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TRANSPORTATION AND PUBLIC UTILITIES LAW FINALS NOTES

CONCEPTS
Doctrine of limited liability when applicable and when inapplicable?
When applicable? Upon abandonment. Abandonment of the vessel, its appurtenances and freightage is an
indispensable requirement before the shipowner or ship agent can enjoy the benefits of the limited liability
principle. If the carrier does not want to abandon the vessel, then he is still liable even beyond the value of the
vessel
Limited Liability Rule: No Vessel, No Liability No vessel, no liability, expresses in a nutshell the limited
liability rule. the shipowners or agents liability is merely co-extensive with his interest in the vessel such
that a total loss thereof results in its extinction. The total destruction of the vessel extinguishes maritime liens
because there is no longer any res to which it can attach.
The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection
with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations
or which stands as the guaranty for their settlement. Thus, the liability of the vessel owner and agent arising
from the operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance, if
any, which limitation served to induce capitalists into effectively wagering their resources against the
consideration of the large profits attainable in the trade.
Rationale To offset against innumerable hazards and perils and to encourage shipbuilding and maritime
commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of
a ship to the vessel, equipment, and freight, or insurance, if any.
Statutory Provisions for the Limited Liability:
Article 587: The ship agent shall also be civilly liable for the indemnities in favor of third persons which may
arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt
himself therefrom by abandoning the vessel with all her equipments and the freight it may have earned during
the voyage.
Article 643: If the vessel and her cargo should be totally lost, by reason of capture or wreck, all rights shall be
extinguished, both as regards the crew to demand any wages whatsoever, and as regards the ship agent to
recover the advances made.
If a portion of the vessel or of the cargo, or of both, should be saved, the crew engaged on wages, including the
captain, shall retain their rights on the salvage, so far as they go, on the remainder of the vessel as well as on
the amount of the freightage of the cargo saved; but sailors who are engaged on shares shall not have any
right whatsoever on the salvage of the hull, but only the portion of the freightage saved. If they should have
worked to recover the remainder of the shipwrecked vessel they shall be given from the amount of the
salvage an award in proportion of the efforts made and to the risks, encountered in order to accomplish the
salvage.
Article 837: The civil liability incurred by the shipowners in the cases prescribed in this section, shall be
understood as limited to the value of the vessel with all her appurtenances and freight earned during the
voyage.
Coverage of Limited Liability:
1) liability to third persons, 2) acts of the captain, 3) collisions
Exceptions to Limited Liability:
1 where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring
negligence of the shipowner and the captain;
2 where the vessel is insured;

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3 in workmens compensation claims


4 the total destruction of the vessel does not affect the liability of the owner for repairs of the vessel
completed before its loss.
Applicability of the Civil Code
In connection with Article 587, the carrier cannot invoke Articles 1733, 1735 of NCC. While the primary law
governing the instant case is the NCC, in all matters not regulated by said Code, the Code of Commerce and
other special laws shall govern. Since the Civil Code contains no provision regulating liability of shipowners or
agents in the event of total loss or destruction of the vessel, it is the provisions of the Code of Commerce,
particularly Article 587 that governs.
MARITIME PROTEST
Protest, definition.
- the written statement by the master of a vessel or any authorized officer, attested by proper officer or
a notary, to the effect that damages has been suffered by the ship
- required under the Code of Commerce in the following cases (ashc dont ashc me!):
(1) when the vessel makes an arrival under stress (AUS)
(2) where the vessel is shipwrecked
(3) where the vessel has gone through a hurricane or the captain believes that the cargo has suffered
damages or averages
(4) maritime collisions
ARTICLE 835. The action for the recovery of losses and damages arising from collisions cannot be admitted if a
protest or declaration is not presented within twenty-four hours before the competent authority of the point where
the collision took place, or that of the first port of arrival of the vessel, if in Philippine territory, and to the consul
of the Republic of the Philippines if it occurred in a foreign country.
WHO MAKES THE PROTEST? Captain
WHEN SHOULD PROTEST BE MADE? within 24 hours from the time the collision took place.
BEFORE WHOM SHOULD IT BE MADE? competent authority at the point of collision or at the first port of
arrival, if in the Philippines and to the Philippine consul, if the collision took place abroad.
Lopez v. Duruelo
Facts:
On February 10, 1927, plaintiff Augusto Lopez was desirous of embarking upon the interisland steamer San
Jacinto in order to go to Cebu, the plaintiff embarked at the landing in the motorboat Jison which was engaged
in conveying passengers and luggage back and forth from the landing to the boats at anchor.
As the motorboat approached San Jacinto in a perfectly quiet sea, it came too near to the stern of the ship, and
as the propeller of the ship had not yet ceased to turn, the blades of the propeller strucked the motorboat and
sank it at once. As it sank, the plaintiff was thrown into the water against the propeller, and the revolving blades
inflicted various injuries upon him. The plaintiff was hospitalized. He filed a complaint seeking to recover
damages from the defendant. The defendant however alleged that the complaint does not have a right of action,
a demurrer was submitted directed to the fact that the complaint does not allege that the protest had been
presented by the plaintiff, within twenty-four hours after the occurrence to the competent authority at the port
where the accident occurred as provided for Article 835 of the Code of Commerce.
Issue:
Whether the motorboat Jison is a vessel provided for by Article 835 of the Code of Commerce?
Ruling:
The word vessel as used in the third section of tile IV, Book III of the Code of Commerce, dealing with
collisions, does not include all ships, craft or floating structures of any kind without limitation. The said

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section does not apply to minor craft engaged in a river and bay traffic. Therefore, a passenger on boat like
the Jison, is not required to make protest as a condition precedent to his right of action for the injury
suffered by him in the collision described in the complaint. Article 835 of the Code of Commerce does
not apply.
Lecture: Maritime protest is only required for ocean-going or merchant vessels but not to motorboats. While
the MARINA Circular makes no distinction between motorboats and vessels, this does not hold true. The
principle in this case still controlling.

ARTICLE 836. With respect to damages caused to persons or to the cargo, the absence of protest may not
prejudice the persons interested who were not on board or were not in a condition to make known their wishes.
Excuses for not filing protest.
1. where the interested person is not on board the vessel; and
2. on collision time, need not be protested.

APPLICATION OF LIMITED LIABILITY RULE TO CHARTERER


The shipowner is the person who is primarily liable for damages sustained in the operation of a vessel. The
Code of Commerce at times uses the term naviero to indicate the person who is liable. The naviero has been
construed to include the shipowner, ship agent and even the charterer.

SHIP MORTGAGE
Preferred Mortgage
Important Codal provisions: Sec. 2 and Sec. 4 of PD 1521
Section 2, PD1521 provides who may constitute a ship mortgage:
1. Any citizen of the Philippines, or
2. Any association or corporation organized under the laws of the Philippines, at least sixty per cent of
the capital of which is owned by citizens of the Philippines
Section 2, PD 1521 provides for the purpose and this is important in determining the preference as held in the
case of Poliand Industrial Ltd. vs NDC
for the purpose of financing the construction, acquisition, purchase of vessels or initial operation of
vessels
In the case of Poliand, it was held that since the purpose was within the ambit of Sec. 2 and the mortgage
constituted in accordance with PD1521, Sec. 17 and 21 of PD1521 applies rather than the Civil Code
provisions on concurrence and preference of credits. Thus, Poliands claim which was a preferred maritime
lien had priority over the preferred mortgage under PD1521. If it was under the Civil Code, Poliands claim
would have been inferior. General legislation must give way to special legislation.
Section 4(a) of PD1521 otherwise known as the Ship Mortgage Decree of 1978 provides:
A valid mortgage which at the time it is made includes the whole of any vessel of domestic
ownership shall have, in respect to such vessel and as of the date of recordation, the preferred
status given by the provisions of Section 17 hereof, if

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1. The mortgage is recorded (currently with MARINA) as provided in Section 3 hereof;


2. An affidavit is filed with the record of such mortgage to the effect that the mortgage is made in
good faith and without any design to hinder, delay, or defraud any existing or future creditor of the
mortgagor or any lien or of the mortgaged vessel;
3. The mortgage does not stipulate that the mortgagee waives the preferred status thereof.
A vessel holding a Provisional Certificate of Philippine Registry is considered a vessel of domestic ownership.
(Sec. 4b, PD1521) Sec. 8 provides guidance on condition precedent to record the preferred mortgage. Sec.
4(c) requires certain endorsements to the documents of a vessel covered by a preferred mortgage. Sec. 4 (e)
provides that a mortgage which includes property other than a vessel shall not be held a preferred mortgage
unless the mortgage provides for the separate discharge of such property.
Preferred Maritime Lien
Important Codal Provisions: Sec. 17 and 21 of PD1521
The preferred mortgage lien shall have priority over all claims against the vessel, except the following
claims in the order stated:
(PREFERRED MARITIME LIENS)
(1) expenses and fees allowed and costs taxed by the court and taxes due to the Government;
(2) crew's wages;
(3) general average;
(4) salvage; including contract salvage;
(5) maritime liens arising prior in time to the recording of the preferred mortgage;
(6) damages arising out of tort; and
(7) preferred mortgage registered prior in time.
The maritime lien in Section 17(a)(5) includes maritime lien for necessaries as provided in Section 21 of
PD 1521.
In Crescent Petroleum Ltd vs M/V Lok Maheshwari, the requirements for a maritime lien for necessaries
which is enforceable by a suit in rem were enumerated, to wit:
1. Necessaries must have been furnished to and for the benefit of the vessel.
2. Necessaries must have been necessary for the continuation of the voyage of the vessel.
3. Credit must have been extended to the vessel
4. Extension of the credit must be a necessity.
5. Necessaries must be ordered by the persons authorized to contract on behalf of the vessel (i.e.
Managing owners, ships husband, master or any person to who management is entrusted)
Extension of credit is presumed if advances are made to a captain. It is not presumed when made to a subcharterer. Necessity of credit is presumed it appears that the repairs and supplies were necessary for the ship
and that they were ordered by the master. A sub-charterer under a time charter is not a person authorized to
contract.
In PNB vs CA and CBC, if such maritime lien arose prior to the recording of a preferred mortgage lien, shall
have a priority over such mortgage lien. The date of the contract for repair was March 12, 1979, the recording
of the mortgage on September 25, 1979 and CBC actually paid off the Standby letter of credit to the repairmen
on March 30, 1983. The Court held CBC had a preferred maritime lien. The lien attached on March 12, 1979
being a jus in re, maritime lien constitute a present right of property in the ship. From the moment the claim
or privilege attaches, it is inchoate and when carried into effect by legal process, it relates back to the period
when it first attached.
The torts contemplated in Sec. 17(a)(6) are maritime torts defined as civil wrongs committed on navigable
waters. It includes collision claim and personal injury claims.

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In Crescent Petroleum Ltd vs M/V Lok Maheshwari, the tests to determine if there is a maritime lien under
the Ship Mortgage Decree are (and whether foreign laws are more appropriate):
1. The law of the country where the supplies were furnished;
2. 7 factors of the Multiple-contact test
3. 6 Factors provided in Restatement (Second) of Conflicts of Law
In the case, the injured party is a Canadian corporation, the sub-charterer which placed the order is a
Canadian, the entity which physically delivered is in Canada, the place of contracting, negotiation and delivery
is in Canada. It should be the laws of Canada that should apply and not the Philippines. Thus, the court
concluded that there is no lien from a contract for supplies between foreign entities delivered in a foreign
port by the mere accident of the Vessels being in the Philippine territory.
Prescription
An action upon an obligation created by law must be brought within ten (10) years from the time the
right of action accrues (Art. 1144, NCC). Hence, enforcement of a maritime lien imposed by special law
prescribes in ten (10) years. (Poliand Industrial Ltd. vs NDC)
Maritime Liens
Definition. In general terms, maritime lien is a privileged claim on a vessel for some service rendered
to it to facilitate its use in navigation. It is a special property right in a ship given to a creditor by law as security
for a debt or claim subsisting from the moment the debt arises with right to have the ship sold and debt paid
out of proceeds.
Nature. A maritime lien is akin to a mortgage lien in that in spite of the transfer of ownership, the lien
is not extinguished. The maritime lien is inseparable from the vessel and until discharged, it follows the vessel.
Hence, the enforcement of a maritime lien is in the nature and character of a proceeding quasi in rem.
Who may constitute a ship mortgage. Sec. 2, Ship Mortgage Decree. Any citizen of the Philippines, or
any association or corporation organized under the laws of the Philippines, at least 60% of the capital of which
is owned by citizens of the Philippines for the purpose financing the (CAPI) construction, acquisition, purchase
of vessels or initial operation of vessels, freely constitute a mortgage or any other lien or encumbrance on his
or its vessels and its equipment with any bank or other financial institutions, domestic or foreign.
Maritime Lien for Necessaries; persons entitled to such lien. Sec. 21, Ship Mortgage Decree. Any person
furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries to any vessel,
whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by such
owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary
to allege or prove that credit was given to the vessel.
Persons authorized to procure necessaries
The following persons shall be presumed to have authority from the owner to procure repairs,
supplies, towage, use of dry dock or marine railway, and other necessaries for the vessel:
Manager owner
Ships husband
Master
Any person to whom the management of the vessel at port of supply is entrusted
No person tortuously or unlawfully in possession or charge of a vessel shall have authority to bind the vessel.
The officers and agents of a vessel shall be taken to include such officers and agents when appointed by a
charterer, by an owner pro hac vice, or by an agreed purchaser in possession of the vessel.
Personal action against debtor
SECTION 17 XXX(b) If the proceeds of the sale should not be sufficient to pay all creditors included in one
number or grade, the residue shall be divided among them pro rate. All credits not paid, whether fully or

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partially shall subsist as ordinary credits enforceable by personal action against the debtor. The record of
judicial sale or sale by public auction shall be recorded in the Record of Transfers and Encumbrances of Vessels
in the port of documentation.
According to an authority, Section 17 is an exception to the hypothecary nature of maritime transactions.

III.

