any
diligence in the custody of the goods<
$. >hat the carrier shall e7ercise a degree of
diligence less than that of a good father of a
family over the movable transported<
(. >hat the carrier shall not be responsible for
the acts or omissions of his or its employees<
1. >hat the carrierCs liability for acts
committed by thieves or robbers who do not
act with grave or irresistible threat, violence or
force is dispensed with or diminished<
.. >hat the carrier is not responsible for the
loss, destruction or deterioration of the goods
on account of the defective condition of the
car, vehicle, ship or other eAuipment used in
the contract of carriage. "Art. 1.$(#
)ispensing with or lessening the e7traordinary
responsibility of a common carrier for the
safety of passengers imposed by law by
stipulation, by posting of notices, by
statements on tic5ets or otherwise. "Art. 1.(.#
R9LES ON PASSENGERS> BAGGAGE
IN T)E C9STODY OF
T)E PASSENGERS
.)AND,CARRIED2
IN T)E C9STODY
OF T)E COMMON
CARRIER
.C)EC?ED,IN2
Legal na$/'e of $&e =aggage
/ecessary deposit Considered as
KgoodsL
Re;/!'ed d!l!gen#e =0 $&e #o++on
#a''!e'
)iligence of a
depositary "ordinary
diligence#
B7traordinary
diligence
A11l!#a=le '/le
Arts. 1;;2 and 2:::*
2::
Arts. 1.*1.(
CONC9RRING CA9SES OF ACTION ARISING FROM
T)E NEGLIGENT ACT OF T)E COMMON CARRIER
1. Culpa contractual "breach of contract#
6nly the carrier is primarily liable and not the driver,
because there is no privity between the driver and the
passenger.
=asis@ Art.1.(;, /CC.
/o defense of due diligence in the selection and
supervision of employees.
2. Culpa aquiliana "Auasi*delict#
>he carrier and driver are solidarily liable as joint
tortfeasors.
=asis@ Art. 212:, /CC.
)efense of due diligence in the selection and supervision
of employees is available. B7ception@ maritime tort
resulting in collision. "'ee notes on Collision#
. Culpa cri(inal "criminal negligence#
>he driver is primarily liable. >he carrier is subsidiarily
liable only if the driver is convicted and declared insolvent.
=asis@ Art. 1::, 4PC.
+n case of injury to a passenger due to the negligence of
the driver of the bus on which he is riding and of the driver
of another vehicle, the drivers as well as the owners of the
two vehicles are jointly and severally liable for damages.
+t ma5es no di-erence that the liability of the bus driver
and owner springs from contract while that of the owner
and driver of the other vehicle arises from Auasi*delict.
"!abre vs. CA#
LIMITATIONS AS TO CARRIER>S LIABILITY
IN(ALID AS BEING
CONTRARY TO
P9BLIC POLICY
(ALID @
ENFORCEABLE
1. 6ne e7empting the
carrier from any and
all liability for loss or
damage occasioned by
its own negligence.
2. An unAuali,ed
limitation of liability to
an agreed valuation.
1. 6ne limiting the
liability of the carrier
to an agreed
valuation, unless the
shipper declares a
higher value and
pays a higher rate of
freight
"?.B. ?eacoc5
Company vs.
Eacondray M
Company +nc.#
?owever, the carrier cannot limit its liability for injury to,
or loss of, goods shipped where such injury or loss was
caused by its own negligence.
"3hewaram vs. PA%, 1. 3C4A 1:1#
SPECIAL R9LES ON LIABILITES OF AIRLINE CARRIERS
1. +n case of Night diversion due to bad weather or other
circumstances beyond the pilotCs control, the relation
between the carrier and the passenger continues until the
latter has been landed at the port of destination and has
left the carrierCs premises. >he carrier should necessarily
e7ercise e7traordinary diligence in safeguarding the
comfort, convenience and safety of its stranded
passengers until they have reached their ,nal destination.
"Philippine Airlines vs. CA, 221 3C4A $2#
2. Bven where overboo5ing of passengers is allowed as a
commercial practice, the airline company would still be
guilty of bad faith and still be liable for damages if it did
not properly inform passenger that it could breach the
contract of carriage even if they were con,rmed
passengers. "Oalamea vs. CA, 222 3C4A 2#
. An open*dated tic5et constitutes a complete contract
between the carrier and passenger. ?ence, the airline
company is liable if it refused to con,rm a passengerCs
Night reservation. "3ingson vs. CA, 222 3C4A 1$;#
$. An airline company which issued a con,rmed tic5et to a
passenger covering successive trips on di-erent airlines
can be held liable for damages occasioned by Kbumping
o-L by one of the successive airlines. "%ufthansa German
Airlines vs. CA, 22 3C4A 2;:#
(. An airline tic5et providing that carriage by successive air
carriers is to be regarded as a Ksingle operationL is to
ma5e the issuing carrier liable for the tortuous conduct of
the other carrier. A printed provision in the tic5et limiting
liability only to its own conduct is not enough to rebut that
liability. "H%E 4oyal )utch Airlines vs. CA, 1( 3C4A 2.#
II* CODE OF COMMERCE
A* O(ERLAND TRANSPORTATION
.A'$* 54A,54A2
A11l!#a=!l!$0
1. )omestic land and water'maritime transportation.
(Pandect o) Co((ercial Law and *urisprudence, *ustice
*ose +itu,, $--. ed.&
2. )omestic Air >ransportation. (Co((ercial Law Re/iew,
Cesar +illanue/a, !""# ed.&

IMPORTANT CONCEPTS%
1. =ill of lading
2. 6bligations of the carrier
. 4ight of abandonment
$. /otice of damage
(. Combined carrier agreement
BILL OF LADING
>he written ac5nowledgment of receipt of goods and
agreement to transport them to a speci,c place to a
person named or to his order.
Rules:
1. +t is not indispensable for the creation of a contract of
carriage. "Compania Earitima vs. +nsurance Company of
/orth America, 12 3C4A 21#
2. Ambiguity is construed against the carrier, the contract
being one of adhesion.
. >he consignee, although the instrument is oftentimes
drawn up only by the consignor and carrier, becomes
bound by all the stipulations contained therein by ma5ing
a claim for loss on the basis of said bill of lading. "3ea*
%and 3ervices +nc. vs. +AC#
$. >he right of a party to recover for loss of shipment
consigned to him under a bill of lading drawn up only by
and between the shipper and the carrier, springs from
either a relation of agency between him and the shipper,
or his status as stranger in whose favor some stipulation is
made in said contract, and who becomes a party thereto
when he demands ful,llment of that stipulation. "Art. 111
"2#, "Eendo0a vs. PA% +nc.#
(. Acceptance of the bill of lading without dissent raises
the presumption that all the terms therein where brought
to the 5nowledge of the shipper and agreed to by him and,
in the absence of fraud or mista5e< he is estopped from
thereafter denying that he assented to such terms. (Notes
and Cases on the Law on Transportation and Public
Utilities, Aquino, T. & ernando, R.P. !""# ed. p.!0$&
?!nd%
1. 1n board * issued when the goods have been
actually placed aboard the ship with very
reasonable e7pectation that the shipment is as
good as on its way.
2. Recei/ed * one in which it is stated that the goods
have been received for shipment with or without
specifying the vessel by which the goods are to be
shipped.
. Ne,otiable * one in which it is stated that the goods
referred to therein will be delivered to the bearer or
to the order of any person named therein.
$. Non%ne,otiable * 6ne in which it is stated that the
goods referred to therein will be delivered to a
speci,ed person.
(. Clean 2 6ne which does not indicate any defect in
the goods.
1. 3oul P 6ne which contains a notation thereon
indicating that the goods covered by it are in bad
condition.
.. 'pent P 6ne which covers goods that already have
been delivered by the carrier without a surrender of
a signed copy of the bill.
2. Throu,h P 6ne issued by the carrier who is obliged
to use the facilities of other carriers as well as his
own facilities for the purpose of transporting the
goods from the city of the seller to the city of the
buyer, which bill of lading is honored by the second
and other interested carriers who do not issue their
own bills.
;. Custod4 P 6ne wherein the goods are already
received by the carrier but the vessel indicated
therein has not yet arrived in the port.
1:. Port P 6ne which is issued by the carrier to whom
the goods have been delivered, and the vessel
indicated in the bill of lading by which the goods are
to be shipped is already in the port where the goods
are held for shipment.
F/n#$!on%
1. =est evidence of the e7istence of the contract of
carriage of cargo "Art. (#
2. )ocument of title
. 4eceipt of cargo
$. Contract to transport and deliver goods as
stipulated
(. 3ymbol of the goods
OBLIGATIONS OF T)E CARRIER
A* D/$0 $o a##e1$ $&e good
56N6RAL RUL6: A common carrier cannot ordinarily
refuse to carry a particular class of goods.
67C6PT81N: !or some su9cient reason the
discrimination against the tra9c in such goods is
reasonable and necessary. "!isher vs. Gangco 3teamship
Co. 1 Phil 1#.
+nstances when the carrier may validly refuse to accept
the goods include the -@
1.# Goods sought to be transported are dangerous objects,
or substances including dynamite and other e7plosives
2.# Goods are un,t for transportation
.# Acceptance would result in overloading
$.# Contrabands or illegal goods
(.# Goods are injurious to health
1.# Goods will be e7posed to untoward danger li5e Nood,
capture by enemies and the li5e
..# Goods li5e livestoc5 will be e7posed to disease
2.# 3tri5e
;.# !ailure to tender goods on time. (Notes and Cases on
the Law on Transportation and Public Utilities, Aquino, T. &
ernando, R.P. !""# ed. p.09&
+n case of carriage by railway, the carrier is e7empted
from liability if carriage is insisted upon by the shipper,
provided its objections are stated in the bill of lading.
?owever, when a common carrier accepts cargo for
shipment for valuable consideration, it ta5es the ris5 of
delivering it in good condition as when it was loaded. "PA%
vs. CA#
B* D/$0 $o del!-e' $&e good
/ot only to transport the goods safely but to the person
indicated in the bill of lading. >he goods should be
delivered to the consignee or any other person to whom
the bill of lading was validly transferred or negotiated.
T!+e of del!-e'0
S$!1/la$ed !n
Con$'a#$/B!ll of
Lad!ng
No $!1/la$!on
1. Carrier is bound to
ful,ll the contract
and is liable for any
delay< no matter
from what cause it
may have arisen.
