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San Beda College of Law
54
MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ CARRIAGE
A contract whereby a person, natural or juridical,
obligates to transport persons, goods, or both, from
one place to another, by land, air or water, for a
price or compensation.
Classifications:
1. Common or Private
2. Goods or Passengers
. !or a fee "for hire# or Gratuitous
$. %and, &ater'maritime, or Air
(. )omestic'inter*island'coastwise or
+nternational'foreign
+t is a relationship which is imbued with the
public interest.
COMMON CARRIER
Persons, corporations, firms or associations
engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air,
for compensation, offering their services to the
public "Art. 1,2, Civil Code#.
Art. 1,2 of the -ew Civil Code avoids any
distinction between one whose principal business
activity is the carrying of persons or goods or both
and one who does such carrying only as an ancillary
activity "sideline#. +t also avoids a distinction
between a person or enterprise offering
transportation service on a regular or scheduled
basis and one offering such service on an
occasional, episodic or unscheduled basis.
-either does the law distinguish between a
carrier offering its services to the general public that
is the general community or population and one
who offers services or solicits business only from a
narrow segment of the general population.
A person or entity is a common carrier even if
he did not secure a Certificate of Public Convenience
")e Gu.man vs. CA, 1/0 1C2A /12#.
+t ma3es no distinction as to the means of
transporting, as long as it is by land, water or air. +t
does not provide that the transportation should be
by motor vehicle. "!irst Philippine +ndustrial
Corporation vs. CA#
4ne is a common carrier even if he has no fi5ed
and publicly 3nown route, maintains no terminals,
and issues no tic3ets "Asia %ighterage 1hipping, +nc.
vs. CA#.
Characteristics:
1. 6nderta3es to carry for all people indifferently
and thus is liable for refusal without
sufficient reason "%astimoso vs. )oliente,
4ctober 27, 18/1#9
2. Cannot lawfully decline to accept a particular
class of goods for carriage to the prejudice
of the traffic in these goods9
. -o monopoly is favored ":atangas ;rans.
vs. 4rlanes, (2 P<+% $((#9
$. Provides public convenience.
PRIVATE CARRIER
4ne which, without being engaged in the
business of carrying as a public employment,
underta3es to deliver goods or passengers for
compensation. "<ome +nsurance Co. vs. American
1teamship Agency, 2 1C2A 2$#
TESTS WETER CARRIER IS COMMON OR
PRIVATE:
;he 1C in !irst Philippine +ndustrial Corporation
vs. CA "188(# reiterated the following tests=
1. +t must be engaged in the business of
carrying goods for others as a public
employment and must hold itself out as
ready to engage in the transportation of
goods generally as a business and not as
a casual occupation9
2. +t must underta3e to carry goods of the
3ind to which its business in confined9
. +t must underta3e to carry by the method
by which his business is conducted and
over its established roads9 and
$. ;he transportation must be for hire.
+n -ational 1teel Corp. vs. CA "188,# the 1C held
that the true test of a common carrier is the
carriage of goods or passengers provided it has
space for all who opt to avail themselves of its
transportation for a fee.

COMMON CARRIER PRIVATE
CARRIER
1. As to availability
<olds himself out for all
people indiscriminately
Contracts with particular
individuals or groups
only
2. As to re>uired diligence
?5traordinary diligence is
re>uired
4rdinary diligence is
re>uired
. As to regulation
1ubject to 1tate
regulation
-ot subject to 1tate
regulation
$. 1tipulation limiting liability
Parties may not agree on
limiting the carrier@s
liability e5cept when
provided by law
Parties may limit the
carrier@s liability,
provided it is not
contrary to law, morals
or good customs
(. ?5empting circumstance
Prove e5traordinary
diligence and Art. 1,,
-CC
caso fortuito, Art. 11,$
-CC
/.Presumption of negligence
;here is a presumption
of fault or negligence
-o presumption of fault
or negligence
,.Governing law
%aw on common carriers %aw on obligations and
contracts
GOVERNING LAWS
A! "o#estic/inter$islan%/coast&ise
Applicable to %and, &ater, and Air transportation
1. Civil Code * primary
2. Code of Commerce "Arts. $8, ,8, (,*
,$, (07, 07/*0$(# * suppletory
'! International/forei(n/o)erseas *Forei(n
co+ntr, to Phili--ines.
COMMERCIAL LAW COMMITTEE
CHAIRPERSON: Garny Luisa Alegre ASST. CHAIRPERSON: Jayson OS Ramos EDP: ea!ri" I. Ramos S#JECT HEADS:
$ari%&elle De 'era (Nego!ia)le Ins!rumen!s La*+, Jose -ernan.o Lla/e (Insuran%e+, Al.ri%& Del Rosario (Trans0or!a!ion La*s+,
S&irley $ae Ta)ang%ura1 on 'in%en! Agus!in (Cor0ora!ion La*+, 2arl S!e/en Co (S0e%ial La*s+, Jo&n Lemuel Ga!.ula (an3ing
La*s+, Ro)es0ierre C# (La* on In!elle%!ual Pro0er!y+
55
Applicable to &ater'maritime and Air
transportation
;he law of the country of destination generally
applies.
1. Civil Code * primary
2. Code of Commerce * suppletory
. 4thers * suppletory
a. &ater'maritime= Carriage of Goods by
1ea Act "C4G1A#
b. Air= &arsaw Convention
I! NEW CIVIL CO"E
*Arts! /012$/033.
RE45IREMENT OF E6TRAOR"INAR7
"ILIGENCE
2endition of service with the greatest s3ill and
utmost foresight. ")avao 1tevedore Co. v.
!ernande.#
2ationale=
1. !rom the nature of the business and for
reasons of public policy "Art. 1,#
2. 2elationship of trust
. :usiness is impressed with a special public
duty
$. Possession of the goods
(. Preciousness of human life
A common carrier is not an absolute insurer of all
ris3s of travel.
COVERAGE
1. Aigilance over goods "Arts. 1,$*1,($#9 and
2. 1afety of passengers "Arts. 1,((*1,/#.
PASSENGER
A person who has entered into a contract of
carriage, e5press or implied, with the carrier. ;hey
are entitled to e5traordinary diligence from the
common carrier.
;he following are not considered passengers, and
are entitled to ordinary diligence only=
a. 4ne who has not yet boarded any part of
a vehicle regardless of whether or not he
has purchased a tic3et9
b. 4ne who remains on a carrier for an
unreasonable length of time after he has
been afforded every safe opportunity 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 with the 3nowledge and
consent of the carrier9
e. 4ne who has boarded a wrong vehicle,
has been properly informed of such fact,
and on alighting, is injured by the carrier9
f. +nvited guests and accommodation
passengers. "%ara vs. Aalencia#
g. 4ne who rides any part of the vehicle
which is unsuitable or dangerous or which
he 3nows is not designed or intended for
passengers.
"EFENSES OF A COMMON CARRIER IN TE
CARRIAGE OF GOO"S
1. CA14 !42;6+;4'!42C? BAC?62?
Re8+isites:
a. Bust be the pro5imate and only cause of
the loss
b. ?5ercise of due diligence to prevent or
minimi.e the loss before, during or after the
occurrence of the disaster "Art. 1,8#
c. Carrier has not negligently incurred in
delay in transporting the goods "Art. 1,$7#
!ire is not considered a natural disaster or
calamity as it arises almost invariably from some act
of man. "?astern 1hipping %ines +nc. vs. +AC#
Bechanical defects are not force majeure if the
same was discoverable by regular and ade>uate
inspections. "-otes and Cases on the %aw on
;ransportation and Public 6tilities, A>uino, ;. D
<ernando, 2.P. 277$ ed. p.127*122#
2. AC;1 4! P6:%+C ?-?BE
Re8+isites:
a. Bust be the pro5imate and only cause of
the loss
b. ?5ercise of due diligence to prevent or
minimi.e the loss before, during or after the
act causing the loss, deterioration or
destruction of the goods "Art. 1,8#
. -?G%+G?-C? 4! ;<? 1<+PP?2 42 4&-?2
a. 1ole and pro5imate cause= absolute defense
b. Contributory= partial defense. "Art. 1,$1#
$. C<A2AC;?2 4! ;<? G44)1 42 )?!?C;1 +-
;<? PACF+-G 42 +- ;<? C4-;A+-?2
?ven if the damage should be caused by the
inherent defect'character of the goods, the common
carrier must e5ercise due diligence to forestall or
lessen the loss. "Art. 1,$2#
;he carrier which, 3nowing the fact of improper
pac3ing of the goods upon ordinary observation, still
accepts the goods notwithstanding such condition,
is not relieved of liability or loss or injury resulting
therefrom. "1outhern %ines, +nc. v. CA, $ 1C2A 2(0#
(. 42)?2 42 AC; 4! P6:%+C A6;<42+;E
1aid public authority must have the power to
issue the order "Art. 1,$#. Conse>uently, where the
officer acts without legal process, the common
carrier will be held liable. "Gan.on v. CA 1/1 1C2A
/$/#
)iligence in the selection and supervision of
employees under Article 2107 of the Civil Code
cannot be interposed as a defense by the common
carrier because the liability of the carriers arises
from the breach of the contract of carriage. ;he
defense under said articles is applicable to
negligence in >uasi*delicts under Art. 21,/. ")el
Prado v. Banila ?lectric Co., (2 Phil 877#
LIA'ILIT7 OF A COMMON CARRIER FOR
"EAT OR IN95RIES TO PASSENGERS "5E TO
ACTS OF ITS EMPLO7EES AN" OTER
PASSENGERS OR STRANGERS
FOR ACTS OF ITS
EMPLO7EES
FOR ACTS OF OTER
PASSENGERS OR
STRANGERS
2e>uired diligence and defense
56
?5traordinary diligence 4rdinary diligence
-ature of liability
;ort9 however,
;he employee must be
on duty at the time of
the act. "Baranan v.
-ot absolute9 limited
by Art. 1,/
Pere.#
;he carrier is liable when its personnel allowed a
passenger to drive the vehicle causing it to collide
with another vehicle resulting to the injuries
suffered by the other passengers. "B22 vs.
:allesteros, 1/ 1C2A /$1#
CARRIAGE OF GOO"S CARRIAGE OF PASSENGERS
Parties
1. Common carrier
2. 1hipper
. Consignee
1. Common carrier
2. Passenger
Ca+se of lia:ilit,
)elay in delivery, loss, destruction, or deterioration of
the goods
)eath or injury to the passengers
"+ration of lia:ilit,
!rom the time the goods are unconditionally placed in
the possession of, and received by the carrier for
transportation until the same are delivered actually or
constructively by the carrier to the consignee or to the
person who has the right to receive them. "Art. 1,/#
+t remains in full force and effect even when they
are temporarily unloaded or stored in transit unless the
shipper or owner has made use of the right of
stoppage in transitu. "Art. 1,,#
+t continues to be operative even during the time
the goods are stored in a warehouse of the carrier at
the place of destination until the consignee has bee
advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or
otherwise dispose of them. "Art. 1,0#
)elivery of goods to the custom authorities is not
delivery to the consignee. "%u )o v. :inamira, 171 Phil
127#
;he duty of a common carrier to provide safety to its
passengers so obligates it not only during the course
of the trip, but for so long as the passengers are
within its premises and where they ought to be in
pursuance to the contract of carriage. "%2;A v.
-avidad, G277H#
All persons who remain on the premises within a
reasonable time after leaving the conveyance are to
be deemed passengers, and what is a reasonable time
or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare
for his departure. "%a Ballorca v. CA, 1, 1C2A ,8 9
Abioti. 1hipping Corporation v. CA, 1,8 1C2A 8(#
+t is the duty of common carriers of passengers to
stop their conveyances a reasonable length of time in
order to afford passengers an opportunity to enter,
and they are liable for injuries suffered from the
sudden starting up or jer3ing of their conveyances
while doing so. ;he duty which the carrier of
passengers owes to its patrons e5tends to persons
boarding the cars as well as to those alighting
therefrom ")angwa ;rans Co., +nc. vs. CA 272 1C2A
(,$#.
