transpo guide & review

8/13/2019 Transpo guide & review

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San Beda College of Law54

MEMORY AID IN COMMERCIAL LAW

TRANSPORTATION LAWS

CONTRACT OF TRANSPORTATION/CARRIAGE

A contract whereby a person, natural or juridical, obligates to transport persons,

goods, or both, from one place to another, byland, air or water, for a price orcompensation.

Cla!f!"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 thepublic interest.

COMMON CARRIER

Persons, corporations, firms or associationsengaged in the business of carrying ortransporting passengers or goods or both, byland, water, or air, for compensation, offeringtheir services to the public "Art. 12, CivilCode#.

Art. 12 of the -ew Civil Code avoids anydistinction 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 offeringtransportation service on a regular orscheduled basis and one offering such serviceon an occasional, episodic or unscheduled

basis.-either does the law distinguish between

a carrier offering its services to the generalpublic that is the general community orpopulation and one who offers 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 Certificate ofPublic Convenience ")e Guman vs. CA, 1/0CA /12#.

+t ma3es no distinction as to the means oftransporting, 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#

4ne is a common carrier even if he has nofi5ed and publicly 3nown route, maintains noterminals, and issues no tic3ets "Asia%ighterage hipping, +nc. vs. CA#.

C%a&a"#e&!#!"$1. 6nderta3es to carry for all people

indifferently and thus is liable forrefusal without sufficient reason"%astimoso vs. )oliente, 4ctober 27,18/1#9

2. Cannot lawfully decline to accept aparticular class of goods for carriageto the prejudice of the traffic in thesegoods9

. -o monopoly is favored ":atangas ;rans. vs. 4rlanes, (2 P<+% $((#9

$. Provides public convenience.

PRI'ATE CARRIER 4ne which, without being engaged in thebusiness of carrying as a public employment,underta3es to deliver goods or passengers forcompensation. "<ome +nsurance Co. vs.American teamship Agency, 2 CA 2$#

TESTS W(ET(ER CARRIER IS COMMONOR PRI'ATE$

;he C in !irst Philippine +ndustrialCorporation vs. CA "188(# 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 casualoccupation9

2. +t must underta3e to carry goods ofthe 3ind to which its business inconfined9

. +t must underta3e to carry by themethod by which his business isconducted and over its establishedroads9 and

$. ;he transportation must be for hire.

+n -ational teel Corp. vs. CA "188# the Cheld that the true test of a common carrier isthe carriage of goods or passengers providedit has space for all who opt to availthemselves of its transportation for a fee.

COMMON CARRIER PRI'ATECARRIER

1. As to availability

<olds himself out forall peopleindiscriminately

Contracts withparticular individualsor groups only

2. As to re>uired diligence

?5traordinarydiligence is re>uired

4rdinary diligence isre>uired

. As to regulation

ubject to tateregulation

-ot subject to tateregulation

$. tipulation limiting liability

Parties may not agreeon limiting thecarrier@s liabilitye5cept whenprovided by law

Parties may limit thecarrier@s liability,provided it is notcontrary to law,morals or goodcustoms

(. ?5empting circumstance

Prove e5traordinarydiligence and Art.1, -CC

caso fortuito, Art.11$ -CC

/.Presumption of negligence

;here is apresumption of faultor negligence

-o presumption offault or negligence

.Governing law

COMMERCIAL LAW COMMITTEE C<A+P?4-= Garny %uisa Alegre A;. C<A+P?4-= ayson 4@ amos ?)P= :eatri5 +. amos 6:?C; <?A)=

Barichelle )e era "-egotiable +nstruments %aw#9 ose !ernando %lave "+nsurance#9 Aldrich )el osario";ransportation %aws#9hirley Bae ;abangcura, :on incent Agustin "Corporation %aw#9 Darl teven Co "pecial %aws#9 ohn %emuelGatdula ":an3ing %aws#9 obespierre C6 "%aw on +ntellectual Property#





%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. $8, 8,

(*$, (07, 07/*0$(# * suppletory

B) In#e&na#!onal/fo&e!gn/o,e&ea-Fo&e!gn "o.n#& #o P%!l!00!ne1

Applicable to &ater'maritime and Airtransportation

;he law of the country of destinationgenerally applies.

1. Civil Code * primary2. Code of Commerce * suppletory. 4thers * suppletory

a. &ater'maritime= Carriage ofGoods by ea Act "C4GA#

b. Air= &arsaw Convention

I) NEW CI'IL CODE-A&#) 23+23661

RE78IREMENT OF E9TRAORDINARYDILIGENCE

endition of service with the greatest s3illand utmost foresight. ")avao tevedore Co.v. !ernande#

Rationale:1. !rom the nature of the business and

for reasons of public policy "Art.1#

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

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

A common carrier is not an absolute insurerof all ris3s of travel.

CO'ERAGE1. igilance over goods "Arts. 1$*1($#9and2. afety of passengers "Arts. 1((*1/#.

PASSENGER

A person who has entered into a contract ofcarriage, e5press or implied, with the carrier.

;hey are entitled to e5traordinary diligencefrom the common carrier.

;he following are not consideredpassengers, and are entitled to ordinarydiligence only=

a. 4ne who has not yet boarded anypart of a vehicle regardless ofwhether or not he has purchased atic3et9

b. 4ne who remains on a carrier for anunreasonable length of time after hehas been afforded every safeopportunity to alight9

c. 4ne who has boarded by fraud,stealth, or deceit9

d. 4ne who attempts to board a

moving vehicle, although he has a

tic3et, unless the attempt be withthe 3nowledge and consent of thecarrier9

e. 4ne who has boarded a wrongvehicle, has been properly informed

of such fact, and on alighting, isinjured by the carrier9f. +nvited guests and accommodation

passengers. "%ara vs. alencia#g. 4ne who rides any part of the

vehicle which is unsuitable ordangerous or which he 3nows is notdesigned or intended for passengers.

DEFENSES OF A COMMON CARRIER INT(E CARRIAGE OF GOODS1. CA4 !4;6+;4'!4C? BA?6?

Re:.!!#e$a. Bust be the pro5imate and onlycause of the lossb. ?5ercise of due diligence to prevent

or minimie the loss before, during orafter the occurrence of the disaster "Art.18#c. Carrier has not negligently incurredin delay in transporting the goods "Art.1$7#

!ire is not considered a natural disaster orcalamity as it arises almost invariably fromsome act of man. "?astern hipping %ines +nc.vs. +AC#

Bechanical defects are not force majeure ifthe same was discoverable by regular andade>uate inspections. (Notes and Cases onthe Law on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p.$!"%$!!

2. AC; 4! P6:%+C ?-?BE

Re:.!!#e$a. Bust be the pro5imate and onlycause of the lossb. ?5ercise of due diligence to preventor minimie the loss before, during orafter the act causing the loss,deterioration or destruction of the goods"Art. 18#

. -?G%+G?-C? 4! ;<? <+PP? 4 4&-?a. ole and pro5imate cause= absolute

defenseb. Contributory= partial defense. "Art.

1$1#

$. C<AAC;? 4! ;<? G44) 4 )?!?C;+- ;<? PACD+-G 4 +- ;<? C4-;A+-?

?ven if the damage should be caused by theinherent defect'character of the goods, thecommon carrier must e5ercise due diligenceto forestall or lessen the loss. "Art. 1$2#

;he carrier which, 3nowing the fact ofimproper pac3ing of the goods upon ordinaryobservation, still accepts the goodsnotwithstanding such condition, is notrelieved of liability or loss or injury resultingtherefrom. "outhern %ines, +nc. v. CA, $ CA2(0#

(. 4)? 4 AC; 4! P6:%+C A6;<4+;E







aid public authority must have the powerto issue the order "Art. 1$#. Conse>uently,where the officer acts without legal process,the common carrier will be held liable."Ganon v. CA 1/1 CA /$/#

)iligence in the selection and supervisionof employees under Article 2107 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. Banila?lectric Co., (2 Phil 877#

LIABILITY OF A COMMON CARRIER FORDEAT( OR IN;8RIES TO PASSENGERSD8E TO ACTS OF ITS EMPLOYEES ANDOT(ER PASSENGERS OR STRANGERS

FOR ACTS OF ITSEMPLOYEES

FOR ACTS OFOT(ER

PASSENGERS ORSTRANGERS

e>uired diligence and defense

?5traordinarydiligence

4rdinary diligence

-ature of liability

;ort9 however, ;he employee mustbe on duty at thetime of the act."Baranan v. Pere#

-ot absolute9 limitedby Art. 1/

;he carrier is liable when its personnelallowed a passenger to drive the vehiclecausing it to collide with another vehicleresulting to the injuries suffered by the otherpassengers. "B vs. :allesteros, 1/ CA/$1#

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Pa&#!e1. Common carrier2. hipper. Consignee

1. Common carrier2. Passenger

Ca.e of l!a<!l!#)elay in delivery, loss, destruction, ordeterioration of the goods

)eath or injury to the passengers

D.&a#!on of l!a<!l!#

!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 effect even whenthey 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 thetime 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. 10#

)elivery of goods to the custom authorities isnot delivery to the consignee. "%u )o v.

:inamira, 171 Phil 127#

;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. "%;A v. -avidad, F277#

All persons who remain on the premiseswithin a reasonable time after leaving theconveyance are to be deemed passengers, andwhat is a reasonable time or a reasonable delaywithin this rule is to be determined from all thecircumstances, and includes a reasonable timeto see after his baggage and prepare for hisdeparture. "%a Ballorca v. CA, 1 CA 8 9Abioti hipping Corporation v. CA, 18 CA8(#

+t is the duty of common carriers ofpassengers to stop their conveyances areasonable length of time in order to affordpassengers an opportunity to enter, and they

are liable for injuries suffered from the suddenstarting up or jer3ing of their conveyanceswhile doing so. ;he duty which the carrier ofpassengers owes to its patrons e5tends topersons boarding the cars as well as to thosealighting therefrom ")angwa ;rans Co., +nc. vs.CA 272 CA ($#.







