Transportation Law Reviewer

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa ’08-‘09

Transportation Law Review Based on the lectures of: Atty. Melissa Romana Suarez

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who wants to avail of the services of transporting persons or things.

Starring: Shyler, the cab beetle.

Q: To be a common carrier, must one be engaged in the transport of goods/passengers primarily?

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A: No. Still considered common carrier --APPLICABLE LAW 1.) De Guzman vs. CA - even if the carriage of goods or pax is only an ancillary or sideline, that person can still be considered a cc. Even if the transportation is merely occasional, sporadic or not on a regular basis. Even though the transporation is offered only to a narrow segment of the general population. And lastly, even if he has not secured a certificate of public convenience.

Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. The primary law in transportation law is the civil code, particularly the provisions on common carriers. The suppletory laws are the Code of Commerce, and special laws like the COGSA (Carriage of Goods by Sea Act), Salvage Law, Warsaw Convention, Tariff and Customs Code. What is transportation? It is a movement of things or persons from one place to another; a carrying across. What does transportation include? 1. Waiting time - just because a person is in the airport waiting for the flight to board, does not mean that transportation has not started. 2. Loading and unloading transportation of goods

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3. Stopping in transit - when one takes a long flight, transit stops are also included even if passenger is required to disembark and take all his belongings with him. 4. All other accessorial services in connection with the loaded movement -- so it could be anything, like when you are in HK, you are allowed to check-in the City, the movement of your luggage from the city check in to the airport is already included in the term transportation. DEFINITION OF COMMON CARRIER (CC) Art. 1732. Common carriers are 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. Elements: 1. must be a person, association, corporation, or firms 2. Engaged in a business 3. Transports persons or goods or both by land, water or air 4. Offers service to the public 5. Accepts compensation for services If one element is missing, then it is not a common carrier. National Steel vs. CA 283 SCRA 45 (True test of Common carrier) The carriage of goods and passengers provided it has space for all who opt to avail themselves of its transportation for a fee. This means that if you are a carrier, you cannot discriminate. You have to provide space for everyone

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Fx: Facts: Ernesto Cendaña, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap material, Cendaña would bring such material to Manila for resale. He utilized 2 six-wheeler trucks which he owned for hauling the material to Manila. On the return trip to Pangasinan, Cendaña would load his vehicles with cargo which various merchants wanted delivered to differing establishments in Pangasinan. For that service, Cendaña charged freight rates which were commonly lower than regular commercial rates. Sometime in November 1970, Pedro de Guzman, a merchant and authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with Cendaña for the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to de Guzman‘s establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970, Cendaña loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by Cendaña himself; while 600 cartons were placed on board the other truck which was driven by Manuel Estrada, Cendaña ‘s driver and employee. Only 150 boxes of Liberty filled milk were delivered to de Guzman. The other 600 boxes never reached de Guzman, since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo. Held: Article 1732 of the Civil Code makes no 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 (in local idiom, as ―a sideline‖). Article 1732 also carefully avoids making any 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. Neither does Article 1732 distinguish between a carrier offering its services to the ―general public,‖ i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. Article 1733 deliberately refrained from making such distinctions. Cendaña is properly characterized as a common carrier even though he merely ―back-hauled‖ goods for other merchants from Manila to Pangasinan, although such backhauling was done on a periodic or occasional rather than regular or scheduled manner,


and even though Cendaña‘s principal occupation was not the carriage of goods for others. There is no dispute that Cendaña charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant.

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Held: No. Petitioner contends that respondent did not observe the standard of care required of a common carrier when it informed her wrongly of the flight schedule. She could not be deemed more negligent than respondent since the latter is required by law to exercise extraordinary diligence in the fulfillment of its obligation. If she were negligent at all, the same is merely contributory and not the proximate cause of the damage she suffered. Her loss could only be attributed to respondent as it was the direct consequence of its employee‘s gross negligence.

A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other franchise.

Petitioner‘s contention has no merit. By definition, a contract of carriage or transportation is one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. Such person or association of persons are regarded as carriers and are classified as private or special carriers and common or public carriers. A common carrier is defined under Article 1732 of the Civil Code as 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.

2. FPIC vs. CA - still a common carrier even if the mode of transportation is not a motor vehicle (in this case, pipeline) for as long as all the requisites/elements of a cc are present. Here, it is not the pipeline that moves, it is the oil. 3. Asia Lighterage vs. CA (2003) -- even if it has no fixed and publicly known route, maintains no terminals and issues no tickets 4. Calvo vc. UCPB - even if it is not in the business of public transportation; here, Calvo was a customs broker.

It is obvious from the above definition that respondent is not an entity engaged in the business of transporting either passengers or goods and is therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make travel arrangements in their behalf. Respondent‘s services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours.

5. Schmitz vs. TVI - even if the mode of transport is not owned by him 6. Bascos vs. CA - even if the contract is not a contract of carriage. Here, what was entered into was a contract of lease of the truck. The goods were lost and the defense was that what was entered into was a lease contract. According to the SC, the name of the contract does not matter, for as long as the requisites are present, then that person is considered a common carrier.

While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not mean that the latter ipso facto is a common carrier. At most, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage to Europe. Respondent‘s obligation to petitioner in this regard was simply to see to it that petitioner was properly booked with the airline for the appointed date and time. Her transport to the place of destination, meanwhile, pertained directly to the airline.

WHO ARE NOT CONSIDERED COMMON CARRIER? FGU vs. Sarmiento (2002) - Truck owned by Sarmiento carrying refrigerators belonging to shipper, Concepcion Industries. Here, SC said that Sarmiento was not a common carrier because it was the exclusive hauler of Concepcion Industries.

The object of petitioner‘s contractual relation with respondent is the latter‘s service of arranging and facilitating petitioner‘s booking, ticketing and accommodation in the package tour. In contrast, the object of a contract of carriage is the transportation of passengers or goods. It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carriage. Petitioner‘s submission is premised on a wrong assumption.

GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no other individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for hire or compensation, offering their services to the public,[8] whether to the public in general or to a limited clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of passengers or goods, providing space for those who opt to avail themselves of its transportation service for a fee.Given accepted standards, GPS scarcely falls within the term ―common carrier.‖ BUT GPS is still liable based on the contract. However, there is no presumption of negligence in case of loss.

DILIGENCE REQUIRED: Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

2. Crisostomo vs. CA (2003) Is a travel agency a common carrier? A t e n e o

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and


1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756. Notes: 1. What is Extra Ordinary Diligence (XOD)? That extreme measure of care and caution which persons of which unusual prudence and circumspection use for securing and preserving their own properties or rights. (National Trucking and Forwarding Corp. vs. Lorenzo Shipping (2005)) Facts: DOH and CARE signed an agreement where CARE would acquire from the US donations to be transported to the Philippines. To deliver the goods within the Phil, DOH entered into a contract with NTFC. NTFC shipped the goods through Lorenzo Shipping. The consignee was A, NTFC‘s branch manager. LS delivered the goods but when it requested A to return the bills of ladings, A merely returned certified true copies thereof. Every after delivery, A and his subordinates signed a delivery receipt. Despite delivery however, it was alleged that the goods were never received. LS invoked that it exercised XOD, and thus was not liable for the loss. Held: Is LS presumed to be at fault for the loss of the goods? No - Article 173 of the Civil Code demands that a common carrier observe extraordinary diligence over the goods transported by it. Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights. This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Hence, in case of loss of goods in transit, the common carrier is presumed under the law to have been at fault or negligent. However, the presumption of fault or negligence, may be overturned by competent evidence showing that the common carrier has observed extraordinary diligence over the goods. In the instant case, we agree with the court a quo that the respondent adequately proved that it exercised extraordinary diligence. Although the original bills of lading remained with petitioner, respondent‘s agents demanded from Abdurahman the certified true copies of the bills of lading. They also asked the latter and in his absence, his designated subordinates, to sign the cargo delivery receipts. This practice, which respondent‘s agents testified to be their standard operating procedure, finds support in Article 353 of the Code of Commerce. Conformably with the aforecited provision, the surrender of the original bill of lading is not a condition precedent for a common carrier to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible, acknowledgment of the delivery by signing the delivery receipt suffices. 2. In PAL vs. CA 106 S 391 - SC said that the duty of to exercise the duty of utmost diligence on the part of the CC is for the safety of passengers, as well as members of the crew. If you are part of the crew, and you are injured, you can sue the the CC and the CC cannot invoke that it is

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not required to exercise XOD. So there is no discrimination between crew and passengers. The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier, the airplane in the present case. And this must be so for any omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to all aboard the plane, passengers and crew members alike. 3. Benedicto vs. IAC - The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof It would be very difficult and often impossible as a practical matter, for members of the general public to enforce the rights of action that they may have for injuries inflicted by the vehicles being negligently operated if they should be required to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner's claim, private respondent is not required to go beyond the vehicle's certificate of registration to ascertain the owner of the carrier. 4. BA Finance vs. CA - the registered owner, the defendant-appellant herein, is primarily responsible for the damage caused to the vehicle of the plaintiffappellee, but he (defendant-appellant) has a right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused to the plaintiff-appellant. (File a 3rd party complaint) Reason: Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. A victim of recklessness on the public highways is usually without means to discover or Identify the person actually causing the injury or damage. He has no means other then by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove the contrary to the prejudice of the person injured, that is, to prove that a third person or another has become the owner, so that he may thereby be relieved of the responsibility to the injured person. STATE REGULATION CARRIER

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COMMON

Art. 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due hearing, cancel the certificate of public convenience granted to any common carrier that


repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section.

regulate the issuance of a license to operate domestic air transport services Distinctions Carrier

Notes: 1. So the public service commission has been replaced by the following bodies: LTO - private vehicles LTFRB- common carrier Civil Aeronautics Board - public airplanes ATO- private planes (according to Lyndon) MARINA - common carriers for sea

3. Pantranco vs. Public Service Commission 70 P 221 - A certificate of public convenience constitutes neither a franchise nor a contract. It confers no property rights and is a mere license or privilege and therefore can be subject to regulation founded on the police power of the State.

A reading of Section 10 of the same reveals the clear intent of Congress to delegate the authority to

2. As to whom it may contract

Bound to carry all pax who choose to employ it Observe XOD

Negligence is presumed if pax or goods do not reach final destination

CC

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Private

Involves a single undertaking May choose person with whom it may contract GFOF

Person who alleges negligence must prove the same

Does not perform public service; also subject to State regulation but not too strict.

CC OF GOODS (CCOG) Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration.

5. PAL vs. CAB 270 S 538 - PAL alleged that CAB abused its discretion when it granted to Grand Air a Temporary Operating Permit. Accdg. to PAL, Grand Air has not been granted a legislative franchise to operate.

There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator. Although Section 11 of Article XII recognizes Congress' control over any franchise, certificate or authority to operate a public utility, it does not mean Congress has exclusive authority to issue the same. Franchises issued by Congress are not required before each and every public utility may operate. In many instances, Congress has seen it fit to delegate this function to government agencies, specialized particularly in their respective areas of public service.

Cf: Art. 1766

5. As to how to escape liability 6. As to A CC performs state public service regulation and is subject to State regulation

4. Medina vs. Cresencia- The sale of CPC without approval of the governing bodies is not binding against the public. So there has to be approval first. It is binding between the parties only. In contemplation of the law, the grantee of record continues to be responsible under the CPC in relation to the governing body or the public.

Civil Aeronautics Board has the authority to issue a Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a domestic air transport operator, who, though not possessing a legislative franchise, meets all the other requirements prescribed by the law. Such requirements were enumerated in Section 21 of R.A. 776.

between

1. Definition

3. Degree of diligence required 4. As to presumption of negligence

2. Note: The cancellation of certificate of public convenience cannot be done without hearing; although these bodies have the power to initiate hearing motu propio. Take note of the ground for cancellation as provided under Art. 1765.

The issue in this petition is whether or not Congress, in enacting Republic Act 776, has delegated the authority to authorize the operation of domestic air transport services to the respondent Board, such that Congressional mandate for the approval of such authority is no longer necessary.

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NOTES: 1. If foreign voyage or flight from foreign country inbound to Phil - governed by Phil laws. If outbound, carrier lands in US and there is complaint, can pax sue CCOG here? Yes, apply conflicts of laws. (Saudia Airlines case) TEST TO DETERMINE IF ONE IS CCOG a. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; b. He must undertake to carry goods of the kind to which his business is confined; c. He must undertake to carry by the method by which his business is conducted and over his established roads; and d. The transportation must be for hire. (FPIC VS. CA) Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods X X X Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756. Notes: What is XOD in the vigilance of goods?


Extraordinary diligence requires rendering service with the greatest skill and foresight to avoid damage and destruction to the goods entrusted for carriage and delivery. (Leamer vs. Malayan, 2005) Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; Notes: 1. Gen Rule is the first sentence; the exceptions are the 5 cases enumerated. 2. Does it mean that if goods are lost, damaged or destroyed, is the CCOG automatically responsible? NO. There is no automatic liability or responsibility for loss/deterioration/damage of goods. What arises is AUTOMATIC PRESUMPTION of negligence.

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that the loss was due to accident or some other circumstance inconsistent with its liability. 7. What does it mean if the shipment is 'containarized'? (Bankers and Manufacturers vs. CA) It must be underscored that the shipment involved in the case at bar was "containerized". The goods under this arrangement are stuffed, packed, and loaded by the shipper at a place of his choice, usually his own warehouse, in the absence of the carrier. The container is sealed by the shipper and thereafter picked up by the carrier. Consequently, the recital of the bill of lading for goods thus transported ordinarily would declare "Said to Contain", "Shipper's Load and Count", "Full Container Load", and the amount or quantity of goods in the container in a particular package is only prima facie evidence of the amount or quantity which may be overthrown by parol evidence.

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A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only to transport and deliver the containers in the same condition as when the carrier received and accepted the containers for transport.

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3. How to rebut presumption/escape liability? The CCOG must prove that it exercised XOD. (Note: Do not say "by exercising XOD" because that is different from proving CCOG exercised XOD.) Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. 4. If any of the 5 instances arises, the presumption of negligence WILL NOT ARISE. The effect is that there is no automatic presumption of negligence. What is the effect? The effect is that the CCOG no longer needs to prove that it exercised XOD. 5. Q: Is the CCOG automatically exempt from liability in cases of the 5 instances mentioned in Art. 1734? A: NO. The CCOG must still have to prove that it complied with the requirements of Art. 1739, 1740, 1741, 1742. 6. YNCHAUSTI VS. DEXTER - What does the shipper/consignee have to show in order to have a prima facie case against the carrier? 1. Actual receipt of goods by the carrier; 2. Failure to deliver the goods in the same conditions as it was received.

What is the requirement to hold the CCOG liable if goods are damaged under this arrangement? In order to hold the carrier liable for whatever loss, damage or deterioration that happened on the goods inside the container, it has to be opened in front of the carrier and inspected. If the consignee receives the container, does not check it, brings it to ihs warehouse and complains days later, then that is no longer allowed. The inspection should be done in front of the carrier. If the inspection is done upon arrival, there is a presumption that the goods were received in good order. The carrier then will have to prove that the goods were received otherwise. 8. What is an arrastre operator? Is an arrastre operator legally liable for the loss of a shipment in its custody? If so, what is the extent of its liability? (Summa Insurance vs. CA) H: In the performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman as enunciated under Article 1733 of the Civil Code and Section 3(8) of the Warehouse Receipts Law, respectively. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.

If these two are shown, the burden of proof is shifted and it is incumbent upon the carrier, in order to exonerate itself, to both allege and prove that the injury was due to some circumstances.

Flood, storm, earthquake, lightning, or other natural disaster or calamity -- in relation to 1739 and 1740:

The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may

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be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2. Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility. Notes: 1. CCOG need not prove it exercised XOD; however, CCOG must prove that: (Philamgen vs. MCG Marine) a. the natural calamity or disaster must have been the proximate and only cause of the loss; and b. the CCOG exercised due diligence to prevent or minimize the loss and c. CCOG did not incur delay in transporting the goods. 2. Is fire a natural calamity? (This was not clearly answered by Atty. Suarez; In response to the suggested answer that fire is considered natural calamity if caused by lightning, the answer given by Ma'am S was: When you say natural, it has to be natural. Obviously if it was caused by something that has some kind of human intervention, it cannot fall under natural disaster.)

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4. DSR Senator vs. Phoenix (2003) - same ruling as Eastern Shipping that fire is not a natural calamity. 5. Illustration of Art. 1740: Philamgen vs. CA 222 SCRA 414 - Here, the goods arrived in port but because of the heavy rains, they were not discharged and so the goods were destroyed. The issue is did the CCOG negligently incur in delay? No, the cause of the delay was not the fault of the carrier. The delay was caused by the decision of the board (construction of catwalks, etc), customs of the place and heavy, intermittent rains. Other cases: 7. Schmitz Transport vs. Transventure: the natural calamity was not the only and proximate cause of the loss. Act of the public enemy in war, whether international or civil; Requirements: a. the natural act of public enemy must have been the proximate and only cause of the loss; and b. the CCOG exercised due diligence to prevent or minimize the loss

EASTERN SHIPPING VS. IAC As a general rule, fire is not a natural disaster. Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or calamity. " However, we are of the opinion that fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier. Of course the exception is unless it was naturally caused, such as lightning, or if there was an earthquake and suddenly the cement rubbed against each other. This was reiterated in Cokaliong vs. UCPB (2003) Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. Broadly speaking, force majeure generally applies to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a public enemy. Hence, fire is not considered a natural disaster or calamity. 3. What about heavy rains, are they considered natural disasters? NO. Vessels are built to withstand heavy rains and seas. Eastern Shipping vs. CA: The heavy seas and rains referred to in the master's report were not caso fortuito, but normal occurrences that an ocean-going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage.

