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San Beda College of Law54

MEMORYAIDINCOMMERCIALLAW

TRANSPORTATION LAWS

CONTRACT OF TRANSPORTATION/CARRIAGE A contract whereby a person, natural orjuridical, obligates to transport persons,

goods, or both, from one place to another, byland, air or water, for a price orcompensation.Cla!"#a$!on%

1. Common or Private2. Goods or Passengers. !or a fee "for hire# or Gratuitous$. %and, &ater'maritime, or Air(. )omestic'inter*island'coastwise or

+nternational'foreign+t is a relationship which is imbued with the

public interest.

COMMON CARRIER

Persons, corporations, rms or associationsengaged in the business of carrying ortransporting passengers or goods or both, byland, water, or air, for compensation, o-eringtheir services to the public "Art. 12, CivilCode#.Art. 12 of the /ew Civil Code avoids any

distinction between one whose principalbusiness activity is the carrying of persons orgoods or both and one who does suchcarrying only as an ancillary activity"sideline#. +t also avoids a distinctionbetween a person or enterprise o-eringtransportation service on a regular orscheduled basis and one o-ering such serviceon an occasional, episodic or unscheduled

basis./either does the law distinguish between

a carrier o-ering its services to the generalpublic that is the general community orpopulation and one who o-ers services orsolicits business only from a narrow segmentof the general population.

A person or entity is a common carriereven if he did not secure a Certicate ofPublic Convenience ")e Gu0man vs. CA, 13C4A 12#.+t ma5es no distinction as to the means of

transporting, as long as it is by land, water orair. +t does not provide that thetransportation should be by motor vehicle."!irst Philippine +ndustrial Corporation vs. CA#6ne is a common carrier even if he has no

7ed and publicly 5nown route, maintains noterminals, and issues no tic5ets "Asia%ighterage 3hipping, +nc. vs. CA#.C&a'a#$e'!$!#%

1. 8nderta5es to carry for all peopleindi-erently and thus is liable forrefusal without su9cient reason"%astimoso vs. )oliente, 6ctober 2:,1;1#he 3C in !irst Philippine +ndustrial

Corporation vs. CA "1;;(# reiterated thefollowing tests@

1. +t must be engaged in the businessof carrying goods for others as apublic employment and must holditself out as ready to engage in the

transportation of goods generally asa business and not as a casualoccupationransportation %aws#abangcura, =on Fincent Agustin "Corporation %aw#< arl 3teven Co "3pecial %aws#< Dohn %emuelGatdula "=an5ing %aws#< 4obespierre C8"%aw on +ntellectual Property#

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%aw on commoncarriers

%aw on obligationsand contracts

GO(ERNING LAWSA* Do+e$!#/!n$e',!land/#oa$w!e

Applicable to %and, &ater, and Airtransportation

1. Civil Code * primary2. Code of Commerce "Arts. $;, ;,

(*$, (:, :*$(# * suppletory

B* In$e'na$!onal/fo'e!gn/o-e'ea.Fo'e!gn #on$'0 $o P&!l!11!ne2 Applicable to &ater'maritime and Air

transportation >he law of the country of destination

generally applies.1. Civil Code * primary2. Code of Commerce * suppletory. 6thers * suppletory

a. &ater'maritime@ Carriage of Goodsby 3ea Act "C6G3A#

b. Air@ &arsaw Convention

I* NEW CI(IL CODE.A'$* 36,3772

RE89IREMENT OF E:TRAORDINARYDILIGENCE4endition of service with the greatest s5ill

and utmost foresight. ")avao 3tevedore Co. v.!ernande0#Rationale:

1. !rom the nature of the business andfor reasons of public policy "Art.1#

2. 4elationship of trust. =usiness is impressed with a specialpublic duty

$. Possession of the goods(. Preciousness of human life

A common carrier is not an absolute insurer

of all ris5s of travel.

CO(ERAGE1. Figilance over goods "Arts. 1$*1($#8+>6'!64CB EADB84BRe;!!$e%

a. Eust be the pro7imate and onlycause of the lossb. B7ercise of due diligence to prevent

or minimi0e the loss before, during orafter the occurrence of the disaster "Art.1;#c. Carrier has not negligently incurredin delay in transporting the goods "Art.1$:#

!ire is not considered a natural disaster or

calamity as it arises almost invariably fromsome act of man. "Bastern 3hipping %ines +nc.vs. +AC#Eechanical defects are not force majeure if

the same was discoverable by regular andadeuate inspections. (Notes and Cases onthe Law on Transportation and Public Utilities,Aquino, T. & ernando, R.P. !""# ed. p.$!"%$!!

2. AC>3 6! P8=%+C B/BEHRe;!!$e%

a. Eust be the pro7imate and onlycause of the lossb. B7ercise of due diligence to preventor minimi0e the loss before, during orafter the act causing the loss,deterioration or destruction of the goods"Art. 1;#

. /BG%+GB/CB 6! >?B 3?+PPB4 64 6&/B4a. 3ole and pro7imate cause@ absolute

defenseb. Contributory@ partial defense. "Art.

1$1#

$. C?A4AC>B4 6! >?B G66)3 64 )B!BC>3+/ >?B PAC+/G 64 +/ >?B C6/>A+/B4Bven if the damage should be caused by the

inherent defect'character of the goods, thecommon carrier must e7ercise due diligenceto forestall or lessen the loss."Art. 1$2# >he carrier which, 5nowing the fact of

improper pac5ing of the goods upon ordinaryobservation, still accepts the goodsnotwithstanding such condition, is notrelieved of liability or loss or injury resultingtherefrom. "3outhern %ines, +nc. v. CA, $ 3C4A2(#

(. 64)B4 64 AC> 6! P8=%+C A8>?64+>H

COMMERCIALLAWCOMMITTEEC?A+4PB436/@ Garny %uisa Alegre A33>. C?A+4PB436/@Dayson 63 4amos B)P@ =eatri7 +. 4amos 38=DBC>?BA)3@

Earichelle )e Fera "/egotiable +nstruments %aw#< Dose !ernando %lave "+nsurance#< Aldrich )el 4osario">ransportation %aws#abangcura, =on Fincent Agustin "Corporation %aw#< arl 3teven Co "3pecial %aws#< Dohn %emuelGatdula "=an5ing %aws#< 4obespierre C8"%aw on +ntellectual Property#