Persons Who Take Part

SHIP AGENT what if the obligation of a person is limited to informing the consignee on the arrival of
goods
SHIP AGENT (Art. 586, Code of Commerce):
The ship owner and the ship agent shall be civilly liable for the acts of the captain and for the obligations
contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the
amount claimed was invested for the benefit of the same.
By ship agent is understood the person entrusted with provisioning of the vessel or representing the
vessel in the port in which it may be found.
* There is also the intention under the Code of Commerce to make the ship agent solidarily liable with the
owner. The solidary liability applies both for breach of contract and extra-contractual obligations such as tort.
The ship agent, even though he is not the owner, is liable in every way to the creditor for losses and damages
without prejudice to his right against the owner, the vessel and its equipment and freight. But his liability
however is subject to the LIMITED LIABILITY RULE (Chapter 6 of the Aquino book).
Macondray case vs Ace Navigaion case
Ace Navigation: issue : whether the person would be considered a ship agent.
SC: Based on the evidence established, the role of the person who was sued in the
capacity as a ship agent but was merely to inform the consignee as to the arrival of the
goods;

He was an agent but not a ship agent; an agent of the consignee but not a ship
agent in contemplation of the code of commerce such that we are not closing
the possibility that if a person I found to be performing a function which is to
inform the consignee but if aside from that function there are other
characteristics that may point out that indeed he/she/ it represents the vessel
in accordance with the definition then it is likely that that person can be
considered a ship agent under the code of commerce but in the Ace navigation
case, based on the evidence, that was only his role then the court said he is not
a ship agent. The implication if he is not a ship agent, ha cannot be held liable,
he cannot be held solitarily liable together with the ship owner.
Macondray: there were several facts that the court noticed and which convinced the court to say
that petitioner was considered a ship agent. Although you will note, the trial court according to the
SC found the petitioner as a local agent of the vessel. SC: these acts: preparation of the notices,
presence of the employees point to the conclusion that it was the entity that represented the
vessel.
o Wing kee case: agent was called operating agent, has to be based on what is your
role.
SC: the admiral line, the ship agent, is liable to pay the seller for the
supplies furnished to the ship. Upon termination of agency, the ship
agent is not responsible anymore.(p. 352 in the book of Aquino)

LIABILITY OF THE SHIP AGENT (solidarily liable /primarily liable with the ship owner)
-for breach of contract
-for extra-contractual obligation such as tort

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-for the acts of ship captain


-for the obligations contracted by ship captain for the repair, equipment and provision
-for indemnities to third person
-for the conduct of ship captain in the case of goods

GR: can seek for reimbursement from the ship owner


EXC: ship agent is also a part owner- cannot seek for reimbursement -liability is subject to the limited liability
rule (no vessel-no liability)
Art.558, COC
(liability for obligations contracted by ship
captain)

Art. 1759, NCC

GR: ship owner and ship agent NOT liable if the


ship captain exceeds authority
EXC: the amount claimed was invested for the
benefit of the vessel
Obligation is financial ("unless AMOUNT claimed...")

Death/injury of passenger, due to negligence of


employee, common carrier is LIABLE even if acted
beyond scope of authority or in violation of order.
specific as to death, injury to passenger even if it's
not an obligation under 588, cannot exonerate
himself from liability

Role of captain vs role of maritime pilot: A captain performs 3 distinct roles:


1) he is a general agent of the shipowner
2) he is also the commander and technical director of the vessel and
3) he is a representative of the country under whose flag he navigates.
The most important of these is his being commander of the vessel. To the captain is committed the governance,
care and management of the vessel. A pilot is a person duly qualified and licensed to conduct a vessel into or
out of ports, or in certain waters. States possessing harbors have enacted laws or promulgated rules requiring
vessels approaching their ports to take on board pilots licensed under the local law. This is known as
compulsory pilotage. While in exercising his functions a pilot is in sole command of the ship and supersedes
the captain for the time being in the command and navigation of the ship and that he becomes the master
(captain) pro hac vice of the ship, the captain does not surrender his vessel to the pilot, and the pilot is not the
captain. The captain should interfere and even displace the pilot as when the latter is obviously incompetent
or intoxicated. In these circumstances, the pilot is not absolved from liability when an accident occurs and he
failed to take the above measures.
Discretion of captain:
The ship captain is accorded a reasonable measure of discretionary authority to decide what the safety of the
ship and of its crew and cargo specifically requires on a stipulated voyage.
It is the right and duty of the captain, in the exercise of sound discretion and in good faith, to do all things with
respect to the vessel and its equipment and conduct of the voyage which are reasonably necessary for the
protection and preservation of the interests under his charge, whether those be of the shipowners, charterers,
cargo owners or underwriters.
If the ship captain is convinced that the instructions of the shipowner will result in imposing unacceptable risks
of loss or serious danger to ship or crew, he cannot casually seek absolution from his responsibility of a marine
casualty occurs in following such instructions.

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15. Slot charter party and its effect on diligence of common carrier

The term slot charter means a charter party whereby the shipper leases one or more slots, aboard a
container ship.
A voyage charter party includes a sub-category known as a slot charter, where the owner or operator rents
or hires container spaces or a percentage of the space on the vessel for a hire fee based on the space rented
to the slot charterer, which is payable regardless of whether the slot charterer fills the space or not. There
may be no distinction between a voyage charter and a slot charter as both involve chartering a space on a
ship.
The carrier is bound to exercise extra ordinary diligence in conveying its slot charter agreement as ruled in
the case of PHILAM INSURANCE COMPANY, INC., vs. HEUNG-A SHIPPING CORPORATION and WALLEM
PHILIPPINES SHIPPING, INC.,
As the carrier of the subject shipment, HEUNG-A was bound to exercise extraordinary diligence in
conveying the same and its slot charter agreement with DONGNAMA did not divest it of such
characterization nor relieve it of any accountability for the shipment. The charter party between HEUNGA and DONGNAMA was a contract of affreightment and not a bare boat or demise charter.
16. Effect of charter party on carrier

Generally the character of common carrier as such is not affected by the charter party if the same is a contract
of affreightment.
(Taken from the book) A charter party may transform a common carrier into a private carrier. However,
it must be a bareboat or demise charter where the charterer mans the vessel with his own people and
becomes, in effect, the owner for the voyage or service stipulated. The common carrier is not transformed
into a private carrier if the charter party is a contract of affreightment like a voyage charter or a time
charter. In a voyage charter, the carrier is answerable to the loss of the goods received for transportation.
Planters products vs. CA Art. 1733 of the New Civil Code mandates that common carriers, by reason of
the nature of their business, should observe extraordinary diligence in the vigilance over the foods they
carry. In the case of private carriers, however, the exercise of ordinary diligence in the carriage of
goods will suffice. xxx xxx xxx xxx It is only when the charter includes both the vessel and its crew, as in a
bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering
the charter-party is concerned.
17. Liability of charterer under a contract of affreightment
In a time charter, the vessel is leased to the charterer for a fixed period of time, whereas in a voyage charter,
the vessel is leased for a single or particular voyage. In both the time and voyage charters, which are said to
be contracts of affreightment, the charterer hires the vessel only, either for a determinate period of time or
for a single or consecutive voyage, with the shipowner providing for the provisions of the ship, the wages of
the master and crew, and the expenses for the maintenance of the vessel.
Generally, the character of the common carrier as such is not affected by the charter party if the same is a
contract of affreightment. Consequently, the rights and responsibilities of ownership still rested on the
owner, and the charterer was thereby freed from any liability to third person in respect of the vessel.
Therefore, it is still the carrier who is liable to third persons and not the charterer in a contract of

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affreightment.
18. Owner pro hac vice
There are 2 different kinds of charter parties: 1. The Bareboat or Demise charter and 2. Contract of
Affreightment.
In a bareboat or demise charter, the shipowner leases to the charterer the whole vessel, transferring to the
latter the entire command, possession and consequent control over the vessels navigation, including the
master and crew, who thereby become the charterers Servants. The charterer takes over the ship, lock,
stock and barrel. As the shipowner is not normally required to provide for a crew; the charterer gains
possession of the vessel bare, hence, the term bareboat. Thus, the charterer becomes owner pro hac vice
of the vessel since ha mans the vessel with his own set of master and crew, effectively becoming the owner for
the voyage or service stipulated, subject however to any liability for damages arising from negligence.
Moreover, the bareboat charterer assumes, to a large extent, the customary rights and liabilities of the
shipowner in relation to third persons who may have dealt with him or with the vessel. In this latter instance,
the master of the vessel is the agent of the charterer, and not of the shipowner, and therefore, it is the
charterer or the owner pro hac vice, and not the general owner of the vessel, who is liable for the expenses of
the voyage including the wages of the seamen.
Loans on Bottomry and Respondentia1
Bottomry Is a contract whereby the owner of a ship borrows [loans money] for the use, equipment or repair
of the vessel, for a definite term, and pledges the ship as security, with the stipulation that if the ship is lost
during the voyage or during the limited time on account of the perils enumerated, the lender shall lose his
money (Blacks Law Dictionary cited in Aquino and Hernando, 2011)
Respondentia A loan, whereby the goods or some part thereof are used as security thereof, the repayment
of which is dependent upon maritime risks.
Essential Requisites applicable to both bottomry and respondentia
(1) There should be a marine risk
(2) Under the condition that if the security (ship or goods) is lost, the right of the lender to recover
principal and stipulated interest, are both lost
The security must exclusively pertain to the vessel or goods It is important to note that there must be a
marine risk upon which the loan is dependent upon. Thus, if the vessel or the cargo is lost, which are considered
securities for the loan taken by the shipowner, but the loan is nevertheless payable, there is neither bottomry
nor respondentia.
Own example (Bottomry): O, a ship owner contracts a loan on bottomry with L, lender, whereby Ship S was used
as security for the same. S has perished due to a tyhoon before it reached its destination. L loses his capital.
Own example (Respondentia): Refer to facts above but this time it is loan on respondentia and the securities are
goods placed on board. Ship S was gutted by fire but cargoes were saved. Lender on respondentia does not
suffer loss on his capital.
Bottomry or Respondentia v. Simple Loan
Bottomry or Respondentia
Simple Loan

Usury law does not apply to the extraordinary


risks involved

Usury law applies

There must be a marine risk the existence of


which must be duly established

No such need to establish the risk

Aquino and Hernando, Transportation and Public Utilities Law, Rex Book Store, 2011, pp. 442 454.

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It must be in writing otherwise void

Does not need to be in writing but of course, apply


general rule in Oblicon that without stipulation on
interest, it shall not be due

The contract must be recorded in the registry of


vessels in order to bind third persons

No such registration is required in the case of a simple


loan

Preference is extended to the last lender if there


be several on the theory that were it not for
the last lender, then the prior lenders would
not have benefited from the preservation of
security

First lender, generally, enjoys preference

There must be a collateral either the ship or the


goods or part of the latter
Loss of collateral extinguishes the same

Does not require collateral


Is not extinguished assuming collateral is lost

When is a purported loan on bottomry or respondentia considered simple loan? If the lender should
prove that the borrower loaned an amount which is larger than the value of the obkect liable for the bottomry
loan due to fraudulent means. The loan shall be valid only for the amount at which the object is appraised and
the surplus shall be repaid as if it were a simple loan.
Who may constitute loan on bottomry?
GR: It is the owner of the ship
Exceptions:
(1) A part owner, to the extent of his interest
(2) The captain of the ship, in extreme necessities
Who may constitute loan on respondentia?
Rule: Only the owner of the cargo.
Form of the loans: See Art. 720 of the Code of Commerce which requires:
(1) By means of a public instrument
(2) By means of a policy signed by the contracting parties and the broker taking part therein
(3) By means of a private instrument
Consequences of Loss of Effects of the Loans. Rules:
(1) If the effects (I think it refers to the security, ie. ship or goods) are lost due to an accident of the
sea during the time and on the occasion of the voyage which has been designated in the contract,
and the cargo was on board, the lender loses the right to institute the action which would have
pertained to him
(2) However, he does not lose such right in the following instances:
a. Loss is caused by an inherent defect of the thing
b. Through fault or malice of the borrower
c. Through barratry on the part of the captain
d. Damages suffered by vessel as a consequence of engaging in a contraband
e. If the damage arose from having loaded the goods on a vessel different from that
designated
i. Only exception to (e) is when the change in goods is due to force majeure
(3) If the same vessel or cargo should be the object of a loan on bottomry or respondentia and marine
insurance, the value of what may be saved in case of shipwreck shall be divided between the lender
and insurer, in proportion to interest.

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I. Averages
20. Pilotage
PILOTAGE2
Who is a Pilot a person duly qualified, and licensed, to conduct a vessel into or out of ports, or in certain
waters. It includes both: (1) Those whose duty is to guide vessels into or out of ports, (2) those entrusted with
the navigation of vessels on the high seas.
In Far Easter Shipping Co v. CA, the term pilot is generally understood as a person taken on board at a
particular place for the purpose of conducting a ship through a river, road or channel, or from a port.
Compulsory pilotage states possessing harbors have enacted laws or promulgated rules requiring vessels
approaching their ports to take on board pilots licensed under the local laws. In the Philippines, compulsory
pilotage is implemented in the Port of Manila.
Master of the Ship v. Pilot The pilot supersedes the master for the time being in the command and navigation
of the ship, and his orders must be obeyed in all matters connected with her navigation. He becomes the master
pro hac vice and should give all directions as to speed, course, stopping and reversing, anchoring, towing and
the like.3
May pilot insist on control? Yes, when pilotage is compulsory and a licensed pilot is employed in such place. 4
Shipowner v. Pilot
(1) General Rule: a pilot is personally liable for damages caused by his own negligence or default to the
owners of the vessel and to third parties for damages in a collision. It constitutes maritime tort!
(2) Exception: Where the pilot of a vessel is not a compulsory one, but is employed voluntarily, the owners
of the vessel are, all the more, liable for his act.
Liability of Pilots Association The fact that the pilot is a member of an association does not make the
association jointly and severally liable. Article 2180 of the Civil Code does not apply because there is no
employer-employee relationship.
21. Ordinary expenses v. extraordinary expenses
ORDINARY EXPENSES: Petty and ordinary expenses incident to navigation, such as those of pilotage
of coasts and ports, those of lighterage and towage, anchorage, inspection, health, quarantine,
lazaretto, and other so-called port expenses, costs of barges and unloading until the merchandise is
placed on the wharf, and any other usual expenses of navigation, shall be considered ordinary expenses
to be defrayed by the shipowner, unless there is an express agreement to the contrary. (Art 807 CC)
EXTRAORDINARY EXPENSES: under 806 --- averages are:
o Extraordinary expenses ex. If machine does not work, you have to ask help of a tugboat the
expenses on the use of tugboat is a question of averages. This is extraordinary because it is not
foreseen. --- assuming the engine of the vessel was defective, can that be considered an average? YES.
(question now if it is particular or general)
o Damages or deterioration suffered refer to the physical feature or attribute of the goods.
- these two are different (ANGELS NOTES)
Q: ordinary expenses are not averages because they are foreseeable. Are there instances that they can
be considered to be extraordinary averages?
A; if the parties agree that the averages will cover ordinary expenses. The code of commerce does not
prohibit the inclusion of other expenses under averages. (ANGELS NOTES)
22. General averages

Aquino and Hernando, Transportation and Public Utilities Law, Rex Book Store, 2011, pp.373 381
Far Eastern Shipping v. CA, GR No. 130068, 1 October 1998.
4
Ibid.
3

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Kinds of Averages:
1. Simple or particular as a general rule include all the expenses and damage caused to the vessel or to
her cargo which have not inured to the common benefit and profit of all the persons interested in the
vessel and her cargo, especially the following: (Art. 809, Code of Commerce)
1. The damage suffered by the cargo from the time of its embarkation until it is unloaded, either
on account of the inherent defect of the goods or by reason of a marine accident or force majeure,
and the expenses incurred to avoid and repair the same.
2. The damage and expenses suffered by the vessel in her hull, rigging, arms, and equipment, for
the same causes and reasons, from the time she puts to sea from the port of departure until she
anchors in the port of destination.
3. The damage suffered by the foods loaded on deck, except on coastwise navigation, if the marine
ordinances allow it.
4. The wages and victuals of the crew when the vessel is detained or embargoed by a legitimate
order or force majeure, if the character has been contracted for a fixer sum for the voyage.
5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions.
6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of
provisions and to save the crew, or to meet any other need of the vessel against which the proper
amount shall be charged.
7. The victuals and wages of the crew while the vessel is in quarantine.
8. The damage inflicted upon the vessel or cargo by reason of an impact or collision with another,
if it is accidental and inevitable. If the accident should occur though the fault or negligence of the
captain, the latter shall be liable for all the damage caused.
9. Any damage suffered by the cargo through the fault, negligence, or barratry of the captain or of
the crew, without prejudice to the right of the owner to recover the corresponding indemnity from
the captain, the vessel, and the freight (Art. 809, Code of Commerce).
2.