Act of omission of the shipper or owner of the goods in relation to: Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced. Notes: 1. In order to totally escape liability, the CCOG must prove that the act/negligence of the shipper is the only and proximate cause of the loss. Otherwise, Art. 1741 applies. If the CCOG is not able to prove that the only and proximate cause of the loss is the act of the shipper then, there will be an equitable reduction of the liability. 2. COMPANIA MARITIMA VS. CA: Here, the shipper stated the weight of the payloader was 2.5 tons when it was 7.5 tons in reality. CCOG used a lifting apparatus with a 5 ton capacity, so the payloader fell and was damaged. H: We are not persuaded by the proferred explanation of petitioner alleged to be the proximate cause of the fall of the payloader while it was being unloaded at the Cagayan de Oro City pier. Petitioner seems to have overlooked the extraordinary diligence required of common carriers in the vigilance over the goods transported by them by virtue of the nature of their business, which is impressed with a special public duty. And circumstances clearly show that the fall of the payloader could have been avoided by petitioner's crew. Evidence on record sufficiently show that the crew of petitioner had been negligent in the performance of its obligation by reason of their having failed to take the necessary precaution under the circumstances which usage has established among careful persons, more particularly its Chief Officer, Mr. Felix Pisang, who is tasked with the over-all



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supervision of loading and unloading heavy cargoes and upon whom rests the burden of deciding as to what particular winch the unloading of the payloader should be undertaken. While it was his duty to determine the weight of heavy cargoes before accepting them. Mr. Felix Pisang took the bill of lading on its face value and presumed the same to be correct by merely "seeing" it.

the goods are already defective, etc. And if the goods arrived in the same condition as it was received, then that can be used as an exception. If that happens, all the carrier has to prove is Art. 1742 -- due diligence to forestall or lessen the loss.

In that sense, therefore, private respondent's act of furnishing petitioner with an inaccurate weight of the payloader upon being asked by petitioner's collector, cannot be used by said petitioner as an excuse to avoid liability for the damage caused, as the same could have been avoided had petitioner utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes.

b. CALVO VS. UCPB: Calvo is a customs broker. The vessel arrived in Manila. The cargo was loaded on the truck of Calvo. Calvo as broker also volunteered to deliver the goods to the warehouse of the shipper. When the goods arrived, they were spoiled. Calvo denied liability for the goods and alleged that the spoilage took place while the goods were in the vessel or while with the arrastre operator.

Act of omission of the shipper or owner of the goods;

According to the SC, when did the consignee discover the spoilage of the goods? When they were in the possession of Calvo.

The character of the goods or defects in the packing or in the containers; ARTICLE 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss. Notes: 1. If there is a defect in the packaging or character of the goods, for example in a case, grain was loaded and they were already halfway to rotting, i.e. there were already molds, then the requisite for CCOG to escape liability is that it must prove that it exercised due diligence to forsetall or lessen the loss. That is under Art. 1742. 2. But a perusal of the cases will show that the SC is saying that CCOG should do something more than just Art. 1742: a. Southern Lines vs. CA: Petitioner claims exemption from liability by contending that the shortage in the shipment of rice was due to such factors as the shrinkage, leakage or spillage of the rice on account of the bad condition of the sacks at the time it received the same and the negligence of the agents of respondent City of Iloilo in receiving the shipment. Held: The contention is untenable, for, if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting thereform. Furthermore, according to the Court of Appeals, "appellant (petitioner) itself frankly admitted that the strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves." This finding, which is binding upon this Court, shows that the shortage resulted from the negligence of petitioner. Therefore, if goods are delivered to the CCOG and the defect in the goods/packaging is apparent, then the CC may accept the goods with reservation or exception. It must be indicated in the bill of lading that

Otherwise, the acceptance of CCOG without exception, the CC cannot hide under this exception.

For this provision to apply, the rule is that if the improper packing or, in this case, the defect/s in the container, is/are known to the carrier or his employees or apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for damage resulting therefrom. In this case, petitioner accepted the cargo without exception despite the apparent defects in some of the container vans. Hence, for failure of petitioner to prove that she exercised extraordinary diligence in the carriage of goods in this case or that she is exempt from liability, the presumption of negligence as provided under Art. 1735 holds. c. Iron bulk Shipping vs. Remington Order or authority.

act

of

competent

public

ARTICLE 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order Note: 1. First requisite: Person issuing order must have power to issue such. 2. Second requisite: The order must be lawful or must have been issued under legal process or authority (Ganzon vs. CA - A,owner of the the CCOG was unloading the iron. Mayor B demanded P5,000 and when A refused, B shot A. After several days, the unloading resumed and Acting Mayor C ordered X and the crew of the vessel to dump the iron. The issue is, can the CCOG be held liable for the loss of the cargo? Held: YES. We cannot sustain the theory of caso fortuito. In the courts below, the petitioner's defense was that the loss of the scraps was due to an "order or act of competent public authority," and this contention was correctly passed upon by the Court of Appeals which ruled that: ... In the second place, before the appellee Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to


unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence.

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The authorities are to the effect that a bill of lading is not indispensable for the creation of a contract of carriage. As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds and from such meeting arise rights and obligations, there should be no limitations as to form.‘ The bill of lading is juridically a documentary proof of the stipulations and conditions agreed upon by both parties.

The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely overpower the will of the petitioner's employees. The mere difficulty in the fullfilment of the obligation is not considered force majeure. DURATION OF LIABILITY (from what point to what point is a carrier liable?)

The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation, and not merely with the formal execution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery and acceptance. Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to bind the carrier.

ARTICLE 1736. The extraordinary responsibility of the common carrier lasts from 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 a right to receive them, without prejudice to the provisions of article 1738.

The test as to whether the relation of shipper and carrier had been established is, had the control and possession of the cotton been completely surrendered by the shipper to the shipper? Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty that the relation of shipper and carrier has been established.

ARTICLE 1737. The common carrier's duty to observe extraordinary diligence in the vigilance over the goods 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.

2. In relation to Art. 1738, what if the goods are in the customs warehouse and they get destroyed, deteriorated or damaged because the processing of papers take too long to process? Can the carrier be held liable? LU DO & LU YM CORP VS. BINAMIRA -- NO.

ARTICLE 1738. The extraordinary liability of the common carrier 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 been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

H: It is true that, as a rule, a common carrier is responsible for the loss, destruction or deterioration of the goods it assumes to carry from one place to another unless the same is due to any to any of the causes mentioned in Article 1734 on the new Civil Code, and that, if the goods are lost, destroyed or deteriorated, for causes other that those mentioned, the common carrier is presumed to have been at fault or to have acted negligently, unless it proves that it has observed extraordinary diligence in their care , and that this extraordinary liability lasts from the time the goods are placed in the possession of the carrier until they are delivered to the consignee, or "to the person who has the right to receive them" , but these provisions only apply when the loss, destruction or deterioration takes place while the goods are in the possession of the carrier, and not after it has lost control of them.

Notes: From when: from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation. Not actually place on the ship, it is enough even if custody is transferred to the office/receiving office of the carrier. It ends: When the goods are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738.

The reason is obvious. While the goods are in its possession, it is but fair that it exercise extraordinary diligence in protecting them from damage, and if loss occurs, the law presumes that it was due to its fault or negligence. This is necessary to protect the interest the interest of the owner who is at its mercy. The situation changes after the goods are delivered to the consignee.

1. Compania Maritima vs. Icna - Since the vessel of CM was too large for the Sasa Warf, CM sent a lighter to pick up the hemp. Before the hemp could be loaded to the vessel, the lighter sank. CM alleged that it could not be liable for the loss as the goods were not yet loaded on the vessel. Besides, there was no bill of lading yet issued to the shipper. H: The claim that there can be no contract of affreightment because the hemp was not actually loaded on the ship that was to take it from Davao City to Manila is of no moment, for the delivery of the hemp to the carrier‘s lighter is in line with the contract.

A t e n e o d e D a v a o

While we agree with the Court of Appeals that while delivery of the cargo to the consignee, or to the person who has a right to receive them", contemplated in Article 1736, because in such case the goods are still in the hands of the Government and the owner cannot exercise dominion over them, we believe however that the parties may agree to limit the liability of the carrier considering that the goods


9

have still to through the inspection of the customs authorities before they are actually turned over to the consignee. This is a situation where we may say that the carrier losses control of the goods because of a custom regulation and it is unfair that it be made responsible for what may happen during the interregnum. And this is precisely what was done by the parties herein.

Held: No. When the carrier under the terms of the bill of lading had delivered the goods at the port of destination, at that point he merely becomes the agent of consignee and ceases to be liable as carrier for loss or damages of the goods transported. Thereafter, loss of goods in its hand for causes beyond its control without negligence being proved, cannot sustain a claim for damage against the carrier.

So what can be done in cases such as this wherein we have no exact provision under the law to govern the same? In such case, the agreement of the parties prevail.

There is no doubt that Art. 1738 finds no applicability to the instant case. The said article contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were still awaiting transshipment to their port of destination, and were stored in the warehouse of a third party when last seen and/or heard of. However, Article 1736 is applicable to the instant suit. Under said article, the carrier may be relieved of the responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the consignee, or to the person who has a right to receive them. In sales, actual delivery has been defined as the ceding of corporeal possession by the seller, and the actual apprehension of corporeal possession by the buyer or by some person authorized by him to receive the goods as his representative for the purpose of custody or disposal. By the same token, there is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. The court a quo found that there was actual delivery to the consignee through its duly authorized agent, the carrier.

3. SERVANDO VS. PHIL STEAM NAVIGATION CO Here, the goods were delivered in good order in the warehouse of the customs authority. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice. Is the carrier liable? H: No. Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. " The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ... In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event. So in this case, the burning of the customs warehouse was considered as a fortuitous event in so far as the carrier is concerned. 4. SAMAR MINING VS. NORDEUTCHER LLOYD The bill of lading provided that it was effective only for the transport of the goods for Germany to Manila. From Manila, the goods were to be further transported to Davao. The carrier had unloaded and delivered the good in the bonded warehouse in Manila. They never reached Davao. Is Nordeutcher Lloyd liable?


It becomes necessary at this point to dissect the complex relationship that had developed between appellant and appellee in the course of the transactions that gave birth to the present suit. Two undertakings appeared embodied and/or provided for in the Bill of Lading 19 in question. The first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila. The second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with appellant acting as agent of the consignee. At the hiatus between these two undertakings of appellant which is the moment when the subject goods are discharged in Manila, its personality changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the case before Us. But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods, It is true that the transshipment of the goods, which was the object of the agency, was not fully performed. However, appellant had commenced said performance, the completion of which was aborted by circumstances beyond its control. An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit


or fraud, cannot be held responsible for the failure of the principal to accomplish the object of the agency.

(3) Supported by a valuable consideration other than the service rendered by the common carrier; and (4) Reasonable, just and not contrary to public policy.

5. Macam vs. CA Facts: Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is the consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as consignee and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the carrier directly to GPC and not to Pakistan Bank and without surrendering the bill of lading. Was there a proper delivery?

Can the parties stipulate that there shall be no diligence to be excercised by the CCOG? NO. Under Art. 1745, these are void stipulations because they are against public policy. ARTICLE 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper; (2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; (3) That the common carrier need not observe any diligence in the custody of the goods; (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported; (5) That the common carrier shall not be responsible for the acts or omission of his or its employees; (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

Held: YES. Delivery to GPC is delivery to the consignee. The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party. However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his demand letter to respondent and his complaint before the court. This premise brings into conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore, there was a valid delivery. So here, even if there was no delivery to the consignee but there were instructions from the shipper then the goods are deemed delivered and the CCOG can no longer be held liable for the loss of the goods. 6. SCHMITZ TRANSPORT VS. TVI: The cargo was on board MV Alexander that was parked outside the breakwater. The goods were loaded on a barge that was supposed to be pulled by the tugboat. According to Schmitz, Black Sea, the owner of MV Alexander, should be liable because the goods have not yet been delivered to the consignee.

Notes: 1. De Guzman vs. CA: Cendana is not liable for the loss of the goods because of the hijacking incident because it fell under Art. 1745(6) . According to the court,

H: No, because Shcmitz is an agent of the consignee. And Black Sea already delivered the goods once the same were transferred from the vessel MV Alexander to the barge that was supposed to bring the goods to the warehouse of Little Giant, the consignee. Thus Black sea no longer had custody over the goods. There was already actual delivery to the person who had the right to receive them, Schmitz -- as an agent of the consignee.

H: Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the instant case the hijacking of the carrier's truck does not fall within any of the five (5) categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on the part of private respondent.

VALIDITY OF STIPULATIONS Can the CCOG and the shipper agree that the CCOG will not be required to exercise XOD? YES. As to the diligence required, General rule: the CCOG and the shipper may enter into an agreement/stipulation which lessens the diligence required, but there are requisites: ARTICLE 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) (2)

In writing, signed by the shipper or owner;

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A t e n e o d e D a v

Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's goods. Petitioner argues that in the circumstances of this case, private respondent should have hired a security guard presumably to ride with the truck carrying the 600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk of his own life and the lives of the driver and his helper. Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed to divest or


to diminish such responsibility even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force." Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper, detaining them for several days and later releasing them in another province (in Zambales). In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence. ARTICLE 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation. ARTICLE 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods. ARTICLE 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid. Stipulation liability

lessening

the

amount

of

Valid: Provided follow the requisites under 1749 and 1750 ARTICLE 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

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The 500-peso limitation is only applicable when the shipper has not declared a higher value and paid a higher freight. A stipulation which exempts the carrier from any or all liability from loss or damage occasioned by its own negligence is not valid. A stipulation which provides for an unqualified limitations, like 10 pesos per kilo (only) and thus limits liability to an agreed valuation is not valid. (Meaning, wala yung stipulation that if the shipper pays a higher freight, etc.) (Heacock vs. Macondray) where the SC enumerated the three kinds of stipulation: 1. No liability -- the carrier will not be liable at all for the negligent acts of its crew and employees -- void 2. Limited Liability -- regardless of the value of the cargo, the maximum liability of the carrier will by only to a certain amount, i.e. 500 per kilo -- void. 3. Qualified liability- this is the only stipulation in a bill of lading/ticket which can validly limit liability; here, the carrier fixes a maximul liability in the event the shipper doe snot delcare any value, or a value upto a certain amount. Should shipper declare a higher value and willing to pay higher freightage, the carrier shall accordingly be liable for greater damage. Other cases cited in ppt: Eastern vs. IAC (150 SCRA 463), Sea-Land Services vs. IAC (153 SCRA), Cokaliong Shipping vs. UCPB (2003) Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods. Even if there is any limitation limiting the liability of the carrier, this cannot be availed of by the carrier if it without just cause, delays the transportation of the goods, or etc. What if there is a stipulation limiting the liability and the flight is from Davao to Manila. But because there was a typhoon in Manila, it was unable to land there so it landed in Cebu. Can the carrier avail of the stipulation?

ARTICLE 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.

Yes, because there was a just cause for the change of flight. 1747 only applies if there is no reason.

Normally, when are these stipulations present? 1. In contracts of carriage by sea -- in the bill of lading; (500 pesos per kilo) 2. In contracts of carriage by air -- in the ticket. (normally $20 per kilo)

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

For the stipulation to be valid, it must not be just a stipulation. It must contain a statement which says that if the shipper agrees or has declared a higher valuation and has paid for a higher price thereof, then the 500 peso limitation is not applicable.

Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid.

Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into


consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy. Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration. That presumption of negligence will still arise despite the fact that there is an agreement. The carrier still has to prove that it exercised EXOD to escape liability. If the carrier does not want to prove it, it will just accept the liability, then the carrier will be liable for the amount stipulated in the agreement. Of course, unless any of the circumstances like natural disaster, etc. are present.

12

CARRIAGE OF PASSENGERS Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755. Automatic presumption of negligence, rebutted by proving that carrier excercised extraordinary diligence for the safety of passengers according to the circumstances of each case.

Baggage of passengers With respect to baggage of passengers, we recognize checked-in baggage and hand-carried baggages. Passenger is responsible for his hand-carry baggages. Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable. With respect to check in baggages, the applicable provisions are the provisions we took up. However, if the luggage is hand-carried, different provisions of the CC will apply. (1998, 2000- 2003) What is the summary for hand-carried items? 1. Art. 1998: The carrier shall be responsible for hand-carried baggages as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the passengers and that, on the part of the latter, they take the precautions which said carriers or their substitutes advised relative to the care and vigilance of their effects. 2. Art. 2000. The responsibility referred to in the preceding article shall include the loss of, or injury to the personal property of the passenger caused by the servants or employees of the carrier as well as strangers; but not that which may proceed from any force majeure.

Under the provisions of carriage of goods, in carriage of passengers, there are no exceptions as to the presumption of negligence. They will be automatically presumed to be negligent under 1756, there are no exceptions. So that is the first distinction between COG and COP, but the presumption can be rebutted. Take note that proving extraordinary diligence is not the only way of escaping liability. We all know that under the general provisions of the Civil Code, a fortuitous event will always exempt the obligor from liability, if the fortuitous event is the cause of the death, injury of the passenger. Just memorize the requisites of fortuitous events. Issue: If A is a passenger of a taxi and taxi figured in an accident. A sues the taxi for breach of contract of carriage, does A have to prove that the taxi driver is at fault for A to collect damages from the operator of the taxi? Answer: In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay damages to the passenger. Because of the automatic presumption of negligence, the burden of proof is on the carrier. If the carrier rebuts the presumption, then it is absolved. If it does not rebut that presumption, there is no need for the passenger or his heirs to prove negligence. What kind of fortuitous event will exempt a carrier from liability? Is a tire blow out a fortuitous event?

The fact that passengers are constrained to rely on the vigilance of the carrier shall be considered in determining the degree of care required of him.

It depends. Remember that even the SC did not categorically state that a tire blow out is not a fortuitous event. You always have to look at the requisites.

3. Art. 2001. The act of a thief or robber, who has entered the carrier is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (n)

In the cases (Yobido vs. CA, Necesito vs. Paras), they were all cases of tire blow outs and the SC always found a way to remove the tire blow out situtation from coverage of fortuitous events.

Art. 2002. The carrier is not liable for compensation if the loss is due to the acts of the passenger, his family, servants or visitors, or if the loss arises from the character of the things brought. (n)

In Necesito vs. Paras (1958), the SC said that "defective parts of vehicles cannot be considered a fortuitous event because the manufacturer of the defective parts is considered in law the agent of the carrier, and the good repute of the manufacturer will not relieve the carrier from liability."

Art. 2003. The common carrier cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the passengers.

In Yobido, the court discovered that the driver was driving too fast, so there was negligence and


participation on the part of the carrier in bringing the accident.

have cautioned or taken steps to warn the rescuers not to bring the lighted torch too near the bus. Said negligence on the part of the agents of the carrier come under the codal provisions above- reproduced, particularly, Articles 1733, 1759 and 1763.