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3aid public authority must have the power

to issue the order "Art. 1$#. Conseuently,where the o9cer acts without legal process,the common carrier will be held liable."Gan0on v. CA 11 3C4A $#

)iligence in the selection and supervisionof employees under Article 21: of the CivilCode cannot be interposed as a defense bythe common carrier because the liability ofthe carriers arises from the breach of thecontract of carriage. >he defense under saidarticles is applicable to negligence in uasi*delicts under Art. 21. ")el Prado v. EanilaBlectric Co., (2 Phil ;::#

LIABILITY OF A COMMON CARRIER FORDEAT) OR INort< however,>he employee mustbe on duty at thetime of the act."Earanan v. Pere0#

/ot absolute< limitedby Art. 1

>he carrier is liable when its personnel

allowed a passenger to drive the vehiclecausing it to collide with another vehicleresulting to the injuries su-ered by the otherpassengers. "E44 vs. =allesteros, 1 3C4A$1#

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Pa'$!e1. Common carrier2. 3hipper. Consignee

1. Common carrier2. Passenger

Cae of l!a=!l!$0)elay in delivery, loss, destruction, ordeterioration of the goods

)eath or injury to the passengers

D'a$!on of l!a=!l!$0

!rom the time the goods are unconditionallyplaced in the possession of, and received by thecarrier for transportation until the same aredelivered actually or constructively by the

carrier to the consignee or to the person whohas the right to receive them. "Art. 1# +t remains in full force and e-ect even when

they are temporarily unloaded or stored intransit unless the shipper or owner has madeuse of the right of stoppage in transitu. "Art.1# +t continues to be operative even during the

time the goods are stored in a warehouse of thecarrier at the place of destination until theconsignee has bee advised of the arrival of thegoods and has had reasonable opportunitythereafter to remove them or otherwise disposeof them. "Art. 1#)elivery of goods to the custom authorities is

not delivery to the consignee. "%u )o v.

=inamira, 1:1 Phil 12:#

>he duty of a common carrier to provide safetyto its passengers so obligates it not only duringthe course of the trip, but for so long as thepassengers are within its premises and where

they ought to be in pursuance to the contractof carriage. "%4>A v. /avidad, I2::J#All persons who remain on the premises within

a reasonable time after leaving the conveyanceare to be deemed passengers, and what is areasonable time or a reasonable delay withinthis rule is to be determined from all thecircumstances, and includes a reasonable timeto see after his baggage and prepare for hisdeparture. "%a Eallorca v. CA, 1 3C4A ; he duty which the carrier ofpassengers owes to its patrons e7tends topersons boarding the cars as well as to thosealighting therefrom ")angwa >rans Co., +nc. vs.CA 2:2 3C4A ($#.



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P'e+1$!on of negl!gen#e

Art.1( Civil Code4eason@ As to when and how goods weredamaged in transit is a matter peculiarly within

the 5nowledge of the carrier and its employees."Eirasol v. )ollar, ( P?+% 12$#

Eere proof of delivery of goods to a carrier ingood order and the subseuent arrival of thesame goods at the place of destination in badorder ma5es for a prima facie case against thecarrier. "Coastwise %ighterage Corp. v. CA, 2$(3C4A ;#

Art.1(( Civil Code4eason@ >he contract between the passengerand the carrier imposes on the latter the duty

to transport the passenger safely< hence theburden of e7plaining should fall on the carrier.

Defene

1. 6rdinary circumstance@ B7ercise ofe7traordinary diligence "Art. 1(#

2. 3pecial circumstances@a. !lood, storm, earthua5e, lighting,

or other natural disaster orcalamity "plus force majeure#

b.Act of the public enemy in war,whether international or civil

c. Act or omission of the shipper orthe owner of goods

d.>he character of the goods ordefects in the pac5ing or in thecontainers

e. 6rder or act of competent publicauthority "Art. 1$#

1. B7ercise of e7traordinary diligence"Art. 1(#

2. Caso fortuito

(al!d $!1la$!on

1. 4eduction of degree of diligence to ordinarydiligence, provided it be@

a# +n writing, signed by the shipper orownerhe diligence reuired in the carriage of the

goods may be reduced by only one degree, frome7traordinary to ordinary diligence or diligenceof a good father of a family. "Art. 1$$, Art.1$(, no. $#

3tipulation limiting liability when a passenger iscarried gratuitously, but not for willful acts orgross negligence. "Art. 1(#

(o!d $!1la$!on

1. >hat the goods are transported at the ris5of the owner or shipperhat carrier will not be liable for any loss,

destruction or deterioration of the goods. C?A+4PB436/@Dayson 63 4amos B)P@ =eatri7 +. 4amos 38=DBC>?BA)3@


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San Beda College of Law5>


. >hat the carrier need not observe anydiligence in the custody of the goodshat the carrier shall e7ercise a degree ofdiligence less than that of a good father of afamily over the movable transportedhat the carrier shall not be responsible forthe acts or omissions of his or its employeeshat the carriers liability for actscommitted by thieves or robbers who do notact with grave or irresistible threat, violence orforce is dispensed with or diminishedhat the carrier is not responsible for theloss, destruction or deterioration of the goodson account of the defective condition of thecar, vehicle, ship or other euipment used inthe contract of carriage. "Art. 1$(#

statements on tic5ets or otherwise. "Art. 1(#



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R9LES ON PASSENGERS? BAGGAGE

IN T)E C9STODY OFT)E PASSENGERS.)AND,CARRIED2

IN T)E C9STODYOF T)E COMMON

CARRIER.C)EC@ED,IN2

Legal na$'e of $&e =aggage/ecessary deposit Considered as

KgoodsL

Re;!'ed d!l!gen#e =0 $&e #o++on#a''!e'

)iligence of adepositary "ordinarydiligence#

B7traordinarydiligence

A11l!#a=le 'leArts. 1;; and 2:::*2::

Arts. 1*1(

CONC9RRING CA9SES OF ACTIONARISING FROM T)E NEGLIGENT ACT OFT)E COMMON CARRIER1. Culpa contractual"breach of contract#6nly the carrier is primarily liable and notthe driver, because there is no privitybetween the driver and the passenger.=asis@ Art.1(;, /CC.

/o defense of due diligence in the selection

and supervision of employees.