1. &ithin a
reasonable time.
2. Carrier is bound to
forward them in the
1
st
shipment of the
same or similar
goods which he may
ma5e to the point of
delivery. "A4>. (2
Code of Commerce#
EBe#$ of dela0
a. Eerely suspends and generally does not terminate the
contract of carriage
b. Carrier remains duty bound to e7ercise e7traordinary
diligence
c. /atural disaster shall not free the carrier from
responsibility "Art.1.$:#
d. +f delay is without just cause, the contract limiting the
common carrierCs liability cannot be availed of in case of
loss or deterioration of the goods "Art.1.$.#
RIG)T OF CONSIGNEE TO ABANDON GOODS
In$an#e%
1. Partial non*delivery, where the goods are useless
without the others "Art. 1#<
2. Goods are rendered useless for sale or consumption
for the purposes for which they are properly destined "Art.
1(#< and
. +n case of delay through the fault of the carrier "Art.
.1#.
NOTICE OF DAMAGE .ART* 5772
Re;/!!$e fo' a11l!#a=!l!$0%
1. )omestic'inter*island'coastwise transportation
2. %and'water'air transportation
. Carriage of goods
$. Goods shipped are damaged
R/le%
a. Patent damage@ shipper must ,le a claim against the
carrier immediately upon delivery "it may be oral or
written#
b. %atent damage@ shipper should ,le a claim against the
carrier within 2$ hours from delivery.
No$e% >hese rules does not apply to misdelivery of goods.
"4oldan vs. %im Pon0o#
Purpose o) notice: >o inform the carrier that the shipment
has been damaged, and it is charged with liability
therefore, and to give it an opportunity to ma5e an
investigation and ,7 responsibility while the matter is
fresh.
>he ,ling of notice of claim is a condition precedent for
recovery.
3horter period may be stipulated by the parties
because it merely a-ects the shipperCs remedy and does
not a-ect the liability of the carrier. "P?+%AEGB/ vs.
3weetlines, +nc.#
P'e#'!1$!-e Pe'!od
/ot provided by Article 11. >hus, in such absence, Civil
Code rules on prescription apply.
+f despite the notice of claim, the carrier refuses to pay,
action must be ,led in court.
1. /o bill of lading was issued@ within 7
0ea'
2. =ill of lading was issued@ within 3C
0ea'*
ARTICLE 577 COGSA Se#*5 .72
A11l!#a=!l!$0
1. )omestic'inter*
island'coastwise
transportation
2. %and, water, air
transportation
. Carriage of goods
1. +nternational'
overseas'foreign
"from foreign
country to Phils.#
/ote@ subject to the
rule on Paramount
Clause
2. &ater'maritime
transportation
. Carriage of goods
No$!#e of da+age
1. Condition
precedent
2. 2$*hour period for
claiming latent
damage
1. /ot a condition
precedent
2. *day period for
claiming latent
damage
P'e#'!1$!-e 1e'!od
/one provided< Civil
Code applies.
6ne year from the
date of delivery
"delivered but
damaged goods#, or
date when the
vessel left port or
from the date of
delivery to the
arrastre "non*
delivery or loss#.
COMBINED CARRIER AGREEMENT .ART* 5452
56N6RAL RUL6: +n case of a contract of transportation of
several legs, each carrier is responsible for its particular
leg in the contract.
67C6PT81N: A combined carrier agreement where a
carrier ma5es itself liable assuming the obligations and
acAuiring as well the rights and causes of action of those
which preceded it.
6* MARITIME
COMMERCE
.A'$* 545,D7A2
IMPORTANT CONCEPTS%
1. Eerchant vessel
2. Earitime lien and Preference of Credit
. )octrine of limited liability
$. Causes of revocation of voyage
(. Participants in maritime commerce
1. Charter party
.. %oans on bottomry and respondentia
2. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
+t is the system of laws which particularly relates to the
a-airs and business of the sea, to ships, their crews and
navigation, and to maritime conveyance of persons and
property. (Notes and Cases on the Law on Transportation
and Public Utilities, Aquino & ernando, citin, 3rancisco,
p.!:#&
Earitime laws apply only to maritime trade and sea
voyages. (Pandect o) Co((ercial Law and *urisprudence,
*ustice *ose +itu,, $--. ed.&
Arrastre service is not maritime in character. +t refers to
a contract for the unloading of goods from a vessel. "+C>3+
vs. Prudential Guarantee, 2: 3C4A 2$$#
C)ARACTERISTICS OF MARITIME TRANSACTION
1. Real * similar to transactions over real property with
respect to e-ectivity against third persons which is done
through registration. "4ubiso vs. 4ivera, . Phil. .2#. >he
evidence of real nature is shown by@ 1# the limitation of the
liability of the agents to the actual value of the vessel and
the freight money< and 2# the right to retain the cargo and
embargo and detention of the vessel "%u0on 3tevedoring
Corp v. CA, 1(1 3C4A 11;#<
2. 4pothecar4 * the liability of the owner of the value of
the vessel is limited to the vessel itself (;octrine o)
Li(ited Liabilit4&.
>he real and hypothecary nature of maritime law simply
means that the liability of the carrier in connection with
losses related to maritime contracts is con,ned to the
vessel, which stands as the guaranty for their settlement.
"Aboiti0 3hipping Corp. vs. General Accident !ire and %ife
Assurance Corp. 21. 3C4A (;#.
MERC)ANT (ESSEL
Dessel engaged in maritime commerce, whether foreign
or otherwise. (<ar Re/iew =aterials in Co((ercial Law,
*or,e =ira/ite, !""! ed.&
Constitutes property which may be acAuired and
transferred by any of the means recogni0ed by law. >hey
shall continue to be considered as personal property. "Arts.
(., (2(#
>hey are susceptible to (ariti(e liens such as for the
repair, eAuipping and provisioning of the vessel in the
preparation of a voyage, as well as mortgage liabilities, in
satisfaction of which a vessel may be validly arrested and
sold. "3hip Eortgage )ecree of 1;.2#
MARITIME LIEN
+t constitutes a present right of property in the ship, a jus
in re, to be afterward enforced in admiralty by process in
rem. "P/= vs. CA, . 3C4A 21#
+f the maritime lien arose prior to the recording of a
preferred mortgage, it shall have priority over the said
mortgage lien. "P/= vs. CA, . 3C4A 21#
ORDER OF PREFERENCE IN CASE OF SALE OF (ESSEL
R*A* 73C7 P*D* 3563
EBe#$!-!$0 da$e
1;1; 1;.2
A11l!#a=!l!$0
6verseas shipping
only
=oth domestic and
overseas shipping
?!nd of ale
Fudicial Fudicial and
e7trajudicial
O'de' of P'efe'en#e
A preferred
mortgage shall have
priority over all
claims against the
vessel, e7cept the
following
preferences in the
order stated@
1. Fudicial costs of
the proceedings<
2. >a7es due the
Philippine
Government<
. 3alaries and
wages of the
Captain and Crew of
the vessel during its
last voyage<
$. General average
or salvage including
contract salvage,
bottomry loans, and
indemnity due
shippers for the
value of goods
transported but
which were not
delivered to the
consignee<
(. Costs of repair
and eAuipment of
the vessel, and
provisioning of food,
supplies and fuel
during its last
voyage< and
1. Preferred
mortgages
registered prior in
time.
>he preferred
mortgage lien shall
have priority over all
claims against the
vessel, e7cept the
following
preferences in the
order stated@
1. B7penses and
fees allowed and
costs ta7ed by the
court and ta7es due
to the Government<
2. CrewCs wages<
. General average<
$. 3alvage, including
contract salvage<
(. Earitime liens
arising prior in time
to the recording of
the preferred
mortgage<
1. )amages arising
out of tort< and
.. Preferred
mortgage registered
prior in time.
B-ect of sale@ All pre*e7isting claims in the vessel are
terminated. >hey will then be satis,ed from the proceeds
of the sale subject to the order of preference.
DOCTRINE OF LIMITED LIABILITY
.)YPOT)ECARY R9LE2
Cases where applicable@
1. Art. (2. P civil liability for indemnities to third
persons
2. Art. (;: P indemnities from negligent acts of the
captain "not the shipowner or ship agent#
. Art. 2. P collision
$. Art. 1$ P liability for wages of the captain and
the crew and for advances made by the ship
agent if the vessel is lost by shipwrec5 or capture
56N6RAL RUL6: >he liability of shipowner and ship agent
is limited to the amount of interest in said vessel such that
where vessel is entirely lost, the obligation is e7tinguished.
"%u0on 3tevedoring v. Bscano, 1(1 3C4A 11;# >he interest
e7tends to@ 1# the vessel itself< 2# eAuipments< #
freightage< and $# insurance proceeds. "Chua v. +AC, 111
3C4A 12#
67C6PT81N':
1. Claims under &or5menCs Compensation "Abueg vs.
3an )iego .. Phil .:#<
2. +njury or damage due to shipowner or to the
concurring negligence of the shipowner and the
captain<
. >he vessel is insured "DasAue0 vs. CA 12 3C4A ((#.
$. B7penses for repair on vessel completed before loss<
(. +n case there is no total loss and the vessel is not
abandoned<
1. Collision between two negligent vessels<
Abandonment of the vessel is necessary to limit the
liability of the shipowner. >he only instance were
abandonment is dispensed with is when the vessel is
entirely lost "%u0on 3tevedoring vs. CA 1(1 3C4A 11;#.
RIG)T OF S)IPOWNER OR S)IP AGENT TO ABANDON
(ESSEL
+nstances@
1. +n case of civil liability from indemnities to third persons
"Art. (2.#<
2. +n case of lea5age of at least Q of the contents of a
cargo containing liAuids "Art. 12.#< and
. +n case of constructive loss of the vessel "3ec. 12,
+nsurance Code#.
RIG)T OF ABANDONMENT
S)IPOWNER OR
S)IP AGENT
CONSIGNEE
W&a$ +a0 =e a=andoned
Dessel Goods shipped
In$an#e
1. +n case of civil
liability from
indemnities to third
persons "Art. (2.#<
2. 3ec. 12,
+nsurance Code<
. +n case of lea5age
of at least Q of the
contents of a cargo
containing liAuids
"Art. 12.#
1. Partial non*
delivery, where the
goods are useless
without the others
"Art. 1#<
2. Goods are
rendered useless for
sale or consumption
for the purposes for
which they are
properly destined
"Art. 1(#< and
. +n case of delay
through the fault of
the carrier "Art.