What about hi-jacking? Is it a fortuitous event? As a general rule, hi-jacking of an airline cannot be a fortuitous event because this is not unforseen, this is expected. That is why security checks are conducted. But in GACAL vs. PAL - this was considered a fortuitous event because the inspection was done by the military, and not PAL. This case is a special case.

2. La Mallorca vs. CA (the child of a Pax was run over by the bus when she followed her father who was getting their baggages. The bus was already moving steadily after it had dropped off the Pax even though the baggages were still on board the truck.)

But what if the hi-jack happened on a bus or a truck? In De Guzman, the SC said that it was a fortuitous event. Can you really expect that your bus will be hijacked while you're traveling along the highway? No, otherwise nobody will travel.

Held: here can be no controversy that as far as the father is concerned, when he returned to the bus for his bayong which was not unloaded, the relation of passenger and carrier between him and the petitioner remained subsisting. For, the relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car, aids the carrier's servant or employee in removing his baggage from the car. The issue to be determined here is whether as to the child, who was already led by the father to a place about 5 meters away from the bus, the liability of the carrier for her safety under the contract of carriage also persisted.

PILAPIL VS. CA: It was held that a CC is not liable for failure to install window grills on its buses to protect its passengers from injuries hurled at the bus by lawless elements. FORTUNE EXPRESS VS. CA: The SC said that FE was liable because there was an early warning already. So the element of unforseeability was missing.

It has been recognized as a rule that the (contractual) relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. So no specific time or specific distance.

DURATION OF LIABILITY No provision for CC of pax for the duration of liability; only cases 1. Bataclan vs. Medina (overturned bus which leaked gasoline and was set on fire when villagers who wanted to help brought torches) Held: CC is still liable even if the bus was no longer in transit. In the present case and under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause of the death of Bataclan was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was very dark (about 2:30 in the morning), the rescuers had to carry a light with them; and coming as they did from a rural area where lanterns and flashlights were not available, they had to use a torch, the most handy and available; and what was more natural than that said rescuers should innocently approach the overturned vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with the torch was to be expected and was a natural sequence of the overturning of the bus, the trapping of some of its passengers and the call for outside help. What is more, the burning of the bus can also in part be attributed to the negligence of the carrier, through its driver and its conductor. According to the witnesses, the driver and the conductor were on the road walking back and forth. They, or at least, the driver should and must have known that in the position in which the overturned bus was, gasoline could and must have leaked from the gasoline tank and soaked the area in and around the bus, this aside from the fact that gasoline when spilled, specially over a large area, can be smelt and detected even from a distance, and yet neither the driver nor the conductor would appear to

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3. PAL vs. Zapatos: Even if the pax are in transit, this will not terminate the contractual relations. Held: Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier's premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. DOCTRINE OF LAST CLEAR CHANCE: This doctrine calls for application in suits between owners of two colliding vehicles. It does not apply where a pax demands responsibility from a carrier to enforce its contractual obligations. The principle of last clear chance is inapplicable in the instant case, as it only applies in a suit between the owners and drivers of two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations, for it would be inequitable to exempt the negligent driver and its owner on the ground that the other driver was likewise guilty of negligence. The common law notion of last clear chance permitted courts to


grant recovery to a plaintiff who has also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult to see what role, if any, the common law of last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code. (Tiu vs. Arriesgado) VALIDITY OF STIPULATIONS Two kinds: 1. As to the diligence required 2. As to the amount of liability AS TO THE DILIGENCE REQUIRED Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise. Remember: Diligence required: XOD What kind of XOD: Utmost diligence of a very cautious person (1)

(2)

CC of Goods are allowed to lessened the degree of diligence, but NOT do away with the same completely. CC of Pax CANNOT dispense with nor lessen the degree of diligence.

AS TO AMOUNT OF LIABILITY Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for wilful acts or gross negligence. The reduction of fare does not justify any limitation of the common carrier's liability. General Rule: Cannot be limited But under 1758, there are circumstances where this liability is limited: 1. Pax carried gratuitously 2. Existence of stipulation limiting liability 3. Accident/Breach not caused by willful acts or gross negligence. Remember: Minimum amount that heirs of pax can collect from CC is P 50,000 because this is indemnity for death. CC is automatically liable for this minimum amount; if it wants to lessen this amount, CC must follow Art. 1758. LIABILITY FOR ACTS OF EES Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a

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good father of a family in the selection and supervision of their employees. Notes: 1. There is no express provision in CC of Goods exactly like Art. 1759. BUT, the absence of express stipulation does not mean that CC of Goods not liable for acts of ees. Under Art. 1775, par. 5, the CC cannot stipulate that it shall not be responsible for the acts of its ees. So this means that CC of goods still liable; 2. If driver is drunk and figures in an accident, CC cannot say that it is not liable because driver violated company rules of no drinking while driving. 3. Defense of Diligence of Good father of family is available if the cause of action is culpa acquiliana (Art. 2176, 2180 of NCC), But if the cause of action is for breach of contract of carriage, this defense of GFOF cannot be invoked. CONTRIBUTORY NEGLIGENCE Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself. Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced. Notes: 1. Definition of Contributory Negligence: It is the principle that negligence, no matter how slight, on the part of the person injured which is one of the causes proximately contributing to his negligence equitably reduces the liability of the CC. 2. Estacion vs. Bernardo (2006): (Pax of Jeepney was seated in extension seat initially but gave his seat up to an old lady. A then hung/stood outside the jeepney. When jeepney stopped at the curve, an isuzu truck with a faulty break hit the jeepney causing injury to A's leg which had to be amputated.) Held: There was contributory negligence on the part of A, and both truck and jeepney were found to be negligent. Sharing of liability: 20-40-40. 20 to be borne by A. Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection. When is one considered to have contributed to his injuries: It has been held that “to hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in disregard of warning or signs of an impending danger to health and body. Respondent Noe’s act of hanging on the Fiera is definitely dangerous to his life and limb. 3. CANGCO VS. MRR ( Jose Cangco, herein plaintiff, was an employee of the defendant in this case, manila Railroad Company. Upon the occasion in question, plaintiff was returning home by rail from his daily labors. As the train drew up to the station, plaintiff arose from his seat. As the train slowed down, plaintiff stepped off, but one or both of his feet came in


contact with a sack of watermelons. As a result, his feet slipped from under him and he fell violently on the platform.) Held: The act of the plaintiff in stepping off the train while it as yet slowly moving was not characterized by imprudence so as to hold him guilty of contributory negligence. In arriving to such conclusion, the court used the best of negligence enunciated in the case of Picart vs. Smith (37 PHIL 809) which was stated as follow: Was there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would have admitted a person of average prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff should have deserted from alighting; and his failure so to desist was contributory negligence. In the case at bar, the plaintiff was ignorant of the fact that the obstruction which was caused by the sacks of melds piled on the platform existed. Moreover, the place was dark or dimly lighted. Thus, he was a failure on the part of the defendant to afford to its passengers facilities for safe egress from its trains. It is not negligence per se for a traveler to alight from a slowly moving train. 4. Del Prado vs. MRR Held: Defendant should still be held liable for the damages sustained by the plaintiff. The contributory negligence upon the latter was not the proximate cause of the injury. The proximate cause was the act of the motorman in putting off on the power prematurely. A person moving boarding a moving car must be taken to assure the risk of injury from boarding the car, but he cannot fairly be held to assume the risk that the motorman will increase his peril by accelerating the speed of the car before he is planted on the platform. The motorman‘s negligence succeeded the negligence of herein plaintiff. Under the doctrine of ―last clear chance‖, the contributory negligence of the party injured will not defeat the action if it be shown that the carrier might be the exercise of reasonable care and prudence have avoided the consequences of the negligence of the injured party. 5. Brinas vs. People (old woman and her granddaughter bound for Losacan. Conductor announced their stop so the lola stood up and carried her "apo" and went to exit. When train door opened, before they could go down, the train picked up speed and they both fell and died) Held: It is a matter of common knowledge and experience about common carriers like trains and buses that before reaching a station or flagstop they slow down and the conductor announces the name of the place. It is also a matter of common experience that as the train or bus slackens its speed, some passengers usually stand and proceed to the nearest exit, ready to disembark as the train or bus comes to a full stop. This is especially true of a train because passengers feel that if the train resumes its run before they are able to disembark, there is no way to stop it as a bus may be stopped. It was negligence on the conductor's part to announce the next flag stop when said stop was still a full three

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minutes ahead. As the respondent Court of Appeals correctly observed, "the appellant's announcement was premature and erroneous and was the proximate cause of the death of the victims. Any negligence of the victims was at most contributory and does not exculpate the accused from criminal liability. 6. Dangwa vs. CA - (There was no contributory negligence on the part of the victim in this case) Held: The foregoing testimonies show that the place of the accident and the place where one of the passengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear right tires of the vehicle, as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. Under such circumstances, it cannot be said that the deceased was guilty of negligence. LLphil The contention of petitioners that the driver and the conductor had no knowledge that the victim would ride on the bus, since the latter had supposedly not manifested his intention to board the same, does not merit consideration. When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same. The premature acceleration of the bus in this case was a breach of such duty. It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered negligent under the circumstances. As clearly explained in the testimony of the aforestated witness for petitioners, Virginia Abalos, the bus had "just started" and "was still in slow motion" at the point where the victim had boarded and was on its platform. It is not negligence per se, or as a matter of law, for one to attempt to board a train or streetcar which is moving slowly. An ordinarily prudent person would have made the attempt to board the moving conveyance under the same or similar circumstances. The fact that passengers board and alight from a slowly moving vehicle is a matter of common experience and both the driver and conductor in this case could not have been unaware of such an ordinary practice. The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled to all the rights and protection pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those alighting therefrom.


7. Isaac vs. Al Ammen Facts: Plaintiff boarded defendant‘s bus as paying passenger from Albay. The bus collided with a pickup truck which was coming from opposite direction trying to swerve from a pile of gravel. As a result, his left arm was completely severed. Plaintiff chose to hold defendant liable on its contractual obligation. Plaintiff brought an action for damages which the lower court dismissed holding the driver of the pick-up car negligent and not that of the bus. Issue: Whether or not the common carrier is liable.

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3. Fortune Express vs. CA- Fortune express cannot invoke this provision. As already stated, despite the report of PC agent Generalao that the Maranaos were planning to burn some of petitioner‘s buses and the assurance of petitioner‘s operations manager (Diosdado Bravo) that the necessary precautions would be taken, nothing was really done by petitioner to protect the safety of passengers. Issue: Are there other causes for breach of contract of carriage aside from Art. 1755 and 1756? Answer: Yes.

Held: The bus was running at a moderate speed. The driver of the bus upon the speeding pick-up truck swerved the bus to the very extreme right of the road. Said driver would not move the bus further without endangering the safety of his passengers. Notwithstanding all these efforts, the rear left side was hit. This finding of the lower court was sustained. Also, of the carrier‘s employee is confronted with a sudden emergency, he is not held to the same degree of care he would otherwise, he required in the absence of such emergency. By placing his left arm on the window, he is guilty of contributory negligence cannot relieve the carrier but can only reduce its liability, this is a circumference which further mistakes against plaintiff‘s position. It is a prevailing rule that it is negligence per se for passengers on a railroad to protrude any part of his body and that no recovery can be had for an inquiry.‖ Responsibility for acts of strangers Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Notes: 1. This is one instance wherein the carrier need not prove that it exercised XOD to escape liability. If the injury/death of pax was caused by the act of a stranger (somebody who is not an ee of the carrier) the carrier need only prove that its ees exercised diligence of GFOF to prevent or stop the act or omission. Why? It is not the responsibility of the CC of Pax to ensure that no injury from outside forces will be caused to the pax, i.e. when a bomb is thrown from the roadside. 2. MRR vs. Ballesteros - Here, the driver of the bus allowed a stranger to take the wheel of the bus. After awhile, the driver struggled with him as the stranger did not want to give the wheel back. The bus met an accident. Can this provision be invoked? What kind of diligence does the CC of Pax have to prove here? XOD because by actually allowing a stranger to drive the bus even if that person caused the accident, but still the driver did not exercise the diligence of GFOF to prevent or stop the act or omission. (yan talaga sa lecture)

1. If a passenger is bumped off his flight and he has a confirmed booking, that is a breach because the carrier in the ticket ensured that it will deliver the pax to its destination on the time and date stipulated. 2. Air France vs. Carrascoso – Rebooked to a lower class without pax consent. Pax seated in first class from Mla to Bangkok. Upon arrival in Bangkok, he was downgraded to economy to give way to a "white man". There is a breach because his ticket says first class, and by booking the pax to economy class without his consent, what happens is that there is no more consent in the contract. 3. Singson vs. Cathay Pacific - On 24 May 1988 CARLOS SINGSON and his cousin Crescentino Tiongson bought from Cathay Pacific Airways, Ltd. (CATHAY), at its Metro Manila ticket outlet two (2) open-dated, identically routed, round trip plane tickets for the purpose of spending their vacation in the United States. Each ticket consisted of six (6) flight coupons corresponding to this itinerary: flight coupon no. 1 - Manila to Hongkong; flight coupon no. 2 Hongkong to San Francisco; flight coupon no. 3 - San Francisco to Los Angeles; flight coupon no. 4 - Los Angeles back to San Francisco; flight coupon no. 5 San Francisco to Hongkong; and, finally, flight coupon no. 6 - Hongkong to Manila. The procedure was that at the start of each leg of the trip a flight coupon corresponding to the particular sector of the travel would be removed from the ticket booklet so that at the end of the trip no more coupon would be left in the ticket booklet. On 6 June 1988 CARLOS SINGSON and Crescentino Tiongson left Manila on board CATHAY‘s Flight No. 902. They arrived safely in Los Angeles and after staying there for about three (3) weeks they decided to return to the Philippines. On 30 June 1988 they arranged for their return flight at CATHAY‘s Los Angeles Office and chose 1 July 1988, a Friday, for their departure. While Tiongson easily got a booking for the flight, SINGSON was not as lucky. It was discovered that his ticket booklet did not have flight coupon no. 5 corresponding to the San FranciscoHongkong leg of the trip. Instead, what was in his ticket was flight coupon no. 3 - San Francisco to Los Angeles - which was supposed to have been used and removed from the ticket booklet. It was not until 6 July 1988 that CATHAY was finally able to arrange for his return flight to Manila. H: CATHAY undoubtedly committed a breach of contract when it refused to confirm petitioner's flight reservation back to the Philippines on account of his missing flight coupon. Its contention that there was no contract of carriage that


was breached because petitioner‘s ticket was opendated is untenable. To begin with, the round trip ticket issued by the carrier to the passenger was in itself a complete written contract by and between the carrier and the passenger. It had all the elements of a complete written contract, to wit: (a) the consent of the contracting parties manifested by the fact that the passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hongkong back to the Philippines, and the carrier‘s acceptance to bring him to his destination and then back home; (b) cause or consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object, which was the transportation of the passenger from the place of departure to the place of destination and back, which are also stated in his ticket. Interestingly, it appears that CATHAY was responsible for the loss of the ticket. One of two (2) things may be surmised from the circumstances of this case: first, US Air (CATHAY‘s agent) had mistakenly detached the San Francisco-Hongkong flight coupon thinking that it was the San FranciscoLos Angeles portion; or, second, petitioner‘s booklet of tickets did not from issuance include a San Francisco-Hongkong flight coupon. In either case, the loss of the coupon was attributable to the negligence of CATHAY‘s agents and was the proximate cause of the non-confirmation of petitioner's return flight on 1 July 1988. With regard to the second issue, we are of the firm view that the appellate court seriously erred in disallowing moral and exemplary damages. Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages, such as in the instant case. 4. PAL vs. CA (Sept. 22, 2008) unaccompanied minors were not able plane because PAL was not able to indemnity bond executed by the minors' they were travelling unaccompanied.

- Here, two to board the produce the parents since

Here, there was definitely a breach of contract even if the flight that the minors were supposed to take is in another airline. It was because of PAL's negligence that they were not able board the other airline. H: When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he be transported on that flight and on that date, and it becomes the airline's obligation to carry him and his luggage safely to the agreed destination without delay. If the passenger is not so transported or if in the process of transporting, he dies or is injured, the carrier may be held liable for a breach of contract of carriage. Private respondents and petitioner entered into a contract of air carriage when the former purchased two plane tickets from the latter. Under this contract, petitioner obliged itself (1) to transport Deanna and Nikolai, as unaccompanied minors, on 2 May 1980 from Manila to San Francisco through one of its

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planes, Flight 106; and (2) upon the arrival of Deanna and Nikolai in San Francisco Airport on 3 May 1980, to transport them on that same day from San Francisco to Los Angeles via a connecting flight on United Airways 996. As it was, petitioner failed to transport Deanna and Nikolai from San Francisco to Los Angeles on the day of their arrival at San Francisco. The staff of United Airways 996 refused to take aboard Deanna and Nikolai for their connecting flight to Los Angeles because petitioner's personnel in San Francisco could not produce the indemnity bond accomplished and submitted by private respondents.It was established in the instant case that since Deanna and Nikolai would travel as unaccompanied minors, petitioner required private respondents to accomplish, sign and submit to it an indemnity bond. Private respondents complied with this requirement. Petitioner gave a copy of the indemnity bond to one of its personnel on Flight 106, since it was required for the San Francisco-Los Angeles connecting flight of Deanna and Nikolai. Petitioner's personnel lost the indemnity bond during the stop-over of Flight 106 in Honolulu, Hawaii. Thus, Deanna and Nikolai were not allowed to take their connecting flight. Evidently, petitioner was fully aware that Deanna and Nikolai would travel as unaccompanied minors and, therefore, should be specially taken care of considering their tender age and delicate situation. Petitioner also knew well that the indemnity bond was required for Deanna and Nikolai to make a connecting flight from San Francisco to Los Angeles, and that it was its duty to produce the indemnity bond to the staff of United Airways 996 so that Deanna and Nikolai could board the connecting flight. Yet, despite knowledge of the foregoing, it did not exercise utmost care in handling the indemnity bond resulting in its loss in Honolulu, Hawaii. This was the proximate cause why Deanna and Nikolai were not allowed to take the connecting flight and were thus stranded overnight in San Francisco. Further, petitioner discovered that the indemnity bond was lost only when Flight 106 had already landed in San Francisco Airport and when the staff of United Airways 996 demanded the indemnity bond. This only manifests that petitioner did not check or verify if the indemnity bond was in its custody before leaving Honolulu, Hawaii for San Francisco. The foregoing circumstances reflect petitioner's utter lack of care for and inattention to the welfare of Deanna and Nikolai as unaccompanied minor passengers. They also indicate petitioner's failure to exercise even slight care and diligence in handling the indemnity bond. Clearly, the negligence of petitioner was so gross and reckless that it amounted to bad faith. It is worth emphasizing that petitioner, as a common carrier, is bound by law to exercise extraordinary diligence and utmost care in ensuring for the safety and welfare of its passengers with due regard for all the circumstances.[19] The negligent acts of petitioner signified more than inadvertence or inattention and thus constituted a radical departure from the extraordinary standard of care required of common carriers. Petitioner's claim that it cannot be entirely blamed for the loss of the indemnity bond because it gave the indemnity bond to the immigration office of Honolulu, Hawaii, as a matter of procedure during the stop-over, and the said immigration office failed to return the


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indemnity bond to petitioner's personnel before Flight 106 left Honolulu, Hawaii, deserves scant consideration. It was petitioner's obligation to ensure that it had the indemnity bond in its custody before leaving Honolulu, Hawaii for San Francisco. Petitioner should have asked for the indemnity bond from the immigration office during the stop-over instead of partly blaming the said office later on for the loss of the indemnity bond. Petitioner's insensitivity on this matter indicates that it fell short of the extraordinary care that the law requires of common carriers.

and which was designated in their boarding passes. They clearly waived their priority or preference when they asked that other passengers be given the upgrade. It should not have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage with the Vazquezes.