2. Culpa aquiliana "uasi*delict#>he carrier and driver are solidarily liable as

joint tortfeasors.=asis@ Art. 21:, /CC.

)efense of due diligence in the selection

and supervision of employees is available.B7ception@ maritime tort resulting in collision."'ee notes on Collision#

. Culpa criinal "criminal negligence#>he driver is primarily liable. >he carrier is

subsidiarily liable only if the driver isconvicted and declared insolvent.=asis@ Art. 1::, 4PC.

+n case of injury to a passenger due to the

negligence of the driver of the bus on whichhe is riding and of the driver of anothervehicle, the drivers as well as the owners ofthe two vehicles are jointly and severallyliable for damages. +t ma5es no di-erencethat the liability of the bus driver and ownersprings from contract while that of the ownerand driver of the other vehicle arises from

uasi*delict. "!abre vs. CA#

LIMITATIONS AS TO CARRIER?S LIABILITY

IN(ALID AS BEINGCONTRARY TOP9BLIC POLICY

(ALID ENFORCEABLE

1. 6ne e7empting thecarrier from any andall liability for loss ordamage occasioned byits own negligence.2. An unualiedlimitation of liability toan agreed valuation.

1. 6ne limiting theliability of the carrierto an agreedvaluation, unless theshipper declares ahigher value andpays a higher rate offreight"?.B. ?eacoc5Company vs.

Eacondray MCompany +nc.#

?owever, the carrier cannot limit its liability

for injury to, or loss of, goods shipped where

such injury or loss was caused by its ownnegligence."3hewaram vs. PA%, 1 3C4A :#

SPECIAL R9LES ON LIABILITES OFAIRLINE CARRIERS1. +n case of Night diversion due to badweather or other circumstances beyond thepilots control, the relation between thecarrier and the passenger continues until thelatter has been landed at the port ofdestination and has left the carrierspremises. >he carrier should necessarilye7ercise e7traordinary diligence insafeguarding the comfort, convenience andsafety of its stranded passengers until they

have reached their nal destination."Philippine Airlines vs. CA, 22 3C4A $2#2. Bven where overboo5ing of passengers isallowed as a commercial practice, the airlinecompany would still be guilty of bad faith andstill be liable for damages if it did not properlyinform passenger that it could breach thecontract of carriage even if they wereconrmed passengers. "Oalamea vs. CA, 223C4A 2#. An open*dated tic5et constitutes acomplete contract between the carrier andpassenger. ?ence, the airline company isliable if it refused to conrm a passengersNight reservation. "3ingson vs. CA, 22 3C4A1$;#$. An airline company which issued aconrmed tic5et to a passenger coveringsuccessive trips on di-erent airlines can beheld liable for damages occasioned byKbumping o-L by one of the successiveairlines. "%ufthansa German Airlines vs. CA,2 3C4A 2;:#(. An airline tic5et providing that carriage bysuccessive air carriers is to be regarded as aKsingle operationL is to ma5e the issuingcarrier liable for the tortuous conduct of theother carrier. A printed provision in the tic5etlimiting liability only to its own conduct is notenough to rebut that liability. "%E 4oyal)utch Airlines vs. CA, ( 3C4A 2#

II* CODE OF COMMERCE

A* O(ERLAND TRANSPORTATION.A'$* 4,2

A11l!#a=!l!$01. )omestic land and water'maritimetransportation. (Pandect o) Coercial Lawand *urisprudence, *ustice *ose +itu, $--ed.2. )omestic Air >ransportation. (CoercialLaw Re/iew, Cesar +illanue/a, !""# ed.IMPORTANT CONCEPTS%

1. =ill of lading

2. 6bligations of the carrier

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. 4ight of abandonment$. /otice of damage(. Combined carrier agreement

BILL OF LADING

>he written ac5nowledgment of receipt ofgoods and agreement to transport them to aspecic place to a person named or to hisorder.Rules:

1. +t is not indispensable for the creation of acontract of carriage. "Compania Earitima vs.+nsurance Company of /orth America, 123C4A 21#

2. Ambiguity is construed against the carrier,the contract being one of adhesion.

. >he consignee, although the instrument isoftentimes drawn up only by the consignorand carrier, becomes bound by all the

stipulations contained therein by ma5ing aclaim for loss on the basis of said bill oflading. "3ea*%and 3ervices +nc. vs. +AC#

$. >he right of a party to recover for loss ofshipment consigned to him under a bill oflading drawn up only by and between theshipper and the carrier, springs from either arelation of agency between him and theshipper, or his status as stranger in whosefavor some stipulation is made in saidcontract, and who becomes a party theretowhen he demands fulllment of thatstipulation. "Art. 111 "2#, "Eendo0a vs. PA%+nc.#

(. Acceptance of the bill of lading withoutdissent raises the presumption that all theterms therein where brought to the5nowledge of the shipper and agreed to byhim and, in the absence of fraud or mista5ehegoods should be delivered to the consignee orany other person to whom the bill of ladingwas validly transferred or negotiated.

T!+e of del!-e'0

S$!1la$ed !nCon$'a#$/B!ll of

Lad!ng

No $!1la$!on

1. Carrier is bound tofulll the contractand is liable for anydelay< no matterfrom what cause itmay have arisen.

1. &ithin areasonable time.2. Carrier is bound toforward them in the1st shipment of thesame or similargoods which he may

ma5e to the point ofdelivery. "A4>. (Code of Commerce#

Ee#$ of dela0a. Eerely suspends and generally does notterminate the contract of carriageb. Carrier remains duty bound to e7ercisee7traordinary diligencec. /atural disaster shall not free the carrierfrom responsibility "Art.1$:#d. +f delay is without just cause, thecontract limiting the common carriers liabilitycannot be availed of in case of loss ordeterioration of the goods "Art.1$#

RIG)T OF CONSIGNEE TO ABANDONGOODSIn$an#e%1. Partial non*delivery, where the goods areuseless without the others "Art. #hus, in such

absence, Civil Code rules on prescriptionapply. +f despite the notice of claim, the carrier

refuses to pay, action must be led in court.1. /o bill of lading was issued@

within 7 0ea'2. =ill of lading was issued@

within 3 0ea'*

ARTICLE 77 COGSA Se#* .72

A11l!#a=!l!$01. )omestic'inter*island'coastwise

transportation2. %and, water, airtransportation. Carriage of goods

1. +nternational'overseas'foreign

"from foreigncountry to Phils.#/ote@ subject to therule on ParamountClause2. &ater'maritimetransportation. Carriage of goods

No$!#e of da+age1. Conditionprecedent2. 2$*hour period forclaiming latentdamage

1. /ot a conditionprecedent2. *day period forclaiming latentdamage

P'e#'!1$!-e 1e'!od

/one provided< CivilCode applies. 6ne year from thedate of delivery"delivered butdamaged goods#, ordate when thevessel left port orfrom the date ofdelivery to thearrastre "non*delivery or loss#.