.1#.
EBe#$
1. >ransfer of
ownership of the
vessel from the
shipowner to the
shippers or insurer.
2. +n case of "2#, the
insurer must pay the
insured as if there
was actual total loss
of the vessel.
1. >ransfer of
ownership on the
goods from the
shipper to the
carrier.
2. Carrier should
pay the shipper the
mar5et value of the
goods at the point of
destination.
CA9SES OF RE(OCATION OF (OYAGE
1. &ar or interdiction of commerce<
2. =loc5ade<
. Prohibition to receive cargo at destination<
$. Bmbargo<
(. +nability of the vessel to navigate. "Art. 1$:#
Te'+%
1. +nterdiction of commerce P A governmental prohibition
of commercial intercourse intended to bring about an
entire cessation for the time being of all trade
whatever.
2. =loc5ade P A sort of circumvallation of a place by
which all foreign connection and correspondence is, as
far as human power can e-ect it, to be cut o-.
. Bmbargo P A proclamation or order of a state, usually
issued in time of war or threatened hostilities,
prohibiting the departure of ships or goods from some
or all the ports of such state until further order.
PARTICIPANTS IN MARITIME COMMERCE
A. 3hipowners and ship agents
=. Captains and masters of the vessel
C. 69cers and crew of the vessel
). 3upercargoes
B. Pilot
A* S)IPOWNERS AND S)IP AGENTS
S&!1owne' .1'o1'!e$a'!o2
Person who has possession, control and management of
the vessel and the conseAuent right to direct her
navigation and receive freight earned and paid, while his
possession continues.
S&!1 agen$ .na-!e'o2
Person entrusted with provisioning and representing the
vessel in the port in which it may be found< also includes
the shipowner.
/ot a mere agent under civil law< he is solidarily liable
with the ship owner.
Powers and functions@
1. Capacity to trade<
2. )ischarge duties of the captain, subject to Art.1:;<
. Contract in the name of the owners with respect to
repairs, details of eAuipment, armament, provisions of
food and fuel, and freight of the vessel, and all that
relate to the reAuirements of navigation<
$. 6rder a new voyage, ma5e a new charter or insure the
vessel after obtaining authori0ation from the
shipowner or if granted in certi,cate of appointment.
C!-!l L!a=!l!$!e of $&e S&!1owne' And S&!1 Agen$
1. All contracts of the captain, whether authori0ed or not,
to repair, eAuip and provision the vessel< "Art. (21#
2. %oss and damage to the goods loaded on the vessel
without prejudice to their right to free themselves
from liability by abandoning the vessel to the
creditors. "Art. (2.#
D/$0 of S&!1 Agen$ $o D!#&a'ge $&e Ca1$a!n and
Me+=e' of $&e C'ew
+f the seamen contract is not for a de,nite period or
voyage, he may discharge them at his discretion. "Art.
1:#
+f for a de,nite period, he may not discharge them until
after the ful,llment of their contracts, e7cept on the
following grounds@
a. +nsubordination in serious matters<
b. 4obbery<
c. >heft<
d. ?abitual drun5enness<
e. )amage caused to the vessel or to its cargo
through malice or manifest or proven negligence. "Art.
1:(#
B* CAPTAINS AND MASTERS
>hey are the chiefs or commanders of ships.
>he terms have the same meaning, but are particularly
used in accordance with the si0e of the vessel governed
and the scope of transportation, i.e., large and overseas,
and small and coastwise, respectively.
/ature of position "*fold character#@
1. General agent of the shipowner<
2. >echnical director of the vessel<
. 4epresentative of the government of the country
under whose Nag he navigates.
Ruali,cations@
1. !ilipino citi0en<
2. %egal capacity to contract<
. Eust have passed the reAuired physical and
mental e7aminations reAuired for licensing him as
such. "Art. 1:;#
+nherent powers@
1. Appoint crew in the absence of ship agent<
2. Command the crew and direct the vessel to its
port of destination<
. +mpose correctional punishment on those who,
while on board vessel, fail to comply with his
orders or are wanting in discipline<
$. Ea5e contracts for the charter of vessel in the
absence of ship agent.
(. 3upply, eAuip, and provision the vessel< and
1. 6rder repair of vessel to enable it to continue its
voyage. "Art. 11:#
3ources of funds to comply with the inherent powers of
the captain "in successive order#@
1. !rom the consignee of the vessel<
2. !rom the consignee of the cargo<
. =y drawing on the ship agent<
$. =y a loan on bottomry<
(. =y sale of part of the cargo. "Art. 111#
)uties@
1. =ring on board the proper certi,cate and
documents and a copy of the Code of Commerce<
2. Heep a %og =oo5, Accounting =oo5 and !reight
=oo5<
. B7amine the ship before the voyage<
$. 3tay on board during the loading and unloading of
the cargo<
(. =e on dec5 while leaving or entering the port<
1. Protest arrivals under stress and in case of
shipwrec5<
.. !ollow instructions of and render an accounting to
the ship agent<
2. %eave the vessel last in case of wrec5<
;. ?old in custody properties left by deceased
passengers and crew members<
1:. Comply with the reAuirements of customs, health,
etc. at the port of arrival<
11. 6bserve rules to avoid collision<
12. )emand a pilot while entering or leaving a port.
"Art. 112#
A shipCs captain must be accorded a reasonable
measure of discretionary authority to decide what the
safety of the ship and of its crew and cargo speci,cally
reAuires on a stipulated ocean voyage "+nter*6rient
Earitime Bnterprises +nc. vs. CA#.
/o liability for the following@
1. )amages caused to the vessel or to the cargo by
force majeure<
2. 6bligations contracted for the repair, eAuipment,
and provisioning of the vessel unless he has
e7pressly bound himself personally or has signed
a bill of e7change or promissory note in his name.
"Art. 12:#
Sol!da'0 L!a=!l!$!e of $&e S&!1 Agen$/S&!1owne' fo'
A#$ Done =0 $&e Ca1$a!n $owa'd Paenge' and
Ca'goe
1. )amages to vessel and to cargo due to lac5 of
s5ill and negligence<
2. >hefts and robberies of the crew<
. %osses and ,nes for violation of laws<
$. )amages due to mutinies<
(. )amages due to misuse of power<
1. !or deviations<
.. !or arrivals under stress<
2. )amages due to non*observance of marine
regulations. "Art. 112#
C* OFFICERS AND CREW
1. 3ailing Eate'!irst Eate
2. 3econd Eate
. Bngineers
$. Crew
/o liability under the following circumstances@
1. +f, before beginning voyage, captain attempts to
change it, or a naval war with the power to which the
vessel was destined occurs<
2. +f a disease brea5s out and be o9cially declared an
epidemic in the port of destination<
. +f the vessel should change owner or captain. "Art.
1$.#
Sa!l!ng Ma$e/F!'$ Ma$e
3econd chief of the vessel who ta5es the place of the
captain in case of absence, sic5ness, or death and shall
assume all of his duties, powers and responsibilities. "Art.
12.#
)uties@
1. Provide himself with maps and charts with
astronomical tables necessary for the discharge
of his duties<
2. Heep the =innacle =oo5<
. Change the course of the voyage on consultation
with the captain and the o9cers of the boat,
following the decision of the captain in case of
disagreement<
$. 4esponsible for all the damages caused to the
vessel and the cargo by reason of his negligence.
"Arts. 122 * 11#
Se#ond Ma$e
>a5es command of the vessel in case of the inability or
disAuali,cation of the captain and the sailing mate,
assuming in such case their powers and responsibilities.
>hird in command
)uties@
1. Preserve the hull and rigging of the vessel<
2. Arrange well the cargo<
. )iscipline the crew<
$. Assign wor5 to crew members<
(. +nventory the rigging and eAuipment of the
vessel, if laid up. "Art. 12#
Eng!nee'
69cers of the vessel but have no authority e7cept in
matters referring to the motor apparatus. &hen two or
more are hired, one of them shall be the chief engineer.
)uties@
1. +n charge of the motor apparatus, spare parts,
and other instruments pertaining to the engines<
2. Heep the engines and boilers in good condition<
. /ot to change or repair the engine without
authority of the captain<
$. +nform the captain of any damage to the motor
apparatus<
(. Heep an Bngine =oo5<
1. 3upervise all personnel maintaining the engine.
"Art. 12#
C'ew
>he aggregate of seamen who man a ship, or the shipCs
company.
?ired by the ship agent, where he is present and in his
absence, the captain hires them, preferring !ilipinos, and
in their absence, he may ta5e in foreigners, but not
e7ceeding 1'( of the crew. "Art. 1$#
Clae of Sea+an> Con$'a#$
1. =y the voyage<
2. =y the month< and
. =y share of pro,ts or freightage.
</$ Ca/e fo' $&e D!#&a'ge of Sea+an W&!le
Con$'a#$ S/=!$
1. Perpetration of a crime<
2. 4epeated insubordination, want of discipline<
. 4epeated incapacity and negligence<
$. ?abitual drun5enness<
(. Physical incapacity<
1. )esertion. "Art. 1.#
R/le !n #ae of Dea$& of a Sea+an
>he seamanCs heirs are entitled to payment as follows@
1. +f death is natural@
a. compensation up to time of death if engaged on
wage
b. if by voyage * half of amount if death occurs on
voyage out< and full, if on voyage in
c. if by shares * none, if before departure< full, if
after departure
2. if death is due to defense of vessel * full payment<
. if captured in defense of vessel * full payment<
$. if captured due to carelessness * wages up to the date
of the capture. "Art. 1$(#
Co+1le+en$ of $&e (eel
All persons on board, from the captain to the cabin boy,
necessary for the management, maneuvers, and service,
thus including the crew, the sailing mates, engineers,
sto5ers and other employees on board not having speci,c
designations.
)oes not include the passengers or the persons whom
the vessel is transporting.
D* S9PERCARGOES
Persons who discharges administrative duties assigned to
him by ship agent or shippers, 5eeping an account and
record of transaction as reAuired in the accounting boo5 of
the captain. "Art. 1$;#
E* PILOT
A person duly Auali,ed, and licensed, to conduct a vessel
into or out of ports, or in certain waters.
>he term generally connotes a person ta5en on board at
a particular place for the purpose of conducting a ship
through a river, road or channel, or from a port.