Pres+#-tion of ne(li(ence
Art.1,( Civil Code
2eason= As to when and how goods were damaged in
transit is a matter peculiarly within the 3nowledge of
the carrier and its employees. "Birasol v. )ollar, (
P<+% 12$#
Bere proof of delivery of goods to a carrier in good
order and the subse>uent arrival of the same goods at
the place of destination in bad order ma3es for a prima
facie case against the carrier. "Coastwise %ighterage
Corp. v. CA, 2$( 1C2A ,8/#
Art.1,(( Civil Code
2eason= ;he contract between the passenger and the
carrier imposes on the latter the duty to transport the
passenger safely9 hence the burden of e5plaining
should fall on the carrier.
57
"efenses
1. 4rdinary circumstance= ?5ercise of
e5traordinary diligence "Art. 1,(#
2. 1pecial circumstances=
a. !lood, storm, earth>ua3e, lighting, or
other natural disaster or calamity "plus
force majeure#
b. Act of the public enemy in war,
whether international or civil
c. Act or omission of the shipper or the
owner of goods
d. ;he character of the goods or defects
in the pac3ing or in the containers
e. 4rder or act of competent public
authority "Art. 1,$#
1. ?5ercise of e5traordinary diligence "Art.
1,(/#
2. Caso fortuito
Vali% sti-+lations
1. 2eduction of degree of diligence to ordinary
diligence, provided it be=
a# +n writing, signed by the shipper or owner9
b# 1upported by a valuable consideration other
than the service rendered by the carriers9
and
c# 2easonable, just and not contrary to public
policy. "Art. 1,$$#
2. !i5ed amount of liability= A contract fi5ing the sum
to be recovered by the owner or shipper for the loss,
destruction or deterioration of the goods, if it is
reasonable and just under the circumstances and has
been fairly and freely agreed upon. "Art. 1,(7#
. %imited liability for delay= An agreement limiting the
common carrier@s liability for delay on account of
stri3es or riots "Art. 1,$0#
$. 1tipulation limiting liability to the value of the goods
appearing in the bill of lading, unless the shipper or
owner declares a greater value. "Art. 1,$8#
;he diligence re>uired in the carriage of the goods
may be reduced by only one degree, from
e5traordinary to ordinary diligence or diligence of a
good father of a family. "Art. 1,$$, Art. 1,$(, no. $#
1tipulation limiting liability when a passenger is
carried gratuitously, but not for willful acts or gross
negligence. "Art. 1,(0#
Voi% sti-+lations
1. ;hat the goods are transported at the ris3 of the
owner or shipper9
2. ;hat carrier will not be liable for any loss,
destruction or deterioration of the goods9
. ;hat the carrier need not observe any diligence
in the custody of the goods9
$. ;hat the carrier shall e5ercise a degree of
diligence less than that of a good father of a family
over the movable transported9
(. ;hat the carrier shall not be responsible for the
acts or omissions of his or its employees9
/. ;hat the carrier@s liability for acts committed by
thieves or robbers who do not act with grave or
irresistible threat, violence or force is dispensed with
or diminished9
,. ;hat the carrier is not responsible for the loss,
destruction or deterioration of the goods on account
of the defective condition of the car, vehicle, ship or
)ispensing with or lessening the e5traordinary
responsibility of a common carrier for the safety of
passengers imposed by law by stipulation, by posting
of notices, by statements on tic3ets or otherwise. "Art.
1,(,#
58
other e>uipment used in the contract of carriage.
"Art. 1,$(#
R5LES ON PASSENGERS; 'AGGAGE
IN TE C5STO"7 OF
TE PASSENGERS
*AN"$CARRIE".
IN TE C5STO"7
OF TE COMMON
CARRIER
*CEC<E"$IN.
Le(al nat+re of the :a((a(e
-ecessary deposit Considered as IgoodsJ
Re8+ire% %ili(ence :, the co##on carrier
)iligence of a depositary
"ordinary diligence#
?5traordinary diligence
A--lica:le r+les
Arts. 1880 and 2777*277 Arts. 1,*1,(
CONC5RRING CA5SES OF ACTION ARISING
FROM TE NEGLIGENT ACT OF TE COMMON
CARRIER
1. Culpa contractual "breach of contract#
4nly the carrier is primarily liable and not the
driver, because there is no privity between the driver
and the passenger.
:asis= Art.1,(8, -CC.
-o defense of due diligence in the selection and
supervision of employees.
2. Culpa a>uiliana ">uasi*delict#
;he carrier and driver are solidarily liable as joint
tortfeasors.
:asis= Art. 2107, -CC.
)efense of due diligence in the selection and
supervision of employees is available. ?5ception=
maritime tort resulting in collision. "1ee notes on
Collision#
. Culpa criminal "criminal negligence#
;he driver is primarily liable. ;he carrier is
subsidiarily liable only if the driver is convicted and
declared insolvent.
:asis= Art. 177, 2PC.
+n case of injury to a passenger due to the
negligence of the driver of the bus on which he is
riding and of the driver of another vehicle, the
drivers as well as the owners of the two vehicles are
jointly and severally liable for damages. +t ma3es
no difference that the liability of the bus driver and
owner springs from contract while that of the owner
and driver of the other vehicle arises from >uasi*
delict. "!abre vs. CA#
LIMITATIONS AS TO CARRIER;S LIA'ILIT7
INVALI" AS 'EING
CONTRAR7 TO P5'LIC
POLIC7
VALI" =
ENFORCEA'LE
1. 4ne e5empting the
carrier from any and all
liability for loss or damage
occasioned by its own
negligence.
2. An un>ualified
limitation of liability to an
agreed valuation.
1. 4ne limiting the
liability of the carrier to
an agreed valuation,
unless the shipper
declares a higher value
and pays a higher rate
of freight
"<.?. <eacoc3
Company vs.
Bacondray D Company
+nc.#
<owever, the carrier cannot limit its liability for
injury to, or loss of, goods shipped where such
injury or loss was caused by its own negligence.
"1hewaram vs. PA%, 1, 1C2A /7/#
SPECIAL R5LES ON LIA'ILITES OF AIRLINE
CARRIERS
1. +n case of flight diversion due to bad weather or
other circumstances beyond the pilot@s control, the
relation between the carrier and the passenger
continues until the latter has been landed at the
port of destination and has left the carrier@s
premises. ;he carrier should necessarily e5ercise
e5traordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers
until they have reached their final destination.
"Philippine Airlines vs. CA, 22/ 1C2A $2#
2. ?ven where overboo3ing of passengers is allowed
as a commercial practice, the airline company would
still be guilty of bad faith and still be liable for
damages if it did not properly inform passenger that
it could breach the contract of carriage even if they
were confirmed passengers. "Kalamea vs. CA, 220
1C2A 2#
. An open*dated tic3et constitutes a complete
contract between the carrier and passenger. <ence,
the airline company is liable if it refused to confirm a
passenger@s flight reservation. "1ingson vs. CA, 202
1C2A 1$8#
$. An airline company which issued a confirmed
tic3et to a passenger covering successive trips on
different airlines can be held liable for damages
occasioned by Ibumping offJ by one of the
successive airlines. "%ufthansa German Airlines vs.
CA, 20 1C2A 287#
(. An airline tic3et providing that carriage by
successive air carriers is to be regarded as a Isingle
operationJ is to ma3e the issuing carrier liable for
the tortuous conduct of the other carrier. A printed
provision in the tic3et limiting liability only to its own
conduct is not enough to rebut that liability. "F%B
2oyal )utch Airlines vs. CA, /( 1C2A 2,#
II! CO"E OF COMMERCE
A! OVERLAN" TRANSPORTATION
*Arts! 1>?$10?.
A--lica:ilit,
1. )omestic land and water'maritime transportation.
"Pandect of Commercial %aw and Curisprudence,
Custice Cose Aitug, 188, ed.#
2. )omestic Air ;ransportation. "Commercial %aw
2eview, Cesar Aillanueva, 277$ ed.#

IMPORTANT CONCEPTS:
1. :ill of lading
2. 4bligations of the carrier
. 2ight of abandonment
$. -otice of damage
(. Combined carrier agreement
'ILL OF LA"ING
;he written ac3nowledgment of receipt of goods
and agreement to transport them to a specific place
to a person named or to his order.
2ules=
1. +t is not indispensable for the creation of a
contract of carriage. "Compania Baritima vs.
+nsurance Company of -orth America, 12 1C2A
21#
2. Ambiguity is construed against the carrier, the
contract being one of adhesion.
. ;he consignee, although the instrument is
oftentimes drawn up only by the consignor and
carrier, becomes bound by all the stipulations
contained therein by ma3ing a claim for loss on the
basis of said bill of lading. "1ea*%and 1ervices +nc.
vs. +AC#
$. ;he right of a party to recover for loss of
shipment consigned to him under a bill of lading
drawn up only by and between the shipper and the
carrier, springs from either a relation of agency
between him and the shipper, or his status as
stranger in whose favor some stipulation is made in
said contract, and who becomes a party thereto
when he demands fulfillment of that stipulation.
"Art. 111 "2#, "Bendo.a vs. PA% +nc.#
(. Acceptance of the bill of lading without dissent
raises the presumption that all the terms therein
where brought to the 3nowledge of the shipper and
agreed to by him and, in the absence of fraud or
mista3e9 he is estopped from thereafter denying
that he assented to such terms. "-otes and Cases
on the %aw on ;ransportation and Public 6tilities,
A>uino, ;. D <ernando, 2.P. 277$ ed. p.2/1#
<in%s:
1. 4n board * issued when the goods have
been actually placed aboard the ship with
very reasonable e5pectation that the
shipment is as good as on its way.
2. 2eceived * one in which it is stated that the
goods have been received for shipment with
or without specifying the vessel by which the
goods are to be shipped.
3. -egotiable * one in which it is stated that
the goods referred to therein will be
delivered to the bearer or to the order of any
person named therein.
4. -on*negotiable * 4ne in which it is stated
that the goods referred to therein will be
delivered to a specified person.
5. Clean L 4ne which does not indicate any
defect in the goods.
6. !oul L 4ne which contains a notation
thereon indicating that the goods covered by
it are in bad condition.
7. 1pent L 4ne which covers goods that
already have been delivered by the carrier
without a surrender of a signed copy of the
bill.
8. ;hrough L 4ne issued by the carrier who is
obliged to use the facilities of other carriers
as well as his own facilities for the purpose
of transporting the goods from the city of
the seller to the city of the buyer, which bill
of lading is honored by the second and other
interested carriers who do not issue their
own bills.
9. Custody L 4ne wherein the goods are
already received by the carrier but the vessel
indicated therein has not yet arrived in the
port.
10. Port L 4ne which is issued by the carrier to
whom the goods have been delivered, and
the vessel indicated in the bill of lading by
which the goods are to be shipped is already
in the port where the goods are held for
shipment.
F+nctions:
1. :est evidence of the e5istence of the
contract of carriage of cargo "Art. (#
2. )ocument of title
3. 2eceipt of cargo
$. Contract to transport and deliver goods as
stipulated
(. 1ymbol of the goods
O'LIGATIONS OF TE CARRIER
A! "+t, to acce-t the (oo%s
G?-?2A% 26%?= A common carrier cannot
ordinarily refuse to carry a particular class of goods.
?MC?P;+4-= !or some sufficient reason the
discrimination against the traffic in such goods is
reasonable and necessary. "!isher vs. Eangco
1teamship Co. 1 Phil 1#.
