Elva T.

Depano JD301
Transportation Reviewer

What is a contract of transportation? Tests whether carrier is common or private:

A contract whereby a person, natural or juridical, The SC in First Philippine Industrial Corporation
obligates to transport persons, goods, or both, vs. CA (1995) reiterated the following tests:
from one place to another, by land, air or water,
1. It must be engaged in the business of
for a price or compensation
carrying goods for others as a public
Classifications: employment and must hold itself out as ready to
engage in the transportation of goods generally
1. Common or Private
as a business and not as a casual occupation;
2. Goods or Passengers
2. It must undertake to carry goods of the
3. For a fee (for hire) or Gratuitous kind to which its business in confined;

4. Land, Water/maritime, or Air 3. It must undertake to carry by the

method by which his business is conducted and
5. Domestic/inter-island/coastwise or over its established roads; and
International/foreig
4. The transportation must be for hire.
Characteristics:

1. Undertakes to carry for all people indifferently

and thus is liable for refusal without sufficient Governing Laws
reason (Lastimoso vs. Doliente, October 20,
A. Domestic/inter-island/coastwise
1961);
> Applicable to Land, Water, and Air
2. Cannot lawfully decline to accept a particular
transportation
class of goods for carriage to the prejudice of the
traffic in these goods; 1. Civil Code - primary

3. No monopoly is favored (Batangas Trans. 2. Code of Commerce (Arts. 349, 379, 573-734,
vs. Orlanes, 52 PHIL 455); 580, 806-845) - suppletory

4. Provides public convenience. B. International/foreign/overseas (Foreign

country to Philippines)

> Applicable to Water/maritime and Air

What is a common carrier?
transportation
Common carriers are persons, corporations,
>The law of the country of destination generally
firms or associations engaged in the business of
applies.
carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, 1. Civil Code - primary
offering their services to the public.
2. Code of Commerce - suppletory
Private Carrier One which, without being
3. Others - suppletory
engaged in the business of carrying as a public
employment, undertakes to deliver goods or a. Water/maritime: Carriage of Goods by Sea Act
passengers for compensation. (Home Insurance (COGSA)
Co. vs. American Steamship Agency, 23 SCRA 24)
b. Air: Warsaw Convention
Elva T. Depano JD301
Transportation Reviewer
What is the degree of diligence required from a
common carrier?
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.
VIGILANCE OVER GOODS
General Rule: Common carriers are responsible
for the loss, destruction, or deterioration of the
goods
Exception: unless the same is due to any of the
following causes only: (F.A.A.C.O.)
(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.
Presumption: if the goods are lost, destroyed or
deteriorated, common carriers are presumed to
have been at fault or to have acted negligently
(except those mentioned in 1734)
Unless: they prove that they observed
extraordinary diligence as required in Article
1733.
Commencement and End of Responsibility of
Common Carrier: The extraordinary
responsibility of the common carrier lasts from
the time the goods are unconditionally placed in
the possession of, and received by the carrier for
transportation until the same are delivered,
actually or constructively, by the carrier to the
consignee, or to the person who has a right to
receive them, without prejudice to the
provisions of Article 1738.
>The 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.
Extraordinary liability when goods are stored in
warehouse:
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.
Common carrier may be exempted from
responsibility when:
>natural disaster has been the proximate and
only cause of the loss
>common carrier exercised due diligence to
prevent or minimize loss before, during and after
the occurrence of flood, storm or other natural
disaster
Elva T. Depano JD301
Transportation Reviewer

>The same duty is incumbent upon the common (2) Supported by a valuable consideration other
carrier in case of an act of the public enemy than the service rendered by the common
referred to in Article 1734, No. 2. carrier; and

(3) Reasonable, just and not contrary to public

policy.
>If the common carrier negligently incurs in
delay in transporting the goods, a natural
disaster shall not free such carrier from
The following or similar stipulations shall be
responsibility.
considered unreasonable, unjust and contrary to
public policy:

Contribution of shipper or owner to the loss: 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.
(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

Diligence as to character of the goods or faulty
degree of diligence less than that of a good
nature of packaging: Even if the loss, destruction,
father of a family, or of a man of ordinary
or deterioration of the goods should be caused
prudence in the vigilance over the movables
by the character of the goods, or the faulty
transported;
nature of the packing or of the containers, the
common carrier must exercise due diligence to (5) That the common carrier shall not be
forestall or lessen the loss. responsible for the acts or omission of his or its
employees;

(6) That the common carrier's liability for acts

Order of Public Authority: If through the order of
committed by thieves, or of robbers who do not
public authority, the goods are seized or
act with grave or irresistible threat, violence or
destroyed, the common carrier is not
force, is dispensed with or diminished;
responsible, provided said public authority had
power to issue the order.