Easter pro hac /ice for the time being in the command
and navigation of the ship.
&hile in e7ercising his functions a pilot is in sole
command of the ship and supersedes the master for the
time being in the command and navigation of the ship, the
master does not surrender his vessel to the pilot and the
pilot is not the master. >here are occasions when the
master may and should interfere and even displace the
pilot, as when the pilot is obviously incompetent or
into7icated "!ar Bastern 3hipping Company vs. CA#.
Compulsory Pilotage P 3tates possessing harbors have
enacted laws or promulgated rules reAuiring vessels
approaching their ports to ta5e on board pilots licensed
under the local laws. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. & ernando,
R.P. !""# ed. p. :$9&
L!a=l!$0 of P!lo$
56N6RAL RUL6@ 6n compulsory pilotage grounds, the
?arbor Pilot is responsible for damage to a vessel or to life
or property due to his negligence.
67C6PT:
1. Accident caused by force majeure or natural calamity
provided the pilot e7ercised prudence and e7tra diligence
to prevent or minimi0e damages.
2. Countermand or overrule by the master of the vessel in
which case the registered owner of the vessel is liable.
"3ec.11, Art.+++ PPA Admin 6rder :*2(#
SPECIAL CONTRACTS OF MARITIME COMMERCE
1. Charter party
2. =ill of lading
. Contract of transportation of passengers on sea
voyages
$. %oan on bottomry
(. %oan on respondentia
1. Earine insurance
C)ARTER PARTY
A contract by virtue of which the owner or agent binds
himself to transport merchandise or persons for a ,7ed
price.
A contract by which an entire ship, or some principal part
thereof is let'leased by the owner to another person for a
speci,ed time or use. "Planters Products, +nc. vs. CA, 221
3C4A $.1#
Pa'$!e%
1. 3hip owner or ship agent
2. Charterer
Clae%
1. =areboat or demise P >he charterer provides crew, food
and fuel. >he charterer is liable as if he were the owner,
e7cept when the cause arises from the unworthiness of the
vessel. >he shipowner leases to the charterer the whole
vessel, transferring to the latter the entire command,
possession and conseAuent control over the vesselCs
navigation, including the master and the crew, who
thereby become the charterCs servants. +t transforms a
common carrier into a private carrier.
>he charterer becomes the owner of the vessel pro
hac vice, just for that one particular purpose only.
=ecause the charterer is treated as owner pro hac
/ice, the charterer assumes the customary rights and
liabilities of the shipowner to third persons and is held
liable for the e7pense of the voyage and the wages of
the seamen.
2. Contract of A-reightment E A contract whereby the
owner of the vessel leases part or all of its space to haul
goods for others.
>he shipowner retains the possession, command
and navigation of the ship, the charterer merely
having use of the space in the vessel in return for his
payment of the charter hired.
Hinds@
a. >ime charter P vessel is chartered for a ,7ed
period of time or duration of voyage.
b. Doyage or trip charter P the vessel is leased for
one or series of voyages usually for purposes of
transporting goods for charterer.
LEASE C)ARTER PARTY
+f for a de,nite
period, lessee cannot
give up the lease by
paying a portion of
the amount agreed
upon.
Charterer may
rescind charter party
by paying half of the
freightage agreed
upon.
+f the leased property
is sold to one who
5nows of the
e7istence of the
lease, the new owner
must respect the
lease.
>he new owner is not
compelled to respect
the charter party so
long as he can load
the vessel with his
own cargo. "Art. 12;#
Civil law concept Commercial law
concept
C)ARTER PARTY BILL OF LADING
An entire or complete
contract.
Eore li5e a private
receipt which the
captain gives to
accredit goods
received from
persons
Consensual contract 4eal contract
BAREBOAT OR
DEMISE C)ARTER
CONTRACT OF
AFFREIG)TMENT
.TIME OR (OYAGE
C)ARTER2
Charterer becomes
liable to others
caused by its
negligence
6wner remains liable
as carrier and must
answer for any
breach of duty
Charterer regarded
as owner pro hac
vice for the voyage
Charterer is not
regarded as owner.
6wner of vessel
relinAuishes
possession,
command and
navigation to
charterer
>he vessel owner
retains possession,
command and
navigation of the ship
Common carrier is
converted to private
carrier.
Common carrier is
not converted to a
private carrier.
PERSONS W)O MAY MA?E A C)ARTER
1. 6wner or owners of the vessel, either in whole or
in majority part, who have legal control and
possession of the vessel
2. Charterer may subcharter entire vessel to
rd
person only if not prohibited in original charter.
"Art.1.;#
. 3hip agent if authori0ed by the owner's or given
such power in the certi,cate of appointment.
"Art.(;2#
$. Captain in the absence of the ship agent or
consignee and only if he acts in accordance with
the instructions of the agent or owner and
protects the latterCs interests. "Art.1:;#
RE89ISITES OF A (ALID C)ARTER PARTY
1. Consent of the contracting parties
2. B7isting vessel which should be placed at the
disposition of the shipper
. !reight
$. Compliance with Art. 1(2 of the Code of
Commerce
Cla/e W&!#& Ma0 Be In#l/ded In a C&a'$e' Pa'$0
<aon #la/e Cla/e 1a'a+o/n$
o' 1a'a+o/n$
#la/e
A stipulation in a
charter party that in
case of a maritime
accident for which
the shipowner is not
responsible by law,
contract or
otherwise, the cargo
shippers, consignees
or owners shall
contribute with the
shipowner in general
average. "Pandect of
Commercial %aw and
Furisprudence, Fustice
Fose Ditug, 1;;. ed.#
A clause in a charter
party providing that
the C6G3A shall
apply, even though
the transportation is
domestic, subject to
the e7tent that any
term of the bill of
lading is repugnant to
the C6G3A or
applicable law, then
to the e7tent thereof
the provision of the
bill of lading is void.
"Pandect of
Commercial %aw and
Furisprudence, Fustice
Fose Ditug, 1;;. ed.#
R!g&$ and O=l!ga$!on of Pa'$!e
S)IPOWNER OR C)ARTERER
S)IP AGENT
1. +f the vessel is
chartered wholly, not
to accept cargo from
others<
2. >o observe
represented capacity<
. >o unload cargo
clandestinely placed
$. >o substitute
another vessel if load
is less than '( of
capacity<
(. >o leave the port
if the charterer does
not bring the cargo
within the lay days
and e7tra lay days
allowed<
1. >o place in a
vessel in a condition
to navigate<
.. to bring cargo to
nearest neutral port
in case of war or
bloc5ade. "Arts. 11;*
1.2#
1. >o pay the
agreed charter price<
2. >o pay
freightage on
unboarded cargo<
. >o pay losses to
others for loading
uncontracted cargo
and illicit cargo<
$. >o wait if the
vessel needs repair<
(. >o pay e7penses
for deviation. "Arts.
1.;*12.#
Re#!!on of a C&a'$e' Pa'$0
A$
#&a'$e'e'>
'e;/e$
.A'$ 7DD2
A$
&!1owne'>
'e;/e$
.A'$* 7DA2
Fo'$/!$o/
#a/e
.A'$* 7AC2
1. =y
abandoning
the charter
and paying
half of the
freightage<
2. Brror in
tonnage or
Nag<
. !ailure to
place the
vessel at the
chartererCs
disposal<
$. 4eturn of
the vessel
due to
pirates,
enemies or
bad weather<
(. Arrival at a
port for
repairs.
1. +f the e7tra
lay days
terminate
without the
cargo being
placed
alongside the
vessel<
2. 3ale by
the owner of
the vessel
before
loading by
the
charterer<
1. &ar or
interdiction
of commerce<
2. =loc5ade<
. Prohibition
to receive
cargo<
$. Bmbargo<
and
(. +nability of
the vessel to
navigate.
Te'+%
1. Primage * bonus to be paid to the captain after the
successful voyage.
2. )emurrage P the sum ,7ed in the charter party as a
remuneration to the owner of the ship for the
detention of his vessel beyond the number of days
allowed by the charter party for loading or unloading
or for sailing.
. )eadfreight P the amount paid by or recoverable from
a charterer of a ship for the portion of the shipCs
capacity the latter contracted for but failed to occupy.
$. %ay )ays * days allowed to charter parties for loading
and unloading the cargo.
(. B7tra %ay )ays E days which follow after the lay days
have elapsed.
9S9AL FORMS OF CONS9MMATING CONTRACTS
1. C.+.!. P cost, insurance and freight<
2. !.6.=. * free on board<
. !.A.3. * free alongside ship< and
$. C. M !. * cost and freight.
TRANSS)IPMENT OF GOODS
>he act of ta5ing cargo out of one ship and loading it in
another, or the transfer of goods from the vessel stipulated
in the contract of a-reightment to another vessel before
the place of destination named in the contract has been
reached, or the transfer for further transportation from one
ship or conveyance to another.
+t is not dependent on the ownership of the transporting
ships or in the change of carriers, but rather on the fact of
actual physical transfer of cargo from one vessel to
another.
+f done without legal e7cuse, however competent and
safe the vessel into which the transfer is made, is a
violation of contract and infringement of right of shipper
and subjects carrier to liability if freight is lost event by
cause otherwise e7cepted. "Eagellan Eanufacturing vs.
CA, 2:1 3C4A 1:2#
LOAN ON BOTTOMRY AND RESPONDENTIA
A real, unilateral, aleatory contract, by virtue of which
one person lends to another a certain amount of money or
goods on things e7posed to maritime ris5s, which amount,
with its earnings, is to be returned if the things are safely
transported, and which is lost if the latter are lost.
LOAN ON
BOTTOMRY
LOAN ON
RESPONDENTIA
)e,nition
%oan made by
shipowner or ship
agent guaranteed
by vessel itself and
repayable upon
arrival of vessel at
destination. "Art.
.1;#
%oan ta5en on
security of the cargo
laden on a vessel,
and repayable upon
safe arrival of cargo
at destination. "Art.
.1;#
&ho may contract
3hipowner or ship
agent. 6utside of
the residence of the
owners * the
captain.
6nly the owner of
the cargo.
Common elements@
1. B7posure of security to marine peril<
2. 6bligation of the debtor conditioned
only upon safe arrival of the security at
the point of destination.