+nstances when the carrier may validly refuse to
accept the goods include the ff=
1.# Goods sought to be transported are dangerous
objects, or substances including dynamite and other
e5plosives
2.# Goods are unfit for transportation
.# Acceptance would result in overloading
$.# Contrabands or illegal goods
(.# Goods are injurious to health
/.# Goods will be e5posed to untoward danger li3e
flood, capture by enemies and the li3e
,.# Goods li3e livestoc3 will be e5posed to disease
0.# 1tri3e
8.# !ailure to tender goods on time. "-otes and
Cases on the %aw on ;ransportation and Public
6tilities, A>uino, ;. D <ernando, 2.P. 277$ ed. p./0#
+n case of carriage by railway, the carrier is
e5empted from liability if carriage is insisted upon by
the shipper, provided its objections are stated in the
bill of lading.
<owever, when a common carrier accepts cargo
for shipment for valuable consideration, it ta3es the
ris3 of delivering it in good condition as when it was
loaded. "PA% vs. CA#
'! "+t, to %eli)er the (oo%s
-ot only to transport the goods safely but to the
person indicated in the bill of lading. ;he goods
should be delivered to the consignee or any other
person to whom the bill of lading was validly
transferred or negotiated.
Ti#e of %eli)er,
Sti-+late% in
Contract/'ill of
La%in(
No sti-+lation
1. Carrier is bound to
fulfill the contract and is
liable for any delay9 no
1. &ithin a reasonable
time.
2. Carrier is bound to
matter from what cause
it may have arisen.
forward them in the 1
st
shipment of the same or
similar goods which he
may ma3e to the point
of delivery. "A2;. (0
Code of Commerce#
Effects of %ela,
a. Berely suspends and generally
does not terminate the contract
of carriage
b. Carrier remains duty bound to
e5ercise e5traordinary diligence
c. -atural disaster shall not free
the carrier from responsibility
"Art.1,$7#
d. +f delay is without just cause,
the contract limiting the
common carrier@s liability cannot
be availed of in case of loss or
deterioration of the goods
"Art.1,$,#
RIGT OF CONSIGNEE TO A'AN"ON GOO"S
Instances:
1. Partial non*
delivery, where the
goods are useless
without the others
"Art. /#9
2. Goods are
rendered useless
for sale or
consumption for
the purposes for
which they are
properly destined
"Art. /(#9 and
. +n case of delay
through the fault of
the carrier "Art.
,1#.
NOTICE OF "AMAGE *ART! 133.
Re8+isites for a--lica:ilit,:
1. )omestic'inter*island'coastwise transportation
2. %and'water'air transportation
. Carriage of goods
$. Goods shipped are damaged
R+les:
a. Patent damage= shipper must file a claim against
the carrier immediately upon delivery "it may be
oral or written#
b. %atent damage= shipper should file a claim
against the carrier within 2$ hours from delivery.
Note: ;hese rules does not apply to misdelivery of
goods. "2oldan vs. %im Pon.o#
Purpose of notice= ;o inform the carrier that the
shipment has been damaged, and it is charged with
liability therefore, and to give it an opportunity to
ma3e an investigation and fi5 responsibility while
the matter is fresh.
;he filing of notice of claim is a condition
precedent for recovery.
1horter period may be stipulated by the parties
because it merely affects the shipper@s remedy and
does not affect the liability of the carrier.
"P<+%ABG?- vs. 1weetlines, +nc.#
Prescri-ti)e Perio%
-ot provided by Article //. ;hus, in such
absence, Civil Code rules on prescription apply.
+f despite the notice of claim, the carrier refuses
to pay, action must be filed in court.
1. -o bill of lading was issued=
within 3 ,ears
2. :ill of lading was issued= within
/@ ,ears!
ARTICLE 133 COGSA Sec!1 *3.
A--lica:ilit,
1. )omestic
'inter*
island'coa
stwise
transport
ation
2. %and,
water, air
transport
ation
. Carriage
of goods
1. +nternational'
overseas'foreign "from
foreign country to
Phils.#
-ote= subject to the
rule on Paramount
Clause
2. &ater'maritime
transportation
. Carriage of goods
Notice of %a#a(e
1.
2.
1.
-ot
2.
*
Prescri-ti)e -erio%
-one provided9 Civil
Code applies.
4ne year from the date
of delivery "delivered
but damaged goods#,
or date when the vessel
left port or from the
date of delivery to the
arrastre "non*delivery
or loss#.
COM'INE" CARRIER AGREEMENT *ART! 101.
G?-?2A% 26%?= +n case of a contract of
transportation of several legs, each carrier is
responsible for its particular leg in the contract.
?MC?P;+4-= A combined carrier agreement where
a carrier ma3es itself liable assuming the obligations
and ac>uiring as well the rights and causes of action
of those which preceded it.
A! MARITIME COMMERCE
*Arts! A01$B3?.
IMPORTANT CONCEPTS:
1. Berchant vessel
2. Baritime lien and Preference of Credit
. )octrine of limited liability
$. Causes of revocation of voyage
(. Participants in maritime commerce
/. Charter party
,. %oans on bottomry and respondentia
0. Accidents in maritime commerce
MARITIME/A"MIRALT7 LAW
+t is the system of laws which particularly relates
to the affairs and business of the sea, to ships, their
crews and navigation, and to maritime conveyance
of persons and property. "-otes and Cases on the
%aw on ;ransportation and Public 6tilities, A>uino D
<ernando, citing !rancisco, p.2($#
Baritime laws apply only to maritime trade and
sea voyages. "Pandect of Commercial %aw and
Curisprudence, Custice Cose Aitug, 188, ed.#
Arrastre service is not maritime in character. +t
refers to a contract for the unloading of goods from
a vessel. "+C;1+ vs. Prudential Guarantee, 27 1C2A
2$$#
CARACTERISTICS OF MARITIME
TRANSACTION
1. 2eal * similar to transactions over real property
with respect to effectivity against third persons
which is done through registration. "2ubiso vs.
2ivera, , Phil. ,2#. ;he evidence of real nature is
shown by= 1# the limitation of the liability of the
agents to the actual value of the vessel and the
freight money9 and 2# the right to retain the cargo
and embargo and detention of the vessel "%u.on
1tevedoring Corp v. CA, 1(/ 1C2A 1/8#9
2. <ypothecary * the liability of the owner of the
value of the vessel is limited to the vessel itself
")octrine of %imited %iability#.
;he real and hypothecary nature of maritime law
simply means that the liability of the carrier in
connection with losses related to maritime contracts
is confined to the vessel, which stands as the
guaranty for their settlement. "Aboiti. 1hipping
Corp. vs. General Accident !ire and %ife Assurance
Corp. 21, 1C2A (8#.
MERCANT VESSEL
Aessel engaged in maritime commerce, whether
foreign or otherwise. ":ar 2eview Baterials in
Commercial %aw, Corge Biravite, 2772 ed.#
Constitutes property which may be ac>uired and
transferred by any of the means recogni.ed by law.
;hey shall continue to be considered as personal
property. "Arts. (,, (0(#
;hey are susceptible to maritime liens such as for
the repair, e>uipping and provisioning of the vessel
in the preparation of a voyage, as well as mortgage
liabilities, in satisfaction of which a vessel may be
validly arrested and sold. "1hip Bortgage )ecree of
18,0#
MARITIME LIEN
+t constitutes a present right of property in the
ship, a jus in re, to be afterward enforced in
admiralty by process in rem. "P-: vs. CA, , 1C2A
01#
+f the maritime lien arose prior to the recording
of a preferred mortgage, it shall have priority over
the said mortgage lien. "P-: vs. CA, , 1C2A 01#
OR"ER OF PREFERENCE IN CASE OF SALE OF
VESSEL
R!A! 3/@3 P!"! /A2/
Effecti)it, %ate
18/8 18,0
A--lica:ilit,
4verseas shipping only :oth domestic and
overseas shipping
<in% of sale
Cudicial Cudicial and
e5trajudicial
Or%er of Preference
A preferred mortgage
shall have priority over
all claims against the
vessel, e5cept the
following preferences in
the order stated=
1. Cudicial costs of the
proceedings9
2. ;a5es due the
Philippine Government9
. 1alaries and wages
of the Captain and
Crew of the vessel
during its last voyage9
$. General average or
salvage including
contract salvage,
bottomry loans, and
indemnity due shippers
for the value of goods
transported but which
were not delivered to
the consignee9
(. Costs of repair and
e>uipment of the
vessel, and provisioning
of food, supplies and
fuel during its last
voyage9 and
/. Preferred mortgages
registered prior in time.
;he preferred mortgage
lien shall have priority
over all claims against
the vessel, e5cept the
following preferences in
the order stated=
1. ?5penses and fees
allowed and costs ta5ed
by the court and ta5es
due to the Government9
2. Crew@s wages9
. General average9
$. 1alvage, including
contract salvage9
(. Baritime liens arising
prior in time to the
recording of the
preferred mortgage9
/. )amages arising out
of tort9 and
,. Preferred mortgage
registered prior in time.
?ffect of sale= All pre*e5isting claims in the vessel
are terminated. ;hey will then be satisfied from the
proceeds of the sale subject to the order of
preference.
"OCTRINE OF LIMITE" LIA'ILIT7
*7POTECAR7 R5LE.
Cases where applicable=
1. Art. (0, L civil liability for indemnities to
third persons
2. 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 for advances made by
the ship agent if the vessel is lost by
shipwrec3 or capture
G?-?2A% 26%?= ;he liability of shipowner and
ship agent is limited to the amount of interest in
said vessel such that where vessel is entirely lost,
the obligation is e5tinguished. "%u.on 1tevedoring v.
?scano, 1(/ 1C2A 1/8# ;he interest e5tends to= 1#
the vessel itself9 2# e>uipments9 # freightage9 and
$# insurance proceeds. "Chua v. +AC, 1// 1C2A 10#
?MC?P;+4-1=
1. Claims under &or3men@s Compensation "Abueg
vs. 1an )iego ,, Phil ,7#9
2. + njury or damage due to shipowner or to the
concurring negligence of the shipowner and
the captain9
3. ;he vessel is insured "Aas>ue. vs. CA 10
1C2A ((#.
4. ?5penses for repair on vessel completed before
loss9
5. +n case there is no total loss and the vessel is
not abandoned9
6. Collision between two negligent vessels9
Abandonment of the vessel is necessary to limit
the liability of the shipowner. ;he only instance
were abandonment is dispensed with is when the
vessel is entirely lost "%u.on 1tevedoring vs. CA 1(/
1C2A 1/8#.
RIGT OF SIPOWNER OR SIP AGENT TO
A'AN"ON VESSEL
+nstances=
1. +n case of civil liability from indemnities to
third persons "Art. (0,#9
2. +n case of lea3age of at least N of the
contents of a cargo containing li>uids "Art.
/0,#9 and
. +n case of constructive loss of the vessel
"1ec. 10, +nsurance Code#.
RIGT OF A'AN"ONMENT
SIPOWNER OR SIP
AGENT
CONSIGNEE
What #a, :e a:an%one%
Aessel Goods shipped
Instances
1. +n case of civil liability
from indemnities to third
persons "Art. (0,#9
2. 1ec. 10, +nsurance
Code9
. +n case of lea3age of
at least N of the
contents of a cargo
containing li>uids "Art.
/0,#
1. Partial non*delivery,
where the goods are
useless without the
others "Art. /#9
2. Goods are rendered
useless for sale or
consumption for the
purposes for which they
are properly destined
"Art. /(#9 and
. +n case of delay
through the fault of the
carrier "Art. ,1#.
Effects
1. ;ransfer of
ownership of
the vessel
from the
shipowner to
the shippers or
insurer.
2. +n case of "2#,
the insurer
must pay the
insured as if
there was
actual total
loss of the
vessel.
1. ;ransfer
of
ownershi
p on the
goods
from the
shipper
to the
carrier.
2. Carrier
should
pay the
shipper
the
mar3et
value of
the
goods at
the point
of
destinati
on.