Stipulation limiting the liability is valid provided: (7) That the common carrier is not responsible
for the loss, destruction, or deterioration of
A stipulation between the common carrier and
goods on account of the defective condition of
the shipper or owner limiting the liability of the
the car, vehicle, ship, airplane or other
former for the loss, destruction, or deterioration
equipment used in the contract of carriage.
of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:

(WSVR) ANNULMENT OF AGREEMENT LIMITING

LIABILITY:
(1) In writing, signed by the shipper or owner;
Elva T. Depano JD301
Transportation Reviewer
An agreement limiting the common carrier's
liability may be annulled by the shipper or owner
if the common carrier refused to carry the goods
unless the former agreed to such stipulation.
CONTRACT LIMITING THE LIABILITY CANNIT BE
AVAILED OF WHEN:
>The common carrier, without just cause, delays
the transportation of the goods
>changes the stipulated or usual route
>in case of the loss, destruction, or deterioration
of the goods.
>An agreement limiting the common carrier's
liability for delay on account of strikes or riots is
valid.
>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.
CONTRACT FIXING THE SUM TO BE RECOVERED:
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.
WHEN COMMON CARRIER HAS NO
COMPETITOR:
The fact that the common carrier has no
competitor along the line or route, or a part
thereof, to which the contract refers shall be
taken into consideration on the question of
whether or not a stipulation limiting the
common carrier's liability is reasonable, just and
in consonance with public policy.
Even when there is an agreement limiting the
liability of the common carrier in the vigilance
over the goods, the common carrier is disputably
presumed to have been negligent in case of their
loss, destruction or deterioration.
LAW OF THE COUNTRY
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.
SAFETY OF PASSENGERS
COMMON CARRIER’S LIABILITY AS TO
PASSENGERS:
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.
PRESEUMPTION: 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.
>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.
WHEN PASSENGER CARRIED GRATUITOUSLY:
When a passenger is carried gratuitously, a
stipulation limiting the common carrier's liability
Elva T. Depano JD301
Transportation Reviewer
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.
LIABILITY OF COMMON CARRIER THROUGH ACTS
OF ITS EMPLOYEES: 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.
>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.
PASSENGER’S DUTY: The passenger must
observe the diligence of a good father of a family
to avoid injury to himself.
CONTRIBUTORY NEGLIGENCE.PROXIMATE
CAUSE. 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.
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.
CODE OF COMMERCE
Important Concepts:
1. Bill of lading
2. Obligations of the carrier
3. Right of abandonment
4. Notice of damage
5. Combined carrier agreement
BILL OF LADING
The written acknowledgment of receipt of
goods and agreement to transport them to a
specific place to a person named or to his order.
It is not indispensable for the creation of a
contract of carriage. (Compania Maritima vs.
Insurance Company of North America, 12 SCRA
213)
2. Ambiguity is construed against the carrier, the
contract being one of adhesion.
3. The consignee, although the instrument is
oftentimes drawn up only by the consignor and
carrier, becomes bound by all the stipulations
contained therein by making a claim for loss on
the basis of said bill of lading. (Sea-Land Services
Inc. vs. IAC)
4. The right of a party to recover for loss of
shipment consigned to him under a bill of lading
drawn up only by and between the shipper and
the carrier, springs from either a relation of
agency between him and the shipper, or his
status as stranger in whose favor some
stipulation is made in said contract, and who
becomes a party thereto when he demands
Elva T. Depano JD301
Transportation Reviewer
fulfillment of that stipulation. (Art. 1311 (2),
(Mendoza vs. PAL Inc.)
5. Acceptance of the bill of lading without
dissent raises the presumption that all the terms
therein where brought to the knowledge of the
shipper and agreed to by him and, in the absence
of fraud or mistake; he is estopped from
thereafter denying that he assented to such
terms. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
Hernando, R.P. 2004 ed. p.261)
Kinds:
1. On board - 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.
2. Received - one in which it is stated that
the goods have been received for shipment with
or without specifying the vessel by which the
goods are to be shipped.
3. Negotiable - one in which it is stated that
the goods referred to therein will be delivered to
the bearer or to the order of any person named
therein.