!orms@
1. Public instrument
2. Policy signed by the contracting parties
and the bro5er ta5ing part therein
. Private instrument "Art. .2:#
Contents@
1. Hind, name and registry of the vessel<
2. /ame, surname and domicile of the
captain<
. /ames, surnames and domiciles of the
borrower and the lender<
$. Amount of the loan and the premium
stipulated<
(. >ime for repayment<
1. Goods pledged to secure repayment<
.. Doyage during which the ris5 is run
"Art..21#
BOTTOMRY/
RESPONDENTIA
ORDINARY LOAN
.M9T99M2
/ot subject to 8sury
%aw
3ubject to 8sury
%aw
%iability of the
borrower is
contingent on the
safe arrival of the
vessel or cargo at
destination
/ot subject to any
contingency
"absolute liability#
>he last lender is a
preferred creditor
>he ,rst lender is a
preferred creditor
W)EN LOAN ON BOTTOMRY OR RESPONDENTIA
REGARDED AS SIMPLE LOAN
1. %ender loaned an amount larger than the value of
the object due to fraudulent means employed by
the borrower. "A4>..21#
2. !ull amount of the loan is not used for the cargo
or given on the goods if all of them could not
have been loaded, the balance will be considered
a simple loan. "A4>..2.#
. +f the e-ects on which the money is ta5en is not
subjected to any ris5. "A4>..2;#
No$e@ 8nder e7isting laws, the parties to a loan, whether
ordinary or maritime, may agree on any rate of interest.
"C= Circular ;:(#
MARINE INS9RANCE LOAN ON
BOTTOMRY OR
RESPONDENTIA
+ndemnity is paid after
the loss has occurred
+ndemnity is paid
in advance by
way of a loan
+n case of loss of the
vessel due to a ris5
insured against, the
obligation of the insurer
becomes absolute
+n case of loss of
the vessel due to
a marine peril,
the obligation of
the borrower to
pay is
e7tinguished
Consensual contract 4eal contract
)01o$&e#a'0 Na$/'e of Bo$$o+'0/ Re1onden$!a
56N6RAL RUL6: >he obligation of the borrower to pay
the loan is e7tinguished if the goods given as security are
absolutely lost by reason of an accident of the sea, during
the voyage designated, and if it is proven that the goods
were on board.
67C6PT81N':
1. %oss due to inherent defect<
2. %oss due to the barratry on the part of the captain<
. %oss due to the fault or malice of the borrower<
$. >he vessel was engaged in contraband< and
(. >he cargo loaded on the vessel be di-erent in from
that agreed upon.
Con#/''en#e of Ma'!ne In/'an#e and Loan on
Bo$$o+'0/Re1onden$!a
1. >he insurable interest of the owner of a ship
hypothecated by bottomry is only the e7cess of
the value over the amount secured by bottomry.
"3ec. 1:1, +nsurance Code#
2. >he value of what may be saved in case of
shipwrec5 shall be divided between the lender
and the insurer in proportion to the interest of
each one. "Art. .(#
/ote@ +f a vessel is hypothecated by bottomry only the
e7cess is insurable, since a loan on bottomry parta5es of
the nature li5ewise of an insurance coverage to the e7tent
of the loan accommodation. >he same rule would apply to
the hypothecation of the cargo by respondentia. (Pandect
o) Co((ercial Law and *urisprudence, *ustice *ose +itu,,
$--. ed.&
ACCIDENTS IN MARITIME COMMERCE
1. Averages
2. Arrival 8nder 3tress
. Collision
$. 3hipwrec5
A(ERAGE
An e7traordinary or accidental e7pense incurred during
the voyage in order to preserve the cargo, vessel or both,
and all damages or deterioration su-ered by the vessel
from departure to the port of destination, and to the cargo
from the port of loading to the port of consignment. "Art.
2:1#
>he person whose property has been saved must
contribute to reimburse the damage caused or e7pense
incurred if the situation constitutes general average.
Classes@
1. Particular or 3imple Average
2. Gross or General Average
&here both vessel and cargo are saved, it is general
average< where only the vessel or only the cargo is saved,
it is particular average.
B7penses incurred to reNoat a vessel, which accidentally
ran aground, in order to continue its voyage, do not
constitute general average. /ot only is there absence of a
marine peril, common safety factor, and deliberateness. +t
is the safety of the property, and not the voyage, which
constitutes the true foundation of general average. "A.
Eagsaysay, +nc. vs. Agan, G.4./o. %*1;, Fan. 1, 1;((#
PARTIC9LAR OR
SIMPLE
GROSS OR
GENERAL
De"n!$!on
)amages or e7penses
caused to the vessel
or cargo that did not
inure to the common
bene,t, and borne by
respective owners.
"Art. 2:;#
)amages or
e7penses
deliberately caused
in order to save the
vessel, its cargo or
both from real and
5nown ris5. "Art.
211#
Re;/!!$e
1. common
danger<
2. deliberate
sacri,ce<
. success<
$. proper
formalities and
legal steps.
L!a=!l!$0
>he owner of the
goods which gave
rise to the e7pense or
su-ered the damage
shall bear this
average. "Art. 21:#
All the persons
having an interest in
the vessel and the
cargo therein at the
time of the
occurrence of the
average shall
contribute to satisfy
this average. "Art.
212#
>he insurers
"Art.2(;# and
lenders on bottomry
and respondentia
shall li5ewise
contribute.
"Art..2#.
N/+=e' of !n$e'e$ !n-ol-ed
6nly one interest
involved
3everal interests
involved
S&a'e !n $&e da+age o' eF1ene
1::S share +n proportion to the
value of the ownerCs
property saved
R!g&$ $o 'e#o-e'
/o reimbursement >here may be
reimbursement
?!nd .no$ eF#l/!-e2
Art. 2:; Art. 211
P'o#ed/'e fo' 'e#o-e'0
1. Assembly and
deliberation
2. 4esolution of the
captain
. Bntry of the
resolution in the
logboo5
$. )etailed minutes
(. )elivery of the
minutes to the
maritime judicial
authority of the ,rst
port, within 2$ hours
from arrival,
1. 4ati,cation by
captain under oath.
"Arts. 21*21$#
GOODS NOT CO(ERED BY GENERAL A(ERAGE E(EN
IF SACRIFICED
1. Goods carried on dec5. "A4>.2((#
2. Goods not recorded in the boo5s or records of the
vessel. "A4>.2(( "2##
. !uel for the vessel if there is more than su9cient
fuel for the voyage. "4ule +T, Gor5*Antwerp 4ule#
<e$$!on
Act of throwing cargo overboard in order to lighten the
vessel.
6rder of goods to be cast overboard@
1. >hose which are on the dec5, preferring the
heaviest one with the least utility and value<
2. >hose which are below the upper dec5, beginning
with the one with greatest weight and smallest
value. "Art. 21(#
Fettisoned goods are not res nullius nor deemed
KabandonedL within the meaning of civil law so as to be
the object of occupation by salvage. (Pandect o)
Co((ercial Law and *urisprudence, *ustice *ose +itu,,
$--. ed.&
+n order that the jettisoned goods may be included in
the gross or general average, the e7istence of the cargo
on board should be proven by means of the bill of lading.
"Art. 211#
Yo'G,An$we'1 .Y,A2 R/le on De$e'+!n!ng L!a=!l!$0
fo' A-e'age W!$& Rega'd To De#G Ca'go
1. )ec5 cargo is allowed only in
domestic'coastwise'inter*island shipping, and is prohibited
in international'overseas'foreign shipping.
2. +f dec5 cargo is loaded with the consent of the shipper
on overseas trade, it must always contribute to general
average, but should the same be jettisoned, it would not
be entitled to reimbursement because there is violation of
the G*A 4ules.
. +f dec5 cargo is loaded with the consent of the shipper
on coastwise shipping, it must always contribute to
general average and if jettisoned would be entitled to
reimbursement.
4eason@ +n domestic shipping, voyages are usually short
and the seas are generally not rough. +n overseas shipping,
the vessel is e7posed for many days to perils of the sea.
DOMESTIC INTERNATIONAL
)ec5 cargo is allowed )ec5 cargo is not
allowed
&ith shipperCs consent
General average Particular average
&ithout shipperCs consent
Captain is liable Captain is liable
ARRI(AL 9NDER STRESS .ARRIBADA2
>he arrival of a vessel at the nearest and most
convenient port instead of the port of destination, if during
the voyage the vessel cannot continue the trip to the port
of destination.
W&en
lawf/l
W&en
/nlawf/l
W&o =ea'
eF1ene%
>he inability
to continue
voyage is
due to lac5
of provisions,
well*founded
fear of
sei0ure,
privateers,
pirates, or
accidents of
the sea
disabling it
to navigate.
"Art. 21;#
1. %ac5 of
provisions
due to
negligence to
carry
according to
usage and
customs<
2. 4is5 of
enemy not
well 5nown or
manifest
. )efect of
vessel due to
improper
>he
shipowner or
ship agent is
liable in case
of unlawful
arrival under
stress. =ut
they shall not
be liable for
the damages
caused by
reason of a
lawful arrival.
"Art. 221#
repair< and
$. Ealice,
negligence,
lac5 of
foresight or
s5ill of
captain. "Art.
22:#
+t is the duty of the captain to continue the voyage
without delay after the cause of the arrival under stress
has ceased failing in such duty renders him liable.
?owever, in case the cause has been ris5 of enemies,
there must ,rst be an assembly before departure. "Art.
22(#
3teps@
1. Captain should determine during the voyage if
there is well founded fear of sei0ure, privateers
and other valid grounds<
2. Captain shall assemble the o9cers and summon
the persons interested in the cargo who may
attend the meeting but without a right to vote<
. >he o9cers shall determine and agree if there is
well*founded reason after e7amining the
circumstances. >he captain shall have the
deciding vote<
$. >he agreement shall be drafted and the proper
minutes shall be signed and entered in the log
boo5<
(. 6bjections and protests shall li5ewise be entered
in the minutes.
COLLISION
+mpact of two vessels both of which are moving.
All!!on
+mpact between a moving vessel and a stationary one.
Na/$!#al R/le $o De$e'+!ne Negl!gen#e
1. &hen two vessels are about to enter a port, the
farther one must allow the nearer to enter ,rst< if they
collide, the fault is presumed to be imputable to the
one who arrived later, unless it can be proved that
there was no fault on its part.
2. &hen two vessels meet, the smaller should give the
right of way to the larger one.