General or gross (Art. 808, Code of Commerce) as a general rule, include all the damages and expenses
which are deliberately caused in order to save the vessel, her cargo, or both at the same time, from a
real known risk, and particularly the following:
1. The effects or cash invested in the redemption or the vessel or the cargo captured by enemies,
privateers, or pirated, and the provisions, wages, and expenses of the vessels detained during the time
the settlement or redemption is being made.
2. The effects jettisoned to lighten the vessel, whether they belong to the cargo, to the vessel, or to the
crew, and the damage suffered through said act by the effects which are kept on board.
3. The cabled and masts which are cut or rendered useless, the anchors and the chains which are
abandoned, in order to save the cargo, the vessel, or both.
4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and
place it in condition to enter a port or roadstead, and the damage resulting therefrom to the effects
removed or transferred.
5. The damage suffered by the effects loaded as cargo by the opening made in the vessel in order to
drain her and prevent her from sinking.
6. The expenses caused in order to float a vessel intentionally stranded for the purpose of saving her.
7. The damage caused to the vessel which had to be opened, scuttled or broken in order to save the
cargo.
8. The expenses for the treatment and subsistence of the members of the crew who may have been
wounded or crippled in defending or saving the vessel.
9. The wages of any member of the crew held as hostage by enemies, privateers, or pirates, and the
necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his
domicile, should he prefer it.
10. The wages and victuals of the crew of a vessel chartered by the month, during the time that she is
embargoed or detained by force majeure or by order of the Government, or in order to repair the
damage caused for the common benefit.

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11. The depreciation resulting in the value of the goods sold at arrivals under stress in order to repair
the vessel by reason of gross average.
12. The expenses of the liquidation of the average (Art. 811, Code of Commerce; 2015 Bar)
(Art. 811)
Who should bear the simple or particular averages?
The owner of the things which gave rise to the expenses or suffered the damage shall bear the simple or
particular averages. (Art. 810, Code of Commerce)
Who should bear general or gross averages?
A: In order to satisfy the amount of the gross or general averages, all the persons having an interest in the
vessel and cargo therein at the time of the occurrence of the average shall contribute (Art. 812, Code of
Commerce)
Distinguish particular or simple averages from general or gross averages
Particular/ Simple Average
General/Gross Average
Have not inured to the common benefit of all Are caused for the benefit of those interested in the
persons interested in the vessel and her cargo
vessel and her cargo
May be due to causes other than deliberate act
Are deliberately caused in order to save the vessel
and/ or her cargo
Are borne by the owner of the things damaged
Shall be shared and contributed by all persons
having an interest in the vessel and cargo (Art. 810
and Art. 812, Code of Commerce)
What are the formalities to be followed before incurring a general or gross average?
In order to incur the expenses and cause the damage corresponding to gross average, the following
formalities must be followed:
1. There must be a resolution of the captain, adopted after deliberation with the sailing mate and other officers
of the vessel, and after hearing the persons interested in the cargo who may be present.
If the latter should object, and the captain and officers of a majority of them, or the captain, if opposed
to the majority, should consider certain measures necessary, they may be executed under his responsibility,
without prejudice to the right of the shippers to proceed against the captain before the competent judge or
court, if they can prove that he acted with malice, lack of skill, or negligence.
If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not
contribute to the gross average, their share being chargeable against the captain, unless the urgency of the case
should be such that the time necessary for previous deliberation was wanting (Art. 813, Code of Commerce).
2. The resolution adopted to cause the damage which constitutes general average must necessarily be entered
in the log books, stating the motives and reasons on which it is based, the votes against it and the reason for
the dissent, should there be any, and the irresistible and urgent causes which impelled the captain, if he acted
of his own accord (Par. 1, Art. 814, Code of Commerce).
3. In the first case mentioned above, the minutes shall be signed by all the persons present who could do so
before taking action, if possible, and if not, at the first opportunity. In the second case, it shall be signed by the
captain and officers of the vessel (Par. 2, Art. 814, Code of Commerce).
4. In the minutes, and after the resolution, shall be stated in detail all the objects jettisoned, and mention shall
be made of the injuries cause to those kept on board. The captain shall be obliged to deliver one copy of these
minutes to the maritime or judicial authority of the first port he may make, within twenty-four hours after his
arrival, and to ratify it immediately under oath (Par. 3, Art. 814, Code of Commerce).
WHO WILL SHOULDER THE LOSS?
General Rule: (Hernandez, et.al)
- Particular Loss will lie on where it falls
o i.e. if cargo was damaged due to seawater, loss lies on the cargo and therefore the shipper or the consignee
will suffer the loss
- General loss will be shared proportionally
o Special circumstances
o Not the owner of the cargo that was jettisoned will shoulder the loss but he will be compensated by those
owners of the cargo and the ship owners of the vessel.

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GENERAL AVERAGE:
Example: jettisoning of cargo (antique/traditional), fire on the vessel and another vessel helps put out the fire
causing damage to the cargo (modern), storm
PHILIPPINE HOME ASSURANCE VS. CA: (Acetylene gas case) vessel was already on fire, another vessel
rescued it and towed it to the nearest port in Japan
SC: Even if the expenses incurred in fighting the fire and bringing the vessel to the nearest port in Japan, the
expenses are not general because the formalities prescribed were not complied.
REQUISITES OF GENERAL AVERAGE: memorize
1) There must be a common danger
2) That for the common safety part of the vessel or of the cargo or both is sacrificed deliberately
3) That from the expenses or damages caused follows the successful saving of the vessel and cargo
4) That the expenses or damages should have been incurred or inflicted after taking proper legal steps and
authority
*3rd requisite (successful saving)
MUST BE SAVED

not sure whether vessel or cargo lang or both. But the book says VESSEL

23. Effect of presence of negligence does the law on averages apply?


AMERICAN HOME VS. CA: Nalunod, ang cargo nawagtang, American home paid the consignees.
American Home filed a case. Motion to dismiss was filed for the reason that it was only 0.18% of
17.20M which did not exceed the 5% pursuant to Article 848, therefore, complaint cannot be
admitted as provided for by law.
-

Instead of presenting proof, filed Motion to Dismiss

hypothetically admitting the allegations.

Article 848 (Code of Commerce): Claims for averages shall not be admitted if they do not exceed 5 per cent of the interest
which the claimant may have in the vessel or in the cargo if it be gross average and 1 per cent of the goods damaged if parti cular
average, deducting in both cases the expense of appraisal, unless there is an agreement to the contrary.

American Home: respondent court failed to consider that respondent National Marine Corp.,
being a common carrier is regulated by the New Civil Code primarily and suppletorily by the Code
of Commerce.

Private Respondent: In all matters not covered by the Civil Code, rights and obligations shall be
governed by the Code of Commerce. Articles 826, etc., should be applied as they provide for the
extent of the common carriers liability.
SC: You do not talk about averages under the Code of Commerce unless we will settle first on the
issue of NEGLIGENCE.

It is clear that the damage of the cargo is particular average since the loss is less than 1% to the value
of the cargo and there appears to be no allegations as to any agreement defendants and consignee of
the goods to the contrary, by express provision of law, plaintiff is barred from suing for recovery.
The law on averages in the Code of Commerce cannot be applied in determining liability
where there is negligence.

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American Home Case: - speaks of CODE OF COMMERCE AND


NOT COGSA
But more importantly, the Court ruled that common carriers cannot limit their liability for
injury or loss of goods where such injury or loss was caused by its own negligence. Otherwise
stated, the law on averages under the Code of Commerce cannot be applied in determining
liability where there is negligence
Further, the new civil code is still the primary law, not COGSA (pg. 544), and defenses under COGSA
is subject to the provisions of the civil code(pg 548).
NDC vs. CA: Collision between two vessels because of negligence of captains. In avoiding liability,
the ship owner and ship agent argues that the law on averages should be applied in determining
liability. Is this tenable?
SC: The negligence being the cause and cargoes not being jettisoned, the trial courts and CA acted
correctly in not applying the law on averages.

24. Expenses to reflect a vessel


MAGSAYSAY vs. AGAN (case where ship run aground)
Facts: The S S "San Antonio", vessel owned and operated by plaintiff, left Manila on October 6, 1949, bound
for Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging to different shippers, among them the
defendant. The vessel reached Aparri on the 10th of that month, and after a day's stopover in that port,
weighed anchor to proceed to Basco. But while still in port, it ran aground at the mouth of the Cagayan river,
and, attempts to refloat it under its own power having failed, plaintiff have it refloated by the Luzon
Stevedoring Co. at an agreed compensation. Once afloat the vessel returned to Manila to refuel and then
proceeded to Basco, the port of destination. There the cargoes were delivered to their respective owners or
consignees, who, with the exception of defendant, made a deposit or signed a bond to answer for their
contribution to the average.
On the theory that the expenses incurred in floating the vessel constitute general average to which both
ship and cargo should contribute, plaintiff brought the present action in the Court of First Instance of Manila
to make defendant pay his contribution, which, as determined by the average adjuster, amounts to P841.40.
Defendant, in his answer, denies liability to his amount, alleging, among other things, that the stranding of
the vessel was due to the fault, negligence and lack of skill of its master, that the expenses incurred in putting
it afloat did not constitute general average, and that the liquidation of the average was not made in
accordance with law. After trial, the lower court found for plaintiff and rendered judgment against the
defendant for the amount of the claim, with legal interests. From this judgment defendant had appealed
directly to this Court.
Issue: WON the trial court erred in allowing the general average for floating a vessel unintentionally
stranded inside a port and at the mouth of a river during a fine weather.
Held: The stranding of plaintiff's vessel was due to the sudden shifting of the sandbars at the mouth of the
river which the port pilot did not anticipate. The standing may, therefore, be regarded as accidental, and the

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question is whether the expenses incurred in floating a vessel so stranded should be considered general
average and shared by the cargo owners.
The law on averages is contained in the Code of Commerce. Under that law, averages are classified
into simple or particular and general or gross. Generally speaking, simple or particular averages
include all expenses and damages caused to the vessel or cargo which have not inured to the common
benefit (Art. 809), and are, therefore, to be borne only by the owner of the property gave rise to same
(Art. 810); while general or gross averages include "all the damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and
known risk" (Art. 811). Being for the common benefit, gross averages are to be borne by the owners
of the articles saved (Art. 812).
In classifying averages into simple o particular and general or gross and defining each class, the Code (Art.
809 and 811) at the same time enumerates certain specific cases as coming specially under one or the other
denomination. Going over the specific cases enumerated we find that, while the expenses incurred in
putting plaintiff's vessel afloat may well come under number 2 of article 809-which refers to expenses
suffered by the vessel "by reason of an accident of the sea of the force majuere" and should
therefore be classified as particular average, the said expenses do not fit into any of the specific cases
of general average enumerated in article 811. No. 6 of this article does mention "expenses caused in
order to float a vessel," but it specifically refers to "a vessel intentionally stranded for the purpose of
saving it" and would have no application where, as in the present case, the stranding was not
intentional.
Let us now see whether the expenses here in question could come within the legal concept of the general
average. Tolentino, in his commentaries on the Code of Commerce, gives the following requisites for general
average:

First, there must be a common danger. This means, that both the ship and the cargo, after
has been loaded, are subject to the same danger, whether during the voyage, or in the port
of loading or unloading; that the danger arises from the accidents of the sea, dispositions of
the authority, or faults of men, provided that the circumstances producing the peril should
be ascertained and imminent or may rationally be said to be certain and imminent. This last
requirement exclude measures undertaken against a distant peril.
Second, that for the common safety part of the vessel or of the cargo or both is sacrificed
deliberately.
Third, that from the expenses or damages caused follows the successful saving of the vessel and
cargo.
Fourth, that the expenses or damages should have been incurred or inflicted after taking
proper legal steps and authority. (Vol. 1, 7th ed., p. 155.)