COMBINED CARRIER AGREEMENT .ART*256N6RAL RUL6: +n case of a contract of

transportation of several legs, each carrier isresponsible for its particular leg in the

contract.67C6PT81N:A combined carrier agreement

where a carrier ma5es itself liable assumingthe obligations and acuiring as well therights and causes of action of those whichpreceded it.

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6* MARIT

IMECOMMERCE

.A'$* 5,>72

IMPORTANT CONCEPTS%1. Eerchant vessel2. Earitime lien and Preference of

Credit. )octrine of limited liability$. Causes of revocation of voyage(. Participants in maritime commerce. Charter party. %oans on bottomry and respondentia. Accidents in maritime commerce

MARITIME/ADMIRALTY LAW +t is the system of laws which particularly

relates to the a-airs and business of the sea,to ships, their crews and navigation, and tomaritime conveyance of persons andproperty. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino &ernando, citin 3rancisco, p.!#

Earitime laws apply only to maritime trade

and sea voyages. (Pandect o) CoercialLaw and *urisprudence, *ustice *ose +itu,$-- ed.

Arrastre service is not maritime in

character. +t refers to a contract for theunloading of goods from a vessel. "+C>3+ vs.Prudential Guarantee, 2: 3C4A 2$$#

C)ARACTERISTICS OF MARITIMETRANSACTION1. Real * similar to transactions over realproperty with respect to e-ectivity againstthird persons which is done through

registration. "4ubiso vs. 4ivera, Phil. 2#.>he evidence of real nature is shown by@ 1#the limitation of the liability of the agents tothe actual value of the vessel and the freightmoney< and 2# the right to retain the cargoand embargo and detention of the vessel"%u0on 3tevedoring Corp v. CA, 1( 3C4A1;#he real and hypothecary nature of

maritime law simply means that the liabilityof the carrier in connection with losses relatedto maritime contracts is conned to the

vessel, which stands as the guaranty for theirsettlement. "Aboiti0 3hipping Corp. vs.General Accident !ire and %ife AssuranceCorp. 21 3C4A (;#.

MERC)ANT (ESSEL Fessel engaged in maritime commerce,

whether foreign or otherwise. (hey shall continue to beconsidered as personal property. "Arts. (,((#>hey are susceptible to aritie lienssuch

as for the repair, euipping and provisioningof the vessel in the preparation of a voyage,as well as mortgage liabilities, in satisfactionof which a vessel may be validly arrested andsold. "3hip Eortgage )ecree of 1;#

MARITIME LIEN+t constitutes a present right of property in

the ship, a jus in re, to be afterward enforcedin admiralty by process in rem. "P/= vs. CA, 3C4A 1# +f the maritime lien arose prior to the

recording of a preferred mortgage, it shallhave priority over the said mortgage lien."P/= vs. CA, 3C4A 1#

ORDER OF PREFERENCE IN CASE OF SALEOF (ESSEL

R*A* 737 P*D* 3563

Ee#$!-!$0 da$e1;; 1;

A11l!#a=!l!$06verseas shippingonly

=oth domestic andoverseas shipping

@!nd of aleDudicial Dudicial and

e7trajudicial

O'de' of P'efe'en#eA preferredmortgage shall havepriority over allclaims against thevessel, e7cept thefollowingpreferences in theorder stated@1. Dudicial costs ofthe proceedingsa7es due thePhilippineGovernmenthe interest e7tends to@ 1# the vessel itself< 2#euipments< # freightage< and $# insuranceproceeds. "Chua v. +AC, 1 3C4A 1#67C6PT81N':

1. Claims under &or5mens Compensation"Abueg vs. 3an )iego Phil :#hey are the chiefs or commanders of ships.

>he terms have the same meaning, but are

particularly used in accordance with the si0eof the vessel governed and the scope oftransportation, i.e., large and overseas, and

small and coastwise, respectively.

/ature of position "*fold character#@

1. General agent of the shipownerechnical director of the vessela5es command of the vessel in case of the

inability or disualication of the captain and

the sailing mate, assuming in such case theirpowers and responsibilities.>hird in command

)uties@

1. Preserve the hull and rigging of the

vesselhe seamans heirs are entitled to payment

as follows@1. +f death is natural@

a. compensation up to time of death ifengaged on wage

b. if by voyage * half of amount if deathoccurs on voyage out< and full, if onvoyage in

c. if by shares * none, if beforedeparture< full, if after departure

2. if death is due to defense of vessel * fullpayment

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. if captured in defense of vessel * fullpaymenthe term generally connotes a person ta5en

on board at a particular place for the purposeof conducting a ship through a river, road orchannel, or from a port.Easterpro hac /icefor the time being in the

command and navigation of the ship.&hile in e7ercising his functions a pilot is in

sole command of the ship and supersedes themaster for the time being in the commandand navigation of the ship, the master doesnot surrender his vessel to the pilot and the

pilot is not the master. >here are occasionswhen the master may and should interfereand even displace the pilot, as when the pilotis obviously incompetent or into7icated "!arBastern 3hipping Company vs. CA#. Compulsory Pilotage 3tates possessing

harbors have enacted laws or promulgatedrules reuiring vessels approaching theirports to ta5e on board pilots licensed underthe local laws. (Notes and Cases on the Lawon Transportation and Public Utilities, Aquino,T. & ernando, R.P. !""# ed. p. $9

L!a=l!$0 of P!lo$56N6RAL RUL6@ 6n compulsory pilotage

grounds, the ?arbor Pilot is responsible fordamage to a vessel or to life or property dueto his negligence.67C6PT:

1. Accident caused by force majeure ornatural calamity provided the pilot e7ercisedprudence and e7tra diligence to prevent orminimi0e damages.2. Countermand or overrule by the master of

the vessel in which case the registered ownerof the vessel is liable. "3ec.11, Art.+++ PPAAdmin 6rder :*(#

SPECIAL CONTRACTS OF MARITIMECOMMERCE

1. Charter party

2. =ill of lading

. Contract of transportation of passengers on sea voyages

$. %oan on bottomry(. %oan on respondentia. Earine insurance

C)ARTER PARTYA contract by virtue of which the owner or

agent binds himself to transport merchandiseor persons for a 7ed price.A contract by which an entire ship, or some

principal part thereof is let'leased by theowner to another person for a specied timeor use. "Planters Products, +nc. vs. CA, 223C4A $#Pa'$!e%

1. 3hip owner or ship agent2. Charterer

Clae%1. =areboat or demise >he chartererprovides crew, food and fuel. >he charterer is

liable as if he were the owner, e7cept whenthe cause arises from the unworthiness of thevessel. >he shipowner leases to the chartererthe whole vessel, transferring to the latter theentire command, possession and conseuentcontrol over the vessels navigation, includingthe master and the crew, who therebybecome the charters servants. +t transformsa common carrier into a private carrier.

>he charterer becomes the owner of

the vessel pro hac vice, just for that oneparticular purpose only. =ecause thecharterer is treated as owner pro hac/ice, the charterer assumes thecustomary rights and liabilities of theshipowner to third persons and is held

liable for the e7pense of the voyage andthe wages of the seamen.

2. Contract of A-reightment A contractwhereby the owner of the vessel leases partor all of its space to haul goods for others.

>he shipowner retains the possession,

command and navigation of the ship, thecharterer merely having use of the spacein the vessel in return for his payment ofthe charter hired.inds@

a. >ime charter vessel is chartered fora 7ed period of time or duration ofvoyage.

b. Foyage or trip charter the vessel isleased for one or series of voyagesusually for purposes of transportinggoods for charterer.

LEASE C)ARTER PARTY

+f for a deniteperiod, lessee cannotgive up the lease bypaying a portion ofthe amount agreedupon.

Charterer mayrescind charter partyby paying half of thefreightage agreedupon.

+f the leased propertyis sold to one who5nows of thee7istence of thelease, the new owner

must respect the

>he new owner is notcompelled to respectthe charter party solong as he can loadthe vessel with his

own cargo. "Art. ;#

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lease.

Civil law concept Commercial lawconcept

C)ARTER PARTY BILL OF LADING

An entire or completecontract.

Eore li5e a privatereceipt which thecaptain gives toaccredit goodsreceived frompersons

Consensual contract 4eal contract

BAREBOAT ORDEMISE C)ARTER

CONTRACT OFAFFREIG)TMENT.TIME OR (OYAGE

C)ARTER2

Charterer becomesliable to otherscaused by itsnegligence

6wner remains liableas carrier and mustanswer for anybreach of duty

Charterer regardedas owner pro hacvice for the voyage

Charterer is notregarded as owner.

6wner of vesselrelinuishespossession,command andnavigation tocharterer

>he vessel ownerretains possession,command andnavigation of the ship

Common carrier isconverted to privatecarrier.

Common carrier isnot converted to aprivate carrier.

PERSONS W)O MAY MA@E A C)ARTER1. 6wner or owners of the vessel,

either in whole or in majority part,who have legal control andpossession of the vessel

2. Charterer may subcharter entirevessel to rd person only if notprohibited in original charter."Art.;#

. 3hip agent if authori0ed by theowner's or given such power in thecerticate of appointment. "Art.(;#

$. Captain in the absence of the shipagent or consignee and only if he

acts in accordance with theinstructions of the agent or ownerand protects the latters interests."Art.:;#

RE89ISITES OF A (ALID C)ARTER PARTY1. Consent of the contracting parties2. B7isting vessel which should be

placed at the disposition of theshipper

. !reight$. Compliance with Art. (2 of the

Code of Commerce

Clae W&!#& Ma0 Be In#lded In aC&a'$e' Pa'$0

o observerepresented capacityo unload cargoclandestinely placed$. >o substituteanother vessel if loadis less than '( ofcapacityo leave the portif the charterer doesnot bring the cargowithin the lay daysand e7tra lay daysallowedo place in avessel in a conditionto navigate>2

A$&!1owne'? 'e;e$.A'$* 7>2

Fo'$!$o#ae

.A'$* 72

1. =y 1. +f the e7tra 1. &ar or

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abandoningthe charterand payinghalf of thefreightage.((#2. Goods not recorded in the boo5s or

records of the vessel. "A4>.(( "2##. !uel for the vessel if there is more

than su9cient fuel for the voyage."4ule +T, Hor5*Antwerp 4ule#

hose which are on the dec5,preferring the heaviest one with theleast utility and valuehose which are below the upper

dec5, beginning with the one withgreatest weight and smallest value."Art. 1(#

Dettisoned goods are not res nullius nor

deemed KabandonedL within the meaning ofcivil law so as to be the object of occupationby salvage. (Pandect o) Coercial Law and*urisprudence, *ustice *ose +itu, $-- ed.+n order that the jettisoned goods may be

included in the gross or general average, thee7istence of the cargo on board should beproven by means of the bill of lading. "Art.1#

Yo',An$we'1 .Y,A2 Rle on De$e'+!n!ngL!a=!l!$0 fo' A-e'age W!$& Rega'd ToDe# Ca'go1. )ec5 cargo is allowed only indomestic'coastwise'inter*island shipping, andis prohibited in international'overseas'foreign

shipping.2. +f dec5 cargo is loaded with the consentof the shipper on overseas trade, it mustalways contribute to general average, butshould the same be jettisoned, it would notbe entitled to reimbursement because thereis violation of the H*A 4ules.. +f dec5 cargo is loaded with the consentof the shipper on coastwise shipping, it mustalways contribute to general average and ifjettisoned would be entitled toreimbursement.4eason@ +n domestic shipping, voyages are

usually short and the seas are generally notrough. +n overseas shipping, the vessel ise7posed for many days to perils of the sea.

DOMESTIC INTERNATIONAL)ec5 cargo is allowed )ec5 cargo is not

allowed

&ith shippers consent

General average Particular average

&ithout shippers consent

Captain is liable Captain is liable

ARRI(AL 9NDER STRESS .ARRIBADA2>he arrival of a vessel at the nearest and

most convenient port instead of the port ofdestination, if during the voyage the vesselcannot continue the trip to the port ofdestination.