. A vessel leaving port should leave the way clear for
another which may be entering the same port.
$. >he vessel which leaves later is presumed to have
collided against one which has left earlier.
(. >here is a presumption against the vessel which sets
sail in the night.
1. >here is a presumption against the vessel with spread
sails which collides with another which is at anchor
and cannot move, even when the crew of the latter
has received word to lift anchor, when there was not
su9cient time to do so or there was fear of a greater
damage or other legitimate reason.
.. >here is a presumption against an improperly moored
vessel.
2. >here is a presumption against a vessel which has no
buoys to indicate the location of its anchors to prevent
damage to vessels which may approach it.
;. Dessels must have Kproper loo5*outsL or persons
trained as such and who have no other duty aside
therefrom. "3mith =ell v. CA#
Na/$!#al R/le a $o Sa!l!ng (eel and S$ea+&!1
1. &here a steamship and a sailing vessel are
approaching each other from opposite directions, or
on intersecting lines, the steamship from the moment
the sailing vessel is seen, shall watch with the highest
diligence her course and movements so as to be able
to adopt such timely means of precaution as will
necessarily prevent the two boats from coming in
contact.
2. >he sailing vessel is reAuired to 5eep her course
unless the circumstances reAuire otherwise.
Hone of T!+e !n $&e Coll!!on of (eel
1. 3irst >one P all time up to the moment when ris5 of
collision begins.
/o rule is as yet applicable for none is necessary.
2. 'econd >one P time between moment when ris5 of
collision begins and moment it becomes a practical
certainty.
+t is in this period where conduct of the vessels is
primordial. +t is in this 0one that vessels must strictly
observe nautical rules, unless a departure therefrom
becomes necessary to avoid imminent danger.
. Third >one P time when collision is certain and time of
impact.
An error in this 0one would no longer be legally
conseAuential.
6rror in 6?tre(is * sudden movement made by a
faultless vessel during the third 0one of collision with
another vessel which is at fault during the 2nd 0one. Bven
if such sudden movement is wrong, no responsibility will
fall on said faultless vessel. "8rrutia and Co. v. =aco 4iver
Plantation Co., 21 P?+% 12#
Cae Co-e'ed B0 Coll!!on and All!!on
$. 1ne /essel at )ault
Dessel at fault is liable for damage caused to innocent
vessel as well as damages su-ered by the owners of cargo
of both vessels. "Art. 221#
2. <oth /essels at )ault
Bach vessel must bear its own loss, but the shippers of
both vessels may go against the shipowners who will be
solidarily liable. "Art. 22.#
. +essel at )ault not @nown
Bach vessel must bear its own loss, but the shippers of
both vessels may go against the shipowners who will be
solidarily liable. "Art. 222#
;octrine o) 8nscrutable 3ault P +n case of collision
where it cannot be determined which between the two
vessels was at fault, both vessels bear their respective
damage, but both should be solidarily liable for
damage to the cargo of both vessels.
#. Third /essel at )ault
>he third vessel will be liable for losses and damages.
"Art. 21#
:. 3ortuitous e/entA)orce (aBeure
/o liability. Bach bears its own loss. "Art. 2:#
>he doctrine of res ipsa loAuitur applies in case a
moving vessel stri5es a stationary object, such as a bridge
post, doc5, or navigational aid. "!ar Bastern 3hipping v. CA,
%u0on 3tevedoring vs. CA#
Bven if the cause of action against the common carrier
is based on Auasi*delict, the defense of due diligence in
the selection and supervision of employees is unavailing in
case of a maritime tort resulting in collision. +t is not a civil
tort governed by the Civil Code but a maritime one
governed by Arts. 221*2; of the Code of Commerce.
"Eanila 3teamship vs. +nsa Abdulhaman#
)octrine of %ast Clear Chance and 4ule on Contributory
/egligence cannot be applied in collision cases because of
Art.22. of the Code of Commerce. (Notes and Cases on
the Law on Transportation and Public Utilities, Aquino, T. &
ernando, R.P. !""# ed.&
MARITIME PROTEST
Condition precedent or prereAuisite to recovery of
damages arising from collisions and other maritime
accidents.
+t is a written statement made under oath by the captain
of a vessel after the occurrence of an accident or disaster
in which the vessel or cargo is lost or damaged, with
respect to the circumstances attending such occurrence,
for the purpose of recovering losses and damages.
B7cuses for not ,ling protest@ 1# where the interested
person is not on board the vessel< and 2# on collision time,
need not be protested. "Art. 21#
Cases applicable@
1. Collision "Art. 2(#<
2. Arrival under stress "Art. 112"2##<
. 3hipwrec5s "Arts. 112"1(#, 2$#<
$. &here the vessel has gone through a hurricane or
when the captain believes that the cargo has
su-ered damages or averages "Art. 12$#.
&ho ma5es@ Captain
&hen made@ within 2$ hours from the time the collision
too5 place.
=efore whom made@ competent authority at the point of
collision or at the ,rst port of arrival, if in the Philippines
and to the Philippine consul, if the collision too5 place
abroad. "Art. 2(#
S)IPWREC?
+t is the loss of the vessel at sea as a conseAuence of its
grounding, or running against an object in sea or on the
coast. +t occurs when the vessel sustains injuries due to a
marine peril rendering her incapable of navigation.
+f the wrec5 was due to malice, negligence or lac5 of
s5ill of the captain, the owner of the vessel may demand
indemnity from said captain. "Art. 2$1#
>he rules on collision or allision, as may be pertinent,
can eAually apply to shipwrec5s.
SPECIAL CONCEPTS
ARRASTRE SER(ICE
A contract for the unloading of goods from a vessel.
A11l!#a=!l!$0% 1/erseas trade only. (Co((ercial Law
Re/iew, C. +illanue/a, !""# ed.&
S!gn!"#an#e% &hen a person brings in cargo from
abroad, he cannot unload and deliver the cargo by himself.
>he unloading must be done by the arrastre operator,
which will then deliver the cargo to the importer.
(Co((ercial Law Re/iew, C. +illanue/a, !""# ed.&
Na$/'e of =/!ne% +t is a public utility, discharging
functions which are heavily invested with public interest.
L!a=!l!$0%
1. 3imilar to a warehouseman "%ua Hian v. Eanila
4ailroad#
2. 3imilar to a common carrier "/orthern Eotors v. Prince
%ine#
. 3olidary liability with the common carrier
No$e% +n order that the arrastre operator may be held
liable, the consignee must prove that the damage was due
to the negligence and while the goods are in the custody
of the arrastre operator. "?artford !ire +nsurance v. B.
4a0on, +nc.#
STE(EDORING SER(ICE
>he carriage of goods from the warehouse or pier to the
holds of the vessel. "Chief of 3ta- vs. C+4#
As understood in the port business, the term consists of
the handling of cargo from the hold of the ship to the doc5,
in case of pier*side unloading< or to a barge, in case of
unloading at sea. "Anglo*!il >rading Corp. vs. %a0aro#
>he loading on the ship of outgoing cargo is also part of
stevedoring wor5. "+bid.#
CONTAINERIHATION/ ISAID,TO,CONTAINJ/
IS)IPPER>S LOAD AND CO9NTJ SYSTEM
3ystem whereby the shipper loads his cargoes in a
specially designed container, seals the container and
delivers it to the carrier for transportation. >he carrier does
not participate in the counting of the merchandise for
loading into the container, the actual loading, and the
sealing of the container. "83 %ines v. Comm. 6f Customs,
+C>3+ v. Prudential Guarantee#
>he matter of Auantity, description and conditions of the
cargo inside the container is the sole responsibility of the
shipper, unless there is stipulation to the contrary. "83
%ines vs. Comm. 6f Customs, 4eyma =ro5erage v. Phil.
?ome Assurance#
No$e% +n order to attribute to the carrier any damage to
the shipment that may be found, inspection o) the ,oods
should be done at pier%side. "=an5ers vs. CA#

III* CARRIAGE OF GOODS BY SEA ACT/COGSA .C*A*
No* 752
APPLICABILITY
>he transportation must be@
1. &ater'maritime transportation<
2. for the carriage of goods< and
. overseas'international'foreign "from foreign port
to Philippine port#.
+t can be applied in domestic sea transportation if
agreed upon by the parties. "Clause para(ount or
para(ount clause#
IMPORTANT FEAT9RES%
1. Amount of carrierCs liability
2. /otice of damage
. Prescriptive period
AMO9NT OF CARRIER>S LIABILITY
8nder the 3ec. $"(#, the liability limit is set at U(:: per
pac5age or customary freight unit unless the nature and
value of such goods is declared by the shipper. >his is
deemed incorporated in the bill of lading even if not
mentioned in it. "Bastern 3hipping vs. +AC, 1(: 3C4A $1#
/ote that Art. 1.$;, /CC applies to domestic'inter*
island'coastwise trade.
NOTICE OF DAMAGE .SEC* 5.722
R/le%
a. Patent damage@ shipper should ,le a claim with the
carrier immediately upon delivery
b. %atent damage@ shipper should ,le a claim with the
carrier within three days from delivery.
No$e@ >he ,ling of a notice of claim is not a condition
precedent.
PRESCRIPTI(E PERIOD
Action for loss or damage to the cargo should be brought
within one year after@
a. )elivery of the goods "delivered but damaged
goods#< or
b. >he date when the goods should have been
delivered "non*delivery#. "3ec. I1J#
K%oss or )amageL as applied to the C6G3A
contemplates a situation where no delivery at all was
made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a
way that their e7istence is un5nown or they cannot be
recovered. >hus, it is inapplicable in case of misdelivery or
conversion. "Ang vs. American 3teamship Agencies +nc.#
and damage arising from delay or late delivery "Eitsui
6.3.H. %ines %td. vs. CA#. +n such instance the, Civil Code
rules on prescription shall apply.
>he one*year prescriptive period is suspended by@
1. >he e7press agreement of the parties "8niversal
3hipping %ines, +nc. vs. +AC, 122 3C4A 1.:#
2. >he ,ling of an action in court until it is dismissed.
"3tevens M Co. vs. /ordeutscher %loyd, 1 3C4A
12:#
>he one*year period shall run from delivery of the last
pac5age and is not suspended by e7trajudicial demand.