With respect to the first requisite, the evidence does not disclose that the expenses sought to be
recovered from defendant were incurred to save vessel and cargo from a common danger. The vessel
ran aground in fine weather inside the port at the mouth of a river, a place described as "very shallow". It
would thus appear that vessel and cargo were at the time in no imminent danger or a danger which might
"rationally be sought to be certain and imminent." It is, of course, conceivable that, if left indefinitely at the
mercy of the elements, they would run the risk of being destroyed. But as stated at the above quotation, "this
last requirement excludes measures undertaken against a distant peril." It is the deliverance from
an immediate, impending peril, by a common sacrifice, that constitutes the essence of general
average. (The Columbian Insurance Company of Alexandria vs. Ashby & Stribling et al., 13 Peters 331; 10 L.
Ed., 186). In the present case there is no proof that the vessel had to be put afloat to save it from
imminent danger. What does appear from the testimony of plaintiff's manager is that the vessel had

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to be salvaged in order to enable it "to proceed to its port of destination." But as was said in the case
just cited it is the safety of the property, and not of the voyage, which constitutes the true foundation
of the general average.
As to the second requisite, we need only repeat that the expenses in question were not incurred for
the common safety of vessel and cargo, since they, or at least the cargo, were not in imminent peril.
The cargo could, without need of expensive salvage operation, have been unloaded by the owners if they
had been required to do so.
With respect to the third requisite, the salvage operation, it is true, was a success. But as the
sacrifice was for the benefit of the vessel to enable it to proceed to destination and not for
the purpose of saving the cargo, the cargo owners are not in law bound to contribute to the
expenses.
The final requisite has not been proved, for it does not appear that the expenses here in question
were incurred after following the procedure laid down in article 813.
In conclusion we found that plaintiff not made out a case for general average, with the result that its
claim for contribution against the defendant cannot be granted.
Collisions
25. Doctrine of error in extremis
DOCTRINE OF ERROR IN EXTREMIS If a vessel having a right of way suddenly changes its course
during the 3rd zone (time between the moment when collision has become a practical certainty and the
moment of actual contact), in an effort to avoid an imminent collision due to the fault of another vessel,
such act may be said to be done in extremis, and even if wrong, cannot create responsibility on the part
of said vessel with the right of way.
Thus, it has been held that fault on the part of the sailing vessel at the moment preceding a collision,
that is , during the 3rd division of time, does not absolve the steamship which has suffered herself and
a sailing vessel to get into such dangerous proximity as to cause inevitable harm and confusion, and a
collision results as a consequence. The steamer having a far greater fault in allowing such proximity to
be brought about is chargeable with all the damages resulting from the collision; and the act of the
vessel sailing having been done in extremis, even if wrong, is not responsible for the result.
26. Zones in collision
3 zones of time in the Collision of vessels
1. First zone all time up to the moment when risk of collision begins
2. Second zone time between moment when risk of collision begins and moment it becomes a
practical certainty
3. Third zone time when collision is certain and time of impact
27. Liability rules
RULES ON LIABILITY
Although the liability with respect to collision is not governed by quasi-delict, liability in collision
cases are still negligence based. Thus, courts are still called upon to determine the negligence of
the persons involved in order to impose liability.
Nature of liability - Both civil and criminal.
Determination of negligence test of a reasonable man in the position of an expert, although with
due consideration to the expertise of the persons involved including the carrier itself.
Doctrine of last clear chance and the rule on contributory negligence both CANNOT be applied in
collision cases. Thus, each vessel involved must suffer its own damage if both of are negligent and
both shall be solidarily responsible for the losses and damages occasioned to their cargoes

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Specific Rules under the Code of Commerce


1. One vessel at fault owner of the vessel at fault shall indemnify the losses and damages suffered,
after an expert appaisal.
2. Both vessels at fault - each vessel must bear its own damages, and both shall be solidarily
responsible for the losses and damages occasioned to their cargoes
3. Party at fault cannot be determined - each of the vessels should bear their respective damages
under the doctrine of inscrutable fault. Neither of the carrier may go after the other. The shipper
may claim damages against the ship owners and the captains of both vessels, having been both
negligent. Their liability is solidary.
4. Case is fortuitous event each vessel and its cargo shall bear its own damages. Burden of prrof is
heavily upon the party asserting the defense of fortuitous event, provided:
a. that the accident could not have been prevented by the use of that degree of reasonable
care and attention which the situation demanded; and
b. that there was no intervening act of negligence on its part
5. Third person at fault the owner of the third vessel shall indemnify the losses and damages caused
28. Is a charterer liable under maritime law?
Limited liability rule
In collision cases, the law limits the liability of the shipowner and ship agent:
Art. 837 of the Code of Commerce states that the civil liability incurred by the ship owners... shall be
understood as limited to the value of the vessel with all its appurtenances and freightage earned
during the voyage.
Is a charterer liable under maritime law? It depends.
1. demise or bareboat charter - charterer mans the vessel with his own people and becomes, in effect,
the owner for the voyage or service stipulated, subject to liability for damages caused by
negligence.
2. contract of affreightment - leaves the general owner in possession of the ship as owner for the
voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free
from liability to third persons in respect of the ship.
CASES:
(National Development Co. v. Court of Appeals, G.R. No. L-49407, L-49469, [August 19, 1988])
NOTE: The question, Is a charterer liable under maritime law? may be applicable in this case. The
answer should be YES then.
FACTS: A vessel, en route to Manila from San Franciso, USA and loaded with cargoes from various
foreign companies, figured in a collision in Japan with a Japanese vessel. The cargoes were lost. The
vessel was managed by MCP, appointed agent of NDC to manage and operate the vessel. NDC was
the referred to as the preferred mortgagee. The insurer of the consignees sought for recovery of sum
of money paid to the insured consignees.
ISSUE:
1. Which laws govern loss or destruction of goods due to collision of vessels outside Philippine
waters?
2. What is the extent of liability? May an agent be held liable?
HELD:
1. Collision of vessels is governed by the Code of Commerce, specifically Articles 826 to 839, Book
Three. Article 826 of the Code of Commerce provides that where collision is imputable to the
personnel of a vessel, the owner of the vessel at fault, shall indemnify the losses and damages
incurred after an expert appraisal. But more in point to the instant case is Article 827 of the same
Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own
damages and both shall be solidarily responsible for the losses and damages suffered by their
cargoes.
2. Under the provisions of the Code of Commerce, particularly Articles 826 to 839, the shipowner or
carrier, is not exempt from liability for damages arising from collision due to the fault or negligence
of the captain. Primary liability is imposed on the shipowner or carrier in recognition of the

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universally accepted doctrine that the shipmaster or captain is merely the representative of the
owner who has the actual or constructive control over the conduct of the voyage.
It is well settled that both the owner and agent of the offending vessel are liable for the damage
done where both are impleaded; that in case of collision, both the owner and the agent are
civilly responsible for the acts of the captain; that while it is true that the liability of the naviero in
the sense of charterer or agent, is not expressly provided in Article 826 of the Code of Commerce, it
is clearly deducible from the general doctrine of jurisprudence under the Civil Code but more
specially as regards contractual obligations in Article 586 of the Code of Commerce. Moreover,
the Court held that both the owner and agent (Naviero) should be declared jointly and severally
liable, since the obligation which is the subject of the action had its origin in a tortious act and did not
arise from contract. Consequently, the agent, even though he may not be the owner of the vessel, is
liable to the shippers and owners of the cargo transported by it, for losses and damages
occasioned to such cargo, without prejudice, however, to his rights against the owner of the ship, to
the extent of the value of the vessel, its equipment, and the freight.
(Mecenas v. Court of Appeals, G.R. No. 88052, [December 14, 1989], 259 PHIL 556-575)
FACTS: On April 22, 1980, two vessels, Tacloban City and Don Juan collided at the Talbas Strait
within the vicinity of Mindoro. M/V Don Juan sank and hundreds of passengers died. Among them
were petitioners parents, whose bodies were never recovered. Petitioners filed a complaint seeking
damages against Negros Navigation. The trial court awarded P400,000, but the Court of Appeals
reduced the award to P100,000.
ISSUE: Whether the reduction of the award was properly ruled upon by the Court of Appeals
HELD: In an action based upon a breach of the contract of carriage, the carrier under our civil law is
liable for the death of passengers arising from the negligence or wilful act of the carrier's employees
although such employees may have acted beyond the scope of their authority or even in violation of
the instructions of the carrier, which liability may include liability for moral damages. It follows that
petitioners would be entitled to moral damages so long as the collision with the "Tacloban City" and
the sinking of the "Don Juan" were caused or attended by negligence on the part of private
respondents.
Whether petitioners are entitled to exemplary damages as claimed must depend upon whether or
not private respondents acted recklessly, that is, with gross negligence. We believe that the
behaviour of the captain of the "Don Juan" in this instance playing mahjong "before and up to the
time of collision" constitutes behaviour that is simply unacceptable on the part of the master of a
vessel to whose hands the lives and welfare of at least seven hundred fifty (750) passengers had been
entrusted. There is also evidence that the "Don Juan" was carrying more passengers than she had
been certified as allowed to carry. We conclude that Capt. Santisteban and Negros Navigation are
properly held liable for gross negligence. We find no necessity for passing upon the degree of
negligence or culpability properly attributable to PNOC and PNOC Shipping or the master of the
"Tacloban City," since they were never impleaded here.
Owner Pro Hac Vice (Topic under Charter Parties)

What does pro hac vice mean? It means for this occasion or for this event.
So how does this apply to Transpo? In a BAREBOAT/DEMISE CHARTER, the shipowner leases to the
charterer the whole vessel, transferring to the latter the entire command, possession, and consequent
control over the vessels navigation, including the master and crew, who thereby become the charterers
servants. Thus, the charterer becomes the owner PRO HAC VICE of the vessel, since he mans the vessel
with his own set of master and crew, effectively becoming the owner for the voyage or service stipulated,
subject howerver, to any liability for damages arising from negligence.
o Here, the charterer assumes the customary rights and liabilities of the shipowner in relation to
third parties who may have dealt with him or the vessel. Thus, the master of the vessel is the
agent of the charterer, and not of the shipowner, and therefore it is the charterer or owner PRO
HAC VICE, and not the general owner of the vessel, who is liable for the expenses of the voyage,
including wages of the seamen.

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Maritime Protest When Not Required

What is a PROTEST? It is the written statement by the master of the vessel or any authorized officer,
attested by proper officer or notary, to the effect that damages has been suffered by the ship.
Under the Code Of Commerce, it is required in the following instances:
1. When the vessel makes an arrival under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the captain believes that the cargo has
suffered damages or averages
4. Maritime collissions
For collisions, the protest must be made within 24 hours from the collision and the
circumstances of the collision are declared or made known before a competent authority at
the point of accident or the first port of arrival if in the Philippines or the Philippine consul in
a foreign country.
A protest is a condition precedent to the filing of an action. Thus, it is one of the material allegations that
must be alleged in the complaint. Otherwise, the complaint should be dismissed for lack of cause of
action.
As opposed to the above, when is protest NOT required?
o When it doesnt fall under any of the above circumstances
o When the case involves TORTS
o When what is involved is not a vessel
WHO can file this protest?
o For MARITIME COLLISIONS
The pessengers or persons interested who may be on board the vessel or who were in a
condition to make known their wishes
The captain himself
o In cases of 1) Arrival under stress; 2) Shipwreck; or 3) when the vessel has gone through a
hurricane, or the captain believes that the cargo has suffered damages or averages --- the
CAPTAIN.

31. Doctrine of inscrutable fault


32. Rule 18 of International Rules of the Road
31. Doctrine of inscrutable fault
***DOCTRINE OF INSCRUTABLE FAULT
It means that, in 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. Neither of the carriers may go after the other. The shipper may claim damages against
the ship owners and the captains of both vessels, having been both negligent. Their liability is solidary.
32. Rule 18 of International Rules of the Road

***Rule 18 - Responsibilities Between Vessels


Except where Rules 9, 10, and 13 otherwise require:
(a) A power-driven vessel underway shall keep out of the way of:

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(i) a vessel not under command;


(ii) a vessel restricted in her ability to maneuver;
(iii) a vessel engaged in fishing;
(iv) a sailing vessel.
(b) A sailing vessel underway shall keep out of the way of:
(i) a vessel not under command;
(ii) a vessel restricted in her ability to maneuver;
(iii) a vessel engaged in fishing.
(c) A vessel engaged in fishing when underway shall, so far as possible, keep out of the way of:
(i) a vessel not under command;
(ii) a vessel restricted in her ability to maneuver.

International

Inland

(d) (i) Any vessel other than a vessel not under


command or a vessel restricted in her ability to
maneuver shall, if the circumstances of the case
admit, avoid impeding the safe passage of a
vessel constrained by her draft, exhibiting the
signals in Rule 28.

N/A

(ii) A vessel constrained by her draft shall


navigate with particular caution having full
regard to her special condition.
(e) A seaplane on the water shall, in general, keep well clear of all vessels and avoid impeding their
navigation. In circumstances, however, where risk of collision exists, she shall comply with Rules 4-19.
(f) (i) A WIG craft shall, when taking off, landing and in flight near the surface, keep well clear of all other
vessels and avoid impeding their navigation;
(ii) a WIG craft operating on the water surface shall comply with Rules 4-19 as a power-driven vessel.

VIII. ARRIVAL UNDER STRESS


Arrival under Stress - arrival of a vessel at a port of destination on account of lack of provision, well founded
fear of seizure, privateers, pirates, or accidents of sea disabling navigation. (Art. 819)
NOTE: Captain must make a protest
Steps to be taken in the determination of the propriety of arrival under stress
2 Captain should determine during the voyage if there is a well founded fear of seizure, privateers of
other valid grounds
3 Captain shall then assemble the officers

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4
5
6
7

Captain shall summon the persons interested in the cargo who may be present and who may attend
but without right to vote
the officers shall determine and agree if there is well founded reason after examining the
circumstances; Captain shall have the deciding vote
agreement shall be drafter and the proper minutes shall be signed and entered into the log book
objections and protests shall likewise be entered in the minutes

When not lawful:


5 lack of provisions due to negligence to carry according to usageand customs;
6 risk of enemy not well known or manifest
7 defect of vessel due to improper repair; and
8 malice, negligence, lack of foresight or skill of captain. (Art. 820)
Who bears expenses:
The shipowner or ship agent shall be liable but they shall not be liable for the damages caused by the shippers
by reason of a lawful arrival. (Art. 821) The captain shall be liable for damages caused by his delay, if after
the cause of the arrival under stress has ceased, he continue the voyage. (Art. 825)
NOTE:
1 After cessation of the cause of the arrival under stress, captain should continue voyage or else
he shall be liable
Shipwreck - loss of the vessel at sea as a consequence of its grounding, or running against an object in sea or
on the coast.
If the wreck was due to malice, negligence or lack of skill of the captain, the owner of the vessel may demand
indemnity from said captain. (Art. 841)
- a demolition or shattering of vessel caused by her driving ashore or on the rocks or shoals in the
midseas, or by violence of winds and waves in tempests
- cause of shipwreck must be force majeure or accident
- liability for loss owners of vessel or cargo EXCEPT if the wreck was caused by malice, negligence
or lack of skill of the captain or because the vessel put to sea was insufficiency repaired and equipped
= shipowner may demand indemnity from the captain for the damage caused to the vessel or cargo
Shipowner is liable in case of in excess of authority given to the captain.
IX. SALVAGE
35. Right to salvage reward
Section 1 of Act 2616 (The Salvage Law) provides:
When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or
shall have been abandoned by them, and picked up and conveyed to a safe place by other
persons, the latter shall be entitled to a reward for the salvage.
Those who, not being included in the above paragraph, assist in saving a vessel or its
cargo from shipwreck, shall be entitled to a like reward.
In case of:
1)
shipwreck or
2)
the vessel or its cargo shall be beyond the control of the crew, or
3)
vessel or cargo shall have been abandoned by the crew
Those entitled to reward are:
1)
those who picked up and conveyed the vessel to a safe place or
2)
those who assist in saving a vessel or its cargo from shipwreck
36. Who are not entitled to reward