P&e.*0#!on of negl!gen"e

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

the 3nowledge of the carrier and its employees."Birasol v. )ollar, ( P<+% 12$#

Bere proof of delivery of goods to a carrier ingood order and the subse>uent arrival of thesame goods at the place of destination in badorder ma3es for a prima facie case against thecarrier. "Coastwise %ighterage Corp. v. CA, 2$(CA 8/#

Art.1(( Civil Codeeason= ;he contract between the passengerand the carrier imposes on the latter the duty

to transport the passenger safely9 hence theburden of e5plaining should fall on the carrier.

Defene

1. 4rdinary circumstance= ?5ercise ofe5traordinary diligence "Art. 1(#

2. pecial circumstances=a. !lood, storm, earth>ua3e,

lighting, or other natural disasteror calamity "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 pac3ing or in thecontainers

e. 4rder or act of competent publicauthority "Art. 1$#

1. ?5ercise of e5traordinary diligence"Art. 1(/#

2. Caso fortuito

'al!d #!0.la#!on

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

a# +n writing, signed by the shipper orowner9

b# upported by a valuable considerationother than the service rendered by thecarriers9 and

c# easonable, just and not contrary topublic policy. "Art. 1$$#

2. !i5ed amount of liability= A contract fi5ing thesum to be recovered by the owner or shipper forthe loss, destruction or deterioration of thegoods, if it is reasonable and just under thecircumstances and has been fairly and freelyagreed upon. "Art. 1(7#. %imited liability for delay= An agreementlimiting the common carrier@s liability for delayon account of stri3es or riots "Art. 1$0#$. tipulation limiting liability to the value of thegoods appearing in the bill of lading, unless theshipper or owner declares a greater value. "Art.1$8#

;he diligence re>uired in the carriage of thegoods may be reduced by only one degree, frome5traordinary to ordinary diligence or diligenceof a good father of a family. "Art. 1$$, Art.1$(, no. $#

tipulation limiting liability when a passenger iscarried gratuitously, but not for willful acts orgross negligence. "Art. 1(0#

'o!d #!0.la#!on$. ;hat the carrier shall e5ercise a degree ofdiligence less than that of a good father of afamily over the movable transported9(. ;hat the carrier shall not be responsible

for the acts or omissions of his or its

)ispensing with or lessening the e5traordinaryresponsibility of a common carrier for thesafety of passengers imposed by law by

stipulation, by posting of notices, by





San Beda College of Law5=


employees9/. ;hat the carrier@s liability for actscommitted by thieves or robbers who do notact with grave or irresistible threat, violence orforce is dispensed with or diminished9

. ;hat the carrier is not responsible for theloss, destruction or deterioration of the goodson account of the defective condition of thecar, vehicle, ship or other e>uipment used inthe contract of carriage. "Art. 1$(#

statements on tic3ets or otherwise. "Art. 1(#





R8LES ON PASSENGERS> BAGGAGE

IN T(E C8STODY OFT(E PASSENGERS-(AND+CARRIED1

IN T(E C8STODYOF T(E COMMON

CARRIER-C(EC?ED+IN1

Legal na#.&e of #%e <aggage-ecessary deposit Considered as

HgoodsI

Re:.!&ed d!l!gen"e < #%e "o**on"a&&!e&

)iligence of adepositary "ordinarydiligence#

?5traordinarydiligence

A00l!"a<le &.leArts. 1880 and 2777*277

Arts. 1*1(

CONC8RRING CA8SES OF ACTIONARISING FROM T(E NEGLIGENT ACT OFT(E COMMON CARRIER1. Culpa contractual "breach of contract#

4nly the carrier is primarily liable and notthe driver, because there is no privitybetween the driver and the passenger.

:asis= Art.1(8, -CC.

-o defense of due diligence in the selectionand supervision of employees.

2. Culpa aquiliana ">uasi*delict#

;he carrier and driver are solidarily liable as joint tortfeasors.

:asis= Art. 2107, -CC.

)efense of due diligence in the selectionand supervision of employees is available.?5ception= maritime tort resulting in collision."'ee notes on Collision#

. Culpa criinal "criminal negligence#

;he driver is primarily liable. ;he carrier issubsidiarily liable only if the driver isconvicted and declared insolvent.

:asis= Art. 177, PC.

+n case of injury to a passenger due to thenegligence 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 ma3es no differencethat 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 TOP8BLIC POLICY

'ALID @ENFORCEABLE

1. 4ne e5empting thecarrier from any andall liability for loss ordamage occasioned byits own negligence.2. An un>ualifiedlimitation of liability toan agreed valuation.

1. 4ne limiting theliability of the carrierto an agreedvaluation, unless theshipper declares ahigher value andpays a higher rate offreight"<.?. <eacoc3Company vs.

Bacondray JCompany +nc.#

<owever, the carrier cannot limit its liabilityfor injury to, or loss of, goods shipped where

such injury or loss was caused by its ownnegligence."hewaram vs. PA%, 1 CA /7/#

SPECIAL R8LES ON LIABILITES OFAIRLINE CARRIERS1. +n case of flight diversion due to badweather or other circumstances beyond thepilot@s control, the relation between thecarrier and the passenger continues until thelatter has been landed at the port ofdestination and has left the carrier@spremises. ;he carrier should necessarilye5ercise e5traordinary diligence insafeguarding the comfort, convenience andsafety of its stranded passengers until they

have reached their final destination."Philippine Airlines vs. CA, 22/ CA $2#2. ?ven where overboo3ing 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 wereconfirmed passengers. "Kalamea vs. CA, 220CA 2#. An open*dated tic3et constitutes acomplete contract between the carrier andpassenger. <ence, the airline company isliable if it refused to confirm a passenger@sflight reservation. "ingson vs. CA, 202 CA1$8#

$. An airline company which issued aconfirmed tic3et to a passenger coveringsuccessive trips on different airlines can beheld liable for damages occasioned byHbumping offI by one of the successiveairlines. "%ufthansa German Airlines vs. CA,20 CA 287#(. An airline tic3et providing that carriage bysuccessive air carriers is to be regarded as aHsingle operationI is to ma3e the issuingcarrier liable for the tortuous conduct of theother carrier. A printed provision in the tic3etlimiting liability only to its own conduct is notenough to rebut that liability. "D%B oyal)utch Airlines vs. CA, /( CA 2#

II) CODE OF COMMERCE

A) O'ERLAND TRANSPORTATION

-A&#) 4+31

A00l!"a<!l!#1. )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. 4bligations of the carrier



. ight of abandonment$. -otice of damage(. Combined carrier agreement

BILL OF LADING

;he written ac3nowledgment of receipt ofgoods and agreement to transport them to a

specific place to a person named or to hisorder.

Rules: 1. +t is not indispensable for the creation of acontract of carriage. "Compania Baritima vs.+nsurance Company of -orth America, 12CA 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 ma3ing aclaim for loss on the basis of said bill oflading. "ea*%and ervices +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 fulfillment of thatstipulation. "Art. 111 "2#, "Bendoa vs. PA%+nc.#

(. Acceptance of the bill of lading withoutdissent raises the presumption that all theterms therein where brought to the3nowledge of the shipper and agreed to byhim and, in the absence of fraud or mista3e9he is estopped from thereafter denying thathe assented to such terms. (Notes and Caseson the Law on Transportation and PublicUtilities, Aquino, T. & ernando, R.P. !""# ed. p.!0$

?!nd$1. 1n board * issued when the goods

have been actually placed aboard theship with very reasonable e5pectationthat the shipment is as good as on its

way.2. Recei/ed * one in which it is stated that

the goods have been received forshipment with or without specifyingthe vessel by which the goods are tobe shipped.

. Neotiable * one in which it is statedthat the goods referred to therein willbe delivered to the bearer or to theorder of any person named therein.

$. Non%neotiable * 4ne in which it isstated that the goods referred totherein will be delivered to a specifiedperson.

(. Clean 2 4ne which does not indicateany defect in the goods.

/. 3oul L 4ne which contains a notation

thereon indicating that the goodscovered by it are in bad condition.

. 'pent L 4ne which covers goods thatalready have been delivered by the

carrier without a surrender of a signedcopy of the bill.0. Throuh L 4ne issued by the carrier

who is obliged to use the facilities ofother carriers as well as his ownfacilities for the purpose oftransporting the goods from the city ofthe seller to the city of the buyer,which bill of lading is honored by thesecond and other interested carrierswho do not issue their own bills.

8. Custod4 L 4ne wherein the goods arealready received by the carrier but thevessel indicated therein has not yetarrived in the port.

17. Port L 4ne which is issued by the

carrier to whom the goods have beendelivered, and the vessel indicated inthe bill of lading by which the goodsare to be shipped is already in the portwhere the goods are held for shipment.

F.n"#!on$1. :est evidence of the e5istence of the

contract of carriage of cargo "Art. (#2. )ocument of title. eceipt of cargo $. Contract to transport and deliver goods

as stipulated(. ymbol of the goods

OBLIGATIONS OF T(E CARRIERA) D.# #o a""e0# #%e good

56N6RAL RUL6: A common carrier cannotordinarily refuse to carry a particular class ofgoods.

67C6PT81N: !or some sufficient reason thediscrimination against the traffic in suchgoods is reasonable and necessary. "!ishervs. Eangco teamship Co. 1 Phil 1#.