4. Non-negotiable - One in which it is
stated that the goods referred to therein will be
delivered to a specified person.
5. Clean – One which does not indicate any
defect in the goods.
6. Foul – One which contains a notation
thereon indicating that the goods covered by it
are in bad condition.
7. Spent ¬– One which covers goods that
already have been delivered by the carrier
without a surrender of a signed copy of the bill.
8. Through – One issued by the carrier who
is obliged to use the facilities of other carriers as
well as his own facilities for the purpose of
transporting the goods from the city of the seller
to the city of the buyer, which bill of lading is
honored by the second and other interested
carriers who do not issue their own bills.
9. Custody – One wherein the goods are
already received by the carrier but the vessel
indicated therein has not yet arrived in the port.
10. Port – 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.
Functions:
1. Best evidence of the existence of the
contract of carriage of cargo (Art. 353)
2. Document of title
3. Receipt of cargo
4. Contract to transport and deliver goods
as stipulated
5. Symbol of the goods
OBLIGATIONS OF THE CARRIER
A. Duty to accept the goods
GENERAL RULE: A common carrier cannot
ordinarily refuse to carry a particular class of
goods.
EXCEPTION: For some sufficient reason the
discrimination against the traffic in such goods is
reasonable and necessary. (Fisher vs. Yangco
Steamship Co. 31 Phil 1).
Instances when the carrier may validly refuse to
accept the goods include the ff:
1.) Goods sought to be transported are
dangerous objects, or substances including
dynamite and other explosives
Elva T. Depano JD301
Transportation Reviewer
2.) Goods are unfit for transportation
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
7.) Goods like livestock will be exposed to
disease
8.) Strike
9.) Failure to tender goods on time. (Notes and
Cases on the Law on Transportation and Public
Utilities, Aquino, T. & Hernando, R.P. 2004 ed.
p.68)
> In case of carriage by railway, the carrier is
exempted from liability if carriage is insisted
upon by the shipper, provided its objections are
stated in the bill of lading.
> However, when a common carrier accepts
cargo for shipment for valuable consideration, it
takes the risk of delivering it in good condition as
when it was loaded. (PAL vs. CA)
B. Duty to deliver the goods
Not only to transport the goods safely but to the
person indicated in the bill of lading. The goods
should be delivered to the consignee or any
other person to whom the bill of lading was
validly transferred or negotiated.
Effects of delay
a. Merely suspends and generally does not
terminate the contract of carriage
b. Carrier remains duty bound to exercise
extraordinary diligence
c. Natural disaster shall not free the carrier
from responsibility (Art.1740)
d. If delay is without just cause, the
contract limiting the common carrier’s liability
cannot be availed of in case of loss or
deterioration of the goods (Art.1747)
RIGHT OF CONSIGNEE TO ABANDON GOODS
Instances:
1. Partial non-delivery, where the goods
are useless without the others (Art. 363);
2. Goods are rendered useless for sale or
consumption for the purposes for which they are
properly destined (Art. 365); and
3. In case of delay through the fault of the
carrier (Art. 371).
NOTICE OF DAMAGE (ART. 366)
Requisites for applicability:
1. Domestic/inter-island/coastwise
transportation
2. Land/water/air transportation
3. Carriage of goods
4. Goods shipped are damaged
Rules:
a. Patent damage: shipper must file a claim
against the carrier immediately upon delivery (it
may be oral or written)
b. Latent damage: shipper should file a claim
against the carrier within 24 hours from delivery.
Note: These rules does not apply to misdelivery
of goods. (Roldan vs. Lim Ponzo)
>Purpose of notice: To inform the carrier that the
shipment has been damaged, and it is charged
with liability therefore, and to give it an
Elva T. Depano JD301
Transportation Reviewer
opportunity to make an investigation and fix
responsibility while the matter is fresh.
>The filing of notice of claim is a condition
precedent for recovery.
> Shorter period may be stipulated by the parties
because it merely affects the shipper’s remedy
and does not affect the liability of the carrier.
(PHILAMGEN vs. Sweetlines, Inc.)
Prescriptive Period
>Not provided by Article 366. Thus, in such
absence, Civil Code rules on prescription apply.
>If despite the notice of claim, the carrier refuses
to pay, action must be filed in court.
1. No bill of lading was issued: within 6
years
2. Bill of lading was issued: within 10 years.
COMBINED CARRIER AGREEMENT (ART. 373)
GENERAL RULE: In case of a contract of
transportation of several legs, each carrier is
responsible for its particular leg in the contract.
EXCEPTION: A combined carrier agreement
where a carrier