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1) The Salvor (under the Salvage Law) must have no relation, contractual or otherwise, upon the Ship in
distress
2) Under Section 8 of Act 2616, viz:
The following shall have no right to a reward for salvage or assistance:
(a) The crew of the vessel shipwrecked or which was in danger of a shipwreck;
(b) He who shall have commenced the salvage in spite of opposition of the captain or his representative; and
(c) He who shall have failed to comply with the provisions of Section three.
Section 3 of the Salvage Law provides:
He who shall save or pick up a vessel or merchandise at sea, in the absence of the captain of
the vessel, owner, or a representative of either of them, they being unknown, shall convey and
deliver such vessel or merchandise, as soon as possible, to the Collector of Customs, if the port
has a collector, and otherwise to the provincial treasurer or municipal mayor.
37. Towage vs Salvage
SALVAGE - services one person render to the owner of a ship or goods, by his own labor, preserving the goods
or the ship whichthe owner or those entrusted with the care of them have either abandoned in distress at sea,
or are unable to protect or secure.
CONTRACT OF TOWAGE - contract whereby one vessel, usually motorized, pulls another, whether loaded or
not with merchandise, from one place to another, for a compensation. It is a contract for services rather than a
contract of carriage.
DISTINCTIONS
SALVAGE
TOWAGE
(F-I-N-G-S)
Fees
Fees distributed among crewmen
Fees belong to the tugboat owner
Involvement in
Vessel must be involved in an accident
Vessel need not be involved in an
Accident
accident
Done with the consent of the
Only the consent of the tugboat
Needed Consent
captain/crewmen
owner is needed
Governing Law
Act No. 2616 (Special Law)
Civil Code on Contract of Lease
Success
Required, otherwise no payment
Not required
Requirement
X. COGSA
38. Delivery to Arrastre operator for purposes of Section 3 (6)
Prescriptive Period: within 1 year after delivery of the goods or the date the goods should have been delivered
UNION CARBIDE PHILS. VS. MANILA RAILROAD
delivery within the meaning of section 3(6) of the Carriage of Goods by Sea Law means delivery
to the arrastre operator. That delivery is evidenced by tally sheets which show whether the
goods were landed in good order or in bad order, a fact which the consignee or shipper can
easily ascertain through the customs broker xxx
39. Notice of Claim
NOTICE OF CLAIM
A) Effect of notice of claim (right
of action)
- Different from prescription
(another ground to dismiss the
case )

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CC/NCC
- If apparent - If not apparent -

That in all things, God may be glorified!

COGSA
- Apparent - immediately from
the time of delivery
- Not apparent carrier to verify)

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TRANSPORTATION AND PUBLIC UTILITIES LAW FINALS NOTES

B) Effect if you cannot comply


with notice of claim

NO RIGHT

- STILL HAVE RIGHT

Applicable Law: SEC 3(6) OF COGSA. Unless notice or loss or damage and the general nature of such loss or
damage by given in writing to the carrier or his agent at the port of discharge or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such
removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.
If the loss or damage is not apparent, the notice must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject
of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless
suit is brought within one year after delivery of the goods or the date when the goods should have been
delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided
for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been delivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the goods.
40. Package Liability Limitation
Under the COGSA, the liability of the carrier shall be limited to $500 per package/pallet in the absence of
declaration in the bill of lading of the value og shipped goods. Note further that COGSA applies only when there
is bill of lading or similar document.
HEUNG-A SHIPPING CORPORATION and WALLEM PHILIPPINES SHIPPING, INC., petitioners, vs. PHILAM
INSURANCE COMPANY, INC.
In this case, the Supreme Court ruled that the liability of the carrier is $500 per pallet because the shipper did
not declare in the bill of lading the value of the goods shipped. Therefore Carriage of Goods in Sea Act applies.
Formula:
Number of packages/pallets damaged x $500 = Liability of the carrier
Hence: 17 damaged packages/pallets x $500 = $18,500
Facts:
Novartis Consumer Health Philippines, Inc. imported from Jinsuk Trading Co. Ltd., in South Korea, 19 pallets of
200 rolls of Ovaltine Power laminated plastic packaging material.
Based on Bill of Lading issued by PROTOP, the cargo was on freight prepaid basis and on "shipper's load and
count" which means that the "container was packed with cargo by one shipper where the quantity, description
and condition of the cargo is the sole responsibility of the shipper".
After opening the same, Caparoso inspected its contents and discovered that the boxes of the shipment were
wet and damp.
In case, however, of the shippers failure to declare the value of the goods in the bill of lading, Section 4,
paragraph 5 of the COGSA provides:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount exceeding $500 per package lawful money
of the United States, or in case of goods not shipped in packages, per customary freight unit, or the
equivalent of that sum in other currency, unless the nature and value of such goods have been declared
by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the
bill of lading shall be prima facie evidence, but shall be conclusive on the carrier.

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Hence, when there is a loss/damage to goods covered by contracts of carriage from a foreign port to a Philippine
port and in the absence a shippers declaration of the value of the goods in the bill of lading, as in the present
case, the foregoing provisions of the COGSA shall apply. The CA, therefore, did not err in ruling that HEUNG-A,
WALLEM and PROTOPs liability is limited to $500 per package or pallet. 45
The Court likewise affirms the CA in pronouncing HEUNG-A, WALLEM and PROTOP liable only for the
lost/damaged 17 pallets instead of 19 pallets stated in the bill of lading. This is because, per the
"Shippers Load and Count" arrangement, the contents are not required to be checked and inventoried
by the carrier at the port of loading or before said carrier enters the port of unloading in the Philippines
since it is the shipper who has the sole responsibility for the quantity, description and condition of the
cargoes shipped in container vans.46 As such, the carrier cannot be held responsible for any discrepancy
if the description in the bill of lading is different from the actual contents of the container.
41. Prescription where to reckon?
Notice of claim to be made in 3 days from delivery if damage is not apparent- NOT MANDATORY
One year after delivery of goods or the date when the goods should have been delivered for the filing of the
case- MANDATORY, CONDITION PRECEDENT
The one year prescriptive period doe snot apply to cases of misdelivery or conversion. Loss contemplates
where no delivery at all was made because the goods had perished gone out of commerce or disappeared in
such a way that their existence is unknown or they cannot be recovered. It does not include a situation where
there was indeed delivery but delivery to the wrong person or a misdelivery.
example: When the goods were delivered to the notify parties, Davao Merchandising Corporation and Herminio
Teves, despite the latters inability to present the proper bills of lading and without the knowledge and consent
of Domingo Ang to whom were endorsed said bills of lading. There is misdelivery and not non-delivery.
MITSUI:
In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the
carrier's breach of contract. Whatever reduction there may have been in the value of the goods is not due to
their deterioration or disappearance because they had been damaged in transit. Indeed, what is in issue in this
petition is not the liability of petitioner for its handling of goods as provided by 3(6) of the COGSA, but its
liability under its contract of carriage with private respondent as covered by laws of more general application.
Precisely, the question before the trial court is not the particular sense of "damages" as it refers to the physical
loss or damage of a shipper's goods as specifically covered by 3(6) of COGSA but petitioner's potential liability
for the damages it has caused in the general sense and, as such, the matter is governed by the Civil Code, the
Code of Commerce and COGSA, for the breach of its contract of carriage with private respondent. We concluded
by holding that as the suit below is not for "loss or damage" to goods contemplated in 3(6), the question of
prescription of action is governed not by the COGSA but by Art. 1144 of the Civil Code which provides for a
prescriptive period of ten years.
LIAO:
Whatever damage or injury is suffered by the goods while in transit would result in loss or damage to either
the shipper or the consignee. As long as it is claimed that the losses or damages suffered by the shipper or
consignee were due to the arrival of the goods in damaged or deteriorated condition, the action is still basically
one for damage to the goods, and must be filed within the period of one year from delivery of the goods or the
date when the goods should have been delivered, as provided by the Carriage of Goods by Sea Act.
The pendency of an extrajudicial claim for damages filed with the carrier does not suspend the running of the
prescriptive period of one year, unless there is express agreement to the contrary.|
Applicable Law: COGSA Section 3 (6)
Unless notice or loss or damage and the general nature of such loss or damage by given in writing to
the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of
the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie

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evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not
apparent, the notice must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject
of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless
suit is brought within one year after delivery of the goods or the date when the goods should have been
delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided
for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been delivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the goods
42. Suspension of prescriptive period by parties
SUSPENSION OF PRESCRIPTIVE PERIOD: COGSA
UNIVERSAL SHIPPING VS. IAC:
Anent the issue of prescription of the action under Section 3(6), Title I, of the Carriage of Goods by Sea Act
(Commonwealth Act No. 65) which provides that: cdrep
". . . the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the goods should have been delivered. . .
.
This provision of the law admits of an exception: if the one year period is suspended by express agreement of
the parties for in such a case, their agreement becomes the law for them.
The exchange of correspondence between the parties and or their associates/representatives (Exhs. R, S, S-1,
T, T-1 and T-2) shows that the parties had mutually agreed to extend the time within which the plaintiff or its
predecessors-in-interest may file suit until December 27, 1976. When the complaint was filed on June 25, 1976,
that deadline had not yet expired.|
CUA VS. WALLEM:
Although the complaint was clearly filed beyond the one-year period, Cua additionally alleged in his complaint
(under paragraph 11) that "[t]he defendants . . . agreed to extend the time for filing of the action up to November
12, 1990." 31 DSEIcT
The allegation of an agreement extending the period to file an action in Cua's complaint is a material averment
that, under Section 11, Rule 8 of the Rules of Court, must be specifically denied by the respondents; otherwise,
the allegation is deemed admitted.
A review of the pleadings submitted by the respondents discloses that they failed to specifically deny Cua's
allegation of an agreement extending the period to file an action to November 12, 1990.|
This presumed admission is further bolstered by the express admission made by the respondents themselves
in their Memorandum:
STATEMENT OF THE CASE
1.This case was filed by [the] plaintiff on 11 November 1990 within the extended period agreed upon by the
parties to file suit.
The above statement is a clear admission by the respondents that there was indeed an agreement to extend the
period to file the claim. Thus, Cua timely filed a claim for the damage to and shortage of the cargo.||
43. Meaning of delivery under Section 3 (6) on prescription(Mitsui v. CA; Liao v. APL)
Section 3(6) of the Carriage of Goods by Sea Act (COGSA).
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier
or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person

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entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the
notice must be given within three days of the delivery.
The sensible and practical interpretation is that delivery within the meaning of section 3(6) of the
Carriage of Goods by Sea Law means delivery to the arrastre operator. That delivery is evidenced
by tally sheets which show whether the goods were landed in good order or in bad order, a fact which
the consignee or shipper can easily ascertain through the customs broker.
To use as basis for computing the one-year period the delivery to the consignee would be unrealistic
and might generate confusion between the loss or damage sustained by the goods while in the carrier's
custody and the loss or damage caused to the goods while in the arrastre operator's possession.
Mitsui v. CA
Facts: Mitsui O.S.K. Lines Ltd. entered into a contract of carriage through Meister Transport, Inc., an
international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to
transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to
France 28 days from initial loading. However, in Kaoshiung, Taiwan the goods were not transshipped
immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee
allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the off
season in that country. The remaining half was allegedly charged to the account of private respondent which
in turn demanded payment from petitioner through its agent.
Issue: whether private respondents action is for loss or damage to goods shipped, within the meaning of 3(6)
of the Carriage of Goods by Sea Act (COGSA).
Ruling: Section 3 provides:
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the
carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the
person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence
of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent,
the notice must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject
of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage
unless suit is brought within one year after delivery of the goods or the date when the goods should
have been delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not
given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to
bring suit within one year after the delivery of the goods or the date when the goods should have been
delivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the goods.
As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, loss
contemplates merely 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 existence is
unknown or they cannot be recovered.[4]
Conformably with this concept of what constitutes loss or damage, this Court held in another case[5] that the
deterioration of goods due to delay in their transportation constitutes loss or damage within the
meaning of 3(6), so that as suit was not brought within one year the action was barred:

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Whatever damage or injury is suffered by the goods while in transit would result in loss or damage to either
the shipper or the consignee. As long as it is claimed, therefore, as it is done here, that the losses or damages
suffered by the shipper or consignee were due to the arrival of the goods in damaged or deteriorated condition,
the action is still basically one for damage to the goods, and must be filed within the period of one year from
delivery or receipt, under the above-quoted provision of the Carriage of Goods by Sea Act.
Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the
goods shipped were neither lost nor damaged in transit but were, on the contrary, delivered in port to someone
who claimed to be entitled thereto, the situation is different, and the special need for the short period of
limitation in cases of loss or damage caused by maritime perils does not obtain.
We conclude by holding that as the suit below is not for loss or damage to goods contemplated in 3(6), the
question of prescription of action is governed not by the COGSA but by Art. 1144 of the Civil Code which
provides for a prescriptive period of ten years.
Liao v. APL
Facts: Plaintiff entered into a contract with the Kent Sales Co., Inc., for the importation of 2,000 cases of fresh
hen eggs, to be shipped on the S.S. Marine Leopard. On the same day contracted with the Defendant shipping
company to have the eggs shipped to Manila on the vessel S.S. Marine Leopard as refrigerated cargo. Also on
the same day (August 6), the Defendant, through ship captain Frank J. Wood, received at the port of New York
the 2,000 cases of eggs and loaded them on the S.S. Marine Leopard in a refrigerated space for delivery to
Plaintiff in Manila. Upon arrival in San Francisco, California, on August 30, 1946, the Defendant unloaded the
2,000 cases of eggs from the S.S. Marine Leopard, which resumed its voyage, arriving in Singapore in
September, 1946. The eggs were later shipped on another of Defendants ships, the S.S. General Meigs, on
November 27, 1946, which arrived in Manila on December 26, 1946. It is claimed by Plaintiff that the discharge
of his cargo at the port of San Francisco was wrongful and unjustified, and a violation of the bill of lading Exhibit
B which provided that the eggs would be shipped to Manila on the S.S. Marine Leopard; that when they were
discharged in San Francisco, the eggs were exposed to the hot summer weather without having been placed in
refrigeration from August 30 to September 12, 1946, when they were transferred to the storage plants of the
National Ice and Cold Storage; that the eggs could have been transhipped on August 31, 1946, on the S.S. Clovis
Victory, also one of Defendants ships, that arrived in Manila on September 20, 1946; that because of the delay
in the shipment and the careless and repeated handling of the cases of eggs by mechanical devices, a substantial
number of them arrived broken and damaged.
As a special defense, Defendant claimed that while Plaintiff received the goods in question on December 26,
1946, he filed a claim with Defendant for damages only on July 25, 1947 (denied on February 16, 1948), and
brought suit on May 25, 1948, more than a year from the receipt of the goods, and so Plaintiffs action had
prescribed under section 3, paragraph 6 of the Carriage of Goods by Sea Act.
Issue: WON the action has prescribed.
Ruling: Appellant also makes a distinction between damage to the goods and damages to the shipper or
consignee, and claims that while the former falls within the prescriptive period in question, the latter is
governed by the provisions of the Code of Civil Procedure (now the New Civil Code) on limitation of actions.
We see no difference between the two. Whatever damage or injury is suffered by the goods while in transit
would result in loss or damage to either the shipper or the consignee. As long as it is claimed, therefore, as it is
done here, that the losses or damages suffered by the shipper or consignee were due to the arrival of the goods
in damaged or deteriorated condition, the action is still basically one for damage to the goods, and must be filed
within the period of one year from delivery or receipt, under the above-quoted provision of the Carriage of
Goods by Sea Act.
Lastly, Appellant urges that, assuming that his action against the Defendant company prescribes in one year,
the same accrued, not upon his receipt of the goods, but upon denial of his claim for damages by the Defendant
on February 16, 1948. The claim is clearly without merit, for the law in question explicitly requires that suit
must be brought within one year after delivery of the goods or the date when the goods should have been