+nstances when the carrier may validlyrefuse to accept the goods include the ff=1.# Goods sought to be transported aredangerous objects, or substances includingdynamite and other e5plosives2.# Goods are unfit for transportation.# Acceptance would result in overloading$.# Contrabands or illegal goods(.# Goods are injurious to health

/.# Goods will be e5posed to untoward dangerli3e flood, capture by enemies and the li3e.# Goods li3e livestoc3 will be e5posed todisease0.# tri3e8.# !ailure to tender goods on time. (Notesand Cases on the Law on Transportation andPublic Utilities, Aquino, T. & ernando, R.P.!""# ed. p.09

+n case of carriage by railway, the carrier ise5empted from liability if carriage is insistedupon by the shipper, provided its objectionsare stated in the bill of lading.

<owever, when a common carrier acceptscargo for shipment for valuable consideration,it ta3es the ris3 of delivering it in good



/. Charter party. %oans on bottomry and respondentia0. Accidents in maritime commerce

MARITIME/ADMIRALTY LAW

+t is the system of laws which particularlyrelates to the affairs 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.!#

Baritime laws apply only to maritime tradeand sea voyages. (Pandect o) CoercialLaw and *urisprudence, *ustice *ose +itu,$-- ed.

Arrastre service is not maritime incharacter. +t refers to a contract for theunloading of goods from a vessel. "+C;+ vs.

Prudential Guarantee, 27 CA 2$$#

C(ARACTERISTICS OF MARITIMETRANSACTION1. Real * similar to transactions over realproperty with respect to effectivity againstthird persons which is done throughregistration. "ubiso vs. ivera, 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 freightmoney9 and 2# the right to retain the cargoand embargo and detention of the vessel"%uon tevedoring Corp v. CA, 1(/ CA1/8#92. 4pothecar4 * the liability of the owner of

the value of the vessel is limited to the vesselitself (;octrine o) Liited Liabilit4.

;he real and hypothecary nature ofmaritime law simply means that the liabilityof the carrier in connection with lossesrelated to maritime contracts is confined tothe vessel, which stands as the guaranty fortheir settlement. "Aboiti hipping Corp. vs.General Accident !ire and %ife AssuranceCorp. 21 CA (8#.

MERC(ANT 'ESSEL

essel engaged in maritime commerce,whether foreign or otherwise. (<ar Re/iew=aterials in Coercial Law, *ore =ira/ite,

!""! ed. Constitutes property which may be ac>uiredand transferred by any of the meansrecognied by law. ;hey shall continue to beconsidered as personal property. "Arts. (,(0(#

;hey are susceptible to aritie liens suchas for the repair, e>uipping 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. "hip Bortgage )ecree of 180#

MARITIME LIEN

+t constitutes a present right of property inthe ship, a jus in re, to be afterward enforced

in admiralty by process in rem. "P-: vs. CA, CA 01#

+f the maritime lien arose prior to therecording of a preferred mortgage, it shallhave priority over the said mortgage lien.

"P-: vs. CA, CA 01#

ORDER OF PREFERENCE IN CASE OF SALEOF 'ESSEL

R)A) 626 P)D) 252Effe"#!,!# da#e

18/8 180

A00l!"a<!l!#4verseas shippingonly

:oth domestic andoverseas shipping

?!nd of ale udicial udicial and

e5trajudicial

O&de& of P&efe&en"e

A preferredmortgage shall havepriority over allclaims against thevessel, e5cept thefollowingpreferences in theorder stated=1. udicial costs ofthe proceedings92. ;a5es due thePhilippineGovernment9. alaries andwages of theCaptain and Crew of

the vessel during itslast voyage9$. General averageor salvage includingcontract salvage,bottomry loans, andindemnity dueshippers for thevalue of goodstransported butwhich were notdelivered to theconsignee9(. Costs of repairand e>uipment ofthe vessel, and

provisioning of food,supplies and fuelduring its lastvoyage9 and/. Preferredmortgagesregistered prior intime.

;he preferredmortgage lien shallhave priority over allclaims against thevessel, e5cept thefollowingpreferences in theorder stated=1. ?5penses andfees allowed andcosts ta5ed by thecourt and ta5es dueto the Government92. Crew@s wages9. General average9$. alvage, including

contract salvage9(. Baritime liensarising prior in timeto the recording ofthe preferredmortgage9/. )amages arisingout of tort9 and. Preferredmortgage registeredprior in time.

?ffect of sale= All pre*e5isting claims in thevessel are terminated. ;hey will then besatisfied from the proceeds of the salesubject to the order of preference.

DOCTRINE OF LIMITED LIABILITY

-(YPOT(ECARY R8LE1



Cases where applicable=1. Art. (0 L civil liability for

indemnities to third persons2. Art. (87 L indemnities from negligent

acts of the captain "not the

shipowner or ship agent#. Art. 0 L collision$. Art. /$ L liability for wages of the

captain and the crew and foradvances made by the ship agent ifthe vessel is lost by shipwrec3 orcapture

56N6RAL RUL6: ;he liability of shipownerand ship agent is limited to the amount ofinterest in said vessel such that where vesselis entirely lost, the obligation is e5tinguished."%uon tevedoring v. ?scano, 1(/ CA 1/8# ;he interest e5tends to= 1# the vessel itself9 2#e>uipments9 # freightage9 and $# insuranceproceeds. "Chua v. +AC, 1// CA 10#

67C6PT81N': 1. Claims under &or3men@s Compensation

"Abueg vs. an )iego Phil 7#92. +njury or damage due to shipowner or to

the concurring negligence of theshipowner and the captain9

. ;he vessel is insured "as>ue vs. CA10 CA ((#.

$. ?5penses for repair on vessel completedbefore loss9

(. +n case there is no total loss and thevessel is not abandoned9

/. Collision between two negligent vessels9

Abandonment of the vessel is necessary tolimit the liability of the shipowner. ;he only

instance were abandonment is dispensedwith is when the vessel is entirely lost "%uontevedoring vs. CA 1(/ CA 1/8#.

RIG(T OF S(IPOWNER OR S(IP AGENTTO ABANDON 'ESSEL

+nstances=1. +n case of civil liability from indemnities tothird persons "Art. (0#92. +n case of lea3age of at least M of thecontents of a cargo containing li>uids "Art./0#9 and. +n case of constructive loss of the vessel"ec. 10, +nsurance Code#.

RIG(T OF ABANDONMENT

S(IPOWNER ORS(IP AGENT

CONSIGNEE

W%a# *a <e a<andonedessel Goods shipped

In#an"e1. +n case of civilliability fromindemnities to thirdpersons "Art. (0#92. ec. 10,+nsurance Code9. +n case of lea3ageof at least M of thecontents of a cargocontaining li>uids

1. Partial non*delivery, where thegoods are uselesswithout the others"Art. /#92. Goods arerendered useless forsale or consumptionfor the purposes forwhich they are

"Art. /0# properly destined"Art. /(#9 and. +n case of delaythrough the fault ofthe carrier "Art.

1#.Effe"#1. ;ransfer ofownership of thevessel from theshipowner to theshippers or insurer.2. +n case of "2#, theinsurer must pay theinsured as if therewas actual total lossof the vessel.

1. ;ransfer ofownership on thegoods from theshipper to thecarrier.2. Carrier shouldpay the shipper themar3et value of thegoods at the point ofdestination.

CA8SES OF RE'OCATION OF 'OYAGE1. &ar or interdiction of commerce92. :loc3ade9

. Prohibition to receive cargo atdestination9

$. ?mbargo9(. +nability of the vessel to navigate. "Art.

/$7#

Te&*$1. +nterdiction of commerce L A

governmental prohibition of commercialintercourse intended to bring about anentire cessation for the time being of alltrade whatever.

2. :loc3ade L A sort of circumvallation of aplace by which all foreign connection andcorrespondence is, as far as humanpower can effect it, to be cut off.

. ?mbargo L A proclamation or order of astate, usually issued in time of war orthreatened hostilities, prohibiting thedeparture of ships or goods from some orall the ports of such state until furtherorder.

PARTICIPANTS IN MARITIME COMMERCEA. hipowners and ship agents:. Captains and masters of the vesselC. 4fficers and crew of the vessel). upercargoes?. Pilot

A) S(IPOWNERS AND S(IP AGENTSS%!0owne& -0&o0&!e#a&!o1

Person who has possession, control andmanagement of the vessel and theconse>uent right to direct her navigation andreceive freight earned and paid, while hispossession continues.

S%!0 agen# -na,!e&o1

Person entrusted with provisioning andrepresenting the vessel in the port in which itmay be found9 also includes the shipowner.

-ot a mere agent under civil law9 he issolidarily liable with the ship owner.

Powers and functions=1. Capacity to trade92. )ischarge duties of the captain, subject

to Art./789



. Contract in the name of the owners withrespect to repairs, details of e>uipment,armament, provisions of food and fuel,and freight of the vessel, and all thatrelate to the re>uirements of navigation9

$. 4rder a new voyage, ma3e a new charteror insure the vessel after obtainingauthoriation from the shipowner or ifgranted in certificate of appointment.

C!,!l L!a<!l!#!e of #%e S%!0owne& AndS%!0 Agen#1. All contracts of the captain, whether

authoried or not, to repair, e>uip andprovision the vessel9 "Art. (0/#

2. %oss and damage to the goods loaded onthe vessel without prejudice to their rightto free themselves from liability byabandoning the vessel to the creditors."Art. (0#

D.# of S%!0 Agen# #o D!"%a&ge #%eCa0#a!n and Me*<e& of #%e C&ew

+f the seamen contract is not for a definiteperiod or voyage, he may discharge them athis discretion. "Art. /7#

+f for a definite period, he may not dischargethem until after the fulfillment of theircontracts, e5cept on the following grounds=

a. +nsubordination in serious matters9b. obbery9c. ;heft9d. <abitual drun3enness9e. )amage caused to the vessel or toits cargo through malice or manifest orproven negligence. "Art. /7(#

B) CAPTAINS AND MASTERS ;hey are the chiefs or commanders of ships.