As we have earlier found, petitioner breached its contract of carriage with private respondents, and it acted recklessly and malevolently in transporting Deanna and Nikolai as unaccompanied minors and in handling their indemnity bond. We have also ascertained that private respondents are entitled to moral damages because they have sufficiently established petitioner's gross negligence which amounted to bad faith. This being the case, the award of exemplary damages is warranted.

DISTINCTIONS BETWEEN CCOG AND CCOP Diligence extraordinary Utmost required diligence diligence of very cautious person. When Loss, death or injury presumption of destruction or and nonnegligence deterioration fulfillment of the arises and non-arrival contract of the goods at destination and negligent delay When in the five (5) NONE, the presumption of instances presumption of negligence mentioned; negligence will does not arise natural calamity, ALWAYS arise automatically etc. in case the carriage of PAX W/N degree of For both, it cannot be dispensed. diligence can be dispensed with W/N degree of yes, under the NO diligence can requisites be lessened previously discussed W/N liability in yes, under Art. As a general case of breach 1748, 1749 and rule, NO, unless can be 1750; carried lessened? gratuitously; stipulation but only for simple negligence.

5. Cathay Pacific vs. Vasquez- Is an involuntary upgrading of an airline passenger‘s accommodation from one class to a more superior class at no extra cost a breach of contract of carriage that would entitle the passenger to an award of damages? H: We resolve the first issue in the affirmative. A contract is a meeting of minds between two persons whereby one agrees to give something or render some service to another for a consideration. There is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the obligation which is established.[4] Undoubtedly, a contract of carriage existed between Cathay and the Vazquezes. They voluntarily and freely gave their consent to an agreement whose object was the transportation of the Vazquezes from Manila to Hong Kong and back to Manila, with seats in the Business Class Section of the aircraft, and whose cause or consideration was the fare paid by the Vazquezes to Cathay.

So it is not only death or injury which causes breach of contract of carriage of pax. Anything that is in violation of a contract will constitute a breach.

The only problem is the legal effect of the upgrading of the seat accommodation of the Vazquezes. Did it constitute a breach of contract? Breach of contract is defined as the ―failure without legal reason to comply with the terms of a contract.‖ It is also defined as the ―[f]ailure, without legal excuse, to perform any promise which forms the whole or part of the contract.‖ The Vazquezes never denied that they were members of Cathay‘s Marco Polo Club. They knew that as members of the Club, they had priority for upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just like other privileges, such priority could be waived. The Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege or would consent to a change of seat accommodation before their seat assignments were given to other passengers. Normally, one would appreciate and accept an upgrading, for it would mean a better accommodation. But, whatever their reason was and however odd it might be, the Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for

VIP: When we talk about transportation laws we should not only focus on breach of contract of carriage. We should also include that there are other causes of action which may arise. Example: A car owned by E and driven by F was speeding along JP Laurel hit a Taxi driven by D which in turn hit C. B the passenger of the taxi was also injured. The taxi is owned by A. Question: How many causes of action are available to B and to C? What are the defenses available to E, D 1 and F? MARITIME COMMERCE Applicable laws: Code of Commerce; COGSA; Salvage Law Governing body: Marina (Maritime Industry Authority)

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I did not include the Q and A already. Please see your UP Bar.


Functions of Marina: CF PD 474 1. Issue certificate of public conveniece for the operation of domestic and overseas water carriers; 2. Register and issue certificate, licenses, documents necessary or incident thereto.

or

Q: What is the requirement for a carrier to operate domestic sea voyages? A: Certificate of Public Convenience (CPC) Kinds of VESSELS (under PD 474) "Vessels" or "Watercraft" Any barge, lighter, bulk carrier, passenger ship freighter, tanker, container ship, fishing boats or other artificial contrivance utilizing any source of motive power, designed, used or capable of being used as a means of water transportation operating either as common contract carrier, including fishing vessels covered under Presidential Decree No. 43, except (1) those owned and/or operated by the Armed Forces of the Philippines and by foreign governments for military purposes, and (2) bancas, sailboats and other waterborne contrivance of less than three gross tons capacity and not motorized. HOW OWNERSHIP OF A VESSEL MAY BE ACQUIRED ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by any of the 2 means recognized by law . The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if not recorded in the mercantile registry.

1. Must appear in a written instrument; 2. Recorded in the proper registry -- under EO 125, transaction must be registered with the Marina but now this is being conducted by the PPA. 3. Robiso vs. Rivera: It is undeniable that the defendant Rivera acquired by purchase the pilot boat Valentina on a date prior to that of the purchase and adjudication made at public auction, by and on behalf of the plaintiff Rubiso; but it is no less true that the sale of the vessel by Sy Qui to Florentino E. Rivera, on January 4, 1915, was entered in the customs registry only on March 17, 1915, while its sale at public auction to Fausto Rubiso on the 23d of January of the same year, 1915, was recorded in the office of the Collector of Customs on the 27th of the same month, and in the commercial registry on the 4th of March, following; that is, the sale on behalf of the defendant Rivera was prior to that made at public auction to Rubiso, but the registration of this latter sale was prior by many days to the sale made to the defendant. The requisite of registration in the registry, of the purchase of a vessel, is necessary and indispensable in order that the purchaser's rights may be maintained against a claim filed by a third person. In view of said legal provisions, it is undeniable that the defendant Florentino E. Rivera's rights cannot prevail over those acquired by Fausto Rubiso in the ownership of the pilot boat Valentina, inasmuch as, though the latter's acquisition of the vessel at public auction, on January 23, 1915, was subsequent to its purchase by the defendant Rivera, nevertheless said sale at public auction was antecedently recorded in the office of the Collector of Customs, on January 27, and entered in the commercial registry-an unnecessary proceeding--on March 4th; while the private and voluntary purchase made by Rivera on a prior date was not recorded in the office of the Collector of Customs until many days afterwards, that is, not until March 17, 1915.

The ownership of a vessel shall also be acquired by the possession thereof in good faith for three years, with a good title duly recorded. In the absence of any of these requisites, uninterrupted possession for ten years shall be necessary in order to acquire ownership. A captain can not acquire by prescription the ship of which he is in command. Notes: 1. Q: Kind of property is a vessel? A: Movable, but ownership must be evidenced by certificate of ownership and transfers must be registered in the proper registry to bind 3rd persons. 2. Requisites for Legal Acquisition of a Merchant Vessel:

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In relation to Art. 712 of the Civil Code: a. Donation; b. law c. Testate or intestate succession; d. As a consequence of certain contracts e. By tradition f. By prescription (3 years if possession in good faith, with just title duly recorded, otherwise, 10 years)

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Repair and Maintenance of Vessel during the Voyage (Art. 583) ARTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Philippine territory, and otherwise to the Filipino Consul should there be one, and, in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contracted. The judge or court, the consul or the local authority as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness. The lack of this formality shall make the captain personally liable to the creditors who may be prejudiced through his fault. Notes:

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa ’08-‘09 3

1. Article 580 Nos. 8 and 9 = contract obligations for the repair and equipment of the vessel and obtain loans and bottomry. 2. Why are these formalities required for the captain? Because omission to follow these requirements will make the captain personally liable. He cannot ask for a refund from the carrier. Persons who commerce

take

part

in

marine

I. SHIP OWNER II. SHIP AGENT - By agent is understood the person intrusted with the provisioning of a vessel, or who represents her in the port in which she happens to be. ARTICLE 586. The owner of a vessel and the agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested therein. Notes: 1. Macondray vs. Provident (2004) - Canpotex, shipper, shipped and loaded on board the vessel M/V ‗Trade Carrier‘, 5000 metric tons of Standard Grade Muriate of Potash in bulk for transportation to and delivery at the port of Sangi, Toledo City, Cebu, in favor of ATLAS FERTILIZER CORPORATION, Consignee. Upon arrival, it was discovered that the shipment sustained losses. MACONDRAY filed ANSWER, denying liability over the losses, having NO absolute relation with defendant TRADE AND TRANSPORT, the alleged operator of the vessel who transported the subject shipment; that accordingly, MACONDRAY is the local representative of the SHIPPER; the charterer of M/V TRADE CARRIER and not party to this case; that it has no control over the acts of the captain and crew of the Carrier and cannot be held responsible for any damage arising from the fault or negligence of said captain and crew. The CA affirmed the trial court‘s finding that petitioner was not the agent of Trade and Transport. The appellate court ruled, however, that petitioner could still be held liable for the shortages of the shipment, because the latter was the ship agent of Canpotex Shipping Services Ltd. -- the shipper and charterer of the vessel M/V Trade Carrier. H: In the present case, we find no compelling reason to overturn the Court of Appeals in its categorical finding that petitioner was the ship agent. Such factual finding was not in conflict with the trial court‘s ruling, which had merely stated that petitioner was not the agent of Trade and Transport. Indeed, although it

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Art. 580 (8) The part of the price which has not been paid the last vendor, the credits pending for the payment of material and work in the construction of the vessel, when it has not navigated, and those arising from the repair and equipment of the vessel and its provisioning with victuals and fuel during its last voyage. x x x (9) The amounts borrowed on bottomry bonds before the departure of the vessel, proven by means of the contracts executed according to law and recorded in the commercial registry; the amounts borrowed during the voyage with the authority mentioned in the foregoing subdivision, filling the same requisites, and the insurance premium, proven by the policy of the contract or certificate taken from the books of the broker.

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is not an agent of Trade and Transport, petitioner can still be the ship agent of the vessel M/V Trade Carrier. Article 586 of the Code of Commerce states that a ship agent is ―the person entrusted with provisioning or representing the vessel in the port in which it may be found.‖ Hence, whether acting as agent of the owner of the vessel or as agent of the charterer, petitioner will be considered as the ship agent and may be held liable as such, as long as the latter is the one that provisions or represents the vessel. The trial court found that petitioner ―was appointed as local agent of the vessel, which duty includes arrangement for the entrance and clearance of the vessel.‖ Further, the CA found and the evidence shows that petitioner represented the vessel. The latter prepared the Notice of Readiness, the Statement of Facts, the Completion Notice, the Sailing Notice and Custom‘s Clearance. Petitioner‘s employees were present at Sangi, Toledo City, one day before the arrival of the vessel, where they stayed until it departed. They were also present during the actual discharging of the cargo. Moreover, Mr. de la Cruz, the representative of petitioner, also prepared for the needs of the vessel, like money, provision, water and fuel. These acts all point to the conclusion that it was the entity that represented the vessel in the Port of Manila and was the ship agent within the meaning and context of Article 586 of the Code of Commerce. III. CAPTAIN- one who governs vessels and navigates the high seas or of large dimension and importance. vs. Master- commands small ships and engages exclusively in coastwide trade. But For purposes of maritime commerce, captain, master, patron, they all mean the same. Qualifications of Captain ARTICLE 609. Captains and masters of vessels must be Filipino having legal capacity to bind themselves in accordance with this Code, and must prove that they have the skill, capacity, and qualifications required to command and direct the vessel, as established by marine laws, ordinances, or regulations, or by those of navigation, and that they are not disqualified according to the same for the discharge of the duties of that position. If the owner of a vessel desires to be the captain thereof and does not have the legal qualifications therefor, he shall limit himself to the financial administration of the vessel, and shall intrust her navigation to a person possessing the qualifications required by said ordinances and regulations. Notes: 1. Coastwise Lighterage vs. CA - Here, the patron of the lighter admitted that he was not licensed. H: Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates Art. 609. It cannot safely claim to have


exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed, he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence. General Functions of a Captain: ARTICLE 610. The following powers are inherent in the position of captain or master of a vessel: 1. To appoint or make contracts with the crew in the absence of the agent and propose said crew, should said agent be present; but the agent shall not be permitted to employ any member against the captain's express refusal. 2. To command the crew and direct the vessel to the port of its destination, in accordance with the instructions he may have received from the agent. 3. To impose, in accordance with the agreements and the laws and regulations of the merchants marine, on board the vessel, correctional punishment upon those who do not comply with his orders or who conduct themselves against discipline, holding a preliminary investigation on the crimes committed on board the vessel on the high seas, which shall be turned over to the authorities, who are to take cognizance thereof, at the first port touched. 4. To make contracts for the charter of the vessel in the absence of the agent or of her consignee, acting in accordance with the instructions received and protecting the interests of the owner most carefully. 5. To adopt all the measures which may be necessary to keep the vessel well supplied and equipped, purchasing for the purpose all that may be necessary, provided there is no time to request instructions of the agent. 6. To make, in similar urgent cases and on a voyage, the repairs to the hull and engines of the vessel and to her rigging and equipment which are absolutely necessary in order for her to be able to continue and conclude her voyage; but if she should arrive at a point where there is a consignee of the vessel, he shall act in concurrence with the latter. Notes: 1. Inter-orient Maritime vs. NLRC- Here, the captain refused to leave the port, contrary to the ship agent's instructions, until the supplies he requested necessary for the welding-repair of the turbo-charger and the economizer were delivered. Subsequently, the captain was dismissed. Issue: Was the captain remiss of his duties? H: NO. The captain has the authority to decide. The captain of a vessel is a confidential and managerial employee within the meaning of the above doctrine. A

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master or captain, for purposes of maritime commerce, is one who has command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical director of the vessel; and (3) he is a representative of the country under whose flag he navigates. Of these roles, by far the most important is the role performed by the captain as commander of the vessel; for such role (which, to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day corporate enterprise) has to do with the operation and preservation of the vessel during its voyage and the protection of the passengers (if any) and crew and cargo. In his role as general agent of the shipowner, the captain has authority to sign bills of lading, carry goods aboard and deal with the freight earned, agree upon rates and decide whether to take cargo. The ship captain, as agent of the shipowner, has legal authority to enter into contracts with respect to the vessel and the trading of the vessel, subject to applicable limitations established by statute, contract or instructions and regulations of the shipowner. 17 To the captain is committed the governance, care and management of the vessel. Clearly, the captain is vested with both management and fiduciary functions. More importantly, 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 requires on a stipulated ocean voyage. The captain is held responsible, and properly so, for such safety. He is right there on the vessel, in command of it and (it must be presumed) knowledgeable as to the specific requirements of seaworthiness and the particular risks and perils of the voyage he is to embark upon. The applicable principle is that the captain has control of all departments of service in the vessel, and reasonable discretion as to its navigation. It is the right and duty of the captain, in the exercise of sound discretion and in good faith, to do all things with respect to the vessel and its equipment and conduct of the voyage which are reasonably necessary for the protection and preservation of the interests under his charge, whether those be of the shipowners, charterers, cargo owners or of underwriters. It is a basic principle of admiralty law that in navigating a merchantman, the master must be left free to exercise his own best judgment. The requirements of safe navigation compel us to reject any suggestion that the judgment and discretion of the captain of a vessel may be confined within a straitjacket, even in this age of electronic communications. 2. Far Eastern Shipping vs. CA- There was a Russian vessel that arrived in Manila, owned by Far Eastern Shipping. It was assigned berth no. 4. There is such a thing as compulsory pilotage -- there is a pilot assigned to pilot the vessel outside the break water until it reaches its birth. In this case, A was assigned to the vessel. The captain of the vessel was beside A. Under the rules of compulsory pilotage, once a pilot takes over the helm, the captain will have to stand aside and surrender all his authority to the pilot who is more familiar with the docking maneuvers. Now, A hit the pier. PPA filed a complaint against Far Eastern Shipping. Issue: Can the captain of the vessel be considered negligent in this case? Because the only way that Far Eastern shipping can be held liable is for the courts to declare the captain negligent. HELD: YES.