W&enlawfl

W&ennlawfl

W&o =ea'e1ene%

>he inabilityto continuevoyage isdue to lac5of provisions,well*foundedfear of sei0ure,privateers,pirates, oraccidents ofthe sea

1. %ac5 of provisionsdue tonegligence tocarryaccording tousage andcustomsheshipowner orship agent isliable in caseof unlawfularrival understress. =utthey shall notbe liable forthe damagescaused byreason of a

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disabling itto navigate."Art. 1;#

. )efect o f vessel due toimproperrepair< and$. Ealice,

negligence,lac5 of foresight ors5ill of captain. "Art.2:#

lawful arrival."Art. 21#

+t is the duty of the captain to continue the

voyage without delay after the cause of thearrival under stress has ceased failing in suchduty renders him liable. ?owever, in case thecause has been ris5 of enemies, there mustrst be an assembly before departure. "Art.2(#3teps@

1. Captain should determine during the

voyage if there is well founded fearof sei0ure, privateers and other validgroundshe captain shall have the decidingvotehe agreement shall be drafted andthe proper minutes shall be signedand entered in the log boo5one time between moment

when ris5 of collision begins and moment itbecomes a practical certainty. +t is in this period where conduct of the

vessels is primordial. +t is in this 0one thatvessels must strictly observe nautical rules,unless a departure therefrom becomesnecessary to avoid imminent danger.. Third >one time when collision is certainand time of impact.An error in this 0one would no longer be

legally conseuential.6rror in 6?treis* sudden movement made

by a faultless vessel during the third 0one ofcollision with another vessel which is at faultduring the 2nd 0one. Bven if such suddenmovement is wrong, no responsibility will fall

on said faultless vessel. "8rrutia and Co. v.=aco 4iver Plantation Co., 2 P?+% 2#

Cae Co-e'ed B0 Coll!!on and All!!on$. 1ne /essel at )aultFessel at fault is liable for damage caused to

innocent vessel as well as damages su-eredby the owners of cargo of both vessels. "Art.2#2.

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shippers of both vessels may go against theshipowners who will be solidarily liable. "Art.2#

;octrine o) 8nscrutable 3ault +n case

of collision where it cannot be

determined which between the twovessels was at fault, both vessels beartheir respective damage, but both shouldbe solidarily liable for damage to thecargo of both vessels.

#. Third /essel at )ault>he third vessel will be liable for losses and

damages. "Art. 1#. 3ortuitous e/ent)orce aBeure /o liability. Bach bears its own loss. "Art.

:#

>he doctrine of res ipsa louitur applies in

case a moving vessel stri5es a stationaryobject, such as a bridge post, doc5, ornavigational aid. "!ar Bastern 3hipping v. CA,

%u0on 3tevedoring vs. CA#

Bven if the cause of action against the

common carrier is based on uasi*delict, thedefense of due diligence in the selection andsupervision of employees is unavailing in caseof a maritime tort resulting in collision. +t isnot a civil tort governed by the Civil Code buta maritime one governed by Arts. 2*; ofthe Code of Commerce. "Eanila 3teamship vs.+nsa Abdulhaman#

)octrine of %ast Clear Chance and 4ule on

Contributory /egligence cannot be applied incollision cases because of Art.2 of the Codeof Commerce. (Notes and Cases on the Law

on Transportation and Public Utilities, Aquino,T. & ernando, R.P. !""# ed.

MARITIME PROTEST Condition precedent or prereuisite to

recovery of damages arising from collisionsand other maritime accidents.+t is a written statement made under oath by

the captain of a vessel after the occurrence ofan accident or disaster in which the vessel orcargo is lost or damaged, with respect to thecircumstances attending such occurrence, forthe purpose of recovering losses anddamages.B7cuses for not ling protest@ 1# where the

interested person is not on board the vesselhe unloadingmust be done by the arrastre operator, whichwill then deliver the cargo to the importer.(Coercial Law Re/iew, C. +illanue/a, !""#ed. Na$'e of =!ne% +t is a public utility,

discharging functions which are heavilyinvested with public interest.L!a=!l!$0%1. 3imilar to a warehouseman "%ua ian v.

Eanila 4ailroad#2. 3imilar to a common carrier "/orthern

Eotors v. Prince %ine#. 3olidary liability with the common carrier

No$e%+n order that the arrastre operator maybe held liable, the consignee must prove thatthe damage was due to the negligence andwhile the goods are in the custody of thearrastre operator. "?artford !ire +nsurance v.B. 4a0on, +nc.#

STE(EDORING SER(ICE>he carriage of goods from the warehouse

or pier to the holds of the vessel. "Chief of3ta- vs. C+4#

As understood in the port business, the termconsists of the handling of cargo from thehold of the ship to the doc5, in case of pier*side unloading< or to a barge, in case ofunloading at sea. "Anglo*!il >rading Corp. vs.%a0aro#>he loading on the ship of outgoing cargo

is also part of stevedoring wor5. "+bid.#

CONTAINERIHATION/ SAID,TO,CONTAINJ/ S)IPPER?S LOAD ANDCO9NTJ SYSTEM 3ystem whereby the shipper loads his

cargoes in a specially designed container,seals the container and delivers it to thecarrier for transportation. >he carrier does not

participate in the counting of the

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merchandise for loading into the container,the actual loading, and the sealing of thecontainer. "83 %ines v. Comm. 6f Customs,+C>3+ v. Prudential Guarantee# >he matter of uantity, description and

conditions of the cargo inside the container isthe sole responsibility of the shipper, unlessthere is stipulation to the contrary. "83 %inesvs. Comm. 6f Customs, 4eyma =ro5erage v.Phil. ?ome Assurance#

No$e%+n order to attribute to the carrier anydamage to the shipment that may be found,inspection o) the oods should be done atpier%side. "=an5ers vs. CA#

III* CARRIAGE OF GOODS BY SEAACT/COGSA .C*A* No* 752

APPLICABILITY>he transportation must be@

1. &ater'maritime transportationhe ling of a notice of claim is not acondition precedent.