;he terms have the same meaning, but areparticularly used in accordance with the sieof the vessel governed and the scope oftransportation, i.e., large and overseas, andsmall and coastwise, respectively.

-ature of position "*fold character#=1. General agent of the shipowner92. ;echnical director of the vessel9. epresentative of the government of

the country under whose flag henavigates.

Nualifications=1. !ilipino citien92. %egal capacity to contract9

. Bust have passed the re>uiredphysical and mental e5aminationsre>uired for licensing him as such."Art. /78#

+nherent powers=1. Appoint crew in the absence of ship

agent92. Command the crew and direct the

vessel to its port of destination9. +mpose correctional punishment on

those who, while on board vessel,fail to comply with his orders or arewanting in discipline9

$. Ba3e contracts for the charter ofvessel in the absence of ship agent.

(. upply, e>uip, and provision thevessel9 and

/. 4rder repair of vessel to enable it tocontinue its voyage. "Art. /17#

ources of funds to comply with the inherent

powers of the captain "in successive order#=1. !rom the consignee of the vessel92. !rom the consignee of the cargo9. :y drawing on the ship agent9$. :y a loan on bottomry9(. :y sale of part of the cargo. "Art.

/11#

)uties=1. :ring on board the proper certificate

and documents and a copy of theCode of Commerce9

2. Deep a %og :oo3, Accounting :oo3and !reight :oo39

. ?5amine the ship before the voyage9$. tay on board during the loading and

unloading of the cargo9

(. :e on dec3 while leaving or enteringthe port9

/. Protest arrivals under stress and incase of shipwrec39

. !ollow instructions of and render anaccounting to the ship agent9

0. %eave the vessel last in case ofwrec39

8. <old in custody properties left bydeceased passengers and crewmembers9

17. Comply with the re>uirements ofcustoms, health, etc. at the port ofarrival9

11. 4bserve rules to avoid collision912. )emand a pilot while entering or

leaving a port. "Art. /12#

A ship@s captain must be accorded areasonable measure of discretionaryauthority to decide what the safety of theship and of its crew and cargo specificallyre>uires on a stipulated ocean voyage "+nter*4rient Baritime ?nterprises +nc. vs. CA#.

-o liability for the following=1. )amages caused to the vessel or to

the cargo by force majeure92. 4bligations contracted for the repair,

e>uipment, and provisioning of thevessel unless he has e5presslybound himself personally or has

signed a bill of e5change orpromissory note in his name. "Art./27#

Sol!da& L!a<!l!#!e of #%e S%!0Agen#/S%!0owne& fo& A"# Done < #%eCa0#a!n #owa&d Paenge& andCa&goe

1. )amages to vessel and to cargo dueto lac3 of s3ill and negligence9

2. ;hefts and robberies of the crew9. %osses and fines for violation of laws9$. )amages due to mutinies9(. )amages due to misuse of power9/. !or deviations9. !or arrivals under stress9



0. )amages due to non*observance ofmarine regulations. "Art. /10#

C) OFFICERS AND CREW1. ailing Bate'!irst Bate

2. econd Bate. ?ngineers$. Crew

-o liability under the followingcircumstances=1. +f, before beginning voyage, captain

attempts to change it, or a naval warwith the power to which the vessel wasdestined occurs9

2. +f a disease brea3s out and be officiallydeclared an epidemic in the port ofdestination9

. +f the vessel should change owner orcaptain. "Art. /$#

Sa!l!ng Ma#e/F!&# Ma#e

econd chief of the vessel who ta3es theplace of the captain in case of absence,sic3ness, or death and shall assume all of hisduties, powers and responsibilities. "Art. /2#

)uties=1. Provide himself with maps and

charts with astronomical tablesnecessary for the discharge of hisduties9

2. Deep the :innacle :oo39. Change the course of the voyage on

consultation with the captain and theofficers of the boat, following thedecision of the captain in case ofdisagreement9

$. esponsible for all the damages

caused to the vessel and the cargoby reason of his negligence. "Arts./20 * /1#

Se"ond Ma#e

;a3es command of the vessel in case of theinability or dis>ualification of the captain andthe sailing mate, assuming in such case theirpowers and responsibilities.

;hird in command

)uties=1. Preserve the hull and rigging of the

vessel92. Arrange well the cargo9. )iscipline the crew9$. Assign wor3 to crew members9

(. +nventory the rigging and e>uipmentof the vessel, if laid up. "Art. /2#

Eng!nee&

4fficers of the vessel but have no authoritye5cept in matters referring to the motorapparatus. &hen two or more are hired, oneof them shall be the chief engineer.

)uties=1. +n charge of the motor apparatus,

spare parts, and other instrumentspertaining to the engines9

2. Deep the engines and boilers in goodcondition9

. -ot to change or repair the enginewithout authority of the captain9

$. +nform the captain of any damage tothe motor apparatus9

(. Deep an ?ngine :oo39/. upervise all personnel maintaining

the engine. "Art. /2#

C&ew

;he aggregate of seamen who man a ship,or the ship@s company.

<ired by the ship agent, where he is presentand in his absence, the captain hires them,preferring !ilipinos, and in their absence, hemay ta3e in foreigners, but not e5ceeding 1'(of the crew. "Art. /$#

Clae of Sea*an> Con#&a"#1. :y the voyage92. :y the month9 and. :y share of profits or freightage.

;.# Ca.e fo& #%e D!"%a&ge of Sea*an

W%!le Con#&a"# S.<!#1. Perpetration of a crime92. epeated insubordination, want of

discipline9. epeated incapacity and negligence9$. <abitual drun3enness9(. Physical incapacity9/. )esertion. "Art. /#

R.le !n "ae of Dea#% of a Sea*an

;he seaman@s heirs are entitled to paymentas follows=1. +f death is natural=

a. compensation up to time of death ifengaged on wage

b. if by voyage * half of amount if death

occurs on voyage out9 and full, if onvoyage in

c. if by shares * none, if beforedeparture9 full, if after departure

2. if death is due to defense of vessel * fullpayment9

. if captured in defense of vessel * fullpayment9

$. if captured due to carelessness * wagesup to the date of the capture. "Art. /$(#

Co*0le*en# of #%e 'eel

All persons on board, from the captain to thecabin boy, necessary for the management,maneuvers, and service, thus including thecrew, the sailing mates, engineers, sto3ers

and other employees on board not havingspecific designations.

)oes not include the passengers or thepersons whom the vessel is transporting.

D) S8PERCARGOES

Persons who discharges administrativeduties assigned to him by ship agent orshippers, 3eeping an account and record oftransaction as re>uired in the accountingboo3 of the captain. "Art. /$8#

E) PILOT

A person duly >ualified, and licensed, toconduct a vessel into or out of ports, or incertain waters.



;he term generally connotes a person ta3enon board at a particular place for the purposeof conducting a ship through a river, road orchannel, or from a port.

Baster pro hac /ice for the time being in the

command and navigation of the ship. &hile in e5ercising his functions a pilot is insole 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 thepilot is not the master. ;here are occasionswhen the master may and should interfereand even displace the pilot, as when the pilotis obviously incompetent or into5icated "!ar?astern hipping Company vs. CA#.

Compulsory Pilotage L tates possessingharbors have enacted laws or promulgatedrules re>uiring vessels approaching theirports to ta3e on board pilots licensed underthe local laws. (Notes and Cases on the Law

on Transportation and Public Utilities, Aquino,T. & ernando, R.P. !""# ed. p. $9

L!a<l!# of P!lo#

56N6RAL RUL6= 4n compulsory pilotagegrounds, 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 e5ercisedprudence and e5tra diligence to prevent orminimie damages.2. Countermand or overrule by the master of

the vessel in which case the registered ownerof the vessel is liable. "ec.11, Art.+++ PPA

Admin 4rder 7*0(#

SPECIAL CONTRACTS OF MARITIMECOMMERCE

1. Charter party2. :ill of lading. Contract of transportation of

passengers on sea voyages$. %oan on bottomry(. %oan on respondentia/. Barine insurance

C(ARTER PARTY

A contract by virtue of which the owner oragent binds himself to transport merchandiseor persons for a fi5ed price.

A contract by which an entire ship, or someprincipal part thereof is let'leased by theowner to another person for a specified timeor use. "Planters Products, +nc. vs. CA, 22/CA $/#

Pa&#!e$1. hip owner or ship agent2. Charterer

Clae$1. :areboat or demise L ;he chartererprovides crew, food and fuel. ;he charterer isliable as if he were the owner, e5cept whenthe cause arises from the unworthiness of thevessel. ;he shipowner leases to the chartererthe whole vessel, transferring to the latter the

entire command, possession and conse>uent

control over the vessel@s navigation, includingthe master and the crew, who therebybecome the charter@s 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 heldliable for the e5pense of the voyage andthe wages of the seamen.

2. Contract of Affreightment 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.

Dinds=a. ;ime charter L vessel is chartered for

a fi5ed period of time or duration ofvoyage.

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

LEASE C(ARTER PARTY

+f for a definiteperiod, 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 who3nows of thee5istence of thelease, the new ownermust respect thelease.

;he new owner is notcompelled to respectthe charter party solong as he can loadthe vessel with hisown cargo. "Art. /08#

Civil law concept Commercial lawconcept

C(ARTER PARTY BILL OF LADING

An entire or completecontract.

Bore li3e a privatereceipt which thecaptain gives toaccredit goodsreceived frompersons

Consensual contract eal contract

BAREBOAT ORDEMISE C(ARTER

CONTRACT OFAFFREIG(TMENT-TIME OR 'OYAGE

C(ARTER1

Charterer becomesliable to otherscaused by itsnegligence

4wner remains liableas carrier and mustanswer for anybreach of duty

Charterer regardedas owner pro hac

vice for the voyage

Charterer is notregarded as owner.