")ole Phils.,+nc. vs. Earitime Co.,1$2 3C4A 112#
>he one*year period shall run from delivery to the
arrastre operator and not to the consignee. "8nion
Carbide Phils, +nc. vs. Eanila 4ailroad Co.,3C4A (;#
>he insurer e7ercising its right of subrogation is bound
by the one*year prescriptive period. ?owever, it does not
apply to the claim against the insurer for the insurance
proceeds. "!il. Eerchants +ns. Co. vs. Alejandro< Eayer
3teel Pipe Corp. vs. CA#
I(* WARSAW CON(ENTION OF 3A6A .WC2
P9RPOSE% >o protect the emerging air transportation
industry and to secure the uniformity of recovery by the
passengers.
APPLICABILITY
>he transportation must be@
1. +nternational transportation<
2. Air transportation< and
. Carriage of passengers, baggage or goods.
>he &C shall also apply to fortuitous transportation by
aircraft performed by an air transportation enterprise.
8nternational transportation * any transportation in
which the place of departure and the place of destination
are situated either@
1. &ithin the territories of two ?igh Contracting Parties
regardless of whether or not there be a brea5 in the
transportation or transshipment, or
2. &ithin the territory of a single ?igh Contracting
Party, if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or
authority of another power, even though that power is
not a party to the Convention. "Kround tripL, Am. Fur.#
>ransportation to be performed by several successive air
carriers shall be deemed to be one undivided
transportation, if it has been regarded by the parties as a
single operation, whether it has been agreed upon under
the form of a single contract or of a series of contracts,
and it shall not lose its international character merely
because one contract or a series of contracts is to be
performed entirely within a territory subject to the
sovereignty, su0erainty, mandate, or authority of the same
?igh Contracting Party. "Art. 1 3ec.#
W)EN INAPPLICABLE
1. &hen public policy is contradicted<
2. +f the reAuirements under the Convention are not
complied with.
IMPORTANT CONCEPTS%
1. >ransportation documents
a. Passenger tic5et
b. =aggage chec5
c. Air way bill
2. %iability of the carrier for damages
a. )eath or injury to passengers
b. %oss or damage to baggage or goods
c. )elay
. 3uccessive carrier agreement
$. Furisdiction
(. Combined transportation agreement
PASSENGER
TIC?ET
BAGGAGE
C)EC?
AIR
WAYBILL
Passenger Chec5ed*in
baggage
Goods to be
shipped
LIABILITY OF CARRIER FOR DAMAGES
1. )eath or injury of a passenger if the accident causing it
too5 place on board the aircraft or in the course of its
operations of embar5ing or disembar5ing< "Art. 1.#
2. )estruction, loss or damage to any baggage or goods, if
it too5 place during the Ktransportation by airL< "Art. 12#
and
Transportation b4 air P >he period during which the
baggage or goods are in the charge of the carrier, whether
in an airport or on board an aircraft, or, in case of a landing
outside an airport, in any place whatsoever.
+t includes any transportation by land or water outside
an airport if such ta5es place in the performance of a
contract for transportation by air, for the purpose of
loading, delivery, or transshipment.
. )elay in the transportation of passengers, baggage or
goods. "Art. 1;#
No$e@ >he ?ague Protocol amended the &C by removing
the provision that if the airline too5 all necessary steps to
avoid the damage, it could e7culpate itself completely "Art.
2:"1##. "Alitalia vs. +AC, 1;2 3C4A ;#
LIMIT OF LIABILITY .A'$* 66K a a+ended =0
G/a$e+ala P'o$o#olK 3A43L Al!$al!a -* IAC2
3* Paenge'
56N6RAL RUL6: U1::,::: per passenger
67C6PT81N: Agreement to a higher limit
6* C&e#Ged,!n =aggage
56N6RAL RUL6: U2: per 5ilogram
67C6PT81N: +n case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value.
5* )and,#a''!ed =aggage
U1:::'passenger
4* Good $o =e &!11ed
56N6RAL RUL6: U2: per 5ilogram
67C6PT81N: +n case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value.
An agreement relieving the carrier from liability or ,7ing
a lower limit is null and void. "Art. 2#
Carrier is not entitled to the foregoing limit if the
damage is caused by willful misconduct or default on its
part. "Art. 2(#
>hus, the &C does not operate as an e7clusive
enumeration of the instances of an absolute limit of the
e7tent of liability. +t does not preclude the application of
the Civil Code and other pertinent local laws. +t does not
regulate or e7clude liability for other breaches of contract
by the carrier, or misconduct of its employees, or for some
particular or e7ceptional type of damage. "Alitalia vs. CA#
+n PanAm v. +AC, the &C was applied as regards the
limitation on the carrierCs liability, there being a simple
loss of baggage without any improper conduct on the part
of the o9cials or employees of the airline or other special
injury sustained by the passenger.
+n H%E 4oyal v. >uller, the &C has invariably been held
inapplicable, or as not restrictive of the carrierCs liability,
where there was satisfactory evidence of malice or bad
faith attributable to its o9cers and employees. "Alitalia vs.
+AC#
ACTION FOR DAMAGES
1. /otice of claim
A written complaint must me made within@
a. days from receipt of baggage
b. . days from receipt of goods
c. +n case of delay, 1$ days from receipt of
baggage'goods
>he complaint is a condition precedent. &ithout the
complaint, the action is barred e7cept in case of fraud on
the part of the carrier. "Art. 21#
2. Prescriptive period
Action must be ,led within 2 years from@
a. date of arrival at the destination
b. date of e7pected arrival
c. date on which the transportation stopped. "Art.
2;#
+n 8nited Airlines vs. 8y the two*year prescriptive period
was not applied where the airline employed delaying
tactics.
R9LE IN CASE OF (ARIO9S S9CCESSI(E CARRIERS
1. Carriage of passengers
56N6RAL RUL6: Action is ,led only against the carrier in
which the accident or delay occurred.
67C6PT81N: Agreement or contract whereby the ,rst
carrier assumed liability for the whole journey.
2. Carriage of baggage or goods
a. Passenger or consignor can ,le an action against
the Crst carrier and the carrier in which the
damage occurred
b. Passenger or consignee can ,le an action against
the last carrier and the carrier in which the
damage occurred.
>hese carriers are jointly and severally liable. "Art.
:#
A contract of international carriage by air, although
performed by di-erent carriers under a series of airline
tic5ets constitutes a single operation. Eembers of the
+nternational Air >ransportation Association "+A>A# are
under a general pool partnership agreement wherein they
act as agent of each other in the issuance of tic5ets to
contracted passengers to boost tic5et sales worldwide and
at the same time provide passengers easy access to
airlines which are otherwise inaccessible in some parts of
the world. "American Airlines vs. CA#
8nder a general pool partnership agreement, the tic5et*
issuing airline is the principal in a contract of carriage
while the endorsee*airline is the agent. >he obligation of
the former remained and did not cease even when the
breach occurred not on its own Night but on that of
another airline which had underta5en to carry the
passengers to one of their destinations. "China Airlines vs.
Chio5#
<9RISDICTION
At the option of the plainti-, the action for damages may
be ,led in the@
a. Court of domicile of the carrier<
b. Court of its principal place of business<
c. Court where it has a place of business through
which the contract has been made< or
d. Court of the place of destination. "Art. 22"1##
NOTE% +t is the passengerCs Kultimate destinationL not Kan
agreed stopping placeL that determines the country where
suit is to be ,led.
>he forum of action provided in Art. 22"1# is a matter of
jurisdiction rather than of venue. "3antos +++ vs. /orthwest<
2A C.F.3.#
(* SAL(AGE LAW .A#$ No* 67372
SAL(AGE
Two #on#e1$%
1. 3ervices one person renders to the owner of a ship or
goods, by his own labor, preserving the goods or the ship
which the owner or those entrusted with the care of them
have either abandoned in distress at sea, or are unable to
protect or secure.
2. Compensation allowed to persons by whose voluntary
assistance a ship at sea or her cargo or both have been
saved in whole or in part from impending sea peril, or such
property recovered from actual peril or loss, as in cases of
shipwrec5, derelict or recapture.
Re;/!!$e%
1. Dalid object of salvage<
2. 6bject must have been e7posed to marine peril
"not perils of the ship#<
. 3ervices rendered voluntarily "neither an e7isting
duty nor out of a pre*e7isting contract#<
$. 3ervices are successful, total or partial.
S/=Me#$ of Sal-age%
1. 3hip itself<
2. Fetsam P goods which are cast into the sea, and there
sin5 and remain under water<
. !loatsam or !lotsam P goods which Noat upon the sea
when cast overboard<
$. %igan or %agan P goods cast into the sea tied to a buoy,
so that they may be found again by the owners (p.$.D,
*ud,e ;ia>&.
Pe'on w&o &a-e no '!g&$ $o a 'ewa'd fo' al-age@
1. Crew of the vessel saved<
2. Person who commenced 3alvage in spite of opposition
of the Captain or his representative<
. +n accordance with 3ec. of the 3alvage %aw, a
person who fails to deliver a salvaged vessel or cargo to
the Collector of Customs.
Derelict P a ship or her cargo which is abandoned and
deserted at sea by those who are in charge of it, without
any hope of recovering it, or without any intention of
returning to it.
>he intention of those in charge must be ascertained. +f
those in charge left with the intention of returning, or of
procuring assistance, the property is not derelict, but if
they Auitted the property with the intention of ,nally
leaving it, it is derelict and a change of their intention and
an attempt to return will not change its nature "Brlanger M
Galinger vs. 3wedish Bast Asiatic Co. %td.#.
+f it is clear that the intention to return is slight, the
salvage which was done thereafter is considered valid.
(Notes and Cases on the Law on Transportation and Public
Utilities, Aquino, T. & ernando, R.P. !""# ed. p. 0$0&
CONTRACT OF TOWAGE
A contract whereby one vessel, usually motori0ed, pulls
another, whether loaded or not with merchandise, from
one place to another, for a compensation. +t is a contract
for services rather than a contract of carriage.
SAL(AGE TOWAGE
Governed by special
law "Act /o. 2111#
Governed by Civil
Code on contract of
lease
4eAuires success,
otherwise no
payment
3uccess is not
reAuired
Eust be done with
the consent of the
captain'crewmen
6nly the consent of
the tugboat owner
is needed
Dessel must be
involved in an
accident
Dessel need not be
involved in an
accident
!ees distributed
among crewmen
!ees belong to the
tugboat owner
R9LES ON SAL(AGE REWARD
1. >he reward is ,7ed by the 4>C judge in the absence of
agreement or where the latter is e7cessive. "3ec. ;#
2. >he reward should constitute a su9cient
compensation for the outlay and e-ort of the salvors
and should be liberal enough to o-er an inducement
to others to render services in similar emergencies in
the future.