CA5SES OF REVOCATION OF VO7AGE
1. &ar or interdiction of commerce9
2. :loc3ade9
. Prohibition to receive cargo at destination9
$. ?mbargo9
(. +nability of the vessel to navigate. "Art. /$7#
Ter#s:
1. +nterdiction of commerce L A governmental
prohibition of commercial intercourse intended
to bring about an entire cessation for the time
being of all trade whatever.
2. :loc3ade L A sort of circumvallation of a place
by which all foreign connection and
correspondence is, as far as human power can
effect it, to be cut off.
. ?mbargo L A proclamation or order of a state,
usually issued in time of war or threatened
hostilities, prohibiting the departure of ships or
goods from some or all the ports of such state
until further order.
PARTICIPANTS IN MARITIME COMMERCE
A. 1hipowners and ship agents
:. Captains and masters of the vessel
C. 4fficers and crew of the vessel
). 1upercargoes
?. Pilot
A! SIPOWNERS AN" SIP AGENTS
Shi-o&ner *-ro-rietario.
Person who has possession, control and
management of the vessel and the conse>uent right
to direct her navigation and receive freight earned
and paid, while his possession continues.
Shi- a(ent *na)iero.
Person entrusted with provisioning and
representing the vessel in the port in which it may
be found9 also includes the shipowner.
-ot a mere agent under civil law9 he is solidarily
liable with the ship owner.
Powers and functions=
1. Capacity to trade9
2. )ischarge duties of the captain, subject to
Art./789
. Contract in the name of the owners with
respect to repairs, details of e>uipment,
armament, provisions of food and fuel, and
freight of the vessel, and all that relate to the
re>uirements of navigation9
$. 4rder a new voyage, ma3e a new charter or
insure the vessel after obtaining authori.ation
from the shipowner or if granted in certificate
of appointment.
Ci)il Lia:ilities of the Shi-o&ner An% Shi-
A(ent
1. All contracts of the captain, whether authori.ed
or not, to repair, e>uip and provision the
vessel9 "Art. (0/#
2. %oss and damage to the goods loaded on the
vessel without prejudice to their right to free
themselves from liability by abandoning the
vessel to the creditors. "Art. (0,#
"+t, of Shi- A(ent to "ischar(e the Ca-tain
an% Me#:ers of the Cre&
+f the seamen contract is not for a definite period
or voyage, he may discharge them at his discretion.
"Art. /7#
+f for a definite period, he may not discharge
them until after the fulfillment of their contracts,
e5cept on the following grounds=
a. +nsubordination in serious matters9
b. 2obbery9
c. ;heft9
d. <abitual drun3enness9
e. )amage caused to the vessel or to its
cargo through malice or manifest or proven
negligence. "Art. /7(#
'! CAPTAINS AN" MASTERS
;hey are the chiefs or commanders of ships.
;he terms have the same meaning, but are
particularly used in accordance with the si.e of the
vessel governed and the scope of transportation,
i.e., large and overseas, and small and coastwise,
respectively.
-ature of position "*fold character#=
1. General agent of the shipowner9
2. ;echnical director of the vessel9
. 2epresentative of the government of the
country under whose flag he navigates.
Oualifications=
1. !ilipino citi.en9
2. %egal capacity to contract9
. Bust have passed the re>uired physical
and mental e5aminations re>uired for
licensing him as such. "Art. /78#
+nherent powers=
1. Appoint crew in the absence of ship
agent9
2. 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 are wanting in
discipline9
$. Ba3e contracts for the charter of vessel in
the absence of ship agent.
(. 1upply, e>uip, and provision the vessel9
and
/. 4rder repair of vessel to enable it to
continue its voyage. "Art. /17#
1ources of funds to comply with the inherent
powers of the captain "in successive order#=
1. !rom the consignee of the vessel9
2. !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 the Code of
Commerce9
2. Feep a %og :oo3, Accounting :oo3 and
!reight :oo39
. ?5amine the ship before the voyage9
$. 1tay on board during the loading and
unloading of the cargo9
(. :e on dec3 while leaving or entering the
port9
/. Protest arrivals under stress and in case of
shipwrec39
,. !ollow instructions of and render an
accounting to the ship agent9
0. %eave the vessel last in case of wrec39
8. <old in custody properties left by
deceased passengers and crew members9
17. Comply with the re>uirements of customs,
health, etc. at the port of arrival9
11. 4bserve rules to avoid collision9
12. )emand a pilot while entering or leaving a
port. "Art. /12#
A ship@s captain must be accorded a reasonable
measure of discretionary authority to decide what
the safety of the ship and of its crew and cargo
specifically re>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 majeure9
2. 4bligations contracted for the repair,
e>uipment, and provisioning of the vessel
unless he has e5pressly bound himself
personally or has signed a bill of e5change
or promissory note in his name. "Art. /27#
Soli%ar, Lia:ilities of the Shi-
A(ent/Shi-o&ner for Acts "one :, the
Ca-tain to&ar%s Passen(ers an% Car(oes
1. )amages to vessel and to cargo due to
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 of
marine regulations. "Art. /10#
C! OFFICERS AN" CREW
1. 1ailing Bate'!irst Bate
2. 1econd Bate
. ?ngineers
$. Crew
-o liability under the following circumstances=
1. +f, before beginning voyage, captain attempts
to change it, or a naval war with the power to
which the vessel was destined occurs9
2. +f a disease brea3s out and be officially
declared an epidemic in the port of destination9
. +f the vessel should change owner or captain.
"Art. /$,#
Sailin( Mate/First Mate
1econd chief of the vessel who ta3es the place of
the captain in case of absence, sic3ness, or death
and shall assume all of his duties, powers and
responsibilities. "Art. /2,#
)uties=
1. Provide himself with maps and charts with
astronomical tables necessary for the
discharge of his duties9
2. Feep the :innacle :oo39
. Change the course of the voyage on
consultation with the captain and the
officers of the boat, following the decision
of the captain in case of disagreement9
$. 2esponsible for all the damages caused to
the vessel and the cargo by reason of his
negligence. "Arts. /20 * /1#
Secon% Mate
;a3es command of the vessel in case of the
inability or dis>ualification of the captain and the
sailing mate, assuming in such case their powers
and responsibilities.
;hird in command
)uties=
1. Preserve the hull and rigging of the
vessel9
2. Arrange well the cargo9
. )iscipline the crew9
$. Assign wor3 to crew members9
(. +nventory the rigging and e>uipment of
the vessel, if laid up. "Art. /2#
En(ineers
4fficers of the vessel but have no authority
e5cept in matters referring to the motor apparatus.
&hen two or more are hired, one of them shall be
the chief engineer.
)uties=
1. +n charge of the motor apparatus, spare
parts, and other instruments pertaining to
the engines9
2. Feep the engines and boilers in good
condition9
. -ot to change or repair the engine
without authority of the captain9
$. +nform the captain of any damage to the
motor apparatus9
(. Feep an ?ngine :oo39
/. 1upervise all personnel maintaining the
engine. "Art. /2#
Cre&
;he aggregate of seamen who man a ship, or the
ship@s company.
<ired by the ship agent, where he is present and
in his absence, the captain hires them, preferring
!ilipinos, and in their absence, he may ta3e in
foreigners, but not e5ceeding 1'( of the crew. "Art.
/$#
Classes of Sea#an;s Contracts
1. :y the voyage9
2. :y the month9 and
. :y share of profits or freightage.
9+st Ca+ses for the "ischar(e of Sea#an
While Contract S+:sists
1. Perpetration of a crime9
2. 2epeated insubordination, want of discipline9
. 2epeated incapacity and negligence9
$. <abitual drun3enness9
(. Physical incapacity9
/. )esertion. "Art. /,#
R+les in case of "eath of a Sea#an
;he seaman@s heirs are entitled to payment as
follows=
1. +f death is natural=
a. compensation up to time of death if
engaged on wage
b. if by voyage * half of amount if death
occurs on voyage out9 and full, if on
voyage in
c. if by shares * none, if before departure9
full, if after departure
2. if death is due to defense of vessel * full
payment9
. if captured in defense of vessel * full payment9
$. if captured due to carelessness * wages up to
the date of the capture. "Art. /$(#
Co#-le#ent of the Vessel
All persons on board, from the captain to the
cabin boy, necessary for the management,
maneuvers, and service, thus including the crew,
the sailing mates, engineers, sto3ers and other
employees on board not having specific
designations.
)oes not include the passengers or the persons
whom the vessel is transporting.
"! S5PERCARGOES
Persons who discharges administrative duties
assigned to him by ship agent or shippers, 3eeping
an account and record of transaction as re>uired in
the accounting boo3 of the captain. "Art. /$8#
E! PILOT
A person duly >ualified, and licensed, to conduct
a vessel into or out of ports, or in certain waters.
;he term generally connotes a person ta3en on
board at a particular place for the purpose of
conducting a ship through a river, road or channel,
or from a port.
Baster pro hac vice for the time being in the
command and navigation of the ship.
&hile in e5ercising his functions a pilot is in sole
command of the ship and supersedes the master for
the time being in the command and navigation of
the ship, the master does not surrender his vessel to
the pilot and the pilot is not the master. ;here are
occasions when the master may and should
interfere and even displace the pilot, as when the
pilot is obviously incompetent or into5icated "!ar
?astern 1hipping Company vs. CA#.
Compulsory Pilotage L 1tates possessing harbors
have enacted laws or promulgated rules re>uiring
vessels approaching their ports to ta3e on board
pilots licensed under the local laws. "-otes and
Cases on the %aw on ;ransportation and Public
6tilities, A>uino, ;. D <ernando, 2.P. 277$ ed. p.
(10#
Lia:lit, of Pilot
G?-?2A% 26%?= 4n compulsory pilotage grounds,
the <arbor Pilot is responsible for damage to a
vessel or to life or property due to his negligence.
?MC?P;=
1. Accident caused by force majeure or natural
calamity provided the pilot e5ercised prudence and
e5tra diligence to prevent or minimi.e damages.
2. Countermand or overrule by the master of the
vessel in which case the registered owner of the
vessel is liable. "1ec.11, Art.+++ PPA Admin 4rder 7*
0(#
SPECIAL CONTRACTS OF MARITIME
COMMERCE
1. Charter party
2. :ill of lading
. Contract of transportation of passengers
on sea voyages
$. %oan on bottomry
(. %oan on respondentia
/. Barine insurance
CARTER PART7
A contract by virtue of which the owner or agent
binds himself to transport merchandise or persons
for a fi5ed price.
A contract by which an entire ship, or some
principal part thereof is let'leased by the owner to
another person for a specified time or use. "Planters
Products, +nc. vs. CA, 22/ 1C2A $,/#
Parties:
1. 1hip owner or ship agent
2. Charterer
Classes:
1. :areboat or demise L ;he charterer provides
crew, food and fuel. ;he charterer is liable as if he
were the owner, e5cept when the cause arises from
the unworthiness of the vessel. ;he shipowner
leases to the charterer the whole vessel, transferring
to the latter the entire command, possession and
conse>uent control over the vessel@s navigation,
including the master and the crew, who thereby
become the charter@s servants. +t transforms a
common carrier into a private carrier.
;he charterer becomes the owner of the
vessel pro hac vice, just for that one particular
purpose only. :ecause the charterer is treated
as owner pro hac vice, the charterer assumes
the customary rights and liabilities of the
shipowner to third persons and is held liable for
the e5pense of the voyage and the wages of
the seamen.
2. Contract of Affreightment C A contract whereby
the owner of the vessel leases part or all of its space
to haul goods for others.
;he shipowner retains the possession,
command and navigation of the ship, the
charterer merely having use of the space in the
vessel in return for his payment of the charter
hired.
Finds=
a. ;ime charter L vessel is chartered for a
fi5ed period of time or duration of voyage.
b. Aoyage or trip charter L the vessel is
leased for one or series of voyages usually
for purposes of transporting goods for
charterer.
LEASE CARTER PART7
+f for a definite period,
lessee cannot give up
the lease by paying a
portion of the amount
agreed upon.
Charterer may rescind
charter party by paying
half of the freightage
agreed upon.
+f the leased property is
sold to one who 3nows
of the e5istence of the
lease, the new owner
must respect the lease.
;he new owner is not
compelled to respect the
charter party so long as
he can load the vessel
with his own cargo. "Art.
/08#
Civil law concept Commercial law concept
CARTER PART7 'ILL OF LA"ING
An entire or complete
contract.
Bore li3e a private
receipt which the
captain gives to accredit
goods received from
persons
Consensual contract 2eal contract
'ARE'OAT OR
"EMISE CARTER
CONTRACT OF
AFFREIGTMENT
*TIME OR VO7AGE
CARTER.
Charterer becomes
liable to others caused
by its negligence
4wner remains liable as
carrier and must answer
for any breach of duty
Charterer regarded as
owner pro hac vice for
the voyage
Charterer is not
regarded as owner.
4wner of vessel
relin>uishes possession,
command and
navigation to charterer
;he vessel owner retains
possession, command
and navigation of the
ship
Common carrier is
converted to private
carrier.
Common carrier is not
converted to a private
carrier.
PERSONS WO MA7 MA<E A CARTER
1. 4wner or owners of the vessel, either in
whole or in majority part, who have legal
control and possession of the vessel
2. Charterer may subcharter entire vessel to
rd
person only if not prohibited in original
charter. "Art./,8#
. 1hip agent if authori.ed by the owner's or
given such power in the certificate of
appointment. "Art.(80#
$. Captain in the absence of the ship agent
or consignee and only if he acts in
accordance with the instructions of the
agent or owner and protects the latter@s
interests. "Art./78#
RE45ISITES OF A VALI" CARTER PART7
1. Consent of the contracting parties
2. ?5isting vessel which should be placed at
the disposition of the shipper
. !reight
$. Compliance with Art. /(2 of the Code of
Commerce
Cla+ses Which Ma, 'e Incl+%e% In a Charter
Part,
9ason cla+se Cla+se -ara#o+nt or
-ara#o+nt cla+se
A stipulation in a charter
party that in case of a
maritime accident for
which the shipowner is
not responsible by law,
contract or otherwise,
the cargo shippers,
consignees or owners
shall contribute with the
shipowner in general
average. "Pandect of
Commercial %aw and
Curisprudence, Custice
Cose Aitug, 188, ed.#
A clause in a charter
party providing that the
C4G1A shall apply, even
though the
transportation is
domestic, subject to the
e5tent that any term of
the bill of lading is
repugnant to the C4G1A
or applicable law, then
to the e5tent thereof the
provision of the bill of
lading is void. "Pandect
of Commercial %aw and
Curisprudence, Custice
Cose Aitug, 188, ed.#
Ri(hts an% O:li(ations of Parties
SIPOWNER OR
SIP AGENT
CARTERER
1. +f the
vessel is
chartered
wholly,
not to
accept
cargo
from
others9
2. ;o
observe
represent
ed
capacity9
. ;o
unload
cargo
clandesti
nely
placed
$. ;o
substitut
e
another
vessel if
load is
less than
'( of
capacity9
1. ;o pay the agreed
charter price9
2. ;o pay freightage
on unboarded cargo9
. ;o pay losses to
others for loading
uncontracted cargo and
illicit cargo9
$. ;o wait if the
vessel needs repair9
(. ;o pay e5penses
for deviation. "Arts.
/,8*/0,#
(. ;o leave
the port
if the
charterer
does not
bring the
cargo
within
the lay
days and
e5tra lay
days
allowed9
/. ;o place
in a
vessel in
a
condition
to
navigate9
,. to bring
cargo to
nearest
neutral
port in
case of
war or
bloc3ade.
"Arts.
//8*/,0#
Rescission of a Charter Part,
At
charterer;s
re8+est
*Art 3BB.
At
shi-o&ner;s
re8+est
*Art! 3B?.
Fort+ito+s
ca+ses
*Art! 3?@.
1. :y
abandoning
the charter and
paying half of
the freightage9
2. ?rror in
tonnage or
flag9
. !ailure to
place the
vessel at the
charterer@s
disposal9
$. 2eturn of
the vessel due
to pirates,
enemies or bad
weather9
(. Arrival at a
port for
repairs.
1. +f the e5tra
lay days
terminate
without the
cargo being
placed
alongside the
vessel9
2. 1ale by the
owner of the
vessel before
loading by the
charterer9
1. &ar or
interdiction of
commerce9
2. :loc3ade9
. Prohibition
to receive
cargo9
$. ?mbargo9
and
(. +nability of
the vessel to
navigate.
Ter#s:
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 of the ship for
the detention of his vessel beyond the number
of days allowed by the charter party for loading
or unloading or for sailing.
. )eadfreight L the amount paid by or
recoverable from a charterer of a ship for the
portion of the ship@s capacity the latter
contracted for but failed to occupy.
4. %ay )ays * days allowed to charter parties for
loading and unloading the cargo.
5. ?5tra %ay )ays C days which follow after the
lay days have elapsed.
5S5AL FORMS OF CONS5MMATING
CONTRACTS
1. C.+.!. L cost, insurance and freight9
2. !.4.:. * free on board9
. !.A.1. * free alongside ship9 and
$. C. D !. * cost and freight.
TRANSSIPMENT OF GOO"S
;he act of ta3ing cargo out of one ship and
loading it in another, or the transfer of goods from
the vessel stipulated in the contract of affreightment
to another vessel before the place of destination
named in the contract has been reached, or the
transfer for further transportation from one ship or
conveyance to another.
+t is not dependent on the ownership of the
transporting ships or in the change of carriers, but
rather on the fact of actual physical transfer of cargo
from one vessel to another.
+f done without legal e5cuse, however competent
and safe the vessel into which the transfer is made,
is a violation of contract and infringement of right of
shipper and subjects carrier to liability if freight is
lost event by cause otherwise e5cepted. "Bagellan
Banufacturing vs. CA, 271 1C2A 172#
LOAN ON 'OTTOMR7 AN" RESPON"ENTIA
A real, unilateral, aleatory contract, by virtue of
which one person lends to another a certain amount
of money or goods on things e5posed to maritime
ris3s, which amount, with its earnings, is to be
returned if the things are safely transported, and
which is lost if the latter are lost.
LOAN ON
'OTTOMR7
LOAN ON
RESPON"ENTIA
)efinition
%oan made by
shipowner or ship
agent guaranteed by
vessel itself and
repayable upon arrival
of vessel at destination.
"Art. ,18#
%oan ta3en on security
of the cargo laden on a
vessel, and repayable
upon safe arrival of
cargo at destination.
"Art. ,18#
&ho may contract
1hipowner or ship
agent. 4utside of the
residence of the
owners * the captain.
4nly the owner of the
cargo.
Common elements=
1. ?5posure of security to marine peril9
2. 4bligation of the debtor conditioned only
upon safe arrival of the security at the point
of destination.
!orms=
1. Public instrument
2. Policy signed by the contracting parties and
the bro3er ta3ing part therein
. Private instrument "Art. ,27#
Contents=
1. Find, name and registry of the vessel9
2. -ame, surname and domicile of the captain9
. -ames, surnames and domiciles of the
borrower and the lender9
$. Amount of the loan and the premium
stipulated9
(. ;ime for repayment9
/. Goods pledged to secure repayment9
,. Aoyage during which the ris3 is run "Art.,21#
'OTTOMR7/
RESPON"ENTIA
OR"INAR7 LOAN
*M5T55M.
-ot subject to 6sury
%aw
1ubject to 6sury %aw
%iability of the
borrower is contingent
on the safe arrival of
the vessel or cargo at
destination
-ot subject to any
contingency "absolute
liability#
;he last lender is a
preferred creditor
;he first lender is a
preferred creditor
WEN LOAN ON 'OTTOMR7 OR
RESPON"ENTIA REGAR"E" AS SIMPLE LOAN
1. %ender loaned an amount larger than the
value of the object due to fraudulent
means employed by the borrower.
"A2;.,2/#
2. !ull amount of the loan is not used for the
cargo or given on the goods if all of them
could not have been loaded, the balance
will be considered a simple loan.
"A2;.,2,#
. +f the effects on which the money is ta3en
is not subjected to any ris3. "A2;.,28#
Note= 6nder e5isting laws, the parties to a loan,
whether ordinary or maritime, may agree on any
rate of interest. "C: Circular 87(#
MARINE INS5RANCE LOAN ON
'OTTOMR7 OR
RESPON"ENTIA
+ndemnity is paid after the
loss has occurred
+ndemnity is paid in
advance by way of
a loan
+n case of loss of the vessel
due to a ris3 insured
against, the obligation of
the insurer becomes
absolute
+n case of loss of
the vessel due to a
marine peril, the
obligation of the
borrower to pay is
e5tinguished
Consensual contract 2eal contract
,-othecar, Nat+re of 'otto#r,/
Res-on%entia
G?-?2A% 26%?= ;he obligation of the borrower to
pay the loan is e5tinguished if the goods given as
security are absolutely lost by reason of an accident
of the sea, during the voyage designated, and if it is
proven that the goods were on board.
?MC?P;+4-1=
1. %oss due to inherent defect9
2. %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.
Conc+rrence of Marine Ins+rance an% Loan on
'otto#r,/Res-on%entia
1. ;he insurable interest of the owner of a
ship hypothecated by bottomry is only the
e5cess of the value over the amount
secured by bottomry. "1ec. 171, +nsurance
Code#
2. ;he value of what may be saved in case
of shipwrec3 shall be divided between the
lender and the insurer in proportion to the
interest of each one. "Art. ,(#
-ote= +f a vessel is hypothecated by bottomry only
the e5cess is insurable, since a loan on bottomry
parta3es of the nature li3ewise of an insurance
coverage to the e5tent of the loan accommodation.
;he same rule would apply to the hypothecation of
the cargo by respondentia. "Pandect of Commercial
%aw and Curisprudence, Custice Cose Aitug, 188,
ed.#
ACCI"ENTS IN MARITIME COMMERCE
1. Averages
2. Arrival 6nder 1tress
. Collision
$. 1hipwrec3
AVERAGE
An e5traordinary or accidental e5pense incurred
during the voyage in order to preserve the cargo,
vessel or both, and all damages or deterioration
suffered by the vessel from departure to the port of
destination, and to the cargo from the port of
loading to the port of consignment. "Art. 07/#
;he person whose property has been saved must
contribute to reimburse the damage caused or
e5pense incurred if the situation constitutes general
average.
Classes=
1. Particular or 1imple Average
2. Gross or General Average
&here both vessel and cargo are saved, it is
general average9 where only the vessel or only the
cargo is saved, it is particular average.
?5penses incurred to refloat a vessel, which
accidentally ran aground, in order to continue its
voyage, do not constitute general average. -ot only
is there absence of a marine peril, common safety
factor, and deliberateness. +t is the safety of the
property, and not the voyage, which constitutes the
true foundation of general average. "A. Bagsaysay,
+nc. vs. Agan, G.2.-o. %*/8, Can. 1, 18((#
PARTIC5LAR OR
SIMPLE
GROSS OR GENERAL
"efinition
)amages or e5penses
caused to the vessel or
cargo that did not inure
to the common benefit,
and borne by respective
owners. "Art. 078#
)amages or e5penses
deliberately caused in
order to save the
vessel, its cargo or both
from real and 3nown
ris3. "Art. 011#
Re8+isites
1. common danger9
2. deliberate
sacrifice9
. success9
$. proper formalities
and legal steps.
Lia:ilit,
;he owner of the goods
which gave rise to the
e5pense or suffered the
damage shall bear this
average. "Art. 017#
All the persons having
an interest in the vessel
and the cargo therein
at the time of the
occurrence of the
average shall contribute
to satisfy this average.
"Art. 012#
;he insurers
"Art.0(8# and lenders
on bottomry and
respondentia shall
li3ewise contribute.
"Art.,2#.
N+#:er of interests in)ol)e%
4nly one interest
involved
1everal interests
involved
Share in the %a#a(e or eD-ense
177P share +n proportion to the
value of the owner@s
property saved
Ri(ht to reco)er
-o reimbursement ;here may be
reimbursement
<in%s *not eDcl+si)e.
Art. 078 Art. 011
Proce%+re for reco)er,
1. Assembly and
deliberation
2. 2esolution of the
captain
. ?ntry of the
resolution in the
logboo3
$. )etailed minutes
(. )elivery of the
minutes to the
maritime judicial
authority of the
first port, within
2$ hours from
arrival,
/. 2atification by
captain under
oath. "Arts. 01*
01$#
GOO"S NOT COVERE" '7 GENERAL AVERAGE
EVEN IF SACRIFICE"
1. Goods carried on dec3. "A2;.0((#
2. Goods not recorded in the boo3s or
records of the vessel. "A2;.0(( "2##
. !uel for the vessel if there is more than
sufficient fuel for the voyage. "2ule +M,
Eor3*Antwerp 2ule#
9ettison
Act of throwing cargo overboard in order to
lighten the vessel.
4rder of goods to be cast overboard=
1. ;hose which are on the dec3, preferring
the heaviest one with the least utility and
value9
2. ;hose which are below the upper dec3,
beginning with the one with greatest
weight and smallest value. "Art. 01(#
Cettisoned goods are not res nullius nor deemed
IabandonedJ within the meaning of civil law so as to
be the object of occupation by salvage. "Pandect of
Commercial %aw and Curisprudence, Custice Cose
Aitug, 188, ed.#
+n order that the jettisoned goods may be
included in the gross or general average, the
e5istence of the cargo on board should be proven
by means of the bill of lading. "Art. 01/#
7orE$Ant&er- *7$A. R+les on "eter#inin(
Lia:ilit, for A)era(es With Re(ar% To "ecE
Car(o
1. )ec3 cargo is allowed only in
domestic'coastwise'inter*island
shipping, and is prohibited in
international'overseas'foreign shipping.
2. +f dec3 cargo is loaded with the consent
of the shipper on overseas trade, it must
always contribute to general average,
but should the same be jettisoned, it
would not be entitled to reimbursement
because there is violation of the E*A
2ules.
. +f dec3 cargo is loaded with the consent
of the shipper on coastwise shipping, it
must always contribute to general
average and if jettisoned would be
entitled to reimbursement.
2eason= +n domestic shipping, voyages are
usually short and the seas are generally not rough.
+n overseas shipping, the vessel is e5posed for many
days to perils of the sea.
"OMESTIC 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
ARRIVAL 5N"ER STRESS *ARRI'A"A.
;he arrival of a vessel at the nearest and most
convenient port instead of the port of destination, if
during the voyage the vessel cannot continue the
trip to the port of destination.
When la&f+l When
+nla&f+l
Who :ears
eD-enses:
;he inability to
continue
voyage is due
to lac3 of
provisions,
well*founded
fear of sei.ure,
privateers,
pirates, or
accidents of
the sea
disabling it to
navigate. "Art.
018#
1. %ac3 of
provisions
due to
negligence
to carry
according
to usage
and
customs9
2. 2is3 of
enemy not
well
3nown or
manifest
. )efect of
vessel due
to
improper
repair9 and
$. Balice,
negligence
, lac3 of
foresight
or s3ill of
captain.
"Art. 027#
;he shipowner
or ship agent is
liable in case of
unlawful arrival
under stress.
:ut they shall
not be liable
for the
damages
caused by
reason of a
lawful arrival.
"Art. 021#
+t is the duty of the captain to continue the
voyage without delay after the cause of the arrival
under stress has ceased failing in such duty renders
him liable. <owever, in case the cause has been ris3
of enemies, there must first be an assembly before
departure. "Art. 02(#
1teps=
1. Captain should determine during the
voyage if there is well founded fear of
sei.ure, privateers and other valid
grounds9
2. Captain shall assemble the officers and
summon the persons interested in the
cargo who may attend the meeting but
without a right to vote9
. ;he officers shall determine and agree if
there is well*founded reason after
e5amining the circumstances. ;he
captain shall have the deciding vote9
$. ;he agreement shall be drafted and the
proper minutes shall be signed and
entered in the log boo39
(. 4bjections and protests shall li3ewise be
entered in the minutes.
COLLISION
+mpact of two vessels both of which are moving.
Allision
+mpact between a moving vessel and a stationary
one.
Na+tical R+les to "eter#ine Ne(li(ence
1. &hen two vessels are about to enter a port,
the farther one must allow the nearer to enter
first9 if they collide, the fault is presumed to be
imputable to the one who arrived later, unless
it can be proved that there was no fault on its
part.
2. &hen two vessels meet, the smaller should
give the right of way to the larger one.
. A vessel leaving port should leave the way
clear for another which may be entering the
same port.
$. ;he vessel which leaves later is presumed to
have collided against one which has left earlier.
(. ;here is a presumption against the vessel
which sets sail in the night.
/. ;here is a presumption against the vessel with
spread sails which collides with another which
is at anchor and cannot move, even when the
crew of the latter has received word to lift
anchor, when there was not sufficient time to
do so or there was fear of a greater damage or
other legitimate reason.
,. ;here is a presumption against an improperly
moored vessel.
0. ;here is a presumption against a vessel which
has no buoys to indicate the location of its
anchors to prevent damage to vessels which
may approach it.
8. Aessels must have Iproper loo3*outsJ or
persons trained as such and who have no other
duty aside therefrom. "1mith :ell v. CA#
Na+tical R+les as to Sailin( Vessel an%
Stea#shi-
1. &here a steamship and a sailing vessel are
approaching each other from opposite
directions, or on intersecting lines, the
steamship from the moment the sailing vessel
is seen, shall watch with the highest diligence
her course and movements so as to be able to
adopt such timely means of precaution as will
necessarily prevent the two boats from coming
in contact.
2. ;he sailing vessel is re>uired to 3eep her
course unless the circumstances re>uire
otherwise.
Fones of Ti#e in the Collision of Vessels
1. !irst .one L all time up to the moment when ris3
of collision begins.
-o rule is as yet applicable for none is necessary.
2. 1econd .one L time between moment when ris3
of collision begins and moment it becomes a
practical certainty.
+t is in this period where conduct of the vessels is
primordial. +t is in this .one that vessels must strictly
observe nautical rules, unless a departure therefrom
becomes necessary to avoid imminent danger.
3. ;hird .one L time when collision is certain and
time of impact.
An error in this .one would no longer be legally
conse>uential.
?rror in ?5tremis * sudden movement made by a
faultless vessel during the third .one of collision with
another vessel which is at fault during the 2nd .one.
?ven if such sudden movement is wrong, no
responsibility will fall on said faultless vessel.
"6rrutia and Co. v. :aco 2iver Plantation Co., 2/
P<+% /2#
Cases Co)ere% ', Collision an% Allision
1. 4ne vessel at fault
Aessel at fault is liable for damage caused to
innocent vessel as well as damages suffered by the
owners of cargo of both vessels. "Art. 02/#
2. :oth vessels at fault
?ach vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. "Art. 02,#
3. Aessel at fault not 3nown
?ach vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. "Art. 020#
)octrine of +nscrutable !ault L +n case of
collision where it cannot be determined which
between the two vessels was at fault, both
vessels bear their respective damage, but both
should be solidarily liable for damage to the
cargo of both vessels.
$. ;hird vessel at fault
;he third vessel will be liable for losses and
damages. "Art. 01#
(. !ortuitous event'force majeure
-o liability. ?ach bears its own loss. "Art. 07#
;he doctrine of res ipsa lo>uitur applies in case a
moving vessel stri3es a stationary object, such as a
bridge post, doc3, or navigational aid. "!ar ?astern
1hipping v. CA, %u.on 1tevedoring vs. CA#
?ven if the cause of action against the common
carrier is based on >uasi*delict, the defense of due
diligence in the selection and supervision of
employees is unavailing in case of a maritime tort
resulting in collision. +t is not a civil tort governed by
the Civil Code but a maritime one governed by Arts.
02/*08 of the Code of Commerce. "Banila
1teamship vs. +nsa Abdulhaman#
)octrine of %ast Clear Chance and 2ule on
Contributory -egligence cannot be applied in
collision cases because of Art.02, of the Code of
Commerce. "-otes and Cases on the %aw on
<ernando, 2.P. 277$ ed.#
MARITIME PROTEST
Condition precedent or prere>uisite to recovery of
damages arising from collisions and other maritime
accidents.
+t is a written statement made under oath by the
captain of a vessel after the occurrence of an
accident or disaster in which the vessel or cargo is
lost or damaged, with respect to the circumstances
attending such occurrence, for the purpose of
recovering losses and damages.
?5cuses for not filing protest= 1# where the
interested person is not on board the vessel9 and 2#
on collision time, need not be protested. "Art. 0/#
Cases applicable=
1. Collision "Art. 0(#9
2. Arrival under stress "Art. /12"0##9
. 1hipwrec3s "Arts. /12"1(#, 0$#9
$. &here the vessel has gone through a
hurricane or when the captain believes
that the cargo has suffered damages or
averages "Art. /2$#.
&ho ma3es= Captain
&hen made= within 2$ hours from the time the
collision too3 place.
:efore whom made= competent authority at the
point of collision or at the first port of arrival, if in
the Philippines and to the Philippine consul, if the
collision too3 place abroad. "Art. 0(#
SIPWREC<
+t is the loss of the vessel at sea as a
conse>uence of its grounding, or running against an
object in sea or on the coast. +t occurs when the
vessel sustains injuries due to a marine peril
rendering her incapable of navigation.
+f the wrec3 was due to malice, negligence or
lac3 of s3ill of the captain, the owner of the vessel
may demand indemnity from said captain. "Art. 0$1#
;he rules on collision or allision, as may be
pertinent, can e>ually apply to shipwrec3s.
SPECIAL CONCEPTS
ARRASTRE SERVICE
A contract for the unloading of goods from a
vessel.
A--lica:ilit,: 4verseas trade only. "Commercial
%aw 2eview, C. Aillanueva, 277$ ed.#
Si(nificance: &hen a person brings in cargo
from abroad, he cannot unload and deliver the
cargo by himself. ;he unloading must be done by
the arrastre operator, which will then deliver the
cargo to the importer. "Commercial %aw 2eview, C.
Aillanueva, 277$ ed.#
Nat+re of :+siness: +t is a public utility,
discharging functions which are heavily invested
with public interest.
Lia:ilit,:
1. 1imilar to a warehouseman "%ua Fian v. Banila
2ailroad#
2. 1imilar to a common carrier "-orthern Botors
v. Prince %ine#
. 1olidary liability with the common carrier
Note: +n order that the arrastre operator may be
held liable, the consignee must prove that the
damage was due to the negligence and while the
goods are in the custody of the arrastre operator.
"<artford !ire +nsurance v. ?. 2a.on, +nc.#
STEVE"ORING SERVICE
;he carriage of goods from the warehouse or pier
to the holds of the vessel. "Chief of 1taff vs. C+2#
As understood in the port business, the term
consists of the handling of cargo from the hold of
the ship to the doc3, in case of pier*side unloading9
or to a barge, in case of unloading at sea. "Anglo*!il
;rading Corp. vs. %a.aro#
;he loading on the ship of outgoing cargo is also
part of stevedoring wor3. "+bid.#
CONTAINERIFATION/ GSAI"$TO$CONTAINH/
GSIPPER;S LOA" AN" CO5NTH S7STEM
1ystem whereby the shipper loads his cargoes in
a specially designed container, seals the container
and delivers it to the carrier for transportation. ;he
carrier does not participate in the counting of the
merchandise for loading into the container, the
actual loading, and the sealing of the container. "61
%ines v. Comm. 4f Customs, +C;1+ v. Prudential
Guarantee#
;he matter of >uantity, description and conditions
of the cargo inside the container is the sole
responsibility of the shipper, unless there is
stipulation to the contrary. "61 %ines vs. Comm. 4f
Customs, 2eyma :ro3erage v. Phil. <ome
Assurance#
Note: +n order to attribute to the carrier any
damage to the shipment that may be found,
inspection of the goods should be done at pier*side.
":an3ers vs. CA#

III! CARRIAGE OF GOO"S '7 SEA ACT/COGSA
*C!A! No! 3A.
APPLICA'ILIT7
;he transportation must be=
1. &ater'maritime transportation9
2. for the carriage of goods9 and
. overseas'international'foreign "from
foreign port to Philippine port#.
+t can be applied in domestic sea transportation if
agreed upon by the parties. "Clause paramount or
paramount clause#
IMPORTANT FEAT5RES:
1. Amount of carrier@s liability
2. -otice of damage
. Prescriptive period
AMO5NT OF CARRIER;S LIA'ILIT7
6nder the 1ec. $"(#, the liability limit is set at
Q(77 per pac3age or customary freight unit unless
the nature and value of such goods is declared by
the shipper. ;his is deemed incorporated in the bill
of lading even if not mentioned in it. "?astern
1hipping vs. +AC, 1(7 1C2A $/#
-ote that Art. 1,$8, -CC applies to
domestic'inter*island'coastwise trade.
NOTICE OF "AMAGE *SEC! 1*3..
R+les:
a. Patent damage= shipper should file a claim with
the carrier immediately upon delivery
b. %atent damage= shipper should file a claim with
the carrier within three days from delivery.
Note= ;he filing of a notice of claim is not a
condition precedent.
PRESCRIPTIVE PERIO"
Action for loss or damage to the cargo should be
brought within one year after=
a. )elivery of the goods "delivered but
damaged goods#9 or
b. ;he date when the goods should have
been delivered "non*delivery#. "1ec. G/H#
I%oss or )amageJ as applied to the C4G1A
contemplates a situation where no delivery at all
was made by the shipper of the goods because the
same had perished, gone out of commerce, or
disappeared in such a way that their e5istence is
un3nown or they cannot be recovered. ;hus, it is
inapplicable in case of misdelivery or conversion.
"Ang vs. American 1teamship Agencies +nc.# and
damage arising from delay or late delivery "Bitsui
4.1.F. %ines %td. vs. CA#. +n such instance the, Civil
Code rules on prescription shall apply.
;he one*year prescriptive period is suspended by=
1. ;he e5press agreement of the parties
"6niversal 1hipping %ines, +nc. vs. +AC,
100 1C2A 1,7#
2. ;he filing of an action in court until it is
dismissed. "1tevens D Co. vs.
-ordeutscher %loyd, / 1C2A 107#
;he one*year period shall run from delivery of the
last pac3age and is not suspended by e5trajudicial
demand. ")ole Phils.,+nc. vs. Baritime Co.,1$0 1C2A
110#
;he one*year period shall run from delivery to the
arrastre operator and not to the consignee. "6nion
Carbide Phils, +nc. vs. Banila 2ailroad Co.,1C2A (8#
;he insurer e5ercising its right of subrogation is
bound by the one*year prescriptive period.
<owever, it does not apply to the claim against the
insurer for the insurance proceeds. "!il. Berchants
+ns. Co. vs. Alejandro9 Bayer 1teel Pipe Corp. vs.
CA#
IV! WARSAW CONVENTION OF /?2? *WC.
P5RPOSE: ;o protect the emerging air
transportation industry and to secure the uniformity
of recovery by the passengers.
APPLICA'ILIT7
;he transportation must be=
1. +nternational transportation9
2. Air transportation9 and
. Carriage of passengers, baggage or
goods.
;he &C shall also apply to fortuitous
transportation by aircraft performed by an air
transportation enterprise.
+nternational transportation * any transportation
in which the place of departure and the place of
destination are situated either=
1. &ithin the territories of two <igh
Contracting Parties regardless of whether or
not there be a brea3 in the transportation or
transshipment, or
2. &ithin the territory of a single <igh
Contracting Party, if there is an agreed
stopping place within a territory subject to the
sovereignty, mandate or authority of another
power, even though that power is not a party
to the Convention. "Iround tripJ, Am. Cur.#
;ransportation to be performed by several
successive air carriers shall be deemed to be one
undivided transportation, if it has been regarded by
the parties as a single operation, whether it has
been agreed upon under the form of a single
contract or of a series of contracts, and it shall not
lose its international character merely because one
contract or a series of contracts is to be performed
entirely within a territory subject to the sovereignty,
su.erainty, mandate, or authority of the same <igh
Contracting Party. "Art. 1 1ec.#
WEN INAPPLICA'LE
1. &hen public policy is contradicted9
2. +f the re>uirements under the Convention
are not complied with.
IMPORTANT CONCEPTS:
1. ;ransportation documents
a. Passenger tic3et
b. :aggage chec3
c. Air way bill
2. %iability of the carrier for damages
a. )eath or injury to passengers
b. %oss or damage to baggage or goods
c. )elay
. 1uccessive carrier agreement
$. Curisdiction
(. Combined transportation agreement
PASSENGER
TIC<ET
'AGGAGE
CEC<
AIR WA7'ILL
Passenger Chec3ed*in
baggage
Goods to be
shipped
LIA'ILIT7 OF CARRIER FOR "AMAGES
1. )eath or injury of a passenger if the accident
causing it too3 place on board the aircraft or in the
course of its operations of embar3ing or
disembar3ing9 "Art. 1,#
2. )estruction, loss or damage to any baggage or
goods, if it too3 place during the Itransportation by
airJ9 "Art. 10# and
;ransportation by air L ;he period during which
the baggage or goods are in the charge of the
carrier, whether in an airport or on board an aircraft,
or, in case of a landing outside an airport, in any
place whatsoever.
+t includes any transportation by land or water
outside an airport if such ta3es place in the
performance of a contract for transportation by air,
for the purpose of loading, delivery, or
transshipment.
. )elay in the transportation of passengers,
baggage or goods. "Art. 18#
Note= ;he <ague Protocol amended the &C by
removing the provision that if the airline too3 all
necessary steps to avoid the damage, it could
e5culpate itself completely "Art. 27"1##. "Alitalia vs.
+AC, 182 1C2A 8#
LIMIT OF LIA'ILIT7 *Art! 22I as a#en%e% :,
G+ate#ala ProtocolI /?0/J Alitalia )s! IAC.
/! Passen(ers
G?-?2A% 26%?= Q177,777 per passenger
?MC?P;+4-= Agreement to a higher limit
2! ChecEe%$in :a((a(e
G?-?2A% 26%?= Q27 per 3ilogram
?MC?P;+4-= +n case of special declaration of
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the
declared sum unless it proves the sum is greater
than actual value.
1! an%$carrie% :a((a(e
Q1777'passenger
>! Goo%s to :e shi--e%
G?-?2A% 26%?= Q27 per 3ilogram
?MC?P;+4-= +n case of special declaration of
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the
declared sum unless it proves the sum is greater
than actual value.
An agreement relieving the carrier from liability or
fi5ing a lower limit is null and void. "Art. 2#
Carrier is not entitled to the foregoing limit if the
damage is caused by willful misconduct or default
on its part. "Art. 2(#
;hus, the &C does not operate as an e5clusive
enumeration of the instances of an absolute limit of
the e5tent of liability. +t does not preclude the
application of the Civil Code and other pertinent
local laws. +t does not regulate or e5clude liability
for other breaches of contract by the carrier, or
misconduct of its employees, or for some particular
or e5ceptional type of damage. "Alitalia vs. CA#
+n PanAm v. +AC, the &C was applied as regards
the limitation on the carrier@s liability, there being a
simple loss of baggage without any improper
conduct on the part of the officials or employees of
the airline or other special injury sustained by the
passenger.
+n F%B 2oyal v. ;uller, the &C has invariably been
held inapplicable, or as not restrictive of the carrier@s
liability, where there was satisfactory evidence of
malice or bad faith attributable to its officers and
employees. "Alitalia vs. +AC#
ACTION FOR "AMAGES
1. -otice of claim
A written complaint must me made within=
a. days from receipt of baggage
b. , days from receipt of goods
c. +n case of delay, 1$ days from receipt of
baggage'goods
;he complaint is a condition precedent. &ithout
the complaint, the action is barred e5cept in case of
fraud on the part of the carrier. "Art. 2/#
2. Prescriptive period
Action must be filed within 2 years from=
a. date of arrival at the destination
b. date of e5pected arrival
c. date on which the transportation stopped.
"Art. 28#
+n 6nited Airlines vs. 6y the two*year prescriptive
period was not applied where the airline employed
delaying tactics.
R5LE IN CASE OF VARIO5S S5CCESSIVE
CARRIERS
1. Carriage of passengers
G?-?2A% 26%?= Action is filed only against the
carrier in which the accident or delay occurred.
?MC?P;+4-= Agreement or contract whereby the
first carrier assumed liability for the whole journey.
2. Carriage of baggage or goods
a. Passenger or consignor can file an action
against the first carrier and the carrier in
which the damage occurred
b. Passenger or consignee can file an action
against the last carrier and the carrier in
which the damage occurred.
;hese carriers are jointly and severally
liable. "Art. 7#
A contract of international carriage by air,
although performed by different carriers under a
series of airline tic3ets constitutes a single
operation. Bembers of the +nternational Air
;ransportation Association "+A;A# are under a
general pool partnership agreement wherein they
act as agent of each other in the issuance of tic3ets
to contracted passengers to boost tic3et sales
worldwide and at the same time provide passengers
easy access to airlines which are otherwise
inaccessible in some parts of the world. "American
Airlines vs. CA#
6nder a general pool partnership agreement, the
tic3et*issuing airline is the principal in a contract of
carriage while the endorsee*airline is the agent.
;he obligation of the former remained and did not
cease even when the breach occurred not on its
own flight but on that of another airline which had
underta3en to carry the passengers to one of their
destinations. "China Airlines vs. Chio3#
95RIS"ICTION
At the option of the plaintiff, the action for
damages may be filed in the=
a. Court of domicile of the carrier9
b. Court of its principal place of business9
c. Court where it has a place of business
through which the contract has been made9
or
d. Court of the place of destination. "Art.
20"1##
NOTE: +t is the passenger@s Iultimate destinationJ
not Ian agreed stopping placeJ that determines the
country where suit is to be filed.
;he forum of action provided in Art. 20"1# is a
matter of jurisdiction rather than of venue. "1antos
+++ vs. -orthwest9 2A C.C.1.#
V! SALVAGE LAW *Act No! 23/3.
SALVAGE
T&o conce-ts:
1. 1ervices one person renders to the owner of a
ship or goods, by his own labor, preserving the
goods or the ship which the owner or those
entrusted with the care of them have either
abandoned in distress at sea, or are unable to
protect or secure.
2. Compensation allowed to persons by whose
voluntary assistance a ship at sea or her cargo or
both have been saved in whole or in part from
impending sea peril, or such property recovered
from actual peril or loss, as in cases of shipwrec3,
derelict or recapture.
Re8+isites:
1. Aalid object of salvage9
2. 4bject must have been e5posed to marine
peril "not perils of the ship#9
. 1ervices rendered voluntarily "neither an
e5isting duty nor out of a pre*e5isting
contract#9
$. 1ervices are successful, total or partial.
S+:Kects of Sal)a(e:
1. 1hip itself9
2. Cetsam L goods which are cast into the sea, and
there sin3 and remain under water9
. !loatsam or !lotsam L goods which float upon the
sea when cast overboard9
$. %igan or %agan L goods cast into the sea tied to a
buoy, so that they may be found again by the
owners "p.1,, Cudge )ia.#.
Persons &ho ha)e no ri(ht to a re&ar% for
sal)a(e=
1. Crew of the vessel saved9
2. Person who commenced 1alvage in spite of
opposition of the Captain or his representative9
. +n accordance with 1ec. of the 1alvage %aw, a
person who fails to deliver a salvaged vessel or
cargo to the Collector of Customs.
"erelict L a ship or her cargo which is
abandoned and deserted at sea by those who are in
charge of it, without any hope of recovering it, or
without any intention of returning to it.
;he intention of those in charge must be
ascertained. +f those in charge left with the intention
of returning, or of procuring assistance, the property
is not derelict, but if they >uitted the property with
the intention of finally leaving it, it is derelict and a
change of their intention and an attempt to return
will not change its nature "?rlanger D Galinger vs.
1wedish ?ast Asiatic Co. %td.#.
+f it is clear that the intention to return is slight,
the salvage which was done thereafter is considered
valid. "-otes and Cases on the %aw on
<ernando, 2.P. 277$ ed. p. /1/#
CONTRACT OF TOWAGE
A contract whereby one vessel, usually
motori.ed, pulls another, whether loaded or not with
merchandise, from one place to another, for a
compensation. +t is a contract for services rather
than a contract of carriage.
SALVAGE TOWAGE
Governed by special
law "Act -o. 2/1/#
Governed by Civil Code
on contract of lease
2e>uires success,
otherwise no payment
1uccess is not re>uired
Bust be done with the
consent of the
captain'crewmen
4nly the consent of the
tugboat owner is
needed
Aessel must be
involved in an accident
Aessel need not be
involved in an accident
!ees distributed
among crewmen
!ees belong to the
tugboat owner
R5LES ON SALVAGE REWAR"
1. ;he reward is fi5ed by the 2;C judge in the
absence of agreement or where the latter is
e5cessive. "1ec. 8#
2. ;he reward should constitute a sufficient
compensation for the outlay and effort of the
salvors and should be liberal enough to offer
an inducement to others to render services in
similar emergencies in the future.
. +f sold "no claim being made within months
from publication#, the proceeds, after
deducting e5penses and the salvage claim,
shall go to the owner9 if the latter does not
claim it within years, (7P of the said
proceeds shall go to the salvors, who shall
divide it e>uitably, and the other half to the
government. "1ecs. 11*12#
$. +f a vessel is the salvor, the reward shall be
distributed as follows=
a. (7P to the shipowner9
b. 2(P to the captain9 and
c. 2(P to the officers and crew in
proportion to their salaries. "1ec. 1#
;a3ing passengers from a sin3ing ship, without
rendering any service in rescuing the vessel, is not a
salvage service, being a duty of humanity and not
for reward.
VI! P5'LIC SERVICE ACT
*C!A! No! />3.
P5RPOSES:
1. ;o secure ade>uate, sustained service for
the public at the least possible cost9
2. ;o protect the public against unreasonable
charges and poor, inefficient service9
. ;o protect and secure investments in
public services9
$. ;o prevent ruinous competition.
A5TORIT7 TO OPERATE P5'LIC SERVICES
G?-?2A% 26%?= -o public service shall operate
without having been issued a certificate of public
convenience or a certificate of public convenience
and necessity.
?MC?P;+4-1=
1. &arehouses9
2. Animal drawn vehicles and bancas moved
by oar or sail9
. Airships, e5cept for the fi5ing of ma5imum
rates for fare and freight9
$. 2adio companies, e5cept for rates fi5ing9
(. Public services owned or operated by the
government, e5cept as to rates fi5ing9
/. +ce plants9 and
,. Public mar3ets.

P5'LIC SERVICE
A person who owns, operates, manages or
controls in the Philippines for hire or compensation,
with general or limited clientele, whether
permanent, occasional or accidental, and done for
general business purposes, any common carrier or
public utility, ice plants, power and water supplies,
communication and similar public services. "1ec.
1b, CA 1$/#
A casual or incidental service devoid of public
character and interest is not brought within the
category. ;he >uestion depends on such factors as
the e5tent of services, whether such person or
company has held himself or itself out as ready to
serve the public or a portion of the public generally.
"%u.on 1tevedoring vs. P1C#
NOTE= ;he Public 1ervice Commission created
under the Public 1ervice %aw has already been
abolished under P.). -o. 1 and other issuances. +t
has been replaced by the following government
agencies= %;49 %;!2:9 A;49 :4?9 -;C9 -?A9 ?2:9
-&2C9 CA:9 and B+A.
CERTIFICATE OF
P5'LIC
CONVENIENCE
*CPC.
CERTIFICATE OF
P5'LIC
CONVENIENCE AN"
NECESSIT7 *CPCN.
An authori.ation
issued by the
appropriate
government agency for
the operation of public
services for which no
franchise, either
municipal or
legislative, is re>uired
by law, e.g., common
carriers.
An authori.ation
issued by the
appropriate
government agency for
the operation of public
service for which a
prior franchise is
re>uired by law9 e.g.
telephone and other
services.
A CPC or a CPC- constitutes neither a franchise
nor a contract, confers no property right, and is a
mere license or a privilege. ;he holder of said
certificate does not ac>uire a property right in the
route covered thereby. -or does it confer upon the
holder any proprietary right or interest or franchise
in the public highways. 2evocation of this certificate
deprives him of no vested right. -ew and additional
burdens, alteration of the certificate, or even
revocation or annulment thereof is reserved to the
1tate. "%u>ue vs. Aillegas, 7 1C2A $70#
+t is a IpropertyJ and has a considerable value
and can be the subject of sale or attachment.
"Cogeo*Cubao 4perators and )rivers Assn. vs. CA,
27, 1C2A $, 2aymundo vs. %uneta Botor Co.#
RE45REMENTS FOR GRANTING CPC OR CPCN
1. Applicant must be a citi.en of the Philippines or
a corporation or entity /7P of the capital of
which is owned by such citi.ens9
2. Applicant must prove public necessity9
. Applicant must prove that the operation of the
public service proposed and the authori.ation
to do business will promote the public interest
on a proper and suitable manner9
$. Applicant must have sufficient financial
capability to underta3e the proposed services
and meeting the responsibilities incident to its
operation.
POWERS
RE45IRING PRIOR
NOTICE AN"
EARING
POWERS
E6ERCISA'LE
WITO5T PRIOR
NOTICE AN"
EARING
1. +ssuance of CPC
or CPC-9
2. !i5ing of rates,
tolls, and
charges9
. 1etting up of
standards and
classifications9
$. ?stablishment of
rules to secure
accuracy of all
meters and all
measuring
appliances9
(. +ssuance of
orders re>uiring
establishment or
maintenance of
e5tension of
facilities9
/. 2evocation, or
modification of
CPC or CPC-9
,. 1uspension of CPC
or CPC-, e5cept when
it is necessary to
avoid serious and
irreparable damage or
inconvenience to the
public or private
interest, in which
case, a suspension
not more than 7
days may be ordered,
prior to the hearing.
"1oriano v. Bedina,
1/$ 1C2A /#
1. +nvestigation any
matter concerning
public service9
2. 2e>uiring
operators to
furnish safe,
ade>uate, and
proper service9
. 2e>uiring public
services to pay
e5penses of
investigation9
$. Aaluation of
properties of
public utilities9
(. ?5amination and
test of measuring
appliances9
/. Grant of special
permits to ma3e
e5tra or special
trips in territories
specified in the
certificate9
,. 6niform
accounting system
and furnishing of
annual reports9
0. Compelling
compliance with
the laws and
regulations.
5NLAWF5L ACTS OF P5'LIC 5TILIT7
COMPANIES
1. ?ngagement in public service business without
first securing the proper certificate9
2. Providing or maintaining unsafe, improper or
inade>uate service as determined by the
proper authority9
. Committing any act of unreasonable and unjust
preferential treatment to any particular person,
corporation or entity as determined by the
proper authority9
$. 2efusing or neglecting to carry public mail
upon re>uest. "1ecs. 10 and 18#
ACTS RE45IRING PRIOR APPROVAL
1. ?stablish and maintain individual or joint rates9
2. ?stablish and operate new units9
. +ssue free tic3ets9
$. +ssue any stoc3 or stoc3 certificates
representing an increase of capital9
(. Capitali.e any franchise in e5cess of the
amount actually paid to the Government9
/. 1ell, alienate, mortgage or lease property,
certificates or franchise.
6nder 1ec. 27"g# of C.A. -o. 1$/, the sale, etc.
may be negotiated and completed before the
approval by the proper authority. +ts approval is not
a condition precedent to the validity of the contract.
;he approval is necessary only to protect public
interest.
PRIOR OPERATOR/OL" OPERATOR R5LE
;he rule allowing an e5isting franchised operator
to invo3e a preferential right within the authori.ed
territory as long as he renders satisfactory and
economical service.
;he policy is not to issue a certificate to a second
operator to cover the same field and in competition
with a first operator who is rendering sufficient,
ade>uate and satisfactory service. ;he prior
operator must first be given an opportunity to
improve its service, if inade>uate or deficient.
Purpose= ;o prevent ruinous and wasteful
competition in order that the interests of the public
would be conserved and preserved.
+t subordinates the prior applicant rule which
gives the first applicant priority only if things and
circumstances are e>ual.
&here the operator either fails or neglects to
ma3e the improvement or effect the increase in
services, especially when given the opportunity, new
operators should be given the chance to give the
services needed by the public.
PRIOR APPLICANT R5LE
Presupposes a situation when two interested
persons apply for a certificate to operate a public
utility in the same community over which no person
has as yet granted any certificate. +f it turns out,
after the hearing, that the circumstances between
the two applicants are more or less e>ual, then the
applicant who applied ahead of the other, will be
granted the certificate.
RATE$FI6ING POWER
;he rate to be fi5ed must be just, founded upon
conditions which are fair and reasonable to both the
owner and the public.
A rate is just and reasonable if it conforms to the
following re>uirements=
1. 4ne which yields to the carrier a fair
return upon the value of the property
employed in performing the service9 and
2. 4ne which is fair to the public for the
service rendered.
REGISTERE" OWNER R5LE
;he registered owner of a certificate of public
convenience is liable to the public for the injuries or
damages suffered by third persons caused by the
operation of said vehicle, even though the same had
been transferred to a third person.
;he registered owner is not allowed to escape
responsibility by proving that a third person is the
actual and real owner 2eason= +t would be easy for
him, by collusion with others or otherwise, to
transfer the responsibility to an indefinite person, or
to one who possesses no property with which to
respond financially for the damage or injury done.
"?re.o, et al. vs. Cepte 172 Phil 17#.
<A'IT S7STEM
A system whereby a person who has been
granted a certificate of public convenience allows
other persons who own motor vehicles to operate
under such license, for a fee or percentage of such
earnings. +t is void and ine5istent under Art. 1$78,
Civil Code.
Effects:
1. ;he transfer, sale, lease or assignment of the
privilege granted is valid between the
contracting parties but not upon the public or
third persons. "Gelisan vs. Alday, 1($ 1C2A
00#
2. ;he registered owner is primarily liable for all
the conse>uences flowing from the operations
of the carrier.
;he public has the right to assume that the
registered owner is the actual or lawful owner
thereof. +t would be very difficult and often
impossible, as a practical matter, for the public
to enforce their rights of action that they may
have for injuries inflicted by the vehicle if they
should be re>uired to prove who the actual
owner is. ":enedicto vs. +AC, 10, 1C2A ($,#
. ;he thrust of the law in enjoining the 3abit
system is to identify the person upon whom
responsibility may be fi5ed with the end in view
of protecting the riding public "%im vs. CA ,
1C2A 8$#.
$. ;he registered owner cannot recover from the
actual owner and the latter cannot obtain
transfer of the vehicle to himself, both being in
pari delicto. ";eja Bar3eting vs. +AC#
5. !or the better protection of the public, both the
registered owner and the actual owner are
jointly and severally liable with the driver.
"Kamboanga ;ransportation Co. vs. CA#

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