PRESCRIPTI(E PERIOD Action for loss or damage to the cargo

should be brought within one year after@a. )elivery of the goods "delivered but

damaged goods#< orb. >he date when the goods should

have been delivered "non*delivery#."3ec. IJ#

K%oss or )amageL as applied to the C6G3A

contemplates a situation where no delivery at

all was made by the shipper of the goods

because the same had perished, gone out ofcommerce, or disappeared in such a way thattheir e7istence is un5nown or they cannot berecovered. >hus, it is inapplicable in case ofmisdelivery or conversion. "Ang vs. American

3teamship Agencies +nc.# and damage arisingfrom delay or late delivery "Eitsui 6.3.. %ines%td. vs. CA#. +n such instance the, Civil Coderules on prescription shall apply.

>he one*year prescriptive period is

suspended by@1. >he e7press agreement of the

parties "8niversal 3hipping %ines,+nc. vs. +AC, 1 3C4A 1:#

2. >he ling of an action in court until itis dismissed. "3tevens M Co. vs./ordeutscher %loyd, 3C4A 1:#

>he one*year period shall run from delivery

of the last pac5age and is not suspended by

e7trajudicial demand. ")ole Phils.,+nc. vs.Earitime Co.,1$ 3C4A 11#

>he one*year period shall run from delivery

to the arrastre operator and not to theconsignee. "8nion Carbide Phils, +nc. vs.Eanila 4ailroad Co.,3C4A (;#

>he insurer e7ercising its right of

subrogation is bound by the one*yearprescriptive period. ?owever, it does notapply to the claim against the insurer for theinsurance proceeds. "!il. Eerchants +ns. Co.vs. Alejandro< Eayer 3teel Pipe Corp. vs. CA#

I(* WARSAW CON(ENTION OF 36 .WC2

P9RPOSE% >o protect the emerging airtransportation industry and to secure theuniformity of recovery by the passengers.APPLICABILITY>he transportation must be@

1. +nternational transportationhe &C shall also apply to fortuitous

transportation by aircraft performed by an airtransportation enterprise.

8nternational transportation * any

transportation in which the place of departureand the place of destination are situatedeither@

1. &ithin the territories of two ?ighContracting Parties regardless of whetheror not there be a brea5 in thetransportation or transshipment, or2. &ithin the territory of a single ?ighContracting Party, if there is an agreedstopping place within a territory subjectto the sovereignty, mandate or authorityof another power, even though thatpower is not a party to the Convention."Kround tripL, Am. Dur.#

>ransportation to be performed by several

successive air carriers shall be deemed to be

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one undivided transportation, if it has beenregarded by the parties as a single operation,whether it has been agreed upon under theform of a single contract or of a series ofcontracts, and it shall not lose its

international character merely because onecontract or a series of contracts is to beperformed entirely within a territory subjectto the sovereignty, su0erainty, mandate, orauthority of the same ?igh Contracting Party."Art. 1 3ec.#

W)EN INAPPLICABLE1. &hen public policy is contradictedransportation documents

a. Passenger tic5etb. =aggage chec5

c. Air way bill2. %iability of the carrier for damagesa. )eath or injury to passengersb. %oss or damage to baggage or goodsc. )elay

. 3uccessive carrier agreement$. Durisdiction(. Combined transportation agreement

PASSENGERTIC@ET

BAGGAGEC)EC@

AIRWAYBILL

Passenger Chec5ed*inbaggage

Goods to beshipped

LIABILITY OF CARRIER FOR DAMAGES1. )eath or injury of a passenger if the

accident causing it too5 place on board theaircraft or in the course of its operations ofembar5ing or disembar5ing< "Art. 1#2. )estruction, loss or damage to anybaggage or goods, if it too5 place during theKtransportation by airL< "Art. 1# and Transportation b4 air >he period during

which the baggage or goods are in the chargeof the carrier, whether in an airport or onboard an aircraft, or, in case of a landingoutside an airport, in any place whatsoever.

+t includes any transportation by land orwater outside an airport if such ta5es place inthe performance of a contract fortransportation by air, for the purpose ofloading, delivery, or transshipment.

. )elay in the transportation of passengers,baggage or goods."Art. 1;#

No$e@ >he ?ague Protocol amended the &Cby removing the provision that if the airlinetoo5 all necessary steps to avoid the damage,it could e7culpate itself completely "Art.2:"1##. "Alitalia vs. +AC, 1;2 3C4A ;#

LIMIT OF LIABILITY .A'$* 66K a a+ended=0 Ga$e+ala P'o$o#olK 33 Al!$al!a -*IAC23* Paenge'56N6RAL RUL6:U1::,::: per passenger

67C6PT81N:Agreement to a higher limit

6* C&e#ed,!n =aggage56N6RAL RUL6:U2: per 5ilogram

67C6PT81N:+n case of special declaration of

value and payment of a supplementary sumby consignor, carrier is liable to not more thanthe declared sum unless it proves the sum isgreater than actual value.* )and,#a''!ed =aggageU1:::'passenger

4* Good $o =e &!11ed56N6RAL RUL6:U2: per 5ilogram

67C6PT81N:+n case of special declaration of

value and payment of a supplementary sumby consignor, carrier is liable to not more thanthe declared sum unless it proves the sum isgreater than actual value.

An agreement relieving the carrier from

liability or 7ing a lower limit is null and void.

"Art. 2#Carrier is not entitled to the foregoing limit

if the damage is caused by willful misconductor default on its part. "Art. 2(#

>hus, the &C does not operate as an

e7clusive enumeration of the instances of anabsolute limit of the e7tent of liability. +t doesnot preclude the application of the Civil Codeand other pertinent local laws. +t does notregulate or e7clude liability for other breachesof contract by the carrier, or misconduct of itsemployees, or for some particular ore7ceptional type of damage. "Alitalia vs. CA#

+n PanAm v. +AC, the &C was applied as

regards the limitation on the carriers liability,there being a simple loss of baggage withoutany improper conduct on the part of theo9cials or employees of the airline or otherspecial injury sustained by the passenger.

+n %E 4oyal v. >uller, the &C has

invariably been held inapplicable, or as notrestrictive of the carriers liability, wherethere was satisfactory evidence of malice orbad faith attributable to its o9cers andemployees. "Alitalia vs. +AC#

ACTION FOR DAMAGES1. /otice of claimA written complaint must me made within@

a. days from receipt of baggageb. days from receipt of goodsc. +n case of delay, 1$ days from

receipt of baggage'goods >he complaint is a condition precedent.

