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TRANSPORTATION LAW AΦB ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA SANSANSANSAN BEDABEDABEDABEDA Ver
TRANSPORTATION LAW
AΦB
ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA
SANSANSANSAN BEDABEDABEDABEDA Ver LAWLAWLAWLAW kav SCHOOLSCHOOLSCHOOLSCHOOL
TRANSPORTATION LAW
PRELIMINARY CONSIDERATIONS
A. GOVERNING LAWS
1. New Civil Code (primary)
• 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.
• 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.
2. Code of Commerce
3. Warsaw Convention (Convention for the Unification of Certain Rules Relating
to the International Carriage by Air)
4. Carriage of Goods by Sea Act
5. Salvage Law
6. Public Service Act
7. Article XII, Section 11 (1987 Constitution)
B. CONCEPT OF PUBLIC UTILITY AND PUBLIC SERVICE
• Public utility – is a business or service engaged in regularly supplying the public
with some commodity or service of public consequence such as electricity, gas,
water, transportation, telephone or telegraph service.
and service. ALPHA PHI BETA
The term implies public use
• When one devotes his property to a use in which the public has an interest, he, in
effect grants to the public an interest in that use, and must submit to the control by
the public for the common good, to the extent of the interest he has thus created.
• The term "public service" includes every person that now or hereafter may own,
operate, manage, or control in the Philippines, for hire or compensation, with general
or limited clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street railway, traction
railway, sub-way motor vehicle, either for freight or passenger, or both with or without
fixed route and whether may be its classification, freight or carrier service of any
class, express service, steamboat or steamship line, pontines, ferries, and water
craft, engaged in the transportation of passengers or freight or both, shipyard, marine
railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power water supply and
power, petroleum, sewerage system, wire or wireless communications system, wire
or wireless broadcasting stations and other similar public services: Provided,
however, That a person engaged in agriculture, not otherwise a public service, who
owns a motor vehicle and uses it personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or compensation to a third party or third
parties engaged in agriculture, not itself or themselves a public service, for operation
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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act. (Section 13, par. b, Public Service Act)

The difference between an ordinary business and a public utility is that the latter, being impressed with public interest, is subjected to greater regulation/monitoring by the State. However, both are not proscribed from earning profits from the public.

C. CONSTITUTIONAL

UTILITIES

LIMITATIONS

ON

OPERATION

OF

PUBLIC

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. (Section 11, Article XII, 1987 Philippine Constitution)

The limit imposed by the constitution on foreign equity applies only to the operation of a public utility and not to ownership of the facilities. The Constitution requires a franchise for the operation of a public utility but it does not require a franchise before one can own the facilities needed to operate a public utility. (Tatad vs. Garcia, Jr.).

D. REGULATORY AGENCIES

1. Department of Transportation and Communications – other agencies are under this department and it is the agency that issues certificates of public convenience for operation of national railroad carriers

2. Land Transportation Franchising Regulatory Board (LTFRB) – land transportation

3. Land Transportation Office (LTO) – registration of drivers and motor vehicles

4. Maritime Industry Authority (MARINA) – water transportation

5. Philippine Coast Guard – concerned with safety in water transportation

6. National Telecommunications Commission – communication utilities and services, radio communications systems, wire or wireless telephone and telegraph systems, radio and television broadcasting systems and other similar public utilities.

7. Energy Regulatory Board (ERB) – electric or power companies

8. National Water Resources Council – water resources

9. Civil Aeronautics Board – air transportation, particularly its economic aspects

10. Air Transportation Office – undertakes the maintenance and operations of airports and other similar facilities; registers aircrafts and other incidents concerning the same and provides safety regulations in air transportation

11. Philippine Ports Authority – wharves and ports ALPHA PHI BETA

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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E. CONCEPT

OF

CONVENIENCE

FRANCHISE

AND

CERTIFICATE

OF

PUBLIC

In

Telecommunications Commission, a franchise was distinguished from a certificate of public convenience in that the former is a grant or privilege from the sovereign power, while the latter is a form of regulation through the administrative agencies.

Radio

Communication

of

the

Philippines,

Inc.

vs.

National

A certificate of public convenience is different from a certificate of public convenience and necessity in that the former requires prior issuance of municipal franchise while the latter does not.

Certificate of Public Convenience (CPC)

Certificate of Public Convenience and Necessity (CPCN)

An authorization issued by the appropriate government agency for the operation of public services for which no franchise, either municipal or legislative, is required by law, e.g., common carriers

An authorization issued by the appropriate government agency for the operation of public service for which a prior franchise is required by law, e.g. telephone and other services

CONDITIONS THAT MUST CONCUR IN THE GRANT OF CERTIFICATE OF PUBLIC CONVENIENCE (AND NECESSITY):

1. Grantee must be a citizen of the Philippines or a corporation or entity 60 percent

of which is owned by such citizens;

ALPHA PHI BETA

2. Grantee must have sufficient financial capability to undertake the service; and

3. Service will promote public interest and interest in a proper and suitable manner. Note: The overriding principle still is public interest, necessity and convenience.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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GENERAL CONCEPTS

A. CONTRACT OF TRANSPORTATION, IN GENERAL

Contract of Transportation – one where a person obligates himself to transport persons or property from one place to another for a consideration.

The person who obligates himself to transport the goods or passengers may be a common carrier or a private carrier.

B. PERFECTION

Contract of carriage of passengers

1. Contract to carry – an agreement to carry a passenger at a future date. This

contract is consensual and is therefore perfected by mere consent.

2. Contract of carriage or of common carriage itself – a real contract for not until the facilities of the carrier are actually used can the carrier be said to have already assumed the obligation of the carrier.

Carriage of goods Where the carrier agrees to accept and transport the goods at a future date, such is consensual.

However, by the act of delivery of the goods, that is, “when the goods are unconditionally placed in the possession and control of the carrier, and upon their receipt by the carrier for transportation, the contract of carriage is perfected.”

Aircraft

There is a perfected contract to carry passengers even if no tickets have been issued

to

said passengers so long as there was already a meeting of the minds with respect

to

the subject matter and the consideration.

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Buses, Jeepneys and Streetcars Once a public utility bus or jeepney stops, it is in effect making a continuous offer to riders. Hence, it is the duty of the drivers to stop their conveyances for 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 of the carrier. Liability of the carrier is already based on a contract. It follows that the passenger is deemed to be accepting the offer if he is already attempting to board the conveyances and the contract of carriage is perfected from that point. (Dangwa Transportation Co., Inc. vs. CA)

Trains

A person who wants to board a train in a railway station must purchase a ticket and

must present himself at the proper place and in the proper manner to be transported. Such person must have a bona fide intention to use the facilities of the carrier, possess sufficient fare with which to pay his passage, and present himself to the carrier for transportation in the place and manner provided. If he does not do so, he will not be considered a passenger.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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C. COMMON CARRIER

1. STATUTORY DEFINITION

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.

2. DISTINGUISHED FROM PRIVATE CARRIER

The distinction between a “common or public carrier” and a “private or special carrier” lies in the character of the business, such that if the undertaking is a single transaction, not a part of a general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier.

Significance

of

classification:

Common

carrier

=

presumption

of

fault

or

negligence

3. DISTINGUISHED FROM TOWAGE, ARRASTRE AND STEVEDORING

Towage – a contract whereby one vessel, usually mo0torized, pulls another, whether loaded or not with merchandise, from one place to another, for a compensation.

One vessel is hired to bring another vessel to another place. It merely facilitates the transport of goods or persons of the common carrier.