4wner of vesselrelin>uishespossession,command andnavigation to

charterer

;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. 4wner 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./8#

. hip agent if authoried by theowner's or given such power in thecertificate of appointment. "Art.(80#

$. Captain in the absence of the shipagent or consignee and only if heacts in accordance with theinstructions of the agent or ownerand protects the latter@s interests."Art./78#

RE78ISITES OF A 'ALID C(ARTER PARTY 1. Consent of the contracting parties2. ?5isting vessel which should be

placed at the disposition of theshipper

. !reight

$. Compliance with Art. /(2 of theCode of Commerce

Cla.e W%!"% Ma Be In"l.ded In aC%a&#e& Pa&#

;aon "la.e Cla.e 0a&a*o.n#o& 0a&a*o.n#

"la.e

A stipulation in acharter party that incase of a maritimeaccident for whichthe shipowner is not

responsible by law,contract orotherwise, the cargoshippers, consigneesor owners shallcontribute with theshipowner in generalaverage. "Pandect ofCommercial %aw and urisprudence, ustice ose itug, 188 ed.#

A clause in a charterparty providing thatthe C4GA shallapply, even thoughthe transportation is

domestic, subject tothe e5tent that anyterm of the bill oflading is repugnant tothe C4GA orapplicable law, thento the e5tent thereofthe provision of thebill of lading is void."Pandect ofCommercial %aw and urisprudence, ustice ose itug, 188 ed.#

R!g%# and O<l!ga#!on of Pa&#!e

S(IPOWNER ORS(IP AGENT

C(ARTERER

1. +f the vessel ischartered wholly, notto accept cargo fromothers92. ;o observerepresentedcapacity9. ;o unload cargoclandestinely placed$. ;o substitute

another vessel if loadis less than '( ofcapacity9(. ;o leave the portif the charterer doesnot bring the cargowithin the lay daysand e5tra lay daysallowed9/. ;o place in avessel in a conditionto navigate9. to bring cargo tonearest neutral portin case of war orbloc3ade. "Arts. //8*

/0#

1. ;o pay theagreed charterprice92. ;o payfreightage onunboarded cargo9. ;o pay losses toothers for loadinguncontracted cargoand illicit cargo9

$. ;o wait if thevessel needs repair9(. ;o paye5penses fordeviation. "Arts. /8*/0#

Re"!!on of a C%a&#e& Pa&#

A#"%a&#e&e&>

&e:.e#-A&# 6==1

A#%!0owne&>

&e:.e#-A&#) 6=1

Fo&#.!#o."a.e

-A&#) 61

1. :yabandoningthe charterand payinghalf of thefreightage92. ?rror in

1. +f the e5tralay daysterminatewithout thecargo beingplacedalongside the

1. &ar orinterdictionof commerce92. :loc3ade9. Prohibitionto receivecargo9



tonnage orflag9. !ailure toplace thevessel at the

charterer@sdisposal9$. eturn ofthe vesseldue topirates,enemies orbad weather9(. Arrival at aport forrepairs.

vessel92. ale bythe owner ofthe vesselbefore

loading bythecharterer9

$. ?mbargo9and(. +nability ofthe vessel tonavigate.

Te&*$1. Primage * bonus to be paid to the captain

after the successful voyage.2. )emurrage L the sum fi5ed in the charter

party as a remuneration to the owner ofthe ship for the detention of his vesselbeyond the number of days allowed bythe charter party for loading or unloadingor for sailing.

. )eadfreight L the amount paid by orrecoverable from a charterer of a ship forthe portion of the ship@s capacity thelatter contracted for but failed to occupy.

$. %ay )ays * days allowed to charterparties for loading and unloading thecargo.

(. ?5tra %ay )ays days which follow afterthe lay days have elapsed.

8S8AL FORMS OF CONS8MMATING

CONTRACTS1. C.+.!. L cost, insurance and freight92. !.4.:. * free on board9. !.A.. * free alongside ship9 and$. C. J !. * cost and freight.

TRANSS(IPMENT OF GOODS

;he act of ta3ing cargo out of one ship andloading it in another, or the transfer of goodsfrom the vessel stipulated in the contract ofaffreightment to another vessel before theplace of destination named in the contracthas been reached, or the transfer for furthertransportation from one ship or conveyanceto another.

+t is not dependent on the ownership of the

transporting ships or in the change ofcarriers, but rather on the fact of actualphysical transfer of cargo from one vessel toanother.

+f done without legal e5cuse, howevercompetent and safe the vessel into which thetransfer is made, is a violation of contract andinfringement of right of shipper and subjectscarrier to liability if freight is lost event bycause otherwise e5cepted. "BagellanBanufacturing vs. CA, 271 CA 172#

LOAN ON BOTTOMRY ANDRESPONDENTIA

A real, unilateral, aleatory contract, byvirtue of which one person lends to another a

certain amount of money or goods on thingse5posed to maritime ris3s, which amount,with its earnings, is to be returned if thethings are safely transported, and which islost if the latter are lost.

LOAN ONBOTTOMRY

LOAN ONRESPONDENTIA

)efinition

%oan made byshipowner or shipagent guaranteedby vessel itself andrepayable uponarrival of vessel atdestination. "Art.18#

%oan ta3en onsecurity of the cargoladen on a vessel,and repayable uponsafe arrival of cargoat destination. "Art.18#

&ho may contract

hipowner or ship

agent. 4utside ofthe residence of theowners * thecaptain.

4nly the owner of

the cargo.

Common elements=1. ?5posure of security to marine peril92. 4bligation of the debtor conditioned

only upon safe arrival of the security atthe point of destination.

!orms=1. Public instrument2. Policy signed by the contracting parties

and the bro3er ta3ing part therein. Private instrument "Art. 27#

Contents=1. Dind, name and registry of the vessel9

2. -ame, surname and domicile of thecaptain9

. -ames, surnames and domiciles of theborrower and the lender9

$. Amount of the loan and the premiumstipulated9

(. ;ime for repayment9/. Goods pledged to secure repayment9. oyage during which the ris3 is run

"Art.21#

BOTTOMRY/RESPONDENTIA

ORDINARY LOAN-M8T88M1

-ot subject to 6sury%aw ubject to 6sury%aw

%iability of theborrower iscontingent on thesafe arrival of thevessel or cargo atdestination

-ot subject to anycontingency"absolute liability#

;he last lender is apreferred creditor

;he first lender is apreferred creditor

W(EN LOAN ON BOTTOMRY ORRESPONDENTIA REGARDED AS SIMPLELOAN



1. %ender loaned an amount largerthan the value of the object due tofraudulent means employed by theborrower. "A;.2/#

2. !ull amount of the loan is not used

for the cargo or given on the goods ifall of them could not have beenloaded, the balance will beconsidered a simple loan. "A;.2#

. +f the effects on which the money ista3en is not subjected to any ris3."A;.28#

No#e= 6nder e5isting laws, the parties to aloan, whether ordinary or maritime, mayagree on any rate of interest. "C: Circular87(#

MARINE INS8RANCE LOAN ONBOTTOMRY OR

RESPONDENTIA+ndemnity is paid afterthe loss has occurred

+ndemnity is paidin advance byway of a loan

+n case of loss of thevessel due to a ris3insured against, theobligation of the insurerbecomes absolute

+n case of loss ofthe vessel due toa marine peril,the obligation ofthe borrower topay ise5tinguished

Consensual contract eal contract

(0o#%e"a& Na#.&e of Bo##o*&/Re0onden#!a

56N6RAL RUL6: ;he obligation of the

borrower to pay the loan is e5tinguished if thegoods given as security are absolutely lost byreason of an accident of the sea, during thevoyage designated, and if it is proven that thegoods were on board.

67C6PT81N':1. %oss due to inherent defect92. %oss due to the barratry on the part of

the captain9. %oss due to the fault or malice of the

borrower9$. ;he vessel was engaged in contraband9

and(. ;he cargo loaded on the vessel be

different in from that agreed upon.

Con".&&en"e of Ma&!ne In.&an"e andLoan on Bo##o*&/Re0onden#!a

1. ;he insurable interest of the ownerof a ship hypothecated by bottomryis only the e5cess of the value overthe amount secured by bottomry."ec. 171, +nsurance Code#

2. ;he value of what may be saved incase of shipwrec3 shall be dividedbetween the lender and the insurerin proportion to the interest of eachone. "Art. (#

-ote= +f a vessel is hypothecated by bottomryonly the e5cess is insurable, since a loan onbottomry parta3es of the nature li3ewise of

an insurance coverage to the e5tent of theloan accommodation. ;he same rule wouldapply to the hypothecation of the cargo byrespondentia. (Pandect o) Coercial Lawand *urisprudence, *ustice *ose +itu, $--

ed.

ACCIDENTS IN MARITIME COMMERCE1. Averages2. Arrival 6nder tress. Collision$. hipwrec3

A'ERAGE

An e5traordinary or accidental e5penseincurred during the voyage in order topreserve the cargo, vessel or both, and alldamages or deterioration suffered by thevessel from departure to the port ofdestination, and to the cargo from the port ofloading to the port of consignment. "Art. 07/#

;he person whose property has been savedmust contribute to reimburse the damagecaused or e5pense incurred if the situationconstitutes general average.

Classes=1. Particular or imple Average2. Gross or General Average

&here both vessel and cargo are saved, itis general average9 where only the vessel oronly the cargo is saved, it is particularaverage.

?5penses incurred to refloat a vessel,which accidentally ran aground, in order tocontinue its voyage, do not constitute generalaverage. -ot only is there absence of amarine peril, common safety factor, and

deliberateness. +t is the safety of theproperty, and not the voyage, whichconstitutes the true foundation of generalaverage. "A. Bagsaysay, +nc. vs. Agan,G..-o. %*/8, an. 1, 18((#

PARTIC8LAR ORSIMPLE

GROSS ORGENERAL

Def!n!#!on)amages ore5penses caused tothe vessel or cargothat did not inure tothe common benefit,and borne byrespective owners."Art. 078#

)amages ore5pensesdeliberately causedin order to save thevessel, its cargo orboth from real and3nown ris3. "Art.011#

Re:.!!#e1. common

danger92. deliberate

sacrifice9. success9$. proper

formalities andlegal steps.