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delivered. Neither could the pendency of the extra-judicial claim for damages filed with the Defendant
company toll or suspend the running of the period of limitation; for as already ruled in the case of Chua Kuy vs.
Everett Steamship Corp., supra, neither the proposal for arbitration for the fact that negotiations have been
made for the adjustment of a controversy suspends the running of the period for prescription, unless there is
an express agreement to the contrary. There being no stipulation between Appellant and the Defendant
company that the prescriptive period for the filing of an action for loss or damage to the goods would be
suspended by the filing of a claim with the carrier for damages and pending action thereon, Appellant is
required to bring suit against the latter within one year from the receipt of his goods, and not having done so,
his action had already prescribed.
44. Invocation of arrastre operator of prescription
INSURANCE CO. OF NA VS. ASIAN
Issue: Whether or not the one-year prescriptive period for filing a suit under the COGSA applies to respondent
arrastre operator.
Held: NO
ARRASTRE OPERATOR CANNOT INVOKE THE PRESCRIPTIVE PERIOD OF 1 YEAR.
In any event the carrier and the ship shall be discharged from all liability in
respect of loss or damage unless suit is brought within one year after delivery of the
goods or the date when the goods should have been delivered: Provided, That if a notice
of loss or damage, either apparent or concealed, is not given as provided for in this section,
that fact shall not affect or prejudice the right of the shipper to bring suit within one year after
the delivery of the goods or the date when the goods should have been delivered.
From the provision above, the carrier and the ship may put up the defense of prescription if the
action for damages is not brought within one year after the delivery of the goods or the date when the
goods should have been delivered. It has been held that not only the shipper, but also the consignee or
legal holder of the bill may invoke the prescriptive period. However, the COGSA does not mention that
an arrastre operator may invoke the prescriptive period of one year; hence, it does not cover the
arrastre operator.
AVIATION
International Transportation

Definition (Under WARSAW), when:


(1) The place of departure and the place of destination are within the territories of two contracting
countries regardless of whether or not there was a break in the transportation or transhipment;
(2) The place of departure and the place of destination are within the territory of a single contracting
country if there is an agreed stopping place within a territory subject to the sovereignty, mandate
or authority of another power, even though the power is not a party to the convention.

Period covered
-during which the baggage or goods are in charge of the carrier, whether in an airport or on board an
aircraft, or, in the case of a landing outside an airport, in any place whatsoever.
NOTE:
(a) It does NOT cover any transportation by land, by sea, by river performed outside an airport.
(b) If transportation takes place in the performance of a contract of transportation by air, fro the
purpose of loading, delivery or transhipment, any DAMAGE is presumed, subject to proof to
contrary, to have been the result of an event which took place during the transportation by air.

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When international carrier is liable


If the passengers injury was inflicted:
(1) On board the aircraft
(2) In the course of any of the operations of embarking
(3) In the course of disembarking
(4) When there was or because of delay
NOTE: With respect to baggage or goods that are CHECKED IN- if damage occurred (a) during air
transportation or (b) when there is delay.

Carriage to be performed by successive carriers


Article 1 (3), Warsaw Convention
Carriage to be performed by several successive air carriers is deemed, for the purposes of this Convention, to
be one undivided carriage if it has been regarded by the parties as a single operation, whether it had been
agreed upon under the form of a single contract or of a series of contract, and it does not lose its international
character merely because one contract or a series of contracts is to be performed entirely within the territory
of the same State.
Article 30 (2), Warsaw Convention
In the case of carriage of this nature, the passenger or his representative can take action only against the carrier
who performed the carriage during which the accident or the delay occurred, save in the case where, by express
agreement, the first carrier has assumed liability for the whole journey.

American Airlines v. CA
FACTS: Respondent purchased from Singapore Airlines in Manila conjunction tickets for Manila - Singapore Athens - Larnaca - Rome - Turin - Zurich - Geneva - Copenhagen - New York. The petitioner was not a
participating airline in any of the segments in the itinerary under the said conjunction tickets. In Geneva the
petitioner decided to forego his trip to Copenhagen and to go straight to New York and in the absence of a direct
flight under his conjunction tickets from Geneva to New York, the private respondent on June 7, 1989
exchanged the unused portion of the conjunction ticket for a one-way ticket from Geneva to New York from the
petitioner airline. Petitioner issued its own ticket to the private respondent in Geneva and claimed the value of
the unused portion of the conjunction ticket from the IATA clearing house in Geneva. In September 1989,
private respondent filed an action for damages before the regional trial court of Cebu for the alleged
embarrassment and mental anguish he suffered at the Geneva Airport when the petitioners security officers
prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane
only after all the other passengers have boarded. The petitioner filed a motion to dismiss for lack of jurisdiction
of Philippine courts to entertain the said proceedings under Art. 28 (1) of the Warsaw Convention.
ISSUE: whether the contract of transportation between the petitioner and the private respondent would be
considered as a single operation and part of the contract of transportation entered into by the latter with
Singapore Airlines in Manila.
RULING:
Petitioner disputes the ruling of the lower court that it is. Petitioners main argument is that the issuance of a
new ticket in Geneva created a contract of carriage separate and distinct from that entered by the private
respondent in Manila.
We find the petitioners argument without merit.
The contract of carriage between the private respondent and Singapore Airlines although performed
by different carriers under a series of airline tickets, including that issued by petitioner, constitutes a
single operation. Members of the IATA are under a general pool partnership agreement wherein they act as

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agent of each other in the issuance of tickets to contracted passengers to boost ticket sales worldwide and at
the same time provide passengers easy access to airlines which are otherwise inaccessible in some parts of the
world. Booking and reservation among airline members are allowed even by telephone and it has become an
accepted practice among them. A member airline which enters into a contract of carriage consisting of a series
of trips to be performed by different carriers is authorized to receive the fare for the whole trip and through
the required process of interline settlement of accounts by way of the IATA clearing house an airline is duly
compensated for the segment of the trip serviced. Thus, when the petitioner accepted the unused portion of
the conjunction tickets, entered it in the IATA clearing house and undertook to transport the private
respondent over the route covered by the unused portion of the conjunction tickets, Geneva to New York, the
petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent of the principal
contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to undertake. As such,
the petitioner thereby assumed the obligation to take the place of the carrier originally designated in the
original conjunction ticket. The petitioners argument that it is not a designated carrier in the original
conjunction tickets and that it issued its own ticket is not decisive of its liability. The new ticket was simply a
replacement for the unused portion of the conjunction ticket, both tickets being for the same amount of US$
2,760 and having the same points of departure and destination. By constituting itself as an agent of the principal
carrier the petitioners undertaking should be taken as part of a single operation under the contract of carriage
executed by the private respondent and Singapore Airlines in Manila.
Warsaw Convention Art. 1(3) clearly states that a contract of air transportation is taken as a single operation
whether it is founded on a single contract or a series of contracts. The number of tickets issued does not detract
from the oneness of the contract of carriage as long as the parties regard the contract as a single operation. The
evident purpose underlying this Article is to promote international air travel by facilitating the procurement of
a series of contracts for air transportation through a single principal and obligating different airlines to be
bound by one contract of transportation. Petitioners acquiescence to take the place of the original designated
carrier binds it under the contract of carriage entered into by the private respondent and Singapore Airlines in
Manila.
KLM v. CA
FACTS:
The KLM Dutch Airlines secured seat reservation for respondents and their two companions from
carriers that would ferry them through their world tour. Their itinerary included the BarcelonaLourdes route, serviced by only one airline, the Aer Lingus.
They were issued KLM tickets for their entire trip, but their coupon for the Aer Lingus portion (Flight
861, June 22, 1965) was marked "RQ" which means "on request."
At the KLM office in Frankfurt, Germany, respondents obtained a confirmation from Aer Lingus of
seat reservations on flight 861.
In the afternoon of June 22, 1965, the Aer Lingus manager at Barcelona Airport directed respondents
to check in. They did as instructed and were accepted for passage.
However, although their companions were allowed to take the plane, respondents were brusquely
off-loaded and shoved aside on orders of the Aer Lingus manager with the aid of policeman who
shouted at them "Coos! Ignorantes Filipinos." As a result they had to take a train to Lourdes.
Respondents sued petitioner for damages arising from breach of carriage and for humiliating
treatment received by them in the hands of Aer Lingus.
After the hearing, the trial court awarded damages to respondents.
On appeal, the KLM sought exoneration, but the Court of Appeals sustained the trial court and
increased the award of damages.
Petitioner assailed the decision of the Court of Appeals, and prayed for exculpation. It argued that its
liability for damages is limited only to occurrence on its own lines citing. Art. 30 of the Warsaw
Convention which provides that in the case of transportation to be performed by various successive
carriers the passenger can take action only against the carrier who performed the transportation
during which the accident or delay occurred.
ISSUE: Whether or not KLM is liable for breach of contract of carriage?

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HELD: Yes. KLM is liable.


The applicability of Art. 30 of the Warsaw Convention cannot be sustained. The article presupposes the
occurrence of delay or accident. What is manifest here is that the Aer Lingus refused to transport the spouses
Mendozas to their planned and contracted destination. As the airline which issued the tickets, KLM was
chargeable with the duty and responsibility of specifically informing the spouses of the conditions prescribed
in their tickets or to ascertain that the spouses read them before they accepted their passage tickets. The
Supreme Court held that KLM cannot be merely assumed as a ticket-issuing agent for other airlines and limit
its liability to untoward occurrences on its own line. The court found, that the passage tickets provide that
the carriage to be performed therein by several successive carriers is to be regarded as a single
operation.
Lufthansa v. CA
Facts:
This is a petition for certiorari filed by Lufthansa German Airlines questioning the decision of the lower courts
which favored Tirso Antiporda, herein private respondent.
Antiporda here engaged in the ticketing services of Lufthansa which issued a confirmed ticket of a five leg trip
for Antiporda who was an official of a bank and was to attend a meeting at Blantyre the last destination of the
trip. The trip was supposed to be from Manila to Singapore, Singapore to Bombay, Bombay to Nairobi, Nairobi
to Lilongwe and lastly Lilongwe to Blantyre. Lufthansa issued to Antiporda a confirmed ticket of Air Kenya to
transport from Bombay to Nairobi however Antiporda was not transported and was given the reason that his
seat was given to a very important person who was to attend a religious rite. Thus, Antiporda arrived only in
Blantyre a couple of days later form his scheduled meeting. Subsequently he filed a case against Lufthansa of
the breach of their contract to transport him to Blantyre and was given favorably judgment by the courts.
Now Lufthansa assails the judgment using again the Warsaw Convention and that it cannot be made liable as
the ticket it issued for Air Kenya was a separate contract and not that of Lufthansa.
ISSUE #1: WON Lufthansa is a mere ticketing agent.
Antiporda entered with Lufthansa an exclusive contract of carriage, the nature of which is a continuous
carriage by air from Manila to Blantyre Malawi; he did not enter into a series of independent contracts with
the carriers that transported him for the remaining leg of his trip. Lufthansa was not merely the ticketingagent, but the principal in the contract of carriage with Antiporda. Lufthansa guaranteed that the successive
carriers such as Air Kenya would honor his ticket. This line from the KLM decision is applicable: the passage
tickets of the respondents provide that the carriage to be performed thereunder by several successive
carriers "is to be regarded as a single operation."
ISSUE # 2: WON the Article 30 of the Warsaw Convention is applicable.
The court ruled that Art. 30 is not applicable as it refers to accident or delay and that nothing in the given case
constituted accident or delay. The court also held that the refusal of Air Kenya to transport Antiporda to
Nairobi did not constitute delay and therefore the Warsaw Convention does not apply in the case. Lufthansa
says that U.S. jurisprudence considers bumping off as delay.
"Delay" means to prolong the time of or before; to stop, detain or hinder for a time, or cause someone or
something to be behind in schedule or usual rate of movement in progress.
"Bumping-off," which is the refusal to transport passengers with confirmed reservation to their planned and
contracted destinations, totally forecloses said passengers' right to be transported, whereas delay merely
postpones for a time being the enforcement of such right.
Art. 30 does not contemplate the instance of bumping off but only simple delay. Thus, payment of damage is
warranted for which Lufthansa was liable.

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China Airlines v. Chiok


Facts: China Airlines issued the tickets: MLA-Taipei-HK-MLA. The said ticket was exclusively endorseable to
Philippine Airlines (PAL). In Hong Kong, Chiok went to the PAL office and confirmed his HK-MLA trip.
However, due to a typhoon the flight was delayed by one day, he was told to return the next day. The
following day, Chiok (respondent) upon checking in, was denied boarding because his name did not appear in
the computerized passenger list. He had to rebook and missed an important business meeting. He sued for
damages.
Issue: Who is liable? China Air (issuing carrier) or PAL (actual carrier)?
SC: the contract of air transportation was between China Air and Chiok, with the former endorsing to PAL the
Hong Kong-to-Manila segment of the journey. Such contract of carriage has always been treated in this
jurisdiction as a single operation. This jurisprudential rule is supported by the Warsaw Convention, to which
the Philippines is a party, and by the existing practices of the International Air Transport Association (IATA).
under a general pool partnership agreement, the ticket-issuing airline is the principal in a contract of carriage,
while the endorsee-airline is the agent.
PAL acted as the carrying agent of China Airlines. In the same way that we ruled against British Airways and
Lufthansa, we also rule that China Airlines cannot evade liability to respondent, even though it may have been
only a ticket issuer for the Hong Kong-Manila sector.
Application of Articles 17, 18 and19
Article 17
The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other
bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on
board the aircraft or in the course of any of the operations of embarking or disembarking.
Article 18
1. The carrier is liable for damages sustained in the event of the destruction or loss of, or of damage to, any
registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the
carriage by air.
2. The carriage by air within the meaning of the preceding paragraph comprises the period during which the
baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of
a landing outside an aerodrome, in any place whatsoever.
3. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed
outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by
air, for the purpose of loading, delivery or trans-shipment, any damage is presumed, subject to proof to the
contrary, to have been the result of an event which took place during the carriage by air.
Article 19
The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo.