In maritime law, it refers to a service rendered to a vessel by towing for the mere purpose of expediting her voyage without reference to any circumstances of danger. Hence, it cannot be considered a common carrier. It is a contract of services rather than a contract of carriage. ALPHA PHI BETA

Arrastre Service – a contract for the unloading of goods from a vessel.

Functions include the following:

1. To receive, handle, care for, and deliver all merchandise imported and exported, upon passing over government-owned wharves and piers in the port; (depositary/ warehouseman)

2. To record and check all merchandise which may be delivered to said port at shipside; and

3. To furnish light and water services and other incidental services in order to undertake its arrastre service.

The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. Since it is the duty of the arrastre operator to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the carrier.

Stevedoring Service – involves the loading and unloading of coastwise vessels calling at the port.

Towage, arrastre operations and stevedoring are not maritime in character. They do not involve the functions of a common carrier.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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4. TESTS TO DETERMINE COMMON CARRIER

In First Philippine Industrial Corp. vs. CA, the Supreme Court reiterated that the tests for determining whether a party is a common carrier of goods are:

1. 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;

2. He must undertake to carry goods of the kind to which his business is confined; ALPHA PHI BETA

3. He must undertake to carry by the method by which his business is conducted and over his established roads; and

4. The transportation must be for hire.

The true test of a common carrier is the carriage of goods or passengers, provided it has space for all who opt to avail themselves of its transportation for a fee. (National Steel Corp. vs. CA)

5. PARTIES TO THE CONTRACT OF CARRIAGE

Carriage of Passengers

1. Passenger – one who travels in a public conveyance by virtue of a contract, express or implied, with the carrier as to the payment of fare or that which is accepted as an equivalent thereof.

2. Common Carrier

Carriage of Goods

1. Shipper – the person who delivers the goods to the carrier for transportation.

2. Common Carrier

3. Consignee – the person to whom the goods are to be delivered.

The consignee may be the shipper himself as in the case where the goods are to be delivered to one of the branch offices of the shipper. However, the consignee may be a third person who is not actually part of the contract. (Principle of Relativity of Contracts) ALPHA PHI BETA

Nevertheless, the third-party consignee may still enforce the agreement as an agent by virtue of the designation made by the shipper, or as a beneficiary who accepted such stipulation in favor of a third party (stipulation pour autrui).

D. REGISTERED OWNER RULE AND KABIT SYSTEM

Registered Owner Rule: The registered owner of a certificate of public convenience is liable to the public for the injuries or damages suffered by third persons caused by the operation of said vehicle, even though the same had been transferred to a third person.

Reason: It would be easy for him, by collusion with others or otherwise, to transfer the responsibility by proving that a third person is the actual and real owner. ALPHA PHI BETA

Kabit System – a system or arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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vehicles to operate under such license, sometimes for a fee or percentage of such earnings. It is void and inexistent under Art. 1409, New Civil Code for being contrary to public policy.

Persons who are parties to the “Kabit” system cannot invoke the same as against each other either to enforce their legal agreement or to invoke the same to escape liability. (Pari Delicto Rule)

The determining factor which negates the existence of Kabit System is the possession of the franchise to operate and not the issuance of one SSS ID Number for both bus lines. (Baliwag Transit vs. CA) ALPHA PHI BETA

Indeed to exempt from liability the owner of a public vehicle who operates it under the ‘boundary system” on the ground that he is a mere lessor would be not only to abet flagrant violations of the Public Service Law, but also to place the riding public at the mercy of reckless and irresponsible drivers. (Spouses Hernandez vs. Spouses Dolor)

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF GOODS

A. VIGILANCE OVER THE GOODS

1. DUTY TO EXERCISE EXTRAORDINARY DILIGENCE

Art. 1733, Civil Code 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.

A common carrier is required to faithfully comply with his obligation to deliver the goods and to ferry the passenger to the point of destination. Compliance with this obligation must be with the element of integrity in the sense that the goods should be delivered in the same condition that they were received and to transport the passengers without encountering any harm or loss.

Art. 363, Code of Commerce. – Outside of the cases mentioned in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods shipped in the same condition in which, according to the bill of lading, they were found at the time they were received, without any damage or impairment, and failing to do so, to pay the value which those not delivered may have at the point and at the time at which their delivery should have been made.

If those not delivered form part of the goods transported, the consignee may refuse to receive the latter, when he proves that he cannot make use of them independently of the others. ALPHA PHI BETA

Art. 364, Code of Commerce. – If the effect of the damages referred to in Article 361 is merely a diminution in the value of the goods, the obligation of the carrier shall be reduced to the payment of the amount which, in the judgment of experts, constitutes such difference in value.

Art. 365, Code of Commerce. – If, in consequence of the damage, the goods are rendered useless for sale and consumption for the purposes for which they are properly destined, the consignee shall not be bound to receive them, and he may have them in the hands of the carrier, demanding of the latter their value at the current price on that day.

If among the damages goods there should be some pieces in good condition and without any defect, the foregoing provision shall be applicable with respect to those damaged and the consignee shall receive those which are sound, this segregation to be made by distinct and separate pieces and without dividing a single object, unless the consignee proves the impossibility of conveniently making use of them in this form.

The same rule shall be applied to merchandise in bales or packages, separating those parcels which appear sound.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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2. PRESUMPTION OF NEGLIGENCE

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.

Reason: As to when and how goods were damaged in transit is a matter peculiarly within the knowledge of the carrier and its employees.

In case of loss, damage or deterioration of goods, the court need not make an express finding of fault or negligence of common carriers; the law imposes liability upon common carriers, as long as it is shown that:

1. There exists a contract between the shipper/passenger and the common carrier; and

2. That the loss, deterioration, injury or death took place during the existence of the contract.

Mere proof of delivery of the goods in good order to a common carrier and their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation as to how the deterioration, loss, or destruction of the goods happened, the transporter shall be held responsible. ALPHA PHI BETA

In effect, the shipper/passenger has no burden of proving that his injury was caused by the negligent or intentional act or omission of the carrier or his agents. However, the common carrier may prove by way of defense that the loss or damage cannot be traced to any act of said carrier but the proximate and only cause of the loss is any of the circumstances mentioned in Art. 1734 of the New Civil Code. The carrier can also prove that the proximate cause of the loss is not any act or omission of the said carrier because he exercised extraordinary diligence.

3. DURATION OF LIABILITY

Art. 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.

Art. 1737. The common carrier's duty to observe extraordinary diligence 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. ALPHA PHI BETA

Art. 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.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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The goods are deemed delivered to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. When such delivery has thus been accepted by the carrier, the liability of the carrier commences eo instanti.

4. DEFENSES OF COMMON CARRIERS

Flood, storm earthquake, lightning and other natural disaster and calamity

Acts of the public enemy in war, whether international or civil

Act of omission of the shipper or owner of the goods

Character of the goods or defects in the packing or in the containers

Order or act of competent public authority

Exercise of extraordinary diligence

The above enumeration is exclusive. For example, the defense of exercise of due diligence in the selection and supervision of employees that is available in tort is not available in an action for breach of contract of carriage.

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; (3) Act of omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority.

a. FORTUITOUS EVENT

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 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.

Requisites:

1.

The cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligation, must be independent of human will.

2.

It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid.

3.