A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or out of ports, or in certain waters. In a broad sense, the term "pilot" includes both (1) those whose duty it is to guide vessels into or out of ports, or in particular waters and (2) those entrusted with the navigation of vessels on the high seas. However, the term "pilot" is more generally understood as a person taken on board at a particular place for the purpose of conducting a ship through a river, road or channel, or from a port. Under English and American authorities, generally speaking, the pilot supersedes the master for the time being in the command and navigation of the ship, and his orders must be obeyed in all matters connected with her navigation. He becomes the master pro hac vice and should give all directions as to speed, course, stopping and reversing, anchoring, towing and the like. And when a licensed pilot is employed in a place where pilotage is compulsory, it is his duty to insist on having effective control of the vessel, or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take entire charge of the vessel, but is deemed merely the adviser of the master, who retains command and control of the navigation even on localities where pilotage is compulsory. While it is indubitable that in exercising his functions a pilot-is in sole command of the ship[69] and supersedes the master for the time being in the command and navigation of a ship and that he becomes master pro hac vice of a vessel piloted by him,[70] there is overwhelming authority to the effect that the master does not surrender his vessel to the pilot and the pilot is not the master. The master is still in command of the vessel notwithstanding the presence of a pilot. There are occasions when the master may and should interfere and even displace the pilot, as when the pilot is obviously incompetent or intoxicated and the circumstances may require the master to displace a compulsory pilot because of incompetency or physical incapacity. If, however, the master does not observe that a compulsory pilot is incompetent or physically incapacitated, the master is justified in relying on the pilot, but not blindly. The master is not wholly absolved from his duties while a pilot is on board his vessel, and may advise with or offer suggestions to him. He is still in command of the vessel, except so far as her navigation is concerned, and must cause the ordinary work of the vessel to be properly carried on and the usual precaution taken. Thus, in particular, he is bound to see that there is sufficient watch on deck, and that the men are attentive to their duties, also that engines are stopped, towlines cast off, and the anchors clear and ready to go at the pilot's order. A perusal of Capt. Kabankov's testimony makes it apparent that he was remiss in the discharge of his duties as master of the ship, leaving the entire docking procedure up to the pilot, instead of maintaining watchful vigilance over this risky maneuver. In sum, where a compulsory pilot is in charge of a ship, the master being required to permit him to navigate it, if the master observes that the pilot is incompetent or physically incapable, then it is the duty of the master to refuse to permit the pilot to act. But if no such reasons are present, then the master is

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justified in relying upon the pilot, but not blindly. Under the circumstances of this case, if a situation arose where the master, exercising that reasonable vigilance which the master of a ship should exercise, observed, or should have observed, that the pilot was so navigating the vessel that she was going, or was likely to go, into danger, and there was in the exercise of reasonable care and vigilance an opportunity for the master to intervene so as to save the ship from danger, the master should have acted accordingly. The master of a vessel must exercise a degree of vigilance commensurate with the circumstances. In general, a pilot is personally liable for damages caused by his own negligence or default to the owners of the vessel, and to third parties for damages sustained in a collision. Such negligence of the pilot in the performance of duty constitutes a maritime tort. At common law, a shipowner is not liable for injuries inflicted exclusively by the negligence of a pilot accepted by a vessel compulsorily.The exemption from liability for such negligence shall apply if the pilot is actually in charge and solely in fault. Since, a pilot is responsible only for his own personal negligence, he cannot be held accountable for damages proximately caused by the default of others, or, if there be anything which concurred with the fault of the pilot in producing the accident, the vessel master and owners are liable. 3. WILDVALLEY SHIPPING VS. CA - Almost same facts, except in this case the vessel was Filipino owned and it arrived in Velenzuela. There was a compulsory pilotage. When the pilot boarded the vessel, the captain left the bridge. When it entered the Venezuelan channel, the vessel experienced some vibration and the pilot assured the captain that the vibrations were normal - the result of the shallowness of the channel. But the vessel ran aground thereafter. Held: The captain in this case was not negligent. We find that the grounding of the vessel is attributable to the pilot. When the vibrations were first felt the watch officer asked him what was going on, and pilot Vasquez replied that "(they) were in the middle of the channel and that the vibration was as (sic) a result of the shallowness of the channel. The law does provide that the master can countermand or overrule the order or command of the harbor pilot on board. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop the vessel. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop the vessel, mayhap, because the latter had assured him that they were navigating normally before the grounding of the vessel. Based on these declarations, it comes as no surprise to us that the master chose not to regain control of the ship. Admitting his limited knowledge of the Orinoco River, Captain Colon relied on the knowledge and experience of pilot Vasquez to guide the vessel safely. So the SC gave conflicting decisions, but if you look at it, the SC ruled in these ways only for one reason -ruling in favor of Filipinos. (Very good, Lyndon!:D) Books to be carried by the captain ARTICLE 612. The following obligations are inherent in the office of captain: x x x


3. To have three folioed and stamped books, placing at the beginning of each one a note of the number of folios it contains, signed by the maritime official, and in his absence by the competent authority. In the first book, which shall be called "log book," he shall enter every day the condition of the atmosphere, the prevailing winds, the course sailed, the rigging carried, the horsepower of the engines, the distance covered, the maneuvers executed, and other incidents of navigation. He shall also enter the damage suffered by the vessel in her hull, engines, rigging, and tackle, no matter what is its cause, as well as the imperfections and averages of the cargo, and the effects and consequence of the jettison, should there be any; and in cases of grave resolutions which require the advice or a meeting of the officers of the vessel, or even of the passengers and crew, he shall record the decision adopted. For the informations indicated he shall make use of the binnacle book, and of the steam or engine book kept by the engineer. In the second book, called the "accounting book," he shall enter all the amounts collected and paid for the account of the vessel, entering specifically article by article, the sources of the collection, and the amounts invested in provisions, repairs, acquisition of rigging or goods, fuel, outfits, wages, and all other expenses. He shall furthermore enter therein a list of all the members of the crew, stating their domiciles, their wages and salaries, and the amounts they may have received on account, either directly or by delivery to their families. In the third book, called "freight book," he shall record the entry and exit of all the goods, stating their marks and packages, names of the shippers and of the consignees, ports of loading and unloading, and the freight earned. In the same book he shall record the names and places of sailing of the passengers and the number of packages of which their baggage consists, and the price of the passage. Notes: 1. Of the three books, the log book is the most important; 2. Haverton Shipping vs. NLRC - What is the probative value of the entries in the logbook? Can you use the log book as evidence? YES. It is an official record of entries made by a person in the performance of his duty required by law and are prima facie evidence of the facts entered therein. But in: 3. Centennial vs. Dela Cruz: In Wallem Maritime Services, Inc. v. National Labor Relations Commission, citing Haverton Shipping Ltd. v. National Labor Relations Commission, the Court ruled that a copy of an official entry in the logbook is legally binding and serves as an exception to the hearsay rule. In the said case, however, there was no controversy as to the genuineness of the said entry and the authenticity of the copy presented in evidence. In the instant case, respondent has consistently assailed the genuineness of the purported entry and the authenticity of such copy. He alleged that before his repatriation, there was no entry in the ship's official logbook regarding any incident that might have caused his relief; that Captain Kowalewski's signature

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in such purported entry was forged. In support of his allegations, respondent submitted three official documents bearing the signature of Capt. Sczepan Kowalewski which is different from the one appearing in Annex E. Thus, it was incumbent upon petitioners to prove the authenticity of Annex E, which they failed to do. Likewise, the purported report of Capt. Kowalewski dated September 1, 2000 and the statements of Safety Officer Khaldun Nacem Faridi and Chief Officer Josip Milin also cannot be given weight for lack of authentication. Although technical rules of evidence do not strictly apply to labor proceedings, however, in the instant case, authentication of the above-mentioned documents is necessary because their genuineness is being assailed, and since petitioners offered no corroborating evidence. These documents and their contents have to be duly identified and authenticated lest an injustice would result from a blind adoption of such contents. Thus, the unauthenticated documents relied upon by petitioners are mere self-serving statements of their own officers and were correctly disregarded by the Court of Appeals. DURATION OF LIABILITY of Captain Do not forget the duration of liability under the Civil Code, Art. 1736. With respect to the captain: ARTICLE 619. The captain shall be liable for the cargo from the time it is turned over to him at the dock, or afloat alongside the ship, at the port of loading until he delivers it on the shores or on the discharging wharf, of the port of unloading unless the contrary has been expressly agreed upon. Notes: 1. If the goods are delivered to Aboitiz in the warehouse, does the liability of Aboitiz start? Yes, because the goods are transferred already to Aboitize. Does the liability of the captain start? NO. Only once the goods are at the dock and until the goods are delivered to the shore. So the captain has a shorter period of responsibility as compared to the carrier. Of course, unless is a stipulation to the contrary. MARITIME PROTEST Definition: This has to be done by the captain if the vessel/cargo is lost or injured. It is a written statement under oath, made by the captain or master of the vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or injured with respect to circumstances attending such ocurrence. Purpose: It is usually intended to show that the loss or damge resulted from a peril of the sea or some other cause for shich neither the master or owner was responsible. It concludes with the protestation against any liablity of the owner for such loss or damage. ARTICLE 624. A captain whose vessel has gone through a hurricane or who believes that the cargo has suffered damages or averages, shall make a protest thereon before the competent authority at the first port he touches within the twenty-four hours following his arrival, and shall ratify it within the same period when he arrives at the place of his destination, immediately proceeding with the


proof of the facts, it not being permitted to open the hatches until this has been done. The captain shall proceed in the same manner if, the vessel having been wrecked, he is saved alone or with part of his crew, in which case he shall appear before the nearest authority, and make a sworn statement of the facts. The authority or the consul abroad shall verify the said facts, receiving a sworn statement of the members of the crew and passengers who may have been saved, and taking the other steps which may assist in arriving at the facts, drafting a certificate of the result of the proceedings in the log book and in that of the sailing mate, and shall deliver the original records of the proceedings to the captain, stamped and folioed, with a memorandum of the folios, which he must rubricate, for their presentation to the judge or court of the port of destination. The statement of the captain shall be believed if it is in accordance with those of the crew and passengers; if they disagree, the latter shall be accepted, unless there is proof to the contrary Procedure: 1. Protest must be made with a competent authority at first port he touches; 2. within 24 hours following his arrival 3. Captain must ratify it within 24 hours when he arrives at the place of destination where he must proceed immediately with the proof of the facts 4. He must not open the hatches until all of the above are done.

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Chief Mate is a managerial employee because the said officer performed the functions of an executive officer next in command to the captain; that in the performance of such functions, he is vested with powers or prerogatives to lay down and execute management policies. The exercise of discretion and judgment in directing a ship's course is as much managerial in nature as decisions arrived at in the confines of the more conventional board room or executive office. Important functions pertaining to the navigation of the vessel like assessing risks and evaluating the vessel's situation are managerial in nature. Thus, respondent, as Chief Officer, is a managerial employee; hence, petitioners need to show by substantial evidence the basis for their claim that respondent has breached their trust and confidence. Petitioners' basis for dismissing respondent was the alleged entry by Captain Kowalewski in the ship's logbook regarding respondent's inexperience and inefficiency. A ship's log/logbook is the official record of a ship's voyage which its captain is obligated by law to keep wherein he records the decisions he has adopted, a summary of the performance of the vessel, and other daily events. A logbook is a respectable record that can be relied upon when the entries therein are presented in evidence. (Connect with page 16) SECOND MATE (which is actually the 3rd mate since the sailing mate is the 2nd mate) In case of disability, disqualification of the captain and the sailing mate, he takes over. Relevant provisions: Art 632-633, Code of Commerce

IV. OFFICERS AND CREW OF THE VESSEL SAILING MATE - He is the 2nd chief of the vessel; takes place of the captain and assumes all his duties and powers in case of absence, sickness or death. ARTICLE 627. The sailing mate, as the second chief of the vessel and unless the agent orders otherwise, shall take the place of the captain in cases of absence, sickness, or death, and shall then assume all his powers, obligations, and responsibilities. Notes: 1. Centennial vs. Dela Cruz, supra. (2008) Petitioners allege loss of trust and confidence due to incompetence as the ground for respondent's dismissal. Loss of trust and confidence is premised on the fact that the employee holds a position whose functions may only be performed by someone who has the confidence of management. Such employee may be managerial or rank-and-file, but the nature of his position determines the requirements for a valid dismissal. Article 627 of the Code of Commerce defines the Chief Mate, also called Chief Officer or Sailing Mate, as "the second chief of the vessel, and unless the agent orders otherwise, shall take the place of the captain in cases of absence, sickness, or death, and shall then assume all his powers, duties, and responsibilities." A Chief Officer, therefore, is second in command, next only to the captain of the vessel.

CREW OR SAILORS - Under the Code of Commerce, they are enlisted by the captain in such number he may deem proper. But I think at present the captain has no business with the crew as they are hired by the carrier. Relevant provisions: Art. 634-637 DISCHARGE:

Who can discharge? The shipowner or the captain can discharge the crew (Art. 637) What is the effect if the captain or the crew is discharged during the voyage? Example, voyage from Manila to San Francisco and en route to SF they are discharged: ARTICLE 604. If the captain or any other member of the crew should be discharged during the voyage, they shall receive their salary until the return to the place where the contract was made, unless there are good reasons for the discharge, all in accordance with Articles 636 et seq. of this Code. Gen Rule: They shall continue to receive their salaries until their return to the port where the contract was made. They have to be paid the full round trip. Except: If there is a just cause or just motive. Rule in case of discharge if the contract is for a definite period or voyage:


ARTICLE 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they can not be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence. Notes: 1. Madrigal vs. Ogilvie - The services of Jesus G. Ogilvie, Salvador Ortile, Antonio C. Militar and Miguel M. Fermin were engaged by Manuel Mascuñana, master or captain employed by the petitioner Madrigal Shipping Company, Inc., to man and fetch the vessel "S.S. Bridge" from Sasebu, Japan. Pursuant thereto the respondents were flown to Sasebu, Japan, and they manned the vessel out of the port of Sasebu. On 16 March 1948, when the vessel reached Hongkong, the respondents were dismissed and replaced by a crew of Chinese nationality. The respondents were flown back to Manila and paid their respective salaries up to the date of their dismissal.(So they were only paid from Japan to Hongkong) H:The services of the respondents were engaged by the petitioner to man its vessel for a determinate time or voyage, with an express stipulation that "this contract expires on the arrival of this boat at the port of Manila." Not having been discharged for any of the causes enumerated in the Art. 605, the respondents are entitled to the amounts they respectively seek to collect from the petitioner. 2. Wallem vs. Minister of Labor: Wallem hired X and Y as seamen for 10 months. For instigating the International Transport Federation (ITF) Chapter to demand higher wages they were dismissed. Was the dismissal proper? No, the seamen cannot be dismissed without legal cause because the contract was for a definite period of 10 months. What X and Y did was not a legal cause under Art. 605 but an exercise of the rights of all workmen to seek better rights and higher benefits x x x Grounds if captain discharges crew:(of course, the captain cannot discharge himself!) ARTICLE 636. Should a fixed period for which a sailor has signed not be stated, he can not be discharged until the end of the return voyage to the port where he enrolled. ARTICLE 637. Neither can the captain discharge a sailor during the time of his contract except for sufficient cause, the following being considered as such: 1. The perpetration of a crime which disturbs order on the vessel. 2. Repeated offenses of insubordination, against discipline, or against the fulfillment of the service. 3. Repeated incapacity or negligence in the fulfillment of the service to be rendered. 4. Habitual drunkenness. 5. Any occurrence which incapacitates the sailor to carry out the work under his charge, with the exception of the provisions contained in Article 644. 6. Desertion.

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ARTICLE 644. A sailor who falls sick shall not lose his right to wages during the voyage, unless the sickness is the result of his own fault. At any rate, the costs of the attendance and cure shall be defrayed from the common funds, in the form of a loan. If the sickness should be caused by an injury received in the service or defense of the vessel the sailor shall be attended and cured from the common funds, there being deducted before anything else from the proceeds of the freight, the cost of the attendance and cure. WHAT IS A SUPERCARGO? A person specially employed by the owner of a cargo to take charge of and sell to the best advantage merchandise which has been shipped, and to purchase returning cargoes and to receive freight, as he may be authorized. ARTICLE 649. Supercargoes shall discharge on board the vessel the administrative duties which the agent or shippers may have assigned them; they shall keep an account and record of their transactions in a book which shall have the same conditions and requisites as required for the accounting book of the captain, and shall respect the latter in his duties as chief of the vessel. The powers and liabilities of the captain shall cease, when there is a supercargo, with regard to that part of the administration legitimately conferred upon the latter, but shall continue in force for all acts which are inseparable from his authority and office. ARTICLE 650. All the provisions contained in the second section of Title III, Book II, with regard to qualifications, manner of making contracts, and liabilities of factors shall be applicable to supercargoes. ARTICLE 651. Supercargoes can not, without special authorization or agreement, make any transaction for their own account during the voyage, with the exception of the ventures which, in accordance with the custom of the port of destination, they are permitted to do. Neither shall they be permitted to invest in the return trip more than the profits from the ventures, unless there is a special authorization thereto from the principals. ABANDONMENT/DOCTRINE OF LIMITED LIABILITY IN MARINE TRANSPORTATION As already discussed, the CCOG can limit its liability by stipulation. (Art. 1749-1750) For CCOP, liability can only be limited when Pax is carried for free and there is a stipulation. Under Maritime Commerce, there is a way for a CC to limits its liability even without a stipulation because it is the law itself which proves for this liability. Recall: ARTICLE 586 and 583 (SO/SA civilly liable for acts of captain and obligations contracted) ARTICLE 587. The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with


all her equipments and the freight he may have earned during the voyage.

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1. When the vessel is properly insured - the insurance will take care of the liability, the value of which may be more than the value of the vessel, freight, etc.