. +f sold "no claim being made within months from
publication#, the proceeds, after deducting e7penses
and the salvage claim, shall go to the owner< if the
latter does not claim it within years, (:S of the said
proceeds shall go to the salvors, who shall divide it
eAuitably, and the other half to the government.
"3ecs. 11*12#
$. +f a vessel is the salvor, the reward shall be distributed
as follows@
a. (:S to the shipowner<
b. 2(S to the captain< and
c. 2(S to the o9cers and crew in proportion to their
salaries. "3ec. 1#
>a5ing passengers from a sin5ing ship, without
rendering any service in rescuing the vessel, is not a
salvage service, being a duty of humanity and not for
reward.
(I* P9BLIC SER(ICE ACT
.C*A* No* 3472
P9RPOSES%
1. >o secure adeAuate, sustained service for the
public at the least possible cost<
2. >o protect the public against unreasonable
charges and poor, ine9cient service<
. >o protect and secure investments in public
services<
$. >o prevent ruinous competition.
A9T)ORITY TO OPERATE P9BLIC SER(ICES
56N6RAL RUL6: /o public service shall operate without
having been issued a certi,cate of public convenience or a
certi,cate of public convenience and necessity.
67C6PT81N':
1. &arehouses<
2. Animal drawn vehicles and bancas moved by oar
or sail<
. Airships, e7cept for the ,7ing of ma7imum rates
for fare and freight<
$. 4adio companies, e7cept for rates ,7ing<
(. Public services owned or operated by the
government, e7cept as to rates ,7ing<
1. +ce plants< and
.. Public mar5ets.

P9BLIC SER(ICE
A person who owns, operates, manages or controls in the
Philippines for hire or compensation, with general or
limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any
common carrier or public utility, ice plants, power and
water supplies, communication and similar public services.
"3ec. 1b, CA 1$1#
A casual or incidental service devoid of public character
and interest is not brought within the category. >he
Auestion depends on such factors as the e7tent of
services, whether such person or company has held
himself or itself out as ready to serve the public or a
portion of the public generally. "%u0on 3tevedoring vs. P3C#
NOTE@ >he Public 3ervice Commission created under the
Public 3ervice %aw has already been abolished under P.).
/o. 1 and other issuances. +t has been replaced by the
following government agencies@ %>6< %>!4=< A>6< =6B<
/>C< /BA< B4=< /&4C< CA=< and E+A.
CERTIFICATE OF
P9BLIC
CON(ENIENCE
.CPC2
CERTIFICATE OF
P9BLIC
CON(ENIENCE
AND NECESSITY
.CPCN2
An authori0ation
issued by the
appropriate
government agency
for the operation of
public services for
which no franchise,
either municipal or
legislative, is
reAuired by law,
e.g., common
carriers.
An authori0ation
issued by the
appropriate
government agency
for the operation of
public service for
which a prior
franchise is reAuired
by law< e.g.
telephone and other
services.
A CPC or a CPC/ constitutes neither a franchise nor a
contract, confers no property right, and is a mere license
or a privilege. >he holder of said certi,cate does not
acAuire a property right in the route covered thereby. /or
does it confer upon the holder any proprietary right or
interest or franchise in the public highways. 4evocation of
this certi,cate deprives him of no vested right. /ew and
additional burdens, alteration of the certi,cate, or even
revocation or annulment thereof is reserved to the 3tate.
"%uAue vs. Dillegas, : 3C4A $:2#
+t is a KpropertyL and has a considerable value and can
be the subject of sale or attachment. "Cogeo*Cubao
6perators and )rivers Assn. vs. CA, 2:. 3C4A $,
4aymundo vs. %uneta Eotor Co.#
RE89REMENTS FOR GRANTING CPC OR CPCN
1. Applicant must be a citi0en of the Philippines or a
corporation or entity 1:S of the capital of which is
owned by such citi0ens<
2. Applicant must prove public necessity<
. Applicant must prove that the operation of the public
service proposed and the authori0ation to do business
will promote the public interest on a proper and
suitable manner<
$. Applicant must have su9cient ,nancial capability to
underta5e the proposed services and meeting the
responsibilities incident to its operation.
POWERS
RE89IRING
PRIOR NOTICE
AND )EARING
POWERS
E:ERCISABLE
WIT)O9T PRIOR
NOTICE AND
)EARING
1. +ssuance of
CPC or CPC/<
2. !i7ing of rates,
tolls, and charges<
. 3etting up of
standards and
classi,cations<
$. Bstablishment
of rules to secure
accuracy of all
meters and all
measuring
appliances<
(. +ssuance of
orders reAuiring
establishment or
maintenance of
e7tension of
1. +nvestigation
any matter
concerning public
service<
2. 4eAuiring
operators to furnish
safe, adeAuate, and
proper service<
. 4eAuiring public
services to pay
e7penses of
investigation<
$. Daluation of
properties of public
utilities<
(. B7amination
and test of
measuring
facilities<
1. 4evocation, or
modi,cation of CPC
or CPC/<
.. 3uspension of
CPC or CPC/,
e7cept when it is
necessary to avoid
serious and
irreparable damage
or inconvenience
to the public or
private interest, in
which case, a
suspension not
more than : days
may be ordered,
prior to the
hearing. "3oriano v.
Eedina, 11$ 3C4A
1#
appliances<
1. Grant of special
permits to ma5e
e7tra or special trips
in territories
speci,ed in the
certi,cate<
.. 8niform
accounting system
and furnishing of
annual reports<
2. Compelling
compliance with the
laws and
regulations.
9NLAWF9L ACTS OF P9BLIC 9TILITY COMPANIES
1. Bngagement in public service business without ,rst
securing the proper certi,cate<
2. Providing or maintaining unsafe, improper or
inadeAuate service as determined by the proper
authority<
. Committing any act of unreasonable and unjust
preferential treatment to any particular person,
corporation or entity as determined by the proper
authority<
$. 4efusing or neglecting to carry public mail upon
reAuest. "3ecs. 12 and 1;#
ACTS RE89IRING PRIOR APPRO(AL
1. Bstablish and maintain individual or joint rates<
2. Bstablish and operate new units<
. +ssue free tic5ets<
$. +ssue any stoc5 or stoc5 certi,cates representing an
increase of capital<
(. Capitali0e any franchise in e7cess of the amount
actually paid to the Government<
1. 3ell, alienate, mortgage or lease property, certi,cates
or franchise.
8nder 3ec. 2:"g# of C.A. /o. 1$1, the sale, etc. may be
negotiated and completed before the approval by the
proper authority. +ts approval is not a condition precedent
to the validity of the contract. >he approval is necessary
only to protect public interest.
PRIOR OPERATOR/OLD OPERATOR R9LE
>he rule allowing an e7isting franchised operator to
invo5e a preferential right within the authori0ed territory
as long as he renders satisfactory and economical service.
>he policy is not to issue a certi,cate to a second
operator to cover the same ,eld and in competition with a
,rst operator who is rendering su9cient, adeAuate and
satisfactory service. >he prior operator must ,rst be given
an opportunity to improve its service, if inadeAuate or
de,cient.
Purpose@ >o prevent ruinous and wasteful competition in
order that the interests of the public would be conserved
and preserved.
+t subordinates the prior applicant rule which gives the
,rst applicant priority only if things and circumstances are
eAual.
&here the operator either fails or neglects to ma5e the
improvement or e-ect the increase in services, especially
when given the opportunity, new operators should be
given the chance to give the services needed by the
public.
PRIOR APPLICANT R9LE
Presupposes a situation when two interested persons
apply for a certi,cate to operate a public utility in the
same community over which no person has as yet granted
any certi,cate. +f it turns out, after the hearing, that the
circumstances between the two applicants are more or
less eAual, then the applicant who applied ahead of the
other, will be granted the certi,cate.
RATE,FI:ING POWER
>he rate to be ,7ed must be just, founded upon
conditions which are fair and reasonable to both the owner
and the public.
A rate is just and reasonable if it conforms to the
following reAuirements@
1. 6ne which yields to the carrier a fair return upon
the value of the property employed in performing
the service< and
2. 6ne which is fair to the public for the service
rendered.
REGISTERED OWNER R9LE
>he registered owner of a certi,cate of public
convenience is liable to the public for the injuries or
damages su-ered by third persons caused by the
operation of said vehicle, even though the same had been
transferred to a third person.
>he registered owner is not allowed to escape
responsibility by proving that a third person is the actual
and real owner Reason@ +t would be easy for him, by
collusion with others or otherwise, to transfer the
responsibility to an inde,nite person, or to one who
possesses no property with which to respond ,nancially for
the damage or injury done. "Bre0o, et al. vs. Fepte 1:2 Phil
1:#.
?ABIT SYSTEM
A system whereby a person who has been granted a
certi,cate of public convenience allows other persons who
own motor vehicles to operate under such license, for a
fee or percentage of such earnings. +t is void and
ine7istent under Art. 1$:;, Civil Code.
EBe#$%
1. >he transfer, sale, lease or assignment of the privilege
granted is valid between the contracting parties but
not upon the public or third persons. "Gelisan vs.
Alday, 1($ 3C4A 22#
2. >he registered owner is primarily liable for all the
conseAuences Nowing from the operations of the
carrier.
>he public has the right to assume that the
registered owner is the actual or lawful owner thereof.
+t would be very di9cult and often impossible, as a
practical matter, for the public to enforce their rights
of action that they may have for injuries inNicted by
the vehicle i) the4 should be required to pro/e who
the actual owner is. "=enedicto vs. +AC, 12. 3C4A ($.#
. >he thrust of the law in enjoining the 5abit system is
to identify the person upon whom responsibility may
be ,7ed with the end in view of protecting the riding
public "%im vs. CA . 3C4A ;$#.
$. >he registered owner cannot recover from the actual
owner and the latter cannot obtain transfer of the
vehicle to himself, both being in pari delicto. ">eja
Ear5eting vs. +AC#
(. !or the better protection of the public, both the
registered owner and the actual owner are jointly and
severally liable with the driver. "Oamboanga
>ransportation Co. vs. CA#