The occurrence must be such as to render it impossible for the debtor

4.

to fulfill his obligation in a normal manner. The obligor (debtor) must be free from any participation in or

aggravation of the injury resulting to the creditor. ALPHA PHI BETA

Fortuitous event, to be a valid defense, must be established to be the proximate and only cause of the loss.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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Case:

Edgar Cokaliong Shipping Lines, inc. vs. UCPB General Insurance Company, 25

June 2003

Petitioner’s vessel, M/V Tandag, sank due to a fire which resulted from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the crack and dripped to the heating exhaust manifold, causing the ship to burst into flames. The crack was located on the side of the fuel oil tank, which had a mere two-inch gap from the engine room walling, thus precluding constant inspection and care by the crew. The sinking of the vessel was not considered due to fortuitous event. Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure.

Hijacking of the carrier does not fall among the five categories of exempting causes. The carrier’s vehicle must be dealt with under Art. 1735 of the New Civil Code. In other words, the common carrier is presumed to be at fault or to have acted negligently unless there is a proof of extraordinary diligence on its part of the common carrier. To exculpate the carrier from liability arising from hijacking, he must prove that the robbers or the hijackers acted with grave or irresistible threat, violence or force. (Bascos vs. CA)

Damage or injury that can be traced to mechanical defects is not a damage or injury that was caused by fortuitous event. The prevailing rule in this jurisdiction is that a carrier is liable to its passengers for damages caused by mechanical defects of the conveyance. (Necesito vs. Paras)

b. PUBLIC ENEMY

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 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.

The term ‘public enemy,’ in its general acceptation presupposes the existence of an actual state of war wit the country to which the carrier belongs, though not necessarily with that to which the owner of the goods owes allegiance.

In order that the common carrier may be exempted from responsibility, the act of the public enemy must have been the proximate and only cause of the loss, and the common carrier must exercise due diligence to prevent or minimize loss before, during and after the performance of the act of the public enemy. ALPHA PHI BETA

c. IMPROPER PACKING

Art. 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.

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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If

the carrier accepts the goods knowing the fact of improper packing of the

goods upon ordinary observation or notwithstanding such condition, it is not

relieved o liability for loss or injury resulting therefrom.

For Article 1734 [4] to apply, the rule is that if the improper packing or in this case, the defects in the container, 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 in Art. 1735 holds. (Calvo vs. UCPB General Insurance Co., Inc.)

In Belgian Overseas Chartering & Shipping N.V. vs. Philippine First Insurance Co., the petitioners tried to escape liability under Art. 1734 [4] of the Civil Code. They cite the notation “metal envelopes rust stained and slightly dented’ printed on the Bill of Lading as evidence that the character of the goods or defect in the packing or the containers was the proximate cause of the damage. The supreme Court rejected the argument explaining that:

 

From the evidence on record, it cannot be reasonably concluded that the damage to the four coils was due to the condition noted on the Bill of lading. The aforecited exception refers to cases when the goods are lost and damages while in transit as a result of the natural decay of perishable goods or the fermentation or evaporation of substances liable therefore, the necessary or natural wear of goods in transport, defects in packages in which they are shipped, or the natural propensities of animals. None of these is present in the instant case.

Further, even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation, it is not relived of liability for loss or injury resulting therefrom, once it accepts the goods notwithstanding such condition. Thus, petitioners have not successfully proven the application of any of the aforecited exceptions in the present case.

Refusal by the carrier by reason of improper packing is not an actionable wrong. Nevertheless, should the carrier decide to accept, notwithstanding the improper packing, the common carrier must, in order to invoke it as a defense, make the proper notation/ reservation in a Foul Bill of Lading, indicating such improper packing; and exercise due diligence to forestall or lessen loss or damage. Hence, mere acceptance does not always amount to an abandonment of such defense. ALPHA PHI BETA

Foul Bill of Lading – one which contains a notation thereon indicating that the goods covered by it are in bad condition.

d. ORDER OF PUBLIC AUTHORITY

Art. 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.

In Ganzon vs. CA, the petitioner carrier was not excused from liability because the Supreme Court did not consider the order of an acting mayor as

a valid order of a public authority. In other words, the public authority who

issues the order must be duly authorized to issue the order as provided for in

the proviso in Art. 1743. ALPHA PHI BETA

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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It should be noted that the Carriage of Goods by Sea Act provides that neither the carrier nor the ship shall be responsible for loss or damage resulting from “arrest or restraint of princes, rulers, or people, or seizure under legal process” and from “quarantine restrictions.”

Degree of diligence: that of a good father of a family

ALPHA PHI BETA

5. CONTRIBUTORY NEGLIGENCE OF THE SHIPPER

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.

The obligation to exercise due diligence is not limited to the carrier. The shipper is obliged to exercise due diligence in avoiding damage or injury. Nevertheless, contributory negligence is not a defense that will excuse the carrier from liability. It will only mitigate such liability.

However, the negligence of the shipper/passenger may be the proximate and only cause of the loss, in which case, the carrier should not be made liable. The carrier may be able to overcome the presumption of negligence and may be able to prove that it is exercised extraordinary diligence in handling the goods or in transporting the passenger. Thus, the carrier may be able to prove that the only cause of the loss of the goods is any of the following acts of the shipper:

1. Failure of the shipper to disclose the nature of the goods;

2. Improper marking or direction as to destination; or

3. Improper loading when he assumes such responsibility

The shipper must see to it that the goods are properly packed, otherwise, liability of he carrier may either be mitigated or barred depending on the circumstances.

6. STIPULATION LIMITING LIABILITY OF CARRIER

a.

REQUISITES

Art. 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) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy.

The contract of carriage itself does not need to be in writing to be valid and enforceable. Being a consensual contract, it is perfected by the mere agreement of the parties as to the subject matter and consideration. There is no formality is needed to become enforceable before the courts since it is not one covered by the Statute of Frauds (Art. 1403, NCC)

However, in case of a stipulation limiting common carrier’s responsibility, such stipulation is required by law to be in writing. If not in writing, the general rule will apply, that is, extraordinary diligence.

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REV based on Atty. Villanueva-Castro’s Course Outline

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Delay without just cause prevents the common carrier from availing of such stipulation limiting its liability.

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

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.

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.

VALID STIPULATIONS

1. Reduction of degree of diligence to ordinary diligence, provided it be

a. In writing, signed by the shipper or owner;

b. Supported by a valuable consideration other than the service rendered by the carriers; and

c. Reasonable, just and not contrary to public policy. (Art. 1744)

2. Fixed amount of liability: A contract fixing the sum to be recovered by the owner or shipper for the loss, destruction or deterioration of the goods, if it is reasonable and just under the circumstances and has been fairly and freely agreed upon. (Art. 1750)

3. Limited liability for delay: An agreement limiting the common carrier’s liability for delay on account of strikes or riots. (Art. 1748)

4. Stipulation limiting liability to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value. (Art.

1749)

The diligence required in the carriage of goods may be reduced only by one degree, from extraordinary to ordinary diligence or diligence of a good father of a family. ALPHA PHI BETA

The purpose of the limiting stipulation in the Bill of Lading is to protect the common carrier. Such stipulation obliges the shipper/consignee to notify the common carrier of the amount that the latter may be liable for in case of loss of the goods. The common carrier can then take appropriate measures – getting insurance, if needed, to cover or protect itself. This precaution on the part of the carrier is reasonable and prudent. Hence, a shipper/consignee that undervalues the real worth of the goods he seeks to transport does not only violate a valid contractual stipulation, but commits a fraudulent act when it seeks to make the common carrier liable for more than the amount declared in the bill of lading. (Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General Insurance Co.)

b. INVALID STIPULATIONS

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REV based on Atty. Villanueva-Castro’s Course Outline

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Art. 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.

c. EFFECT OF DELAY

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.