Northwest v. Cuenca
FACTS: Having boarded petitioner's plane in Manila with a first class ticket to Tokyo, he was,
upon arrival at Okinawa, transferred to the tourist class compartment. Although he revealed
that he was traveling in his official capacity as official delegate of the Republic to a conference

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in Tokyo, an agent of petitioner rudely compelled him in the presence of other passengers to
move, over his objection, to the tourist class, under threat of otherwise leaving him in
Okinawa. In order to reach the conference on time, respondent had no choice but to obey. His
ticket was marked as wait listed but he paid the full fare for business class seat. Petitioner now
argues that t the Warsaw Convention of October 12, 1929, relative to transportation by air is
not in force in the Philippines.
ISSUE: Whether or not the Warsaw Convention is applicable.
RULING:
Petitioner argues that pursuant to Articles 17, 18 and 19, an air "carrier is liable only" in the event of death of
a passenger or injury suffered by him, or of destruction or loss of, or damage to any checked baggage or any
goods, or of delay in the transportation by air of passengers, baggage or goods. This pretense is not borne out
by the language of said Articles. The same merely declare the carrier liable for damages in the enumerated
cases, if the conditions therein specified are present. Neither said provisions nor others in the aforementioned
Convention regulate or exclude liability for other breaches of contract by the carrier. Under petitioner's theory,
an air carrier would be exempt from any liability for damages in the event of its absolute refusal, in bad faith,
to comply with a contract of carriage, which is absurd.
Sir: Warsaw convention was not applied. New Civil Code was used. SC said Warsaw does not exclude NCC.
Common carriers cannot just be held liable based on Articles 17-19. The carrier can still be held liable for other
violations not necessarily covered under Art. 17, 18, 19.
Airline General Pool Agreement
AMERICAL AIRLINES vs. COURT OF APPEALS and DEMOCRITO MENDOZA
Members of the IATA are under a general pool partnership agreement wherein they act
as agent of each other in the issuance of tickets to contracted passengers to boost ticket
sales worldwide and at the same time provide passengers easy access to airlines which
are otherwise inaccessible in some parts of the world. Booking and reservation among
airline members are allowed even by telephone and it has become an accepted practice among
them. A member airline which enters into a contract of carriage consisting of a series of trips
to be performed by different carriers is authorized to receive the fare for the whole trip and
through the required process of interline settlement of accounts by way of the IATA clearing
house an airline is duly compensated for the segment of the trip serviced. Thus, when the
petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA
clearing house and undertook to transport the private respondent over the route covered by
the unused portion of the conjunction tickets,Geneva to New York, the petitioner tacitly
recognized its commitment under the IATA pool arrangement to act as agent of the principal
contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to
undertake. As such, the American Airilnes thereby assumed the obligation to take the place of
the carrier originally designated in the original conjunction ticket. The petitioners argument
that it is not a designated carrier in the original conjunction tickets and that it issued its own
ticket is not decisive of its liability. The new ticket was simply a replacement for the unused
portion of the conjunction ticket, both tickets being for the same amount of US$ 2,760 and
having the same points of departure and destination. By constituting itself as an agent of the
principal carrier the petitioners undertaking should be taken as part of a single operation
under the contract of carriage executed by the private respondent and Singapore Airlines in
Manila.

Application of the Convention

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The Warsaw Convention on Air Transport applies to international air carriage. The Warsaw
Convention to which the Republic of the Philippines is a party and which has the force and effect of
law in this country applies to all international transportation of persons, baggage or goods
performed by an aircraft gratuitously or for hire. As enumerated in the Preamble of the Convention,
one of the objectives is to regulate in a uniform manner the conditions of international
transportation by air.
Limited Liability when applicable and when applicable?
The liability of the carrier for injuries to passengers under the Warsaw Convention is 25,000 francs.
Article 22
1. In the carriage of persons the liability of the carrier for each passenger is limited to the sum of two hundred
and fifty thousand francs. Where, in accordance with the law of the court seised of the case, damages may be
awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed
two hundred and fifty thousand francs. Nevertheless, by special contract, the carrier and the passenger may
agree to a higher limit of liability.
2. (a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of two
hundred and fifty francs per kilogramme, unless the passenger or consignor has made, at the time when the
package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid
a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding
the declared sum, unless he proves that the sum is greater than the passenger's or consignor's actual interest
in delivery at destination.
(b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained
therein, the weight to be taken into consideration in determining the amount to which the carrier's liability is
limited shall be only the total weight of the package or packages concerned. Nevertheless, when the loss,
damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects the
value of other packages covered by the same baggage check or the same air waybill, the total weight of such
package or packages shall also be taken into consideration in determining the limit of liability.
3. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to five
thousand francs per passenger. HAND-CARRIED BAGGAGE
4. The limits prescribed in this Article shall not prevent the court from awarding, in accordance with its own
law, in addition, the whole or part of the court costs and of the other expenses of the litigation incurred by the
plaintiff. The foregoing provision shall not apply if the amount of the damages awarded, excluding court costs
and other expenses of litigation, does not exceed the sum which the carrier has offered in writing to the
plaintiff within a period of six months from the date of the occurrence causing the damage, or before the
commencement of the action, if that is later.
5. The sums mentioned in francs in this Article shall be deemed to refer to a currency unit consisting of sixtyfive and a half milligrammes of gold of millesimal fineness nine hundred. These sums may be converted into
national currencies in round figures. Conversion of the sums into national currencies other than gold shall, in
case of judicial proceedings, be made according to the gold value of such currencies at the date of the
judgment.
However, by special contract, the carrier and the passenger may agree to a higher limit of liability.
Registered bags and cargoes = 250 francs per kilogram

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If the passenger or consignor has made, at the time when the package was handed over to
the carrier, a special declaration of interest in delivery at destination and has paid a
supplementary sum if the case so requires, the carrier will be liable to pay a sum not
exceeding the declare sum, unless he proves that sum is greater than the actual value to the
consignor at delivery
In determining the amount to which the carriers liability, only the total weight of the package or
packages concerned shall be considered except when the value of other packages covered by the
same baggage check or the same airway bill are affected, the total weight of such other package or
packages shall also be taken into consideration in determining the limit of the liability
With respect to objects which the passenger takes charge himself, the limit of liability is 5000 francs
per passenger.
The Guatemala Protocol of 1971 increased the limit for passengers to $100,000 and $1000 for baggage.
However, the Supreme Court noted in Santos III v Northwest Orient Airlines, et.al. that the Guatemala
Protocol is still ineffective
Notes from Class:
Liability may be limited when there is death injury or delay, checked baggage as well as carry-on baggage
(objects over which the passengers have custody referred to under the Warsaw convention)
There is no provision in Warsaw about the particular document that is supposed to be given by the carrier in
favor of the passenger who is carrying hand-carried ticket. Only docs in the Warsaw:
1. passenger ticket
2. baggage check
3. Airway Bill
When is article 22 inapplicable?
1. Willful misconduct under Art. 25. There is no definition of Art. 25 because that is to be determined by the
SC.
2. When no passenger ticket was not issued (or airway bill)
3. Or one issued with no statement about application of Warsaw Convention.
4. Transportation outside of the Convention (see Mapa v. CA)
a. Place of destination and departure in the territories of 2 contracting persons
b. Same territory
5. If the passenger declares a higher value.
Notice of Claim
Federal Express v. American Home
The filing of a claim with the carrier within the time limitation provided either by the airway bill or by the
Warsaw Convention is a condition precedent to the accrual of a right of action against the carrier for loss or
damage to the goods. In this regard, the Warsaw Convention provides that a notice of claim must be made
within: 1) for BAGS: within 3 days from date of receipt; 2) for GOODS: within 7 days from receipt; and 3) in case
of DELAY: within 14 days from the date on which the baggage or goods have been placed at his disposal
Facts:
Smithkline Nebraska delivered to Burlington Air Express, an agent of Federal Express, a shipment of
109 cartons of veterinary biologicals for delivery to consignee Smithkline in Makati, Manila. In the airway Bill,
the words: Refrigerate when not in transit and perishable were stamped on its face. Burlington insured the
cargoes with Home Assurance Company (AHAC). Upon arrival of the goods, it was discovered that the ELISA
reading of the vaccinates sera are below positive reference serum for the reason that it was merely stored in a
2-conditioner room thus without proper refrigeration. Hence, Smithkline declared a total loss for the goods,
abandoned the shipment and filed a claim against AHAC through Philam, its representative in the Philippines.

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Federal Express claims that Smithklines right of action are already barred by reason of its failure to
file a written notice or complaint with Federal regarding its claim for damage or loss to the subject cargo within
the period required by the Warsaw Convention and/or airway bill.
Issue:
WON AHAC has a cause of action against Federal Express to make it consequently liable for the loss
and damage of the subject cargoes.
Held:
Yes, AHAC has the personality to sue as well as a cause of action. However, as its claim has not been
filed within the prescribed period provided for under the Airway Bill, that is: within 14 days from delivery, it
cant now recover from the loss or damage it has suffered.
Being a condition precedent, the notice must precede a suit for enforcement. In the present case, there
is neither an allegation nor a showing of respondents compliance with this requirement within the prescribed
period. While respondents may have had a cause of action then, they cannot now enforce it for their failure to
comply with the aforesaid condition precedent
Jurisdiction in Art. 28
Under Art. 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before:
1. The court where the carrier is domiciled
2. the court where the carrier has its principal place of business
3. the court where the carrier has an establishment by which the contract has been made
4. the court of the place of destination.
Jurisdictional in Character - characterization as jurisdiction and not a venue provision.
Reason of the SC:
1. The wording of Art. 32, which indicates the places where the action for damages must be brought,
underscores the mandatory nature of Art. 28(1).
2. This characterization is consistent with one of the objectives of the Convention, which is to regulate
in a uniform manner the conditions of international transportation by air
3. The Convention does not contain any provision prescribing rules of jurisdiction other than Art. 28(1),
which means that the phrase rule as to jurisdiction used in Art. 32 must refer only to Art. 28(1).
Filing of the case in the proper venues provided for under Art. 28(1) of the Warsaw Convention is still
required even if there are allegations of tortious conduct committed against an airline passenger during the
course of the international carriage. Allegations of tort do not bring the case outside the ambit of the Warsaw
Convention. (Lhuillier vs British Airways)
Santos v. Northwest Orient
In the facts petitioner Santos purchased from Northwest Orient a roundtrip ticket. Bought ticket in San
Francisco. Route: SF Manila (via Tokyo) and back. Santos filed in Manila, case was dismissed for lack of
jurisdiction. Petitioner said his destination was Manila within the meaning of Warsaw
SC: ultimate destination was San Francisco, Manila only an agreed stopping place. Northwest Orient was
bound to transport petitioner to San Francisco
Prescription in respect of loss or damage
In respect of Loss or Damage interpreted by the Supreme Court as something related to
PHYSICAL damage (not economic, not including the depreciation of the value of the goods upon
arrival on the port of destination)
In the case of Liao, there was no such distinction. Whatever damage that may be suffered by the
consignee or the shipper, there is damage pursuant to the Hague rules.

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Prescriptive period in respect of loss or damage: One year after the delivery of goods or the date
when the goods should have been delivered

Applicable Law as to the prescriptive period: COGSA Section 3 (6)

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier
or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person
entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the
notice must be given within three days of the delivery. Said notice of loss or damage may be endorsed upon the
receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the
state of the goods has at the time of their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit
is brought within one year after delivery of the goods or the date when the goods should have been delivered:
Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the
delivery of the goods or the date when the goods should have been delivered.

However, the 1 year prescriptive period may be suspended: if the one-year period is suspended by
express agreement of the parties for in such a case, their agreement becomes the law for them.

Defense in Article 30

Article 30
1. In the case of carriage to be performed by various successive carriers and falling within the
definition set out in the third paragraph of Article 1, each carrier who accepts passengers, luggage
or goods is subjected to the rules set out in this Convention, and is deemed to be one of the
contracting parties to the contract of carriage in so far as the contract deals with that part of the
carriage which is performed under his supervision.

2.

In the case of carriage of this nature, the passenger or his representative can take action only
against the carrier who performed the carriage during which the accident or the delay occurred,
save in the case where, by express agreement, the first carrier has assumed liability for the whole
journey.

3.

As regards luggage or goods, the passenger or consignor will have a right of action against the first
carrier, and the passenger or consignee who is entitled to delivery will have a right of action
against the last carrier, and further, each may take action against the carrier who performed the
carriage during which the destruction, loss, damage or delay took place. These carriers will be
jointly and severally liable to the passenger or to the consignor or consignee.

The defense in Article 30 (the limited liability rule) are the following:
1. If the damage is caused by the carriers willful misconduct or such default on his part (Sec.
25, Warsaw Convention)
2. If there is no delivery of adequate transportation documents (e.g. passenger tickets, airway
bill for goods) (Sec. 3, Warsaw Convention)

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3.

If it is a transportation outside of the Convention (for the carrier to avail of the limited
liability, there must be a statement in the ticket that the liability is subject to the rules under
the Warsaw Convention).

Bumping off is the refusal to transport passengers with confirmed reservation, totally foreclosing
the passengers right to be transported. Delay prolongs only the time, merely postpones for a time
the enforcement of such right but eventually the person will be transported.
SC: Article 30 does not contemplate the instance of bumping off.

55. CPC as Property


Nature of a Certificate of Public Covenience
A certificate of public convenience may or may not be considered property depending on the perspective or
viewpoint. A certificate is a mere privilege that is always subject to the regulation of the State. Insofar as the
State is concerned, a CPC is neither a franchise, nor a contract. It confers no property right and is a mere license
or privilege. Meaning, a common carrier who holds such certificate does not acquire property right in the route
covered or even the highways it usually traverses. However, a CPC maybe considered as property. Under the
Public Service Law, a CPC can be sold by the holder thereof because it has considerable material value and is
considered as a valuable asset.
How then do we reconcile this? Both sides are correct.
There is no doubt that a CPC is a private property, but it is still affected with public interest and must be
submitted to the control of the government for the common good. So insofar as the interest of the State is
concerned, a CPC does not confer upon the holder any proprietary right or interest or franchise in the route
covered thereby and in the public highways. However, with respect to other persons and other public utilities,
a CPC, as property which represents the right and authority to operate its facilities for public service, cannot be
taken or interfered without due process of law.
Primary Concern or Overriding Principle in Issuance of CPCs
Public Interest is the overriding principle, so with necessity and convenience. Thus, the issuance of Certificate
of Public Convenience requires concurrence of the following requisites:
8 the applicant must be a citizen of the Philippines or a domestic corporation
9 the applicant must be financially capable of undertaking the proposed service and meeting the
required responsibilities as well as those incident to its operations, and
10 the applicant must prove that the operation of the public service proposed and the authorization to do
business will promote the public interest in a proper and suitable manner
While public interest, convenience and necessity is the controlling policy, the regulating administrative bodies
previously applied different policies and rules such as the prior operator rule, prior applicant rule and third
operator rule and protection of investment rule.
56. Prior operator rule
9

the regulating agency like the then Public Service Commision (PSC) protects the first licensee's
investment and will not be subjected to ruinous competition.
10 Under this policy, the PSC will not issue a certificate of public convenience to a second operator if there
is a first operator who is rendering sufficient, adequate, satisfactory service, and who in all things and
respects is complying with the rules and regulations of PSC
11 Public operators must be shielded from ruinous competition by giving the prior operator the
opportunity to IMPROVE his equipment and services before allowing a new operator to serve in the
same territory.