L!a<!l!# ;he owner of thegoods which gaverise to the e5pense or

suffered the damage

All the personshaving an interest inthe vessel and the

cargo therein at the



shall bear thisaverage. "Art. 017#

time of theoccurrence of theaverage shallcontribute to satisfythis average. "Art.

012# ;he insurers"Art.0(8# andlenders on bottomryand respondentiashall li3ewisecontribute."Art.2#.

N.*<e& of !n#e&e# !n,ol,ed4nly one interestinvolved

everal interestsinvolved

S%a&e !n #%e da*age o& e0ene177O share +n proportion to the

value of the owner@sproperty saved

R!g%# #o &e"o,e&

-o reimbursement ;here may bereimbursement

?!nd -no# e"l.!,e1Art. 078 Art. 011

P&o"ed.&e fo& &e"o,e&1. Assembly anddeliberation2. esolution of thecaptain. ?ntry of theresolution in thelogboo3$. )etailed minutes(. )elivery of theminutes to themaritime judicialauthority of the firstport, within 2$ hoursfrom arrival,/. atification bycaptain under oath."Arts. 01*01$#

GOODS NOT CO'ERED BY GENERALA'ERAGE E'EN IF SACRIFICED

1. Goods carried on dec3. "A;.0((#2. Goods not recorded in the boo3s or

records of the vessel. "A;.0(( "2##. !uel for the vessel if there is more

than sufficient fuel for the voyage."ule +, Eor3*Antwerp ule#

;e##!on

Act of throwing cargo overboard in order tolighten the vessel.

4rder of goods to be cast overboard=1. ;hose which are on the dec3,

preferring the heaviest one with theleast utility and value9

2. ;hose which are below the upperdec3, beginning with the one withgreatest weight and smallest value."Art. 01(#

ettisoned goods are not res nullius nordeemed HabandonedI within the meaning ofcivil law so as to be the object of occupation

by salvage. (Pandect o) Coercial Law and

*urisprudence, *ustice *ose +itu, $-- ed.

+n order that the jettisoned goods may beincluded in the gross or general average, thee5istence of the cargo on board should beproven by means of the bill of lading. "Art.

01/#

Yo&+An#we&0 -Y+A1 R.le onDe#e&*!n!ng L!a<!l!# fo& A,e&age W!#%Rega&d To De" Ca&go1. )ec3 cargo is allowed only indomestic'coastwise'inter*island shipping, andis prohibited in international'overseas'foreignshipping.2. +f dec3 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 E*A ules.. +f dec3 cargo is loaded with the consent

of the shipper on coastwise shipping, it mustalways contribute to general average and if jettisoned would be entitled toreimbursement.

eason= +n domestic shipping, voyages areusually short and the seas are generally notrough. +n overseas shipping, the vessel ise5posed for many days to perils of the sea.

DOMESTIC INTERNATIONAL)ec3 cargo is allowed )ec3 cargo is not

allowed

&ith shipper@s consent

General average Particular average

&ithout shipper@s consent

Captain is liable Captain is liable

ARRI'AL 8NDER STRESS -ARRIBADA1

;he arrival of a vessel at the nearest andmost convenient port instead of the port ofdestination, if during the voyage the vesselcannot continue the trip to the port ofdestination.

W%enlawf.l

W%en.nlawf.l

W%o <ea&e0ene$

;he inabilityto continuevoyage isdue to lac3

of provisions,well*foundedfear ofseiure,privateers,pirates, oraccidents ofthe seadisabling itto navigate."Art. 018#

1. %ac3 ofprovisionsdue tonegligence to

carryaccording tousage andcustoms92. is3 ofenemy notwell 3nown ormanifest. )efect ofvessel due toimproperrepair9 and$. Balice,negligence,lac3 offoresight or

s3ill of

;heshipowner orship agent isliable in case

of unlawfularrival understress. :utthey shall notbe liable forthe damagescaused byreason of alawful arrival."Art. 021#



cargo of both vessels.#. Third /essel at )ault

;he third vessel will be liable for losses anddamages. "Art. 01#. 3ortuitous e/ent)orce aBeure

-o liability. ?ach bears its own loss. "Art.07#

;he doctrine of res ipsa lo>uitur applies incase a moving vessel stri3es a stationaryobject, such as a bridge post, doc3, ornavigational aid. "!ar ?astern hipping v. CA,%uon tevedoring vs. CA#

?ven if the cause of action against thecommon 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. 02/*08 of

the Code of Commerce. "Banila teamship vs.+nsa Abdulhaman#

)octrine of %ast Clear Chance and ule onContributory -egligence cannot be applied incollision cases because of Art.02 of the Codeof Commerce. (Notes and Cases on the Lawon Transportation and Public Utilities, Aquino,T. & ernando, R.P. !""# ed.

MARITIME PROTEST

Condition precedent or prere>uisite torecovery of damages arising from collisionsand other maritime accidents.

+t is a written statement made under oath bythe captain of a vessel after the occurrence of

an 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.

?5cuses for not filing protest= 1# where theinterested person is not on board the vessel9and 2# on collision time, need not beprotested. "Art. 0/#

Cases applicable=1. Collision "Art. 0(#92. Arrival under stress "Art. /12"0##9. hipwrec3s "Arts. /12"1(#, 0$#9$. &here the vessel has gone through

a hurricane or when the captainbelieves that the cargo has suffereddamages or averages "Art. /2$#.

&ho ma3es= Captain

&hen made= within 2$ hours from the timethe collision too3 place.

:efore whom made= competent authority atthe point of collision or at the first port ofarrival, if in the Philippines and to thePhilippine consul, if the collision too3 placeabroad. "Art. 0(#

S(IPWREC?

+t is the loss of the vessel at sea as aconse>uence of its grounding, or runningagainst an object in sea or on the coast. +toccurs when the vessel sustains injuries due

to a marine peril rendering her incapable of

navigation.

+f the wrec3 was due to malice, negligenceor lac3 of s3ill of the captain, the owner of thevessel may demand indemnity from saidcaptain. "Art. 0$1#

;he rules on collision or allision, as may bepertinent, can e>ually apply to shipwrec3s.

SPECIAL CONCEPTSARRASTRE SER'ICE

A contract for the unloading of goods from avessel.

A00l!"a<!l!#$ 1/erseas trade only.(Coercial Law Re/iew, C. +illanue/a, !""#ed.

S!gn!f!"an"e$ &hen a person brings incargo from abroad, he cannot unload anddeliver the cargo by himself. ;he 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!#$1. imilar to a warehouseman "%ua Dian v.

Banila ailroad#2. imilar to a common carrier "-orthern

Botors v. Prince %ine#. olidary 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.

?. aon, +nc.#

STE'EDORING SER'ICE

;he carriage of goods from the warehouseor pier to the holds of the vessel. "Chief oftaff vs. C+#

As understood in the port business, the termconsists of the handling of cargo from thehold of the ship to the doc3, in case of pier*side unloading9 or to a barge, in case ofunloading at sea. "Anglo*!il ;rading Corp. vs.%aaro#

;he loading on the ship of outgoing cargois also part of stevedoring wor3. "+bid.#

CONTAINERIATION/ SAID+TO+CONTAINH/ S(IPPER>S LOAD ANDCO8NTH SYSTEM

ystem whereby the shipper loads hiscargoes in a specially designed container,seals the container and delivers it to thecarrier for transportation. ;he carrier does notparticipate in the counting of themerchandise for loading into the container,the actual loading, and the sealing of thecontainer. "6 %ines v. Comm. 4f Customs,+C;+ v. Prudential Guarantee#

;he matter of >uantity, description andconditions of the cargo inside the container isthe sole responsibility of the shipper, unlessthere is stipulation to the contrary. "6 %ines

vs. Comm. 4f Customs, eyma :ro3erage 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 at

pier%side. ":an3ers vs. CA# III) CARRIAGE OF GOODS BY SEA

ACT/COGSA -C)A) No) 651

APPLICABILITY

;he transportation must be=1. &ater'maritime transportation92. for the carriage of goods9 and. overseas'international'foreign "from

foreign port to Philippine port#.

+t can be applied in domestic seatransportation if agreed upon by the parties."Clause paraount or paraount clause#

IMPORTANT FEAT8RES$

1. Amount of carrier@s liability2. -otice of damage. Prescriptive period

AMO8NT OF CARRIER>S LIABILITY

6nder the ec. $"(#, the liability limit is setat Q(77 per pac3age or customary freight unitunless the nature and value of such goods isdeclared by the shipper. ;his is deemedincorporated in the bill of lading even if notmentioned in it. "?astern hipping vs. +AC,1(7 CA $/#

-ote that Art. 1$8, -CC applies todomestic'inter*island'coastwise trade.

NOTICE OF DAMAGE -SEC) -611

R.le$a. Patent damage= shipper should file a

claim with the carrier immediately upondelivery

b. %atent damage= shipper should file aclaim with the carrier within three daysfrom delivery.

No#e= ;he filing of a notice of claim is not acondition precedent.

PRESCRIPTI'E PERIOD

Action for loss or damage to the cargoshould be brought within one year after=

a. )elivery of the goods "delivered butdamaged goods#9 or

b. ;he date when the goods shouldhave been delivered "non*delivery#."ec. F/#

H%oss or )amageI as applied to the C4GAcontemplates a situation where no delivery atall was made by the shipper of the goodsbecause the same had perished, gone out ofcommerce, or disappeared in such a way thattheir e5istence is un3nown or they cannot berecovered. ;hus, it is inapplicable in case ofmisdelivery or conversion. "Ang vs. Americanteamship Agencies +nc.# and damage arisingfrom delay or late delivery "Bitsui 4..D. %ines%td. vs. CA#. +n such instance the, Civil Coderules on prescription shall apply.