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

d. RULE ON PRESUMPTION OF NEGLIGENCE DESPITE STIPULATION

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

deterioration.

B. OTHER OBLIGATIONS

1. DUTY TO ACCEPT GOODS

Gen. Rule: A common carrier cannot ordinarily refuse to carry a particular class of goods. ALPHA PHI BETA Exception: When for some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. (Fisher vs. Yangco Steamship Co.)

a. GROUNDS FOR VALID REFUSAL OF ACCEPTANCE OF GOODS

1. Hazardous and dangerous substances

2. Unfit for transport These goods may by nature be unfit for transportation or are unfit because of improper packaging or defect in their containers. However,

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

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REV based on Atty. Villanueva-Castro’s Course Outline

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presumed

to

have

been

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the carrier may choose to transport such goods and limit its liability by stipulation.

3. Acceptance would result in overloading

4. Contrabands or illegal goods

5. Goods are injurious to health

6. Goods will be exposed to untoward danger like flood, capture by enemies and the like ALPHA PHI BETA

7. Goods like livestock will be exposed to disease

8. Strike

9. Failure to tender goods on time

2. DUTY TO DELIVER GOODS

a. TIME OF DELIVERY

In the absence, of any agreement as to the time of deliver, when a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time.

Art. 358, Code of Commerce. If there is no period fixed for the delivery of the goods to the carrier shall be bound to forward them in the first shipment of the same or similar goods which he may make to the point of delivery; and should he not do so, the damages caused by the delay should be for his account.

But where a carrier has made an express contract to transport and deliver property within a specified time, he is bound to fulfill the contract and is liable for any delay, no matter from what cause it may have arisen.

b. CONSEQUENCES OF DELAY

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

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.

Effects of delay:

1. Merely suspends and generally does not terminate the contract of carriage

2. Carrier remains duty bound to exercise extraordinary diligence

3. Natural disaster shall not free carrier from responsibility

4. If the delay is without just cause, the contract limiting the carrier’s liability cannot be availed of in case of loss or deterioration of goods

Art. 370, Code of Commerce. If a period has been fixed for the delivery of the goods, it must be made within such time, and, for failure to do so, the carrier shall pay the indemnity stipulated in the bill of lading, neither the shipper nor the consignee be entitled to anything else.

If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the carrier shall be liable for the damages which the delay may have caused.

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

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REV based on Atty. Villanueva-Castro’s Course Outline

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Art. 371, Code of Commerce. In case of delay through the fault of the carrier, referred to in the preceding articles, the consignee may leave the goods transported in the hands of the former, advising him thereof in writing before their arrival at the point of destination.

When this abandonment takes place, the carrier shall pay the full value of the goods as if they had been lost or mislaid.

If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot exceed the current price which the goods transported would have had on the day and at the place in which they should have been delivered; this same rule is to be observed in all other cases in which the indemnity may be due.

Art. 372, Code of Commerce. The value of the goods which the carrier must pay in cases of loss or misplacement shall be determined in accordance with that declared in the bill of lading, the shipper not being allowed to present proof that among the goods declared therein there were articles of greater value and money.

Horses, vehicles, vessels, equipment and all other principal and accessory means of transportation shall be especially bound in favor of the shipper, although with respect to railroads said liability shall be subordinated to the provisions of the laws of concession with respect to the property, and to what this Code established as to the manner and form of effecting seizures and attachments against said companies.

Art. 373, Code of Commerce. The carrier who makes the delivery of the merchandise to the consignee by virtue of combined agreements or services with other carriers shall assume the obligations of those who preceded him in the conveyance, reserving his right to proceed against the latter if he was not the party directly responsible for the fault which gave rise to the claim of the shipper or consignee.

The carrier who makes the delivery shall likewise acquire all the actions and rights of those who preceded him in the conveyance.

The shipper and consignee shall have an immediate right of action against the carrier who executed the transportation contract, or against the other carriers who may have received the goods transported without reservation.

However, the reservation made by the latter shall not relieve them from the responsibilities which they may have incurred by their own acts.

Art. 374, Code of Commerce. The consignee to whom the shipment was made may not defer the payment of the expenses and transportation charges of the goods they receive after the lapse of twenty-four hours following their delivery; and in case of delay of this payment, the carrier may demand the judicial sale of the goods transported in an amount necessary to cover the cost of transportation and the expenses incurred.

c. PLACE OF DELIVERY

The goods should be delivered in the place agreed upon by the parties.

If

the specific place or warehouse is designated in the bill of lading, the goods

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must be delivered in such place even if it is not the usual place of delivery in the place of destination.

Art. 360, Code of Commerce. The shipper, without changing the place where the delivery is to be made, may change the consignment of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee, the bill of lading signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract appears. ALPHA PHI BETA

The expenses which this change of consignment occasions shall be for the account of the shipper.

d. TO WHOM DELIVERY SHALL BE MADE

The goods shall be delivered to the consignee or any other person to whom the bill of lading was validly transferred or negotiated.

Art. 368, Code of Commerce. The carrier must deliver to the consignee, without any delay or obstruction, the goods which he may have received, by the mere fact of being named in the bill of lading to receive them; and if he does not do so, he shall be liable for the damages which may be caused thereby.

Art. 369, Code of Commerce. If the consignee cannot be found in the residence found in the bill of lading, or if he refuses to pay the transportation charges and expenses, or if he refuses to receive the goods, the municipal judge, where there is none of the first instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the effects of delivery without prejudice to third parties with a better right.

It should be noted that a negotiable bill of lading is a document of title that may be transferred to a holder for value. In case of such transfer, the carrier is obligated to deliver the goods to the transferee or holder. The transferee to whom the bill of lading has been negotiated acquires the direct obligation of the carrier from the time of such negotiation. There is even no need to notify the carrier that there was such a transfer. ALPHA PHI BETA

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REV based on Atty. Villanueva-Castro’s Course Outline

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OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF PASSENGERS

A. SAFETY OF PASSENGERS

1. DUTY TO OBSERVE UTMOST DILIGENCE

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.

Extraordinary diligence – rendition of service with the greatest skill or foresight, with due regard for all circumstances.

2. DURATION OF LIABILITY

With respect to carriage of passengers by trains, the extraordinary responsibility of common carriers commences the moment the person who purchases the ticket from the carrier presents himself at the proper place and in a proper manner to be transported with a bona fide intent to ride the coach.

The duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the trip, but also for as long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage. ALPHA PHI BETA

All persons who remain on the premises within a reasonable time after leaving the conveyance are deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. (La Mallorca vs. CA; Aboitiz Shipping Corp. vs. CA)

It is the duty of common carriers of passengers to stop their conveyances a reasonable length of time to afford passengers an opportunity to enter, and they are liable for injuries suffered for the sudden starting up or jerking of their conveyances while doing so. The duty which the carrier of passengers owes to its patrons extends to persons boarding the cars as well as those alighting therefrom. (Dangwa Transportation Co., Inc. vs. CA)

3. PRESUMPTION OF NEGLIGENCE

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.

With respect to passengers, the carrier’s defense is exercise of extraordinary or utmost diligence. It is believed that the defenses mentioned in Art. 1734 like fortuitous event or acts of public enemy (except No. 4 – character or packing of goods) may be invoked against the passenger or his heirs provided that utmost diligence is exercised. However, the presumption under Art. 1756 applies.

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4. LIABILITY OF ACTS OF EMPLOYEES

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 good father of a family in the selection and supervision of their employees.

Diligence in the selection and supervision of employees under Article 2180 of the Civil Code cannot be interposed as a defense by the common carrier because the liability of the carriers arises from the breach of the contract of carriage. The defense under said articles is applicable to negligence in quasi-delicts under Art.