Other provisions providing for abandonment: ARTICLE 590. The owners of a vessel shall be civilly liable in the proportion of their contribution to the common fund, for the results of the acts of the captain, referred to in Article 587. Each part owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belonging to him. And in cases of collision if the same is caused by the captain alone, under Art. 837: The civil liability contracted by the shipowners in the cases prescribed in this section, shall be understood as limited to the value of the vessel with all her appurtenances and all the freight earned during the voyage. Notes: 1. What is abandonment? It is equivalent to an offer of the value of the vessel, her equipment and freigth earne in return for an exemption from liability. So if the vessel sank and the sinking of the vessel was caused entirely by the negligence of the captain, the SO or SA can be held liable. But if SO or SA abandons the vessel, then the liability will only be limited to the value of the vessel, the freightage and the equipment. 2. The real and hypothecary nature of maritime law, therefore, distinguishes it from Civil law and commercial law because of this doctrine. A shipping transportation contract is "real and hypothecary" in nature under Art. 587 which accord/issue a shipowner/agent the right of abandonment and by necessary implication, his liability is confined to that to which he is entitled as of right to abandon, meaning the vessel and all her equipment and the freight she may have earned during the voyage. Read: Yangco vs. Laserna for history of right of abandonment. 3. Reasons why SO/SA are given the right to abandonment (Heirs of Amparo vs. delos Santos) a. To offset against the innumerable hazards and perils of the sea; b. To encourage ship building and marine commerce 4. Note that when abandonment is made in the instances provided by law, it cannot be refused. 5. Can a charterer make an abandonment? NO, because he cannot be considered in place of the owner or the shipagent in matters regarding to the reponsibility pertaining to ownership and possession of the vessel. Even if the charter is a bareboat or demise charter. EXCEPTIONS TO RIGHT OF ABANDONMENT (meaning even if the right to abandonment exists, the SO/SA will still pay for more than the value of the vessel)

2. When the liability for repairs of the vessel was incureed before the loss of such vessel (favorite BQ) 3. When the liability is one which arises from the provisions of the labor code. When abandonment CANNOT BE MADE 1. When the voyage is not maritime, but only in a river, bay, or gulf 2. When the vessel is not acting as a common carrier but a private carrier. 3. When the SO/SA is at fault, i.e. when there is lack of proper equipment, lack of technical training of the crew, unlicensed crew members, captain. So any kind of negligence, no matter how minute will remove the right of abandonment. cases: a. Heirs of Amparo delos Santos vs. CA: The vessel left late because the carrier decided to load more unmanifested passengers and cargo. Because the vessel left late, it encountered a typhoon and the vessel sank. According to the Board of Marine Inquiry (BMI) the sinking was caused by the fault of the captain and its officers in operating the vessel. The SO/SA claimed the right to abandon, but the SC said that the doctrine of limited liability cannot be invoked in this case because there was fault or negligence on the part of the carrier because it overloaded the vessel even if it was cleared to leave. And everytime it is discovered that a vessel is overloaded with cargo/pax, goodbye abandonment. It must be stressed at this point that Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. In cases where the shipowner is likewise to be blamed, Article 587 does not apply. Such a situation will be covered by the provisions of the New Civil Code on Common Carriers. Owing to the nature of their business and for reasons of public policy, common carriers are tasked to observe extraordinary diligence in the vigilance over the goods and for the safety of its passengers (Article 1733, New Civil Code). Further, they are bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances (Article 1755, New Civil Code). Whenever death or injury to a passenger occurs, common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as prescribed by Articles 1733 and 1755 b. PHILAMGEN VS. CA- According to the SC, despite the fact that the vessel was sea worthy, it was not cargo worthy. The cases and cases of coca-cola bottles were loaded on deck and the vessel was top heavy making it easy to tilt in case of strong winds. Q: What if the sinking of the vessel is caused by fortuitous event, is the right of abandonment present? A: No, the SO or SA will be exempt from liability. Other important cases:


1. Aboitiz Shipping v. General Accident (1993)- The sinking of this vessel caused a lot of cases to be filed against aboitiz. In this case, the SC applied the findings of the BMI where it was found that the sinking of the vessel was caused by a fortuitous event. The SC even exonerated the captain and crew so nothing could be collected from Aboitiz 2. Monarch Insurance vs. CA (2000)- It was discovered that Aboitiz was negligent. So the sinking of the ship was not caused by fortuitous event and it was not also caused by the captain of the ship. So therefore the right of abandonment does not exist as there was fault or negligence on the part of the CC. BUT in this case, there was so many claimants, about 110 claimants, the claim amounting to about 43 Million and the insurance proceeds were only 14 million. The SC said that the claimants cannot get their 43 million claims. They have to share pro-rata the proceeds of the insurance. There is no preference of credit. In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be given precedence over the others by the simple expedience of having completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even these already final and executory must be stayed pending completion of all cases occasioned by the subject sinking. Then and only then can all such claims be simultaneously settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims. 3. Aboitiz Shipping vs. New India (2006) - The SC changed its mind again. Our ruling in Monarch may appear inconsistent with the exception of the limited liability doctrine, as explicitly stated in the earlier part of the Monarch decision. An exception to the limited liability doctrine is when the damage is due to the fault of the shipowner or to the concurrent negligence of the shipowner and the captain. In which case, the shipowner shall be liable to the full-extent of the damage. We thus find it necessary to clarify now the applicability here of the decision in Monarch. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. Therefore, we agree with the appellate court in sustaining the trial court's ruling that petitioner is liable for the total value of the lost cargo. 4. Aboitiz Shipping vs. Equitable (2008) which affirmed the New India ruling. Here, the SC traced the history starting from GAFLAC to New India. So no pro-rata sharing of the insurance proceeds. The Court declared in the 1993 GAFLAC case that claims against Aboitiz arising from the sinking of M/V P. Aboitiz should be limited only to the extent of the value of the vessel. Thus, the Court held that the execution of judgments in cases already resolved with finality must be stayed pending the resolution of all the other similar claims arising from the sinking of M/V P. Aboitiz. Considering that the claims against Aboitiz had reached more than 100, the Court found it necessary to collate all these claims before their payment from the insurance proceeds of the vessel and its pending freightage. As a result, the Court

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exhorted the trial courts before whom similar cases remained pending to proceed with trial and adjudicate these claims so that the pro-rated share of each claim could be determined after all the cases shall have been decided. In Monarch Insurance, the Court deemed it fit to settle once and for all this factual issue by declaring that the sinking of M/V P. Aboitiz was caused by the concurrence of the unseaworthiness of the vessel and the negligence of both Aboitiz and the vessel's crew and master and not because of force majeure. Notwithstanding this finding, the Court did not reverse but reiterated instead the pronouncement in GAFLAC to the effect that the claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the totality of claims against it." However, on 02 May 2006, the Court rendered a decision in Aboitiz Shipping Corporation v. New India Assurance Company, Ltd. (New India), reiterating the well-settled principle that the exception to the limited liability doctrine applies when the damage is due to the fault of the shipowner or to the concurrent negligence of the shipowner and the captain. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. In New India, the Court clarified that the earlier pronouncement in Monarch Insurance was not an abandonment of the doctrine of limited liability and that the circumstances therein still made the doctrine applicable. In New India, the Court declared that Aboitiz failed to discharge its burden of showing that it exercised extraordinary diligence in the transport of the goods it had on board in order to invoke the limited liability doctrine. Thus, the Court rejected Aboitiz's argument that the award of damages to respondent therein should be limited to its pro rata share in the insurance proceeds from the sinking of M/V P. Aboitiz. The instant petitions provide another occasion for the Court to reiterate the well-settled doctrine of the real and hypothecary nature of maritime law. As a general rule, a ship owner's liability is merely co-extensive with his interest in the vessel, except where actual fault is attributable to the shipowner. Thus, as an exception to the limited liability doctrine, a shipowner or ship agent may be held liable for damages when the sinking of the vessel is attributable to the actual fault or negligence of the shipowner or its failure to ensure the seaworthiness of the vessel. The instant petitions cannot be spared from the application of the exception to the doctrine of limited liability in view of the unanimous findings of the courts below that both Aboitiz and the crew failed to ensure the seaworthiness of the M/V P. Aboitiz. SPECIAL CONTRACTS IN MARITIME COMMERCE: (Charter party, bill of lading, loans on bottomry and respondentia) 1. CHARTER PARTY - a contract wherein the entire ship or some principal part thereof is let by the owner to another person for a specified time or use, in consideration of the payment of a fee. Two kinds of C/P: a. Contract of Affreightment here the owner retains control of the vessel, he provides the crew, what is being leased is only the space of the vessel. A contract of affreightment can be a time charter or a voyage charter. b.


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Bareboat/Demise Charter wherein the owner of the vessel gives up the control and full possession of the vessel to the charterer who becomes the owner pro hac vice.

3.If the vessel should not be placed at the disposal of the charterer within the period and in the manner agreed upon. (non placement at disposal of the charterer)

If Voyage or time charter = common carrier retains its nature as a common carrier; but if it is bareboat charter, the common carrier becomes a private carrier for that particular charter only.

4.If, after the vessel has put to sea, she should return to the port of departure, on account of risk of pirates, enemies, or bad weather, and the freighters should agree to unload her. (charterer must pay owner for the voyage out, meaning one way)

Formal/Substantial requirements: ARTICLE 652. A charter party must be drawn in duplicate and signed by the contracting parties, and when either does not know how or can not do so, by two witnesses at their request. The charter party shall include, besides the conditions unrestrictedly stipulated, the following statements: 1.The kind, name, and tonnage of the vessel. 2.Her flag and port of registry. 3.The name, surname, and domicile of the captain. 4.The name, surname, and domicile of the agent, if the latter should make the charter party. 5.The name, surname, and domicile of the charterer, and if he states that he is acting by commission, that of the person for whose account he makes the contract. 6.The port of loading and unloading. 7.The capacity, number of tons or weight, or measure which they respectively bind themselves to load and transport, or whether it is the total cargo. 8.The freightage to be paid, stating whether it is to be a fixed amount for the voyage or so much per month, or for the space to be occupied, or for the weight or measure of the goods of which the cargo consists, or in any other manner whatsoever agreed upon. (PRIMAGE- a small allowance or compensation payable to the master or owner of the vessel for the use of its cables to load and unload the goods and to the mariners for lading and unlading in port. So what you pay those who load; DEMURRAGE - an amount stipulated in the charter party to be paid by the charter/shipper to the ship owner for any delay. ) 9.The amount of primage to be paid to the captain. 10.The days agreed upon for loading and unloading. (laydays- no. of days between unloading and departure) 11.The lay days and extra lay days to be allowed and the rate of demurrage. WHO CAN RESCIND A CHARTER PARTY: Either party

In the second and third cases the person from whom the vessel was chartered shall indemnify the charterer for the losses he may suffer. In the fourth case the person from whom the vessel was chartered shall have a right to the freightage in full for the voyage out. If the charter should have been made by the months, the charterers shall pay the full freightage for one month, if the voyage were to a port in the same waters, and two months, if the voyage were to a port in different waters. From one port to another of the Peninsula and adjacent islands, the freightage for one month only shall be paid. 5.If a vessel should make a port during the voyage in order to make urgent repairs and the freighters should prefer to dispose of the merchandise.(pay for voyage out) When the delay does not exceed thirty days, the freighters shall pay the full freight for the voyage out. Should the delay exceed thirty days, they shall only pay the freight in proportion to the distance covered by the vessel. ARTICLE 689. At the request of the person from whom the vessel is chartered the charter party may be rescinded: 1.If the charterer at the termination of the extra lay days does not place the cargo alongside the vessel. In such case the charterer must pay half the freight stipulated besides the demurrage for the lay days and extra lay days elapsed. 2.If the person from whom the vessel was chartered should sell her before the charterer has begun to load her and the purchaser should load her for his own account. In such case the vendor shall indemnify the charterer for the losses he may suffer. If the new owner of the vessel should not load her for his own account the charter party shall be respected (in such case, the charter party is not rescinded) and the vendor shall indemnify the purchaser if the former did not inform him of the charter pending at the time of making the sale. Otherwise, if he informed him, then no need to indemnify.

ARTICLE 688. A charter party may be annulled at the request of the charterer:

Charter Party

1.If before loading the vessel he should abandon the charter, paying half of the freightage agreed upon. (abandonment of charter before loading; pay 1/2 of the freight)

Period

2.If the capacity of the vessel should not agree with that stated in the certificate of the tonnage, or if there is an error in the statement of the flag under which she sails. (Charterer will be indemnified by the owner)

Effect of sale rd to 3 person

If for definite period, the charterer may rescind the charter party by paying half of the freightage New owner cannot be compelled to respect the charter party.

Ordinary Lease Contract If the lease is for a definite period, the lessee cannot terminate the contract If the leased property is sold to one who knows of the existence of the lease contract, the new owner must respect the lease


Case: Santiago Lighterage vs. CA: Seaworthiness cannot be agreed to between the parties (parang jurisdiction of the court) because it is a fact which has to be proven. Fx: In this case two charter parties were entered into. The owner of the vessel was Santiago. He chartered the vessel to B (bareboat charter). B chartered the vessel to C (voyage charter). The vessel was supposed to carry an ore to South Korea. On the way to pick up the ore from Manila to Zambales, the vessel had to undergo repairs. In short it never reached Korea. The pertinent provisions of the contract between Santiago and B reads: "3. Delivery – The VESSEL shall be delivered and taken over by the CHARTERERS at the port of the City of Manila, in such ready berth as the CHARTERERS may direct. The OWNER shall before and at the time of delivery exercise due diligence to make the VESSEL seaworthy and in every respect ready in hull, machinery and equipment for service hereunder. The VESSEL shall be properly documented at time of delivery. The delivery to the CHARTERERS of the VESSEL and the taking over of the VESSEL by the CHARTERERS shall constitute a full performance by the OWNER of all the OWNER‘S obligations hereunder, and thereafter the CHARTERERS shall not be entitled to make or assert any claim against the OWNER on account of the representations or warranties expressed or implied with respect to the VESSEL but the OWNER shall be responsible for repairs or renewals occasioned by latent defects in the VESSEL, her machinery or appurtenances existing at the time of delivery under this Agreement, provided such defects have manifested before turnover." What is the liability of Santiago as the owner? Held: The mere physical transfer of MV Christine Gay from petitioner to Pelaez does not constitute full performance of its obligation under their bareboat charter agreement. Neither is it considered a delivery. Under the agreement, physical transfer of a seaworthy vessel is necessary to satisfy delivery. Seaworthiness is a relative term. The degree of seaworthiness varies in relation to the contemplated voyage. To be seaworthy, a vessel ―must have that degree of fitness which an ordinary, careful and prudent owner would require his vessel to have at the commencement of her voyage, having regard to all the probable circumstances of it.‖ Thus the degree of seaworthiness varies in relation to the contemplated voyage. Crossing the Atlantic calls for stronger equipment than sailing across the Visayan Sea. It is essential to consider that once the necessary degree of seaworthiness has been ascertained, this obligation is an absolute one, i.e. the undertaking is that the vessel actually is seaworthy. It is no excuse that the shipowner took every possible precaution to make her so, if in fact he failed.

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In examining what is meant by seaworthiness we must bear in mind the dual nature of the carrier‘s obligations under a contract of affreightment. To satisfy these duties the vessel must (a) be efficient as an instrument of transport and (b) as a storehouse for her cargo. The latter part of the obligation is sometimes referred to as cargoworthiness. A ship is efficient as an instrument of transport if its hull, tackle and machinery are in a state of good repair, if she is sufficiently provided with fuel and ballast, and is manned by an efficient crew. And a vessel is cargoworthy if it is sufficiently strong and equipped to carry the particular kind of cargo which she has contracted to carry, and her cargo must be so loaded that it is safe for her to proceed on her voyage. A mere right given to the charterer to inspect the vessel before loading and to satisfy himself that she was fit for the contracted cargo does not free the shipowner from his obligation to provide a cargoworthy ship. BILLS OF LADING (CF: ART. 356, 357, 709, 718) An intstrument in writing signed by the carrier or his agent, describing the freight so as to identify it, staing the name of the consigor, the terms of the contract of carriage and agreeing or directing that the freight be delivered to the order or assigns of a specified person at a specified place. Two fold nature: Serves as a receipt as well as evidence of a contract. BUT it is not important for a contract of carriage to exist between the shipper/pax and the common carrier. It is merely an evidence. What is the effect of the issuance by a carrier of an unsigned bill of lading when accepted by the shipper or the consignee? A: Keng Hua Paper Products Co, Inc. vs. CA: A "bill of lading delivered and accepted constitutes the contract of carriage even though not signed," because the "(a)cceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or constructive notice." In a nutshell, the acceptance of a bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to the presumption that the same was a perfected and binding contract. What must be done to the bill of lading upon fulfillment of the contract? ARTICLE 353. The legal basis of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which all disputes which may arise with regard to their execution and fulfillment shall be decided without admission of other exceptions than forgery or material errors in the drafting thereof. After the contract has been complied with the bill of lading issued by the carrier shall be returned to him, and by virtue of the exchange of this certificate for the article transported, the respective obligations and actions shall be considered as canceled, unless in the same act the claims which the contracting parties


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desired to reserve are reduced to writing, exception being made of the provisions of Article 366.

apparent, file a claim, which may be verbal, immediately upon receipt)

If in case of loss or for any other reason whatsoever, the consignee can not return upon receiving the merchandise the bill of lading subscribed by the carrier, he shall give said carrier a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading.

After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.

AFter the contract has been complied with, the bill of lading shall be returend to the carrier who may have issued it and it (the surrender) is proof that the goods have been delivered. And after the deliverey or return of the bill of lading, the respective obligations and actions between the parties shall be considered as cancelled. In case the consignee cannot return upon receive the merchandise the bill of lading, he must give the said carrier a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. (Art. 353) What is the presumption if the carrier does not hold the bill of lading after the fulfillment of the contract of transportation? The presumption is that the carrier did not deliver the goods. Who may change the consignee? ARTICLE 360. The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided that at the time of making the change of the consignee the bill of lading subscribed by the carrier be returned to him, if one were issued, exchanging it for another containing the novation of the contract. The expenses arising from the change of consignment shall be defrayed by the shipper. TRANSSHIPMENT - It is the act of taking cargo from one ship and loading it into another. Transshipment cannot be made if the shipper does not consent because it is dangerous.. it will expose the goods to breakage, etc. So the effect if there was transshipment without consent is that there is a breach in the contract of carriage. And the carrier is liable to the shipper in case of loss, even for an otherwise excepted cause. BRINGING AN ACTION/CLAIM AGAINST THE CARRIER Under Art. 366, this does not cover loss because it says upon receipt of the goods or merchandise. ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the indications of the damage or average giving rise to the claim can not be ascertained from the exterior of said packages, in which case said claim would only be admitted on the receipt of the packages. (So if the damage is

When does the 24 hour period begin to run? When the goods are actually received. Case: New Zealand vs. Chua Joy - Held: In order that the condition provided in Article 366 of the Code of Commerce may be demanded there should be a consignment of goods, through a common carrier, by a consignor in one place to a consignee in another place. And said article provides that the claim for damages must be made ―within twenty-four hours following the receipt of the merchandise‖ by the consignee from the carrier. In other words, there must be delivery of the merchandise by the carrier to the consignee at the place of destination. The cargo never reached Manila, its destination, nor was it ever delivered to the consignee, the office of the shipper in Manila, because the ship ran aground upon entering Laoang bay, Samar on the same day of the shipment. Such being the case, it follows that the cargo was never received by the consignee. Did the Civil Code repeal the prescriptive period to file a claim under the Code of Commerce? No, the limitations of actions mentioned in the Civil Code are without prejudice to those specified in teh Code of Commerce. Period to file for recovery of undelivered/lost cargo in the courts:(note that under the Code of commerce, it does not cover loss/non delivery of cargo) If there is a bill of lading, 10 years, otherwise, 6 years. If it involves overseas trading, 1 year from date when it was supposed to be received. LOANS ON RESPONDENTIA

BOTTOMRY

AND

ARTICLE 719. A loan on bottomry or respondentia shall be considered that which the repayment of the sum loaned and the premium stipulated, under any condition whatsoever, depends on the safe arrival in port of the goods on which it is made, or of their value in case of accident. Notes: 1. If the collateral is the vessel = bottomry; if collateral is goods = respondentia. Ex. Loan for 5 Million, en route to San Francisco, the vessel sinks. The loan is extinguished because the collateral is lost. 2. Characteristics of a loan on Bottomry: It is a loan the security of which is the vessel itself and conditioned on the safe arrival at the port of destination. Also the vessel must be exposed to maritime peril. (So it must be destroyed during its voyage)


3. Who may contract such loan? On bottomry: The owner of the vessel or the captain (see previous discussion, Art. 580); on respondentia: owner of the cargo. Ordinary Loan May or may not have collateral Collateral may be real or personal property Absolutely repayable

Need not be in writing rd To be binding on 3 persons, need not be registered Loss of collateral, if any does not extinguish the loan

Loan on Bottomry/respondentia Must always have collateral Collateral must be a vessel or a cargo subject to maritime risk Payment depends on the safe arrival by the collateral at the port of the loan Must be in writing Must be registered in the registry of vessels Loss of collateral extinguishes the loan.