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Exceptions to the prior operator rule (when public interest is compromised):


2

Where the old operator failed to make an offer to meet the increase in traffic;

When the application of the rule would be conducive to monopoly.

57. Validity of a Presumption of Public Need


The issue is as regards to the presumption of public need in the issuance of a certificate of public
convenience for public utilities
Note: Public utilities privately owned and operated businesses whose service are essential to the general
public; enterprises which specially cater to the needs of the public and conducive to their comfort and
convenience.
Case: KMU vs Garcia
Facts:
1.
2.

3.
4.

5.

6.

DOTC Sec. issued Memorandum Circular No. 90-395 to then LTFRB Chairman allowing provincial
bus operators to charge passengers rates within a range of 15% above and 15%below the LTFRB
official rate for a period of 1 year;
PBOAP pursuant to Memo. Cir. it filed an application for fare rate increase. An across-the-board
increase of eight and a half centavos (P0.085) per kilometer for all types of provincial buses with
a minimum-maximum fare range of fifteen (15%) percent over and below the proposed basic per
kilometer fare rate, with the said minimum-maximum fare range applying only to ordinary, first
class and premium class buses and a fifty-centavo(P0.50) minimum per kilometer fare for aircon
buses, was sought;
Respondent LTFRB rendered a decision granting the fare rate increase in accordance with a
specified schedule of fares on a straight computation method;
DOTC Sec. issued Department Order No. 92-587 defining the policy framework on the regulation
of transport services. It provides inter alia that Passenger fares shall also be deregulated, except
for the lowest class of passenger service (normally third class passenger transport) for which the
government will fix indicative or reference fares. Operators of particular services may fix their
own fares within a range 15% above and below the indicative or reference rate.
LTFRB issued Memorandum Circular No. 92009 promulgating the guidelines for the
implementation of DOTC Department Order No. 92-587, which provides, among others, that: The
issuance of a Certificate of Public Convenience is determined by public need. The presumption of
public need for a service shall be deemed in favor of the applicant, while burden of proving that
there is no need for the proposed service shall be the oppositors. The existing authorized fare
range system of plus or minus 15 per cent for provincial buses and jeepneys shall be widened to
20% and -25% limit in 1994 with the authorized fare to be replaced by an indicative or reference
rate as the basis for the expanded fare range
KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares.

Issue: WON the above memoranda, circulars and/or orders of the DOTC and the LTFRB which, among
others:
(a)authorize provincial bus and jeepney operators to increase or decrease the prescribed transportation
fares without application therefor with the LTFRB and without hearing and approval thereof by said
agency is in violation of Sec. 16(c) of CA 146,
and in derogation of LTFRBs duty to fix and determine just and reasonable fares by delegating that
function to bus operators, and
(b) establish a presumption of public need in favor of applicants for certificates of public convenience and

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place on the oppositor the burden of proving that there is no need for the proposed service, in patent
violation not only of Sec. 16(c) of CA 146, as amended,
but also of Sec. 20(a) of the same Act mandating that fares should be just and reasonable
Held:
1.

Section 16(c) of the Public Service Act, as amended, reads:


Sec. 16. Proceedings of the Commission, upon notice and hearing. The Commission shall
have power, upon proper notice and hearing in accordance with the rules and provisions of
this Act, subject to the limitations and exceptions mentioned and saving provisions to the
contrary:xxx xxx
xxx(c) To fix and determine individual or joint rates, tolls, charges, classifications, orschedules
thereof, as well as commutation, mileage kilometrage, and other special rates which shall be
imposed, observed, and followed thereafter by any public service: Provided, That the
Commission may, in its discretion, approve rates proposed by public services provisionally and
without necessity of any hearing; but it shall call a hearing thereon within thirty days thereafter,
upon publication and notice to the concerns operating in theterritory affected: Provided,
further, That in case the public service equipment of an operator is used principally or
secondarily for the promotion of a private business, the net profits of said private business shall
be considered in relation with the public service of such operator for the purpose of fixing the
rates.
LTFRB is authorized under EO 202, s. 1987 to determine, prescribe, approve and periodically
review and adjust, reasonable fares, rates and other related charges, relative to the operation of
public land transportation services provided by motorized vehicles

2.

3.
4.

LTFRB not authorized to delegate that power to a common carrier, a transport operator,
or other public service. Authority given by the LTFRB to the provincial bus operators to set
a fare range over and above the authorized existing fare, is illegal and invalid as it is
tantamount to an undue delegation of legislative authority.
Rate should not be confiscatory as would place an operator in a situation where he will continue
to operate at a loss; rate should enable public utilities to generate revenues sufficient to cover
operational costs and provide reasonable return on the investments.
CPC - authorization granted by the LTFRB for the operation of land transportation services for
public use as required by law. Pursuant to Section 16(a) of the Public Service Act, as amended,
the following requirements must be met before a CPC may be granted, to wit:
(i)The applicant must be a citizen of the Philippines, or a corporation or copartnership,association or jointstock company constituted and organized under the laws of thePhilippines, at least 60 per
centum of its stock or paid-up capital must belong entirely to citizens of the Philippines;
(ii) The applicant must be financially capable of undertaking the proposed service and meeting
the responsibilities incident to its operation; and
(iii)Theapplicant must prove that the operation of the public service proposed and
theauthorization to do business will promote the public interest in a proper and suitable manner;
there must be proper notice and hearing before the PSC can exercise its power to issue a CPC.
LTFRB Memorandum Circular No. 92-009, Part IV is incompatible and inconsistent with
Section 16(c)(iii) of the Public Service Act which requires that before a CPC will be issued, the
applicant must prove by proper notice and hearing that the operation of the public service
proposed will promote public interest in a proper and suitable manner. On the contrary, the
policy guideline states that the presumption of public need for a public service shall be
deemed in favor of the applicant.

By its terms, public convenience or necessity generally means something fitting or suited to the
public need. As one of the basic requirements for the grant of a CPC, public convenience and necessity
exists when the proposed facility or service meets a reasonable want of the public and supply a need which

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the existing facilities do not adequately supply. The existence or non-existence of public convenience and
necessity is therefore a question of fact that must be established by evidence, real and/or testimonial;
empirical data; statistics and such other means necessary, in a public hearing conducted for that purpose.
The object and purpose of such procedure, among other things, is to look out for, and protect, the interests
of both the public and the existing transport operators.
Verily, the power of a regulatory body to issue a CPC is founded on the condition that after full-dress
hearing and investigation, it shall find, as a fact, that the proposed operation is for the convenience of the
public. 17 Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must
be consistently borne in mind. Also, existing operators in subject routes must be given an opportunity to
offer proof and oppose the application. Therefore, an applicant must, at all times, be required to prove his
capacity and capability to furnish the service which he has undertaken to render. 18 And all this will be
possible only if a public hearing were conducted for that purpose.
Otherwise stated, the establishment of public need in favor of an applicant REVERSES well-settled and
institutionalized judicial, quasi-judicial and administrative procedures. It allows the party who initiates
the proceedings to prove, by mere application, his affirmative allegations. Moreover, the offending
provisions of the LTFRB memorandum circular in question would in effect amend the Rules of Court by
adding another disputable presumption in the enumeration of 37 presumptions under Rule 131, Section 5
of the Rules of Court. Such usurpation of this Court's authority cannot be countenanced as only this Court
is mandated by law to promulgate rules concerning pleading, practice and procedure.
58. Meaning of Capital

Section 11, Article XII (National Economy and Patrimony) of the 1987 Constitution
mandates the Filipinization of public utilities, to wit:

Section 11.No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines, at least sixty per centum of
whose capital is owned by such citizens; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty years. Neither shall
any such franchise or right be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so requires. The
State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise shall
be limited to their proportionate share in its capital, and all the executive and managing
officers of such corporation or association must be citizens of the Philippines.
The term "capital" in Section 11, Article XII of the Constitution refers only to shares of stock entitled
to vote in the election of directors, and thus in the present case only to common shares, and not to the
total outstanding capital stock comprising both common and non-voting preferred shares.
Considering that common shares have voting rights which translate to control, as opposed to preferred
shares which usually have no voting rights, the term "capital" in Section 11, Article XII of the Constitution
refers only to common shares. However, if the preferred shares also have the right to vote in the election
of directors, then the term "capital" shall include such preferred shares because the right to participate
in the control or management of the corporation is exercised through the right to vote in the election of
directors. In short, the term "capital" in Section 11, Article XII of the Constitution refers only to
shares of stock that can vote in the election of directors. (GAMBOA VS. TEVES)

59. Non-Exclusivity of franchise requirement


Constitutional Provision:
Article XII of the 1987 Constitution entitled National Economy and Patrimony:

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Section 11: No franchise, certificate or any other form of authorization for the operation of a public utility shall
be granted except to citizens of the Philippines or to corporations or associations organized under the laws of
the Philippines at least 60% of whose capital is owned by such citizens, nor shall such franchise certificate
or authorization be exclusive in character or for a longer period than 50 years. Neither shall any such
franchise or right be granted except under the condition that it shall be subject to the amendment, alteration
or repeal by the Congress when the common good so requires. The state shall encourage equity participation
in public utilities by the general public. The participation of foreign investors in the governing body of any
public utility enterprise shall be limited to their proportionate share in its capital and all the executive and
managing officers of such corporation or association must be citizens of the Philippines.
Any statutory provisions contrary to the provisions of the Constitition is considered VOID. Section 46 of P.D.
198 which vests an exclusive franchise upon public utilities is clearly repugnant to Art XIV, Section 5 of the
1973 Constitution. It is unconstitutional and may not be relied upon in support of an opposition against an
application for Certificate of Public Convenience.
Sec 47. Exclusive Franchise No Franchise shall be granted to any other person or agency for domestic,
industrial or commercial water service within the distrct or any portion thereof unless and except to the extent
that the board of directors of said district concents thereto by resolution duly adopted, such resolution
however, shall be subject to review by the administration.
A common carrier who holds such certificate does not acquire a property right in the route covered thereby.
No vested right will be affected if the government decides to re-route the traffic thereby changing the route of
the carrier.
The certificate of public convenience does not confer upon the holder any proprietary right or interest or
franchise in the public highways. Renovation of the certificate deprives him of no vested ruggts.
Indeed, the President, Congress and the Court cannot create directly franchises that are exclusive in character.
What the President, Congress and the Court cannot legally do directly they cannot do indirectly. Thus, the
President, Congress and the Court cannot create indirectly franchises that are exclusive in character by
allowing the Board of Directors (BOD) of a water district and the Local Water Utilities Administration (LWUA)
to create franchises that are exclusive in character.
60. Validity of ordinance vis--vis infringement of CPC
Lagman v. City of Manila:
The ordinance is valid. There is no infringement on the certificate of public convenience. The city of Manila has
the power under its Charter to regulate the use of tis streets. This charter is a special law and therefore prevails
over the Public Service Act. Consequently, the power of the LTFRB to grant certificates is subject to this
provision of the charter of Manila
The court ruled: First, as correctly maintained by respondents, Republic Act No. 409, as amended, otherwise
known as the Revised Charter of the City of Manila, is a special law and of later enactment than Commonwealth
Act No. 548 and the Public Service Law (Commonwealth Act No. 146, as amended), so that even if conflict exists
between the provisions of the former act and the latter acts, Republic Act No. 409 should prevail over both
Commonwealth Acts Nos. 548 and 146. In Cassion vs. Banco Nacional Filipino, 89 Phil. 560, 561, this Court said:
That the powers conferred by law upon the Public Service Commission were not designed to deny or supersede
the regulatory power of local governments over motor traffic, in the streets subject to their control, is made
evident by section 17 (j) of the Public Service Act (Commonwealth Act No. 146) that provides as follows:
In addition: Luque v. Villegas ruled:

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Petitioner's argument pales on the face of the fact that the very nature of a certificate of public convenience is
at cross purposes with the concept of vested rights. To this day, the accepted view, at least insofar as the State
is concerned, is that "a certificate of public convenience constitutes neither a franchise nor a contract, confers
no property right, and is a mere license or privilege." The holder of such certificate does not acquire a property
right in the route covered thereby. Nor does it confer upon the holder any proprietary right or interest of
franchise in the public highways. Revocation of this certificate deprives him of no vested right. Little reflection
is necessary to show that the certificate of public convenience is granted with so many strings attached. New
and additional burdens, alteration of the certificate, and even revocation or annulment thereof is reserved to
the State. We need but add that the Public Service Commission, a government agency vested by law with
"jurisdiction, supervision, and control over all public services and their franchises, equipment, and other
properties" is empowered, upon proper notice and hearing, amongst others: (1) " To amend, modify or revoke
at any time a certificate issued under the provisions of this Act (Commonwealth Act 146, as amended),
whenever the facts and circumstances on the strength of which said certificate was issued have been
misrepresented or materially changed"; and (2) "To suspend or revoke any certificate issued under the
provisions of this Act whenever the holder thereof has violated or wilfully and contumaciously refused to
comply with any order, rule or regulation of the Commission or any provision of this Act. Provided, That the
Commission, for good cause, may prior to the hearing suspend for a period not to exceed thirty days any
certificate or the exercise of any right or authority issued or granted under this Act by order of the Commission,
whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable
damage or inconvenience to the public or to private interests." Jurisprudence echoes the rule that the
Commission is authorized to make reasonable rules and regulations for the operation of public services and to
enforce them.
In reality, all certificates of public convenience issued are subject to the condition that all public services "shall
observe and comply with all the rules and regulations of the Commission relative to" the service.
To further emphasize the control imposed on public services, before any public service can "adopt, maintain,
or apply practices or measures, rules, or regulations to which the public shall be subject in its relation with the
public service," the Commission's approval must first be had. And more. Public services must also reckon with
provincial resolutions and municipal ordinances relating to the operation of public utilities within the province
or municipality concerned. The Commission can require compliance with these provincial resolutions or
municipal ordinances

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