2176.

When the crime was committed by a train guard who had no duties to discharge in connection with the transportation of the victim, the crime stands on the same footing as if committed by a stranger or co-passenger since the killing was not in

the line of duty. (Gillaco vs. Manila Railroad)

ALPHA PHI BETA

It is no defense that the employee acted beyond the scope of his authority because the riding public is not expected to inquire from time to time before they board the carrier whether or not the driver or any other employee is authorized to drive the vehicle or that said driver is acting within the scope of his authority and observing the existing rules and regulations required of him by management.

At least three very cogent reasons underlie this rule: (1) the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier’s own servants charged with the passenger’s safety; (2) said liability of the carrier for the servant’s violation of duty to passengers, is the result of the former’s confiding in the servant’s hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed bylaw; and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts and negligence of the carrier’s employees against passengers, since it, and not the passengers, has power to select and remove them. (Maranan vs. Perez)

Willful acts of the employees include theft.

5. LIABILITY 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.

Liability of a common carrier for death or injuries to passengers

 

For acts of its employees

For acts of other passengers or strangers

Required

diligence

Extraordinary diligence

Ordinary diligence

and defense

Nature of liability

Tort; however, the employee must be on duty at the time of the act (Maranan vs. Perez)

Not absolute; limited by Art. 1763

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

BEDASAN BEDASAN BEDA LAWLAWEXCLUSIVELY LAWLAW

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With respect to acts of strangers and other passengers resulting in injury to a passenger, the availability of such defense is also subject to the exercise of due diligence to prevent or stop the act or omission.

Negligence of the carrier need not be the sole cause of the damage or injury to the passenger or the goods. The carrier would still be liable even if the contractual breach concurs with the negligent act or omission of another person.

6. EFFECT OF STIPULATION ON LIABILITY

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.

There can be no stipulation lessening the utmost diligence that is owed to passengers. ALPHA PHI BETA

Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for willful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carrier's liability.

The provision implies that the same degree of diligence is required even if the passenger is carried gratuitously. A common carrier should therefore exercise extraordinary diligence even as to non-paying passengers. What the carrier can do is just limit its liability.

Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.

There can be no stipulation lessening the utmost diligence that is owed to passengers. ALPHA PHI BETA

B. PASSENGER’S 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.

The term baggage has been defined to include whatever articles the passenger usually takes with him for his own personal use, comfort, and convenience according to the habits or wants of a particular class to which he belongs, either with reference to his immediate necessities or to the ultimate purpose of his journey.

Baggage that are “checked-in” or delivered to the carrier are governed by Art. 1754 requiring extraordinary diligence. If the passenger had hand carried luggage, the rules under Article 1998, 2000 to 2003 of the Civil Code on necessary deposit apply.

Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects.

Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him.

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

Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel.

Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void.

In the custody of passengers (Hand-Carried)

In the custody of the common carrier (checked-in)

Legal nature of the baggage

Legal nature of the baggage

Necessary deposit

Considered as “goods”

Required diligence by the common carrier

Required diligence by the common carrier

Diligence of a depositary (Ordinary diligence)

Extraordinary diligence

Applicable rules

Applicable rules

Arts. 1998 and 2000-2003

Arts. 1733-1753

C. RELEVANT PROVISIONS OF THE WARSAW CONVENTION

1. BINDING EFFECT OF THE WARSAW CONVENTION

The rights and obligations of the air carrier and the passengers in international flights are governed by the Convention for the Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention), signed on October 12, 1929, coming into force in February 13, 1933, adhered to by the Philippines on November 9, 1951. This Convention was partly amended by the Hague Protocol of September 28, 1955, the Montreal Agreement of 1966, the Guatemala Protocol of 1971 and Montreal Protocols of 1975 (Alitalia vs. IAC, 192 SCRA 9) ALPHA PHI BETA

The Warsaw Convention of 1929 to which the Republic of the Philippines is a party and which has the force and effect of law in this country applies to all international transportation of persons, baggage, or goods performed by an aircraft gratuitously or for hire. As enumerated in the Preamble of the Convention, one of the objectives is “to regulate in a uniform manner the

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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conditions of international transportation by air.(American vs. CA, 327 SCRA

482)

The Warsaw Convention is as much a part Philippine law as the Civil Code, Code of Commerce, and other municipal special laws, and the provisions therein contained, specifically on the limitation of carrier’s liability, are operative in the Philippines but only in appropriate situations. (PAL vs. CA, 255 SCRA 48)

Warsaw Convention denies to the carrier availment of the provisions which exclude or limit his liability if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court seized the case, is considered to be equivalent to willful misconduct, or if the damage is similarly caused by a agent of the carrier acting within the scope of his employment. (Sabena vs. CA) ALPHA PHI BETA

Under domestic law and jurisprudence, the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the common carrier liable for all damages which can be reasonably attributed, although unforeseen, to the non- performance of the obligation, including moral and exemplary damages.

While the Warsaw Convention has the force and effect of law in the Philippines, the same does not operate as an exclusive enumeration of the instances when a carrier shall be liable for breach of contract or as an absolute limit to the extent of liability, nor does it preclude the operation of the Civil Code or other pertinent laws. (Cathay vs. CA, 219 SCRA 520)

Applicability: The transportation must be:

1. International transportation

2. Air transportation; and

3. Carriage of passengers, baggage or goods.

2. CATEGORIES OF INTERNATIONAL AIR TRANSPORTATION

International Transportation – any transportation in which the place of departure and the place of destination are situated either:

1. Within the territories of two High Contracting Parties regardless of whether or not there be a break in the transportation or transshipment, or

2. Within the territory of a single High Contracting party, if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though that power is not a party to the Convention.

Effect of the absence of an agreement concerning a stopping place: the transportation shall not be deemed to be international for the purposes of the Convention. ALPHA PHI BETA

High Contracting Party – is one of the original parties to the convention

3. LIABILITY UNDER THE CONVENTION

Article 22, Warsaw Convention 1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of 125,000 francs. Where, in accordance with the law of the Court

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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seized of the case, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed 125,000 francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability.

2. In the carriage of registered luggage and of goods, the liability of the carrier is

limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that

case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery.

3. As regards objects of which the passenger takes charge himself the liability of the

carrier is limited to 5,000 francs per passenger. 4. The sums mentioned above shall be deemed to refer to the French franc consisting of 65 1/2 milligrams gold of millesimal fineness 900. These sums may be

converted into any national currency in round figures.

Limit of Liability (Art. 22, as amended by Guatemala Protocol, 1971; Alitalia vs. IAC, December 4, 1990)

1. Passengers Gen. Rule: $100,000 per passenger Exception: Agreement to a higher limit Note: An agreement relieving the carrier from liability or fixing a lower limit is null and void (Art. 23). Carrier is not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part. (Art. 25) ALPHA PHI BETA

2. Checked-in baggage Gen. Rule: $20 per kilogram Exception: In case of special declaration of value and payment of a supplementary sum by consignor, carrier is liable to not more than the declared sum unless it proves that the sum is greater than the actual value.

3. Hand-carried baggage: $1,000 per passenger

4. Goods to be shipped Gen. Rule: $20 per kilogram Exception: In case of special declaration of value and payment of a supplementary sum by consignor, carrier is liable to not more than the declared sum unless it proves that the sum is greater than the actual value.

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER

A. EFFECT OF NEGLIGENCE OF SHIPPER OR PASSENGER

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.