Effect of loss of collateral: Gen Rule: Extinguishes the loan requirements of Art. 731 are complied with.

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ARTICLE 807. The petty and ordinary expenses of navigation, such as pilotage of coasts and ports, lighterage and towage, anchorage dues, inspection, health, quarantine, lazaretto, and other so-called port expenses, costs of barges, and unloading, until the merchandise is placed on the wharf, and any other expenses common to navigation shall be considered ordinary expenses to be defrayed by the shipowner, unless there is a special agreement to the contrary. ARTICLE 808. Averages shall be: 1.Simple or particular. 2.General or gross. PARTICULAR AVERAGE: Simple or particular averages shall be, as a general rule, all the expenses and damages caused to the vessel or to her cargo which have not redounded to the benefit and common profit of all the persons interested in the vessel and her cargo x x x (Art. 809) Who bears the loss in P/A? The owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular average (Art. 810)

provided

ARTICLE 731. The actions which may be brought by the lender shall be extinguished by the absolute loss of the goods on which the loan was made, if said loss arose from an accident of the sea at the time and during the voyage designated in the contract, and should it be proven that the cargo was on board; EXCEPTIONS: but this shall not take place if the loss were caused by the inherent defect of the thing; or through the fault or malice of the borrower, or through barratry on the part of the captain, or if it were caused by damages suffered by the vessel as a consequence of being engaged in contraband, or if it arose through loading the merchandise on a vessel other than that designated in the contract, unless this change should have been made by reason of force majeure. The proof of the loss is incumbent upon the person who received the loan, as well as the proof of the existence in the vessel of the goods declared to the lender as the object thereof. RISKS, DAMAGES AND ACCIDENTS OF MARITIME COMMERCE ARTICLE 806. For the purposes of this Code the following shall be considered averages: 1. All extraordinary or accidental expenses which may be incurred during the navigation for the preservation of the vessel or cargo, or both. 2. All damages or deterioration the vessel may suffer from the time she puts to sea from the port of departure until she casts anchor in the port of destination, and those suffered by the merchandise from the time it is loaded in the port of shipment until it is unloaded in the port of consignment. What are NOT averages? Petty expenses under Art. 807

Examples of P/A: 1. The damages suffered by the cargo from the time of its embarkation until it is unloaded, either on account of the nature of the goods or by reason of an accident at sea or force majeure, and the expenses incurred to avoid and repair the same. 2.The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the same causes and reasons, from the time she puts to sea from the port of departure until she anchored in the port of destination. 3.The damages suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it. 4.The wages and victuals of the crew when the vessel should be detained or embargoed by a legitimate order or force majeure, if the charter should have been for a fixed sum for the voyage. 5.The necessary expenses on arrival at a port, in order to make repairs or secure provisions. 6.The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to cover any other requirement of the vessel against which the proper amount shall be charged. 7.The victuals and wages of the crew during the time the vessel is in quarantine. 8.The damage suffered by the vessel or cargo by reason of an impact or collision with another, if it were accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the damage caused. 9.Any damage suffered by the cargo through the faults, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freight.


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GENERAL AVERAGE: all the damages and expenses which are deliberately caused in order to save the vessel, her cargo, or both at the same time, from a real and known risk (Art. 811)

2. For the common safety or for the purposes of avoiding imminent peril, part of the cargo or vessel on board is sacrificed deliberately (part of the crew, pwede? hehe)

Who bears the loss? ARTICLE 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute.

3. There must be attempt to avoid the imminent peril must be successful in a sense that the vessel and some of the cargo are saved; 4. Damages or expenses were incurred after taking the proper legal steps.

Example of General Ave: 1. The goods or cash invested in the redemption of the vessel or cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the arrangement or redemption is taking place. 2. The goods jettisoned to lighten the vessel, whether they belong to the vessel, to the cargo, or to the crew, and the damage suffered through said act by the goods kept. 3.The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned in order to save the cargo, the vessel, or both. 4.The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place her in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred. 5.The damage suffered by the goods of the cargo through the opening made in the vessel in order to drain her and prevent her sinking. 6.The expenses caused through floating a vessel intentionally stranded for the purpose of saving her. 7.The damage caused to the vessel which it is necessary to break open, scuttle, or smash in order to save the cargo. 8.The expenses of curing and maintaining the members of the crew who may have been wounded or crippled in defending or saving the vessel. 9.The wages of any member of the crew detained as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it. 10.The wages and victuals of the crew of a vessel chartered by the month during the time it should be embargoed or detained by force majeure or by order of the Government, or in order to repair the damage caused for the common good. 11.The loss suffered in the value of the goods sold at arrivals under stress in order to repair the vessel because of gross average. 12.The expenses of the liquidation of the average. REQUISITES FOR GENERAL AVERAGE: 1. There must be a COMMON DANGER, a danger in which the ship, cargo and crew all participate;

Cases: 1. Magsaysay vs. Agan Facts: The S S ―San Antonio‖, a vessel owned and operated by A. Magsaysay Inc., left Manila on 6 October 1949, bound for Basco, Batanes, via Aparri, Cagayan, with general cargo belonging to different shippers, among them Anastacio Agan. The vessel reached Aparri on the 10th of that month, and after a day‘s stopover in that port, weighed anchor to proceed to Basco. But while still in port, it ran aground at the mouth of the Cagayan river, and, attempts to refloat it under its own power having failed, Magsaysay had it refloated by the Luzon Stevedoring Co. at an agreed compensation. The stranding of Magsaysay‘s vessel was due to the sudden shifting of the sandbars at the mouth of the river which the port pilot did not anticipate. Once afloat, the vessel returned to Manila to refuel and then proceeded to Basco, the port of destination. There the cargoes were delivered to their respective owners or consignees, who, with the exception of Agan, made a deposit or signed a bond to answer for their contribution to the average. On the theory that the expenses incurred in floating the vessel constitute general average to which both ship and cargo should contribute, Magsaysay brought the action in the CFI of Manila to make Agan pay his contribution, which, as determined by the average adjuster, amounts to P841.40. Agan, in his answer, denies liability for this amount, alleging, among other things, that the stranding of the vessel was due to the fault, negligence and lack of skill of its master, that the expenses incurred in putting it afloat did not constitute general average, and that the liquidation of the average was not made in accordance with law. After trial, the lower court found for Magsaysay and rendered judgment against Agan for the amount of the claim, with legal interests. From this judgment, Agan has appealed directly to the Supreme Court. The Supreme Court reversed the decision appealed from, and dismissed Magsaysay‘s complaint. Held: Herein, while the expenses incurred in putting Magsaysay‘s vessel afloat may well come under number 2 of article 809 — which refers to expenses suffered by the vessel ―by reason of an accident of the sea or force majeure‖ — and should therefore be classified as particular average, the said expenses do not fit into any of the specific cases of general average enumerated in article 811. Number 6 of Article 811 does mention ―expenses caused in order to float a vessel,‖ but it specifically refers to ―a vessel intentionally stranded for the purpose of saving it‖ and would have no application where, as in the present case, the stranding was not intentional. With respect to Requisites of General average:


1. With respect to the first requisite, the evidence does not disclose that the expenses sought to be recovered from defendant were incurred to save vessel and cargo from a common danger. The vessel ran aground in fine weather inside the port at the mouth of a river, a place described as ―very shallow‖. It would thus appear that vessel and cargo were at the time in no imminent danger or a danger which might ―rationally be sought to be certain and imminent.‖ 2. As to the second requisite, the expenses in question were not incurred for the common safety of vessel and cargo, since they, or at least the cargo, were not in imminent peril. The cargo could, without need of expensive salvage operation, have been unloaded by the owners if they had been required to do so. 3. With respect to the third requisite, the salvage operation was a success; however, as the sacrifice was for the benefit of the vessel — to enable it to proceed to destination — and not for the purpose of saving the cargo, the cargo owners are not in law bound to contribute to the expenses.

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cases on Art. 366 1. Lorenzo Shipping vs. Chubb (2004): Steel pipes were loaded on MV A for shipment from Manila to Dvo. L/S issued a clean bill of lading for the account of the consignee X, a corporation in San Francisco. So the voyage is Mla-Dvo-SF, USA. MV A arrived in Sasa warf in Dec. 2, 1987. Trans Marine Carrier received the shipment in Davao. When TMC received the shipment in Dvo, it discovered that sea water was in the vessel and the steel pipes were submerged in water. So X hired a surveyor and it was found that the cargo was no longer suitable and that the cargo hold of MV A was flooded w/ sea water. The rusty condition of the cargo was noted on the mate's receipts and the checker of M/V A signed his conforme thereon. After the survey, respondent Gearbulk loaded the shipment on board its vessel M/V San Mateo Victory, for carriage to the United States. It issued Bills of Lading covering 364 bundles of steel pipes to be discharged at Oakland, U.S.A. All bills of lading were marked "ALL UNITS HEAVILY RUSTED." While the cargo was in transit from Davao City to the U.S.A., consignee Sumitomo sent a letter of intent dated December 7, 1987, to petitioner Lorenzo Shipping, which the latter received on December 9, 1987. Sumitomo informed petitioner Lorenzo Shipping that it will be filing a claim based on the damaged cargo once such damage had been ascertained. On January 17, 1988, M/V San Mateo Victory arrived at Oakland, California, U.S.A. Due to its heavily rusted condition, the consignee X rejected the damaged steel pipes and declared them unfit for the purpose they were intended. On December 2, 1988, respondent Chubb and Sons, Inc. filed a complaint for collection of a sum of money, against respondents Lorenzo Shipping. Issue: Was there a valid notice of claim made by X? Held: YES. The twenty-four-hour period prescribed by Art. 366 of the Code of Commerce within which claims must be presented does not begin to run until the consignee has received such possession of the merchandise that he may exercise over it the ordinary control pertinent to ownership. In other words, there must be delivery of the cargo by the carrier to the consignee at the place of destination. In the case at bar, consignee Sumitomo has not received possession of the cargo, and has not physically inspected the same at the time the shipment was discharged from M/V Lorcon IV in Davao City. Petitioner Lorenzo Shipping failed to establish that an authorized agent of the consignee Sumitomo received the cargo at Sasa Wharf in Davao City. Respondent Transmarine Carriers as agent of respondent Gearbulk, Ltd., which carried the goods from Davao City to the United States, and the principal, respondent Gearbulk, Ltd. itself, are not the authorized agents as contemplated by law. What is clear from the evidence is that the consignee received and took possession of the entire shipment only when the latter reached the United States' shore. Only then was delivery made and completed. And only then did the 24-hour prescriptive period start to run. 2. Phil. Charter vs. Chemoil (June 2005) and compare this with Aboitiz vs. ICNA (2008)

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On the matter concerning the giving of the notice of claim as required by Article 366 of the Code of Commerce, the finding of fact of the Court of Appeals does not actually contradict the finding of fact of the trial court. Both courts held that, indeed, a telephone call was made by Alfredo Chan to Encarnacion Abastillas, informing the latter of the contamination. However, nothing in the trial court's decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period of twenty-four hours from the time the goods were received. The Court of Appeals made the same finding. Having examined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or filed. The allegation of the petitioner that not only the Vice President of the respondent was informed, but also its drivers, as testified by Alfredo Chan, during the time that the delivery was actually being made, cannot be given great weight as no driver was presented to the witness stand to prove this. The object sought to be attained by the requirement of the submission of claims in pursuance of this article is to compel the consignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of delivery or within twentyfour hours thereafter, and if necessary fix responsibility and secure evidence as to the nature and extent of the alleged damages to the goods while the matter is still fresh in the minds of the parties. The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable condition precedent; it does not constitute a limitation of action. The second paragraph of Article 366 of the Code of Commerce is also edifying. It is not only when the period to make a claim has elapsed that no claim whatsoever shall be admitted, as no claim may similarly be admitted after the transportation charges have been paid. In this case, there is no question that the transportation charges have been paid, as admitted by the petitioner, and the corresponding official receipt Aboitiz Ruling: Under the Code of Commerce, the notice of claim must be made within twenty four (24) hours from receipt of the cargo if the damage is not apparent from the outside of the package. For damages that are visible from the outside of the package, the claim must be made immediately. The periods , as well as the manner of giving notice may be modified in the terms of the bill of lading, which is the contract between the parties. Notably, neither of the parties in this case presented the terms for giving notices of claim under the bill of lading issued by petitioner for the goods. The shipment was delivered on August 11, 1993. Although the letter informing the carrier of the damage


was dated August 15, 1993, that letter, together with the notice of claim, was received by petitioner only on September 21, 1993. But petitioner admits that even before it received the written notice of claim, Mr. Mayo B. Perez, Claims Head of the company, was informed by telephone sometime in August 13, 1993. Mr. Perez then immediately went to the warehouse and to the delivery site to inspect the goods in behalf of petitioner. In the case of Philippine Charter Insurance Corporation (PCIC) v. Chemoil Lighterage Corporation, the notice was allegedly made by the consignee through telephone. The claim for damages was denied. This Court ruled that such a notice did not comply with the notice requirement under the law. There was no evidence presented that the notice was timely given. Neither was there evidence presented that the notice was relayed to the responsible authority of the carrier. The call to petitioner was made two days from delivery, a reasonable period considering that the goods could not have corroded instantly overnight such that it could only have sustained the damage during transit. Moreover, petitioner was able to immediately inspect the damage while the matter was still fresh. In so doing, the main objective of the prescribed time period was fulfilled. Thus, there was substantial compliance with the notice requirement in this case. Cases on Averages: 1. Standard Oil vs. Castelo - A and B entered into a time charter voyage agreement. While the vessel was on its voyage, a typhoon came and the captain was forced to jettison some barrels of petroleum on deck. A brought an action to recover the petroleum from B. Is this an average? Ordinarily the loss of cargo carried on deck shall not be considered a general average loss. This is clearly expressed in Rule I of the York-Antwerp Rules, as follows: "No jettison of deck cargo shall be made good as general average." The reason for this rule is found in the fact that deck cargo is in an extra-hazardous position and, if on a sailing vessel, its presence is likely to obstruct the free action of the crew in managing the ship. Moreover, especially in the case of small vessels, it renders the boat top-heavy and thus may have to be cast overboard sooner than would be necessary if it were in the hold; and naturally it is always the first cargo to go over in case of emergency. Indeed, in subsection 1 of article 815 of the Code of Commerce, it is expressly declared that deck cargo shall be cast overboard before cargo stowed in the hold. But this rule, denying deck cargo the right to contribution by way of general average in case of jettison, was first mad in the days of sailing vessels; and with the advent of the steamship as the principal conveyer of cargo by sea, it has been felt that the reason for the rule has become less weighty, especially with reference to coastwise trade; and it is now generally held that jettisoned goods carried on deck, according to the custom of trade, by steam vessels navigating coastwise and inland waters, are entitled to contribution as a general average loss.

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From what has been said it is evident that the loss of this petroleum is a general and not a special average, with the result that the plaintiff is entitled to recover in some way and from somebody an amount bearing such proportion to its total loss as the value of both the ship and the saved cargo bears to the value of the ship and entire cargo before the jettison was effected. What is Jason Clause: Part of the York-Antwerp Rules (Rule D): Right to contribution in general average shall not be affected, though the even which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure, BUT this shall not prejudice any remedies which may be open against that party for such cause. Bar Q: What is the liability of the goods/cargo for general average? ARTICLE 665. The cargo shall be specially liable for the payment of the freight expenses, and duties arising therefrom, which must be reimbursed by the shippers, as well as for the part of the general average which may be due, but it shall not be legal for the captain to delay unloading on account of delay in complying with this obligation. Should there be reasons for distrust, the judge or court, at the instance of the captain, may order the deposit of the merchandise until he has been paid in full. Gen Average vs. Particular Ave General Ave - Deliberately caused; inures to the benefit of those interested in the vessel or cargo; contribution to general average shall be contributed to by all the persons benefited and distributed to all those who suffered the loss; Particular Ave- may be due to other causes other than a deliberate act; does not inure to the benefit of those interested in vessel/cargo; owner bears the loss EFFECTS OF DECLARATION OF WAR/BLOCKADE IF THERE IS CHARTER PARTY ARTICLE 677. The charter party shall be enforced if the captain should not have any instructions from the charterer, and a declaration of war or a blockade should take place during the voyage. In such case the captain shall be obliged to make the nearest safe and neutral port, and request and await orders from the freighter; and the expenses incurred and salaries earned during the detention shall be paid as general average. If, by orders of the freighter, the cargo should be discharged at the port of arrival, the freight for the voyage out shall be paid in full. CASES: 1. International Harvester vs. Hamburg American Line: Vessel was German; Goods/Cargo were French. There was a declaration of war between Germany and France. Vessel was in Saigon when the war was announce, vessel left and landed in Manila (neutral port). Owner of vessel tried to claim from French general averages. Held: There can be no recovery. There was no general average in the case because requisite no. 1 was missing. There was no common danger


shared/participated in by cargo and crew. There was no danger to the French cargo. 2. Campagnie de Commerce vs. Hamburge American Line: While vessel was in voyage, war brok out between Germany and Russia. The vessel was carrying american cargo. Because of the war, the ship landed in Manila. Again, there is no general average. Cargo was American, only German vessel was at risk, not the amercian cargo. LIABILITY OF LENDERS ON BOTTOMRY OR RESPONDENTIA FOR GEN. AVE OR PARTICULAR AVE. IN TEH THINGS ON WHICH THE LOAN WAS MADE: ARTICLE 732.Lenders on bottomry or respondentia shall suffer in proportion to their respective interest, the general average which may take place in the goods on which the loan was made. In particular averages, in the absence of an express agreement between the contracting parties, the lender on bottomry or respondentia shall also contribute in proportion to his respective interest, should it not belong to the kind of risks excepted in the foregoing article. So: 1. General Average: suffer in proportion to their interest 2. Particular Average: Contribute in proportion to their respective interest Provided that they do not fall under the exceptions under Art. 731. ARTICLE 731. The actions which may be brought by the lender shall be extinguished by the absolute loss of the goods on which the loan was made, if said loss arose from an accident of the sea at the time and during the voyage designated in the contract, and should it be proven that the cargo was on board; but this shall not take place if the loss were caused by the inherent defect of the thing or through the fault or malice of the borrower, or through barratry on the part of the captain, or if it were caused by damages suffered by the vessel as a consequence of being engaged in contraband, or if it arose through loading the merchandise on a vessel other than that designated in the contract, unless this change should have been made by reason of force majeure. Application: A- Borrower B- Lender Loan on Respondentia = P1M Security - Cargo of A worth 1.5M Facts: Vessel met a typhoon, to lighten the load, other cargoes were thrown overboard; A's cargo and the vessel were saved. It was determined that A's contribution to the average was P300,000. Determine the Interest of the parties in P1.5M worth of cargo/ Extent of share in the P300,000 contribution A: 1/3 (amount not loaned or P500,00 ) = 100,000 B: 2/3 (amount of loan or P1M) = 200,000 2. Suppose A's cargo was damaged to the extent of P1.2 M and the same was a particular average?