;he one*year prescriptive period issuspended by=

1. ;he e5press agreement of theparties "6niversal hipping %ines,

+nc. vs. +AC, 100 CA 17#2. ;he filing of an action in court until itis dismissed. "tevens J Co. vs.-ordeutscher %loyd, / CA 107#

;he one*year period shall run from deliveryof the last pac3age and is not suspended bye5trajudicial demand. ")ole Phils.,+nc. vs.Baritime Co.,1$0 CA 110#

;he one*year period shall run from deliveryto the arrastre operator and not to theconsignee. "6nion Carbide Phils, +nc. vs.Banila ailroad Co.,CA (8#

;he insurer e5ercising 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. Berchants +ns. Co.vs. Alejandro9 Bayer teel Pipe Corp. vs. CA#

I') WARSAW CON'ENTION OF 2 -WC1

P8RPOSE$ ;o protect the emerging airtransportation industry and to secure theuniformity of recovery by the passengers.APPLICABILITY

;he transportation must be=1. +nternational transportation92. Air transportation9 and. Carriage of passengers, baggage or

goods. ;he &C shall also apply to fortuitoustransportation by aircraft performed by an airtransportation enterprise.

8nternational transportation * anytransportation 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 brea3 in thetransportation or transshipment, or2. &ithin the territory of a single <ighContracting Party, if there is an agreedstopping place within a territory subject

to the sovereignty, mandate or authorityof another power, even though thatpower is not a party to the Convention."Hround tripI, Am. ur.#

;ransportation to be performed by severalsuccessive air carriers shall be deemed to beone 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 itsinternational character merely because onecontract or a series of contracts is to beperformed entirely within a territory subjectto the sovereignty, suerainty, mandate, or



authority of the same <igh Contracting Party."Art. 1 ec.#

W(EN INAPPLICABLE1. &hen public policy is contradicted9

2. +f the re>uirements under theConvention are not complied with.

IMPORTANT CONCEPTS$1. ;ransportation documents

a. Passenger tic3etb. :aggage chec3c. Air way bill

2. %iability of the carrier for damagesa. )eath or injury to passengersb. %oss or damage to baggage or goodsc. )elay

. uccessive carrier agreement$. urisdiction(. Combined transportation agreement

PASSENGERTIC?ET BAGGAGEC(EC? AIRWAYBILL

Passenger Chec3ed*inbaggage

Goods to beshipped

LIABILITY OF CARRIER FOR DAMAGES1. )eath or injury of a passenger if theaccident causing it too3 place on board theaircraft or in the course of its operations ofembar3ing or disembar3ing9 "Art. 1#2. )estruction, loss or damage to anybaggage or goods, if it too3 place during theHtransportation by airI9 "Art. 10# and

Transportation b4 air L ;he period duringwhich the baggage or goods are in the chargeof the carrier, whether in an airport or on

board 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 ta3es 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. 18#

No#e= ;he <ague Protocol amended the &Cby removing the provision that if the airlinetoo3 all necessary steps to avoid the damage,it could e5culpate itself completely "Art.27"1##. "Alitalia vs. +AC, 182 CA 8#

LIMIT OF LIABILITY -A&#) a a*ended< G.a#e*ala P&o#o"ol 232J Al!#al!a ,)IAC12) Paenge&

56N6RAL RUL6: Q177,777 per passenger

67C6PT81N: Agreement to a higher limit

) C%e"ed+!n <aggage

56N6RAL RUL6: Q27 per 3ilogram

67C6PT81N: +n case of special declaration ofvalue and payment of a supplementary sumby consignor, carrier is liable to not morethan the declared sum unless it proves thesum is greater than actual value.

) (and+"a&&!ed <aggage

Q1777'passenger4) Good #o <e %!00ed

56N6RAL RUL6: Q27 per 3ilogram

67C6PT81N: +n case of special declaration of

value and payment of a supplementary sumby consignor, carrier is liable to not morethan the declared sum unless it proves thesum is greater than actual value.

An agreement relieving the carrier fromliability or fi5ing a lower limit is null and void."Art. 2#

Carrier is not entitled to the foregoing limitif the damage is caused by willful misconductor default on its part. "Art. 2(#

;hus, the &C does not operate as ane5clusive enumeration of the instances of anabsolute limit of the e5tent of liability. +t doesnot preclude the application of the Civil Code

and other pertinent local laws. +t does notregulate or e5clude liability for otherbreaches of contract by the carrier, ormisconduct of its employees, or for someparticular or e5ceptional type of damage."Alitalia vs. CA#

+n PanAm v. +AC, the &C was applied asregards the limitation on the carrier@s liability,there being a simple loss of baggage withoutany improper conduct on the part of theofficials or employees of the airline or otherspecial injury sustained by the passenger.

+n D%B oyal v. ;uller, the &C hasinvariably been held inapplicable, or as notrestrictive of the carrier@s liability, wherethere was satisfactory evidence of malice orbad faith attributable to its officers andemployees. "Alitalia vs. +AC#

ACTION FOR DAMAGES1. -otice of claim

A 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 barrede5cept in case of fraud on the part of thecarrier. "Art. 2/#

2. Prescriptive period

Action must be filed within 2 years from=a. date of arrival at the destinationb. date of e5pected arrivalc. date on which the transportation

stopped. "Art. 28#

+n 6nited Airlines vs. 6y the two*yearprescriptive period was not applied where theairline employed delaying tactics.

R8LE IN CASE OF 'ARIO8S S8CCESSI'E

CARRIERS



1. Carriage of passengers

56N6RAL RUL6: Action is filed only againstthe carrier in which the accident or delayoccurred.

67C6PT81N: Agreement or contract

whereby the first carrier assumed liability forthe whole journey.2. Carriage of baggage or goods

a. Passenger or consignor can file anaction against the )irst carrier andthe carrier in which the damageoccurred

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

;hese carriers are jointly and severallyliable. "Art. 7#

A contract of international carriage by air,although performed by different carriers

under a series of airline tic3ets constitutes asingle operation. Bembers 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 tic3ets to contractedpassengers to boost tic3et sales worldwideand at the same time provide passengerseasy access to airlines which are otherwiseinaccessible in some parts of the world."American Airlines vs. CA#

6nder a general pool partnershipagreement, the tic3et*issuing airline is theprincipal in a contract of carriage while theendorsee*airline is the agent. ;he obligation

of the former remained and did not ceaseeven when the breach occurred not on itsown flight but on that of another airline whichhad underta3en to carry the passengers toone of their destinations. "China Airlines vs.Chio3#

;8RISDICTION

At the option of the plaintiff, the action fordamages may be filed in the=

a. Court of domicile of the carrier9b. Court of its principal place of

business9c. Court where it has a place of business

through which the contract has beenmade9 or

d. Court of the place of destination. "Art.20"1##

NOTE$ +t is the passenger@s HultimatedestinationI not Han agreed stopping placeIthat determines the country where suit is tobe filed.

;he forum of action provided in Art. 20"1#is a matter of jurisdiction rather than ofvenue. "antos +++ vs. -orthwest9 2A C...#

') SAL'AGE LAW -A"# No) 6261

SAL'AGE

Two "on"e0#$1. ervices 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 by

whose 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 shipwrec3, derelict orrecapture.

Re:.!!#e$ 1. alid object of salvage92. 4bject must have been e5posed to

marine peril "not perils of the ship#9. ervices rendered voluntarily

"neither an e5isting duty nor out of apre*e5isting contract#9

$. ervices are successful, total orpartial.

S.<Ke"# of Sal,age$

1. hip itself92. etsam L goods which are cast into the sea,and there sin3 and remain under water9. !loatsam or !lotsam L goods which floatupon the sea when cast overboard9$. %igan or %agan L goods cast into the seatied to a buoy, so that they may be foundagain by the owners (p.$, *ude ;ia>.

Pe&on w%o %a,e no &!g%# #o a &ewa&dfo& al,age=1. Crew of the vessel saved92. Person who commenced alvage in spiteof opposition of the Captain or hisrepresentative9 . +n accordance with ec. of the alvage%aw, a person who fails to deliver a salvaged

vessel or cargo to the Collector of Customs.

Derelict L a ship or her cargo which isabandoned and deserted at sea by those whoare in charge of it, without any hope ofrecovering it, or without any intention ofreturning to it.

;he intention of those in charge must beascertained. +f those in charge left with theintention of returning, or of procuringassistance, the property is not derelict, but ifthey >uitted the property with the intention offinally leaving it, it is derelict and a change oftheir intention and an attempt to return willnot change its nature "?rlanger J Galinger vs.

wedish ?ast Asiatic Co. %td.#.

+f it is clear that the intention to return isslight, the salvage which was done thereafteris considered valid. (Notes and Cases on theLaw on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p. 0$0

CONTRACT OF TOWAGE

A contract whereby one vessel, usuallymotoried, pulls another, whether loaded ornot with merchandise, from one place toanother, for a compensation. +t is a contractfor services rather than a contract of carriage.



SAL'AGE TOWAGE

Governed by speciallaw "Act -o. 2/1/#

Governed by CivilCode on contract oflease

e>uires success,otherwise nopayment

uccess is notre>uired

Bust be done withthe consent of thecaptain'crewmen

4nly the consent ofthe tugboat owneris needed

essel must beinvolved in anaccident

essel need not beinvolved in anaccident

!ees distributedamong crewmen

!ees belong to thetugboat owner

R8LES ON SAL'AGE REWARD1. ;he reward is fi5ed by the ;C judge in

the absence of agreement or where thelatter is e5cessive. "ec. 8#

2. ;he reward should constitute a sufficientcompensation for the outlay and effort ofthe salvors and should be liberal enoughto offer 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 e5penses and thesalvage claim, shall go to the owner9 ifthe latter does not claim it within years,(7O of the said proceeds shall go to thesalvors, who shall divide it e>uitably, andthe other half to the government. "ecs.