The obligation to exercise due diligence is not limited to the carrier. The shipper is obliged to exercise due diligence in avoiding damage or injury. Nevertheless, contributory negligence on the part of the passenger is not a defense that will excuse the carrier from liability. It will only mitigate such liability.

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.

The negligence of the passenger or the shipper may be the proximate and only cause of the loss, in which case, the carrier should not be made liable. Moreover, even if the carrier is responsible for the loss or injury, the passenger is al required to lessen the damage or injury in what is known as the doctrine of avoidable consequences. ALPHA PHI BETA

Doctrine of Last Clear Chance: A negligent defendant is held liable to a negligent plaintiff, or even to a plaintiff who has been grossly negligent in placing himself in peril, if he, aware of the plaintiff’s peril, or according to some authorities, should have been aware of it in the reasonable exercise of due care, had in fact an opportunity later than that of the plaintiff to avoid an accident.

Assumption of Risk Passengers must take such risks incident to the mode of travel. Carriers are not insurers of the lives of their passengers. Thus, in air travel, adverse weather conditions or extreme climactic changes are some of the perils involved in air travel, the consequences of which the passenger must assume or expect. (Japan Airlines vs. CA, August 7, 1998)

B. PAYMENT OF FREIGHT

Art. 374, Code of Commerce. – The consignees to whom the shipment was made may not defer the payment of the expenses and transportation charges of the goods they receive after the lapse of twenty-four hours following their delivery; and in case of delay in this payment, the carrier may demand the judicial sale of the goods transported in an amount necessary to cover the cost of transportation and the expenses incurred.

Who will pay: The shipper may pay the necessary freight before or at the time he delivers the goods to the carrier for shipment. However, the parties may stipulate that the freight may be paid by the consignee at the point of destination. The consignee is bound by such stipulation the moment he accepts the goods.

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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Nevertheless, the consignor with whom the contract of carriage is made is primarily liable for the payment of the freight charges whether or not he is the owner of the goods. The obligation to pay is implied from the mere fact that the consignor has placed the goods with the carrier for the purpose of transportation.

Time to pay:

In the absence of any agreement, the consignee who is supposed to

(Code of Commerce

pay must do so within 24 hours from the time of the delivery.

provisions on Overland Transportation) ALPHA PHI BETA

With respect to carriage of goods by sea, the tickets are purchased in advance from ticket outlets or booking offices that are required to be set up in every ports of call of the vessel. Carriers are not supposed to allow passengers without tickets – the carrier is bound to observe a “No Ticket, No Boarding Policy.” (MARINA Memorandum Circular No. 112 dated December 15, 1995)

Art. 375. Code of Commerce. – The goods transported shall be especially bound to answer for the cost of transportation and for the expenses and fees incurred for them during their conveyance and until the moment of their delivery.

This special right shall prescribe eight days after the delivery has been made, and once prescribed, the carrier shall have no other action than that corresponding to him as an ordinary creditor.

Carrier’s Lien. If the consignor or the consignee failed to pay the consideration for the transportation of goods, the carrier may exercise his lien in accordance with Art. 375 of the Code of Commerce.

C. LIABILITY FOR DEMURRAGE

Demurrage – the compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading.

Essentially, it is the claim for damages for failure to accept delivery. Liability for demurrage, using the word in its strictly technical sense, exists only when expressly stipulated in the contract.

Using the term in its broader sense, damages in the nature of demurrage are recoverable fro a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against one who is a party to the shipping contract. Notice of arrival of vessels or conveyances, or of their placement for purposes of unloading if often a condition precedent to the right to collect demurrage charges. (Magellan Manufacturing Marketing Corporation vs. Court of Appeals)

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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EXTRAORDINARY DILIGENCE

A. UNDERLYING REASON

This extraordinary diligence required of common carriers is calculated to protect the passengers from the tragic mishaps that frequently occur in connection with the rapid modern transportation. This high standard of care is imperatively demanded by the preciousness of human life and by the consideration that every person must in every way be safeguarded against all injury. (Report of the Code Commission)

Rationale:

1. From the nature of the business and for reasons of public policy

2. Relationship of trust

3. Business is impressed with a special public duty

4. Possession of the goods

5. Preciousness of human life

A common carrier is not an absolute insurer of all risks of travel.

Note:

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B. EFFECT OF STIPULATION

Art. 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) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy.

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.

There can be no stipulation lessening the utmost diligence that is owed to passengers.

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.

The provision implies that the same degree of diligence is required even if the passenger is carried gratuitously. A common carrier should therefore exercise extraordinary diligence even as to non-paying passengers. What the carrier can do is just limit its liability. ALPHA PHI BETA

Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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There

passengers.

can

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lessening

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to

C. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA

1. SEAWORTHINESS OF THE VESSEL

Generally, seaworthiness is that strength, durability and engineering skill made a part of a ship’s construction and continued maintenance, together with a competent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonably be expected or encountered during her voyage without loss or damage to her particular cargo. (Standard Vacuum Oil Co. vs. Luzon Stevedoring Co., Inc.)

Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to –

(a)

Make the ship seaworthy; ALPHA PHI BETA

(b)

Properly man, equip, and supply the ship;

(c)

Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation.

(2)

The carrier shall properly and carefully load, handle, stow, carry, keep, care

for, and discharge the goods carried. (COGSA)

Sec. 116, Insurance Code. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurtenances and equipment, such as ballasts, cables and anchors, cordage and sails, food, water, fuel and lights, and other necessary or proper stores and implements for the voyage.

Sec. 119, Insurance Code. A ship which is seaworthy for the purpose of an insurance upon the ship may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the purpose of the insurance upon the cargo.

Art. 609, Code of Commerce. Captains, masters or patrons of vessels must be Filipinos, have legal capacity to contract in accordance with this code, and prove the skill, capacity, and qualifications necessary to command and direct the vessel, as established by marine or navigation laws, ordinances, or regulations, and must not be disqualified according to the same for the discharge of the duties of the position. If the owner of the vessel desires to be the captain thereof, without having the legal qualifications therefore, he shall limit himself to the financial administration of the vessel, and shall intrust the navigation to a person possessing the qualifications required by said ordinances and regulations.

2. OVERLOADING

Duty to exercise due diligence likewise includes the duty to take passengers or cargoes that are within the carrying capacity of the vessel.

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3. PROPER STORAGE

The vessel itself may be suitable for the cargo but this is not enough because the cargo must also be properly stored. ALPHA PHI BETA

4. OBLIGATION OF CAPTAIN AND CREW

Failure on the part of the carrier to provide competent captain and crew should be distinguished from the negligence of the captain and the crew. Under the Limited Liability Rule, the liability of the shipowner may be limited to the value of the vessel. On the other hand, if the negligence of the captain or crew can be traced to the fact that they are really incompetent, the Limited Liability Rule cannot be invoked because the shipowner may be deemed negligent.

5. RULE ON DEVIATION AND TRANSSHIPMENT

Art. 359, Code of Commerce. If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this cause, he shall be liable for all the losses which the goods he transports may suffer from any other cause, beside paying the sum which may have been stipulated for such case.

When on account of said cause of force majeure, the carrier had to take another route which produced an increase in transportation charges, he shall be reimbursed for such increase upon formal proof thereof.

Improper deviation may be a valid ground to deny a marine insurance claim under the Insurance Code.

Transshipment – the act of taking cargo out of one ship and loading it in another; or the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached; or the transfer for further transportation from one ship or conveyance to another. ALPHA PHI BETA

The fact of transshipment is not dependent upon the ownership of the transporting ships or conveyances or in the change of carriers, but rather on the fact of actual physical transfer of cargo from one vessel to another.

D. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND

1. VEHICLE’S CONDITION

Common carriers that offer transportation by land are required to make sure that the vehicles that they are using are in good order or condition.

Thus, the carrier will not be excused from liability on the ground that the tire blowout was due to fortuitous event when it was shown that the passengers were injured because the floor of the bus gave way.

Explosion of tires are not considered fortuitous event.

It is a long-standing rule

that a carrier cannot escape liability by claiming that the accident that resulted

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because of a defective brake or tire is due to a fortuitous event.

even if it can be established, for instance, that the tire that was subject of a blowout is brand new. The duty to exercise extraordinary diligence requires the carrier to purchase and use vehicle parts that are not defective.

This is true,

2. TRAFFIC RULES

The carrier fails to exercise extraordinary diligence if it will not comply with basic traffic rules. For the presumption of negligence under Article 1756 to

operate, all that is required is proof of death or injury to a passenger. For the

to operate, there must be proof of violation of

presumption under Article 2185 traffic rules. ALPHA PHI BETA

1

Proof of violation of traffic rules confirms that the carrier failed to exercise extraordinary diligence.

The basic traffic rules that must be complied with include those provided under

Other traffic rules

are embodied in the ordinances issued by the local government units and the

Metro manila Development Authority.

not comply with the rules on overtaking on a curve under Sec. 41 of the Code, when there was improper parking under Sec. 54, when the carrier is overloaded in violation of Sec. 32 (a), or when there was overtaking in a junction without

extreme caution.

the Land Transportation and Traffic Code, RA No. 4136.

These rules are violated if the carrier did

3. OBLIGATION TO INSPECT

There is no unbending duty to inspect each and every package or baggage that is being brought inside the bus or jeepney. The carrier is duty bound to conduct such inspection depending on the circumstances.

E. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR

“Airworthiness” – means that an aircraft, its engines, propellers, and other components and accessories, are of proper design and construction, and are safe for air navigation purposes, such design and construction being consistent with accepted engineering practice and in accordance with aerodynamic laws and aircraft science. (RA 779) ALPHA PHI BETA

Proof of airworthiness is not by itself sufficient to prove exercise of extraordinary

For instance, extraordinary diligence likewise requires the carrier to

diligence.

provide competent and well-trained crew.

With respect to goods, the failure of the carriers to exercise due diligence in a number of cases consists in their failure to take care of the baggage of the carrier’s passengers. In the cases where the carriers are made liable, the baggage of their passengers are either damaged or transported to another place, or are delayed or are lost altogether.

1 Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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BILL OF LADING & OTHER FORMALITIES

A. DEFINITION OF BILL OF LADING

A bill of lading is a written acknowledgement, signed by the master of a vessel or other authorized agent of the carrier, that he has received the described goods from the shipper, to be transported on the expressed terms to the described place of destination, and to be delivered there to the designated consignee or parties.

A bill of lading or a ticket is not necessary for the perfection of a contract of carriage. Thus, the obligation of the carrier to exercise extraordinary diligence in transporting the goods or passengers is present even if no bill of lading or ticket was issued by the carrier. ALPHA PHI BETA

In the absence of any bill of lading, disputes shall be determined on the basis of the provisions of the New Civil Code and suppletorily by the Code of Commerce.

B. CLASSES OF BILL OF LADING

1. Negotiable – one in which it is stated that the goods referred to therein will be delivered to the bearer or the order of the person named therein.

2. Non-negotiable – one in which it is stated that the goods referred to therein will be delivered to a specified person.

3. Clean B/L – one which does not indicate any defect in the goods

4. Foul B/L – one which contains a notation thereon indicating that the goods covered by it are in bad condition.

5. On Board Bill – issued when the goods have been actually placed aboard the ship with very reasonable expectation that the shipment is as good as on its way.

6. Received for shipment bill – one in which it is stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped. ALPHA PHI BETA

7. Spent B/L – one which covers goods that already have been delivered by the carrier without a surrender of a signed copy of the bill.

8. Through B/L – one issued by a carrier who is obliged to use the facilities of other carriers as well as his own facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which bill of lading is honored by the second and other interested carriers who do not issue their own bills.

9. Custody B/L – one wherein the goods are already received by the carrier but the vessel indicated therein has not yet arrived at the port.

10. Port B/L – one which is issued by the carrier to whom the goods have been delivered, and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment.

C. NATURE OF BILL OF LADING

It is a long-standing jurisprudential rule that a bill of lading operates as a receipt, as a contract, and is a document of title.

Art. 353. Code of Commerce. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material error in the drafting.

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by the virtue of exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with exception of that provided for in Article 366.

In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading.

Art. 709, Code of Commerce. A bill of lading drawn up in accordance with the provisions of this title shall be proof as between all those interested in the cargo and between the latter and the insurers, proof to the contrary being reserved for the latter.

Sec 3. COGSA (4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs (3) (a), (b), and (c) of this section:

(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall indemnify the carrier against all loss damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage or to any person other than the shipper.

1. As a contract

As a contract, it stipulates the rights and obligations assumed by the parties, it names the parties, which includes the consignee, fixes the route, destination, and freight rates and charges. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy. ALPHA PHI BETA

a. Basic stipulations in a bill of lading

Overland Transportation

 

Art.

350,

Code

of

Commerce.

The

shipper

as

well

as

the

carrier

of

merchandise or goods may mutually demand that a bill of lading be made,

stating:

 

1. The name, surname and residence of the shipper.

 

2. The name, surname and residence of the carrier.

 

3. The name, surname and residence of the person to whom or to whose order the goods are to be sent or whether they are to be delivered to the bearer of said bill.

4. The description of the goods, with a statement of their kind, of their weight,

 

and of the external marks or signs of the packages in which they are contained.

5. The cost of transportation.

 

6. The date on which shipment is made.

 

7. The place of delivery to the carrier.

 

8. The pace and the time at which delivery to the consignee shall be made.

 

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter.

Maritime Commerce

Art. 706, Code of Commerce. The captain of the vessel and the shipper shall have the obligation of drawing up the bill of lading in which shall be stated:

1. The name, registry, and tonnage of the vessel.

2. The name of the captain and his domicile.

3. The port of loading and that of unloading.

4. The name of the shipper.

5. The name of the consignee, if the bill of lading is issued in the name of a specified person.

6. The quantity, quality, number of packages and marks of the merchandise.

7. The freightage and the primage stipulated.

The bill of lading may be issued to bearer, to order, or in the name of a specified person, and must be signed within 24 hours after the cargo has been received on

board, the shipper being entitled to demand the unloading at the expense of the captain should the latter not sign it, and, in every case, the losses and damages suffered thereby.

Read substantially: Arts. 707-718, Code of Commerce

b. Prohibited stipulations

ALPHA PHI BETA

Art. 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.

2. As a document of title

Negotiation of the document has the effect of manual delivery so as to constitute the transferee the owner of the goods. Under the Civil Code, the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him. Negotiation of the instrument results in the same transfer of ownership because transfer of the document likewise transfers control over the goods

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Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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Art. 1508, New Civil Code. A negotiable document of title may be negotiated by delivery:

(1) Where by the terms of the document the carrier, warehouseman or other bailee issuing the same undertakes to deliver the goods to the bearer; or (2) Where by the terms of the document the carrier, warehouseman or other bailee issuing the same undertakes to deliver the goods to the order of a specified person, and such person or a subsequent endorsee of the document has indorsed it in blank or to the bearer. Where by the terms of a negotiable document of title the goods are deliverable to bearer or where a negotiable document of title has been indorsed in blank or to bearer, any holder may indorse the same to himself or to any specified person, and in such case the document shall thereafter be negotiated only by the endorsement of such endorsee.