&ithout the complaint, the action is barrede7cept in case of fraud on the part of thecarrier. "Art. 2#

2. Prescriptive periodAction must be led within 2 years from@

a. date of arrival at the destinationb. date of e7pected arrival

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c. date on which the transportationstopped. "Art. 2;#

+n 8nited Airlines vs. 8y the two*year

prescriptive period was not applied where the

airline employed delaying tactics.

R9LE IN CASE OF (ARIO9S S9CCESSI(ECARRIERS1. Carriage of passengers56N6RAL RUL6:Action is led only against

the carrier in which the accident or delayoccurred.67C6PT81N:Agreement or contract whereby

the rst carrier assumed liability for the wholejourney.2. Carriage of baggage or goods

a. Passenger or consignor can le anaction against the rst carrier andthe carrier in which the damageoccurred

b. Passenger or consignee can le anaction against the last carrier andthe carrier in which the damageoccurred.

>hese carriers are jointly and severally

liable. "Art. :#

A contract of international carriage by air,

although performed by di-erent carriersunder a series of airline tic5ets constitutes asingle operation. Eembers of the+nternational Air >ransportation Association"+A>A# are under a general pool partnershipagreement wherein they act as agent of eachother in the issuance of tic5ets to contractedpassengers to boost tic5et sales worldwide

and at the same time provide passengerseasy access to airlines which are otherwiseinaccessible in some parts of the world."American Airlines vs. CA#

8nder a general pool partnership

agreement, the tic5et*issuing airline is theprincipal in a contract of carriage while theendorsee*airline is the agent. >he obligationof the former remained and did not ceaseeven when the breach occurred not on itsown Night but on that of another airline whichhad underta5en to carry the passengers toone of their destinations. "China Airlines vs.Chio5#

he forum of action provided in Art. 2"1#

is a matter of jurisdiction rather than ofvenue. "3antos +++ vs. /orthwest< 2A C.D.3.#

(* SAL(AGE LAW .A#$ No* 67372

SAL(AGETwo #on#e1$%1. 3ervices one person renders to the ownerof a ship or goods, by his own labor,preserving the goods or the ship which theowner or those entrusted with the care ofthem have either abandoned in distress atsea, or are unable to protect or secure.2. Compensation allowed to persons bywhose voluntary assistance a ship at sea orher cargo or both have been saved in wholeor in part from impending sea peril, or suchproperty recovered from actual peril or loss,as in cases of shipwrec5, derelict orrecapture.Re;!!$e%

1. Falid object of salvagehe reward is 7ed by the 4>C judge in

the absence of agreement or where thelatter is e7cessive. "3ec. ;#

2. >he reward should constitute a su9cientcompensation for the outlay and e-ort ofthe salvors and should be liberal enoughto o-er an inducement to others torender services in similar emergencies inthe future.

. +f sold "no claim being made within months from publication#, the proceeds,after deducting e7penses and thesalvage claim, shall go to the owner< ifthe latter does not claim it within years,(:S of the said proceeds shall go to thesalvors, who shall divide it euitably, andthe other half to the government. "3ecs.11*12#

$. +f a vessel is the salvor, the reward shallbe distributed as follows@a. (:S to the shipownerhe uestion depends onsuch factors as the e7tent of services,whether such person or company has heldhimself or itself out as ready to serve thepublic or a portion of the public generally."%u0on 3tevedoring vs. P3C#

NOTE@ >he Public 3ervice Commissioncreated under the Public 3ervice %aw hasalready been abolished under P.). /o. 1 andother issuances. +t has been replaced by thefollowing government agencies@ %>6< %>!4=6< =6B< />C< /BA< B4=< /&4C< CA=< andE+A.

CERTIFICATE OFP9BLIC

CON(ENIENCE.CPC2

CERTIFICATE OFP9BLICCON(ENIENCEAND NECESSITY.CPCN2

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An authori0ationissued by theappropriategovernment agencyfor the operation of

public services forwhich no franchise,either municipal orlegislative, isreuired by law,e.g., commoncarriers.

An authori0ationissued by theappropriategovernment agencyfor the operation of

public service forwhich a priorfranchise is reuiredby law< e.g.telephone and otherservices.

A CPC or a CPC/ constitutes neither a

franchise nor a contract, confers no propertyright, and is a mere license or a privilege. >heholder of said certicate does not acuire aproperty right in the route covered thereby./or does it confer upon the holder anyproprietary right or interest or franchise in thepublic highways. 4evocation of this certicatedeprives him of no vested right. /ew andadditional burdens, alteration of thecerticate, or even revocation or annulmentthereof is reserved to the 3tate. "%uue vs.Fillegas, : 3C4A $:#

+t is a KpropertyL and has a considerable

value and can be the subject of sale orattachment. "Cogeo*Cubao 6perators and)rivers Assn. vs. CA, 2: 3C4A $,4aymundo vs. %uneta Eotor Co.#

RE89REMENTS FOR GRANTING CPC ORCPCN

1. Applicant must be a citi0en of thePhilippines or a corporation or entity :Sof the capital of which is owned by suchciti0enshe transfer, sale, lease or assignment ofthe privilege granted is valid between thecontracting parties but not upon the

public or third persons. "Gelisan vs.Alday, 1($ 3C4A #

2. >he registered owner is primarily liablefor all the conseuences Nowing from theoperations of the carrier. >he public has the right to assume

that the registered owner is the actual orlawful owner thereof. +t would be verydi9cult and often impossible, as apractical matter, for the public to enforcetheir rights of action that they may havefor injuries inNicted by the vehicle i) the4should be required to pro/e who theactual owner is. "=enedicto vs. +AC, 13C4A ($#

. >he thrust of the law in enjoining the5abit system is to identify the personupon whom responsibility may be 7edwith the end in view of protecting theriding public "%im vs. CA 3C4A ;$#.

$. >he registered owner cannot recoverfrom the actual owner and the latter

cannot obtain transfer of the vehicle tohimself, both being in pari delicto. ">ejaEar5eting vs. +AC#

(. !or the better protection of the public,both the registered owner and the actualowner are jointly and severally liable withthe driver. "Oamboanga >ransportationCo. vs. CA#

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