11*12#$. +f a vessel is the salvor, the reward shall

be distributed as follows=a. (7O to the shipowner9b. 2(O to the captain9 and

c. 2(O to the officers and crew inproportion to their salaries. "ec. 1#

;a3ing passengers from a sin3ing ship,without rendering any service in rescuing thevessel, is not a salvage service, being a dutyof humanity and not for reward.

'I) P8BLIC SER'ICE ACT

-C)A) No) 2461

P8RPOSES$1. ;o secure ade>uate, sustained

service for the public at the leastpossible cost9

2. ;o protect the public againstunreasonable charges and poor,inefficient service9

. ;o protect and secure investments inpublic services9

$. ;o prevent ruinous competition.

A8T(ORITY TO OPERATE P8BLICSER'ICES

56N6RAL RUL6: -o public service shall

operate without having been issued acertificate of public convenience or acertificate of public convenience andnecessity.

67C6PT81N':

1. &arehouses92. Animal drawn vehicles and bancasmoved by oar or sail9

. Airships, e5cept for the fi5ing ofma5imum rates for fare and freight9

$. adio companies, e5cept for ratesfi5ing9

(. Public services owned or operatedby the government, e5cept as torates fi5ing9

/. +ce plants9 and. Public mar3ets.

P8BLIC SER'ICE

A person who owns, operates, manages orcontrols in the Philippines for hire or

compensation, with general or limitedclientele, whether permanent, occasional oraccidental, and done for general businesspurposes, any common carrier or publicutility, ice plants, power and water supplies,communication and similar public services."ec. 1b, CA 1$/#

A casual or incidental service devoid ofpublic character and interest is not broughtwithin the category. ;he >uestion depends onsuch factors as the e5tent of services,whether such person or company has heldhimself or itself out as ready to serve thepublic or a portion of the public generally."%uon tevedoring vs. PC#

NOTE= ;he Public ervice Commissioncreated under the Public ervice %aw hasalready been abolished under P.). -o. 1 andother issuances. +t has been replaced by thefollowing government agencies= %;49 %;!:9A;49 :4?9 -;C9 -?A9 ?:9 -&C9 CA:9 andB+A.

CERTIFICATE OFP8BLIC

CON'ENIENCE-CPC1

CERTIFICATE OFP8BLICCON'ENIENCEAND NECESSITY-CPCN1

An authoriationissued by theappropriategovernment agencyfor the operation ofpublic services forwhich no franchise,either municipal orlegislative, isre>uired by law,e.g., commoncarriers.

An authoriationissued by theappropriategovernment agencyfor the operation ofpublic service forwhich a priorfranchise is re>uiredby law9 e.g.telephone and otherservices.

A CPC or a CPC- constitutes neither afranchise nor a contract, confers no property

right, and is a mere license or a privilege. ;he



holder of said certificate does not ac>uire aproperty right in the route covered thereby.-or does it confer upon the holder anyproprietary right or interest or franchise in thepublic highways. evocation of this certificate

deprives him of no vested right. -ew andadditional burdens, alteration of thecertificate, or even revocation or annulmentthereof is reserved to the tate. "%u>ue vs.illegas, 7 CA $70#

+t is a HpropertyI and has a considerablevalue and can be the subject of sale orattachment. "Cogeo*Cubao 4perators and)rivers Assn. vs. CA, 27 CA $,aymundo vs. %uneta Botor Co.#

RE78REMENTS FOR GRANTING CPC ORCPCN1. Applicant must be a citien of the

Philippines or a corporation or entity /7O

of the capital of which is owned by suchcitiens92. Applicant must prove public necessity9. Applicant must prove that the operation

of the public service proposed and theauthoriation to do business will promotethe public interest on a proper andsuitable manner9

$. Applicant must have sufficient financialcapability to underta3e the proposedservices and meeting the responsibilitiesincident to its operation.

POWERSRE78IRING

PRIOR NOTICEAND (EARING

POWERSE9ERCISABLE

WIT(O8T PRIORNOTICE AND

(EARING

1. +ssuance ofCPC or CPC-92. !i5ing of rates,tolls, and charges9. etting up ofstandards andclassifications9$. ?stablishmentof rules to secureaccuracy of allmeters and allmeasuring

appliances9(. +ssuance oforders re>uiringestablishment ormaintenance ofe5tension offacilities9/. evocation, ormodification of CPCor CPC-9. uspension ofCPC or CPC-,e5cept when it isnecessary to avoidserious andirreparable

1. +nvestigationany matterconcerning publicservice92. e>uiringoperators to furnishsafe, ade>uate, andproper service9. e>uiring publicservices to paye5penses ofinvestigation9

$. aluation ofproperties of publicutilities9(. ?5aminationand test ofmeasuringappliances9/. Grant of specialpermits to ma3ee5tra or special tripsin territoriesspecified in thecertificate9. 6niformaccounting systemand furnishing of

damage orinconvenience tothe public orprivate interest, inwhich case, a

suspension notmore than 7 daysmay be ordered,prior to thehearing. "oriano v.Bedina, 1/$ CA/#

annual reports90. Compellingcompliance with thelaws andregulations.

8NLAWF8L ACTS OF P8BLIC 8TILITYCOMPANIES1. ?ngagement in public service business

without first securing the propercertificate9

2. Providing or maintaining unsafe,improper or inade>uate service asdetermined by the proper authority9

. Committing any act of unreasonable andunjust preferential treatment to anyparticular person, corporation or entity asdetermined by the proper authority9

$. efusing or neglecting to carry publicmail upon re>uest. "ecs. 10 and 18#

ACTS RE78IRING PRIOR APPRO'AL1. ?stablish and maintain individual or joint

rates92. ?stablish and operate new units9. +ssue free tic3ets9$. +ssue any stoc3 or stoc3 certificates

representing an increase of capital9(. Capitalie any franchise in e5cess of the

amount actually paid to the Government9

/. ell, alienate, mortgage or leaseproperty, certificates or franchise.

6nder ec. 27"g# of C.A. -o. 1$/, the sale,etc. may be negotiated and completed beforethe approval by the proper authority. +tsapproval is not a condition precedent to thevalidity of the contract. ;he approval isnecessary only to protect public interest.

PRIOR OPERATOR/OLD OPERATOR R8LE

;he rule allowing an e5isting franchisedoperator to invo3e a preferential right withinthe authoried territory as long as he renderssatisfactory and economical service.

;he policy is not to issue a certificate to a

second operator to cover the same field andin competition with a first operator who isrendering sufficient, ade>uate andsatisfactory service. ;he prior operator mustfirst be given an opportunity to improve itsservice, if inade>uate or deficient.

Purpose= ;o prevent ruinous and wastefulcompetition in order that the interests of thepublic would be conserved and preserved.

+t subordinates the prior applicant rulewhich gives the first applicant priority only ifthings and circumstances are e>ual.

&here the operator either fails or neglects

to ma3e the improvement or effect the



increase in services, especially when giventhe opportunity, new operators should begiven the chance to give the services neededby the public.

PRIOR APPLICANT R8LE Presupposes a situation when two interestedpersons apply for a certificate to operate apublic utility in the same community overwhich no person has as yet granted anycertificate. +f it turns out, after the hearing,that the circumstances between the twoapplicants are more or less e>ual, then theapplicant who applied ahead of the other, willbe granted the certificate.

RATE+FI9ING POWER

;he rate to be fi5ed must be just, foundedupon conditions which are fair and reasonableto both the owner and the public.

A rate is just and reasonable if it conforms

to the following re>uirements=1. 4ne which yields to the carrier a fair

return upon the value of theproperty employed in performing theservice9 and

2. 4ne which is fair to the public for theservice rendered.

REGISTERED OWNER R8LE

;he registered owner of a certificate ofpublic convenience is liable to the public forthe injuries or damages suffered by thirdpersons caused by the operation of saidvehicle, even though the same had beentransferred to a third person.

;he registered owner is not allowed to

escape responsibility by proving that a thirdperson is the actual and real owner Reason= +twould be easy for him, by collusion withothers or otherwise, to transfer theresponsibility to an indefinite person, or toone who possesses no property with which torespond financially for the damage or injurydone. "?reo, et al. vs. epte 172 Phil 17#.

?ABIT SYSTEM

A system whereby a person who has beengranted a certificate of public convenienceallows other persons who own motor vehiclesto operate under such license, for a fee orpercentage of such earnings. +t is void andine5istent under Art. 1$78, Civil Code.

Effe"#$1. ;he transfer, sale, lease or assignment of

the privilege granted is valid between thecontracting parties but not upon thepublic or third persons. "Gelisan vs.Alday, 1($ CA 00#

2. ;he registered owner is primarily liablefor all the conse>uences flowing from theoperations of the carrier.

;he public has the right to assumethat the registered owner is the actual or

lawful owner thereof. +t would be verydifficult and often impossible, as apractical matter, for the public to enforcetheir rights of action that they may havefor injuries inflicted by the vehicle i) the4should be required to pro/e who theactual owner is. ":enedicto vs. +AC, 10CA ($#

. ;he thrust of the law in enjoining the3abit system is to identify the personupon whom responsibility may be fi5edwith the end in view of protecting theriding public "%im vs. CA CA 8$#.

$. ;he registered owner cannot recoverfrom the actual owner and the lattercannot obtain transfer of the vehicle to

himself, both being in pari delicto. ";ejaBar3eting vs. +AC#(. !or the better protection of the public,

both the registered owner and the actualowner are jointly and severally liable withthe driver. "Kamboanga ;ransportationCo. vs. CA#

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