Art. 1509. A negotiable document of title may be negotiated by the endorsement of the person to whose order the goods are by the terms of the document deliverable. Such endorsement may be in blank, to bearer or to a specified person. If indorsed to a specified person, it may be again negotiated by the endorsement of such person in blank, to bearer or to another specified person. Subsequent negotiations may be made in like manner.

Art. 1510. If a document of title which contains an undertaking by a carrier, warehouseman or other bailee to deliver the goods to bearer, to a specified person or order of a specified person or which contains words of like import, has placed upon it the words "not negotiable," "non-negotiable" or the like, such document may nevertheless be negotiated by the holder and is a negotiable document of title within the meaning of this Title. But nothing in this Title contained shall be construed as limiting or defining the effect upon the obligations of the carrier, warehouseman, or other bailee issuing a document of title or placing thereon the words "not negotiable," "non-negotiable," or the like.

Art. 1513. A person to whom a negotiable document of title has been duly negotiated acquires thereby:

(1) Such title to the goods as the person negotiating the document to him had or had ability to convey to a purchaser in good faith for value and also such title to the goods as the person to whose order the goods were to be delivered by the terms of the document had or had ability to convey to a purchaser in good faith for value; and (2) The direct obligation of the bailee issuing the document to hold possession of the goods for him according to the terms of the document as fully as if such bailee had contracted directly with him.

Art. 1515. Where a negotiable document of title is transferred for value by delivery, and the endorsement of the transferor is essential for negotiation, the transferee acquires a right against the transferor to compel him to endorse the document unless a contrary intention appears. The negotiation shall take effect as of the time when the endorsement is actually made.

3. As a receipt

The issuance of a bill of lading carries the presumption that the goods were delivered to the carrier issuing the bill, for immediate shipment. A bill of lading is a prima facie evidence of the receipt of the goods by the carrier. In the absence

ALPHAALPHAALPHAALPHA PHIPHIPHIPHI BETABETABETABETA FRATERNITYFRATERNITYFRATERNITYFRATERNITY –––– SANSANSANSAN BEDABEDABEDABEDA LAWLAWLAWLAW SCHOOLSCHOOLSCHOOLSCHOOL

Contributed by: Ivin Ronald D.M. Alzona [2007]

REV based on Atty. Villanueva-Castro’s Course Outline

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of convincing testimony establishing mistake, recitals in the bill of lading showing that the carrier received the goods for shipment on a specified date control.

An airway bill estops the carrier from denying receipt of the goods of the quantity and quality described in the bill. However, as between the shipper and the carrier, when no goods have been delivered for shipment no recitals in the bill can estop the carrier from showing the true facts. Between the consignor of goods and receiving carrier, recitals in a bill of lading as to the goods shipped raise only the rebuttable presumption that such goods were delivered for shipment. As between the consignor and a receiving carrier, the fact must outweigh the recital. ALPHA PHI BETA

D. RELEVANT PROVISIONS OF THE WARSAW CONVENTION

Airway bill – a document which the consignor is obliged to make out and hand over to the carrier.

Functions: An Airway Bill is prima facie evidence of:

1. The conclusion of the contract

2. The receipt of the goods

3. The conditions of the transportation

4. The weight, dimensions and packaging of the goods

5. The number of packages

The carrier has the right to require the consignor to make out separate airway bills when there is more than one package.

There is nothing in the Convention which prohibits the carrier from making out the airway bill itself.

A printed stipulation in the airway bill or airline ticket limiting the liability of the air carrier to a specified amount is valid, but any ambiguity is strictly construed against the carrier. (Ong Yiu vs. CA)

Liability of Carrier for Damages

1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations of embarking or disembarking. (Art. 17,

WC)

2. Destruction, loss or damage to any baggage or goods, if it took place during the “transportation by air” (Art. 18, WC)

Transportation by air – the period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or, in case of a landing outside an airport, in any place whatsoever. It includes any transportation by land or water outside an airport if such takes place in the performance of the contract of transportation by air, for the purpose of loading, delivery, or transshipment.

3. Delay in the transportation of passengers, baggage or goods (Art. 19, WC)

The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all the necessary steps to avoid the damage, it could exculpate itself completely. (Alitalia vs. IAC, 192 SCRA 9)

Effect of absence, irregularity or loss of passenger ticket/ baggage check/ airway bill:

1. Does not affect the existence and validity of the contract of transportation which shall nevertheless be subject to the rules of the Convention.

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REV based on Atty. Villanueva-Castro’s Course Outline

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2. If the carrier accepts the passenger without a passenger ticket, or a baggage without a baggage check, or goods without an airway bill, the carrier shall not be entitled to avail of the provisions of the Convention which exclude or limit its liability. ALPHA PHI BETA

ACTION FOR DAMAGES

1. Notice of claim

A written complaint must be made within 3 days from receipt of baggage, 7 days from receipt of goods; in case of delay, 14 days from receipt of baggage or goods. The complaint is a condition precedent. Without the complaint, the action is barred except in case of fraud on the part of the carrier. (Art. 26, WC)

2. Prescriptive period

Action must be filed within 2 years from:

a. date of arrival at the destination – an intermediate place where carriage may

be broken (i.e. stopping place) is not a place of destination

b. date of expected arrival

c. date on which the transportation stopped (Art. 29, WC)

In United Airlines vs. UY, the two-year prescriptive period was not applied where the airline employed delaying tactics.

Rule in case of Various Successive Carriers

1. Carriage of passengers Gen. Rule: Action is filed only against the carrier in which the accident or delay

occurred.

Exception: Agreement or contract whereby the first carrier assumed liability for

the whole journey.

2. Carriage of baggage or goods

a. Passenger or consignor can file an action against the first carrier and the carrier in which the damage occurred.

b. Passenger or consignee can file an action against the last carrier and the carrier in which the damage occurred

Note: These carriers are jointly and severally liable. (Art. 30, WC)

A contract of international carriage by air, although performed by different carriers under a series of airline tickets constitutes a single operation. Members of the International Air Transportation Association (IATA) are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide passengers access to airlines which are otherwise inaccessible in some parts of the world. (American Airlines vs. CA, 197 SCRA 645) ALPHA PHI BETA

Under a general pool partnership agreement, the ticket-issuing airline is the principal in a contract of carriage while the endorsee-airline is the agent. The obligation of the former remained and did not cease even when the breach occurred not on its own flight but on that of another airline which had undertaken to carry the passengers to one of their destinations. (China Airlines vs. Chiok)

At the option of the plaintiff, the action for damages may be filed in the:

1. Court of domicile of the carrier;

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REV based on Atty. Villanueva-Castro’s Course Outline

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2. Court of its principal place of business;

3. Court where it has a place of business through which the contract has been made; or

4. Court of the place of destination. (Art. 28 [1])

NOTE: It is the passenger’s ultimate destination” not “an agreed stopping place” that determines the country where suit is to be filed. The place of destination is determined by the terms of the contract of carriage. ALPHA PHI BETA

The forum of action provided in Art. 28(1) is a matter of jurisdiction rather than of venue. (Santos III vs. Northwest Airlines)

Article 17, Warsaw Convention. The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.

Article 18. 1. The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.

2. The carriage by air within the meaning of the preceding paragraph comprises the period during which the

luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of

a landing outside an aerodrome, in any place whatsoever.