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1/3 of 1.2 = 400,000 2/3 of 1.2 = 800,000

ARRIVAL UNDER STRESS Arrival of the vessel at the nearest and most convenient port because the vessel cannot continue the trip to the port of destination on the following grounds: 1. lack of provisions; 2. well founded fear of seizure, privateers or pirates; 3. by reason of any accident of the sea disabling the vessel to navigate. (Art. 819) LACK OF PROVISION -note that the arrival under stress is NOT lawful If the lack of provisions should arise from the failure to take the necessary provisions for the voyage, according to usage and custom, or if they should have been rendered useless or lost through bad stowage or negligence in their care. WELL FOUNDED FEAR X X X - not lawful If the risk of enemies, privateers, or pirates should not have been well known, manifest, and based on positive and justifiable facts. ACCIDENT OF SEA X X X - not lawful if the vessel was unseaworthy or if it is the result of some erroneous order of the captain. Whenever malice, negligence, want of foresight, or lack of skill on the part of the captain is the reason for the act causing the damage, the arrival under stress is NOT lawful. Effect if arrival under stress is lawful: losses are considered as particular average and damages need not be paid to the shipper. (Art. 821) If not lawful: Damages must be paid to the shipper. (Jointly liable S/A, S/O and captain) COLLISIONS It is the impact of two moving vessels. Includes allision in a broad sense. (ALLISION - striking of a moving vessel against one which is not moving.) Gen Rule: Guilty vessel must pay What if: 1. ONE VESSEL AT FAULT: Said vessel is liable for the damage caused to the innocent vessel and for damages suffered by the owners of the cargo of the innocent vessel and the owners of the cargoes of its own vessel. Take note that the owners of the cargo of the innocent vessel can still sue the innocent vessel for breach of contract. 2. BOTH VESSELS AT FAULT or IT CANNOT BE DETERMINED WHICH ONE IS AT FAULT: Each vessel must bear its own loss; both ship owners are solidarily liable to the shippers for the damages occasioned to the cargo (Art. 827, 828) 3. 3RD VESSEL IS AT FAULT - Third vessel liable for everything (Art. 831) 4. COLLISION CAUSED BY FORTUITOUS EVENT everybody must bear his/her own loss. (Art. 840)


Case: 1. Manila Steamship vs. Abdulhaman: Can shipowner raise the defense of GFOF in case of collision? This defense is untenable. While it is true that plaintiff's action against petitioner is based on a tort or quasi-delict, the tort in question is not a civil tort under the Civil Code but a maritime tort resulting in a collision at sea, governed by Articles 826-939 of the Code of Commerce. Under Article 827 of the Code of Commerce, in case of collision between two vessels imputable to both of them, each vessel shall suffer her own damage and both shall be solidarily liable for the damages occasioned to their cargoes. The characteristic language of the law in making the "vessels" solidarily liable for the damages due to the maritime collision emphasizes the direct nature of the responsibilities on account of the collision incurred by the shipowner under maritime law, as distinguished from the civil law and mercantile law in general. This direct responsibility is recognized in Article 618 of the Code of Commerce under which the captain shall be civilly liable to the ship agent, and the latter is the one liable to third persons. Other issue: Can the doctrine of limited liability be invoked? No, because there was fault on the part of both the vessels. We agree, however, with petitioner-appellant, that the Court of Appeals was in error in declaring the respondent Lim Hong To, owner of the M/L "Consuelo V", exempt from liability to the original plaintiff, Abdulhaman, in view of the total loss of his own vessel, that sank as a result of the collision. It is to be noted that both the master and the engineer of the motor launch "Consuelo V" were not duly licensed. ARTICLE 826. If a vessel should collide with another through the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert appraisal. aisadc ARTICLE 827. If both vessels may be blamed for the collision, each one shall be liable for his own damages, and both shall be jointly responsible for the losses and damages suffered by their cargoes. ARTICLE 828. The provisions of the foregoing article are applicable to the case in which it can not be decided which of the two vessels was the cause of the collision. ARTICLE 829. In the cases above mentioned the civil action of the owner against the person liable for the damage is reserved, as well as the criminal liabilities which may be proper. ARTICLE 830. If a vessel should collide with another by reason of an accident or through force majeure, each vessel and her cargo shall be liable for their own damage. ARTICLE 831. If a vessel should be forced to collide with another one by a third vessel, the owner of the third vessel shall indemnify for the losses and damages caused, the captain thereof being civilly liable to said owner. ARTICLE 832. If, by reason of a storm or other cause of force majeure, a vessel which is properly anchored and moored should collide with those in her immediate vicinity, causing them damage, the injury occasioned shall be looked upon as particular average to the vessel run into. 2005letcd

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ARTICLE 833. A vessel shall be presumed as lost thru a collision which, upon being run into, sinks immediately, and also any vessel which is obliged to make a port to repair the damages caused by the collision should be lost during the voyage, or should be obliged to be stranded in order to be saved. iatdc2005 ARTICLE 834. If the vessels colliding should have pilots on board discharging their duties at the time of the collision, their presence shall not exempt the captains from the liabilities they incur; but the latter shall have the right to be indemnified by the pilots without prejudice to the criminal liability which the latter may incur. ARTICLE 835. The action for the recovery of losses and damages arising from collisions can not be admitted if a protest or declaration is not presented within twenty-four hours to the competent authority of the point where the collision took place, or that of the first port of arrival of the vessel, if in Spain, * and to the consul of Spain * if it should have occurred in a foreign country. ARTICLE 836. In so far as the damages caused to persons or to the cargo are concerned, the absence of a protest can not prejudice the persons interested who were not on board or were not in a condition to make known their wishes. ARTICLE 837. The civil liability contracted by the shipowners in the cases prescribed in this section, shall be understood as limited to the value of the vessel with all her appurtenances and all the freight earned during the voyage. ARTICLE 838. When the value of the vessel and her appurtenances should not be sufficient to cover all the liabilities, the indemnity due by reason of the death or injury of persons shall have preference. Error in Extremis - Where a navigator, suddenly realizing that a collision is imminent by no fault of his own, in confusion and excitement of the moment does something which contributes to the collision or omits to do something by which the collision might be avoided, such act or omission is ordinarily considered to be in extremis and the ordinary rules of strict accountability will not apply. When will the rule of error in extremis apply? It must appear that there was an imminent danger since the error of judgment is excusable only if it was committed during such peril. It is the actual risk of danger and not apprehension merely that determines the question whether the error is one extremis. Example: A stepped on the gas instead of stepping on the brake and there is a collision, then that is an error in extremis. What applies depends on the facts, but not the rules of collision. DOCTRINE OF INSCRUTABLE FAULT Means that the court can see that a fault has been committed, but is unable, from the conflict of testimony or otherwise to locate it. Hence, when it is impossible to determine to what direct and specific acts the collision is attributable, it is a case of damage arising for a cause that is inscrutable. (Perez, Transpo Reviewer)


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CAN A SHIPOWNER RAISE THE DEFENSE OF GOOD FATHER OF A FAMILY? A. if culpa contractual - NO b. If culpa acquiliana - Yes, except in cases of collision when both parties/vessel are at fault (Art. 827) c. If culpa criminal - No.

COGSA

SHIPWRECK- the demolition or shattering of a vessel caused by her driving ashore or on rocks and shoals in teh midseas or by the violence of winds and waves in tempest.

cases: 1. American Insurance vs. Compania Maritimavoyage was from NY to Mla to Cebu; the bill of lading states the freight was prepaid all the way to Cebu. From NY to Mla, the vessel was MV X. From Mla to Cebu, MV Y, so there was transshipment.

Who bears the damage? Gen rule: borne individually by the respective owners, exceptions: a. captain shall be liable for the damage of the shipwreck in case of malice, negligence, or lack of skill, or b. because the vessel was put to sea was insufficienlty repaired and equipped (Art. 841, Code of Commerce) OBSOLETE ARTICLES IN THE COMMERCE 608, 613, 635, 642, 645, 649, 650, 651

CODE

OF

SALVAGE LAW (ACT 2616) WHAT IS SALVAGE - Salvage is a service which one person renders to the owner of a ship or goods by his own labor, preserving the goods or ship the owner or those entrusted with the care of them eithr abandoned in distress or at sea or are unable to protect and secure. Performed by the salvagor. The Salvage law provides for a compulsory reward to those who brave the perils of the sea to save the cargo or the vessel. If the salvage is successful, the owner of the vessel/cargo has to give a 50% (of the value of the property saved) reward to the salvagor. This is the maximum. REQUISITES: 1. There must be a valid object to salvage; 2. The subject to be salvaged must have been exposed to a marine peril 3. The salvage service must be rendered voluntarily and must not arise from a pre-existing duty or from special contract (so it must be rendered by a 3rd party, not the ees) 4. The efforts must be successful.

Only refers to goods; does not refer to passenger liners. This is a US law. This applies only to foreign trade; does not apply in domestic trade.

Something happened to the cargo between Manila and Cebu. Does the COGSA apply? Held: YES, the fact that the transshipment was made by an inter-island vessel did not operate to remove the transaction from the operation of the COGSA. Such transshipment was not a separate transaction from the one originally entered into. The contract of carriage was from New York to Cebu; it was one undivided contract for which the corresponding freight has been pre-paid. WHAT IS THE EFFECT OF COGSA ON OUR MARITIME LAW AND CIVIL CODE? It shall not repeal any existing provision of the code of commerce which are now in force nor does it limit the application of the code of commerce. FILING OF CLAIM (Sec. 3.6) (6) Unless notice or loss or damage and the general nature of such loss or damage by given in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.

Towage is made to take the vessel from one place to another.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered.

For salvage, the captain and crew are entitled to a share in the reward. In towage, the captain and crew are not entitled to a share in the towage service payment.

In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods.

Salvage vs. Towage Towage is when a tugboat pulls a barge. There is salvage when a vessel, by towing, is aided to escape present or prospective danger. So even if the vessel being salvaged is not a wreck, and it is towed to escape danger, then that is still considered salvage.


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Note: 1. The prescpriptive period for filing an action in court is 1 year after the delivery of the goods if the goods are destroyed or damaged or 1 year after the date when the goods should have been delivered if they are lost. 2. What is the effect if you do not file a notice of loss? In E.E. Elser vs. CA, the SC held that it shall NOT prejudice the right of the shipper to bring the suit within the one year period. So even if 3.6 requires a notice of claim to be filed with the carrier, according to the SC, under the COGSA, it is not jurisdictional. Unlike the Code of Commerce which does not have a prescriptive period for filing a complaint in court, follow the Civil Code provision (10 years or 6 years) 3. What is the effect if you do not file a case in court within the one year period? The carrier and the ship shall be discharged from liability. 4. Chua Kay vs. Everett Steamship: The cargo was received on Feb 26, 1947; the case was filed on May 7, 1948 - obviously, the case has prescribed. 5.Maritime Agencies vs. CA - Oct. 20,1979 the last item was shipped and delivered to the consignee. An action was filed against the carriery by the consignee on December 19, 1980. In april 20, 1981, an action was filed against the ship agent. Against the carrier, it has not prescribed because it was filed within the one year period (huh?check the facts na lang) but against the ship agent, the same has prescribed because it was outside the one year period already. WHAT LAW PREVAILS WITH RESPECT TO THE PRESCRIPTIVE PERIOD? The SC said that the Civil Code did not impliedly repeal the prescriptive period of the Cogsa. Because the COGSA is a special law, the one year period shall prevail for foreign trade of goods by sea. DOLE VS. MARITIME (BAR Q) - Cargo was discharged to the custody of the consignee on Dec. 18, 1971. Dole filed a notice of claim with the carrier on May 5, 1972, 5 months after. The complaint in court was on June 11, 1973, 1 1/2 year from discharge. Has the action prescribed ? YES. 1) an extra judicial demand does not interrupt the running of the prescriptive period (of one year). 2) even if it does interrupt, the case was still filed 1 year and 1 month from filing of claim. Doctrine: Only the filing in court will interrupt the running of the period.

UNIVERSAL SHIPPING VS. IAC - What if it is stated in the bill of lading that the prescriptive period is 2 years? Or that an extra judicial demand shall interrupt the prescriptive period? Valid agreements. AETNA VS. LUZON STEVEDORING - cargo was delivered Feb. 25, 1964. An action was filed against X ShipLines on Feb. 22, 1965. The complaint was dismissed on the ground that X shiplines was not the real party in interest but it was XY Services. Has the action against XY Services prescribe? YES, for the judicial demand to interrup the prescriptive period, it must be filed against the correct parties. From what point should the one year period be counted? INSURANCE VS. PHILIPPINE PORTS AUTHORITY (BAR Q, 2x) - Consignee A sued arrastre operator X for failure to deliver goods from abroad which X received from the carrier for delivery to the Consignee A. The action was brought within 4 years, but after the lapse of 1 year. The case was dismissed on the ground of prescription. Has the action prescribe? No, because the one year period will only apply to foreign trade of goods by sea. The arrastre operator is no longer foreign transport of goods by sea. The prescriptive period in this case is 4 years because there is no written contract. ANG VS. AMERICAN STEAMSHIP - X, consignee and Y, shipper. Carrier is AMS. Y agreed to sell to X steel sheets. X was supposed to pay to Y a bank draft upon arrival of the goods at port. If the Y receives the bank draft, then the bill of lading would be delivered to AMS. And AMs has to issue a permit to deliver to be presented to the customs warehouse. But X did not issue the bank draft. So Y decided to change the consignee to Ang. But X obtained a bank guarantee in favor of AMS. AMS in turn issued a permit to deliver to X and therefore X was able to retrieve the goods. So when Ang got there, the goods were no longer there. Ang filed a complaint against AMS for wrongful delivery. AMS filed a motion to dismiss on the ground of prescription because more than one year has prescribed since the goods were delivered to X. Has the action prescribed? No, delivery should be made to the correct consignee. Where the imported goods are delivered to the wrong person, the 1 year limitation under the COGSA which refers to loss or damage does not apply. The applicable rule on prescription is found in the Civil Code. Is the one year period in Cogsa applicable to misdelivery or conversion? NO.

STEVENS VS. NORDEUTCHER - an action against the carrier was filed within the 1 year prescriptive period. But the case was dismissed on a technicality. So the action was re-filed. The re-filing was done more than one year from receipt of the goods.

What do you mean by LOSS? Mitsui vs. CA - A undertook to deliver goods loaded by B to France. The goods were bathing suits, etc. The commitment of A, the carrier, was to deliver the goods within 28 days from loading. Long story short, A was unable to ship the goods within the stipulated date.

Has the action prescribed? No, because the judicial demand (filing of case in court) already interrupted the running of the prescriptive period.

So the consignee in France paid half the value of the goods on the ground that they arrived off season. (bathing suits arrived on December! winter!)


The remaining half of the value of the goods were charged by the shipper to A. A denied liability. B filed a case in the RTC on April 14, 1992. A filed a motion to dismiss alleging that the claim against it has prescribed under the COGSA. Has the action prescribed? No, even if the case was filed more than one year after delivery. The loss was not a physical loss, but loss of income. Loss of income is not the loss contemplated under COGSA. The goods here were not deteriorated or damaged, either. ―Loss‖ refers to the deterioration or disappearance of goods. As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, ―loss‖ contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered. Conformably with this concept of what constitutes ―loss‖ or ―damage,‖ this Court held in another case that the deterioration of goods due to delay in their transportation constitutes ―loss‖ or ―damage‖ within the meaning of §3(6), so that as suit was not brought within one year the action was barred Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither lost nor damaged in transit but were, on the contrary, delivered in port to someone who claimed to be entitled thereto, the situation is different, and the special need for the short period of limitation in cases of loss or damage caused by maritime perils does not obtain. In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carrier‘s breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit. So apply Civil Code provisions on prescription. Effect of prescriptive period on liability of insurerWhat if the goods were insured and the insurance company paid the consignee if the goods were lost, or damaged or destroyed? So there is subrogation. Note that it says in 3.6 that only the carrier's liability is extinguished if no suit is brought within 1 year from delivery of the goods. But the liability of the insurer is not extinguished because insurers are governed by insurance code (not less than 1 year if there is stipulation, or 10 years) BUT the insurance company cannot bring an action against the carrier beyond the one year prescriptive period. Sec. 4.5 of COGSA -- note that under the COGSA, there is no need to provide for a stipulation limiting liability. (5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package of lawful money of the United States, or in case of goods not shipped

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in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier. By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, that such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained. Neither the carrier nor the ship shall be responsible in any event for loss damage to or in connection with the transportation of the goods if the nature or value thereof has been knowingly and fraudulently misstated by the shipper in the bill of lading. Eastern Shipping vs. IAC - There was no provision on limitation of liability.. can Eastern Shipping limit its liability to $500? YES, the provisions of COGSA on limited liability are as much a part of the bill of lading as though placed in it by agreement of the parties.

Transportation Law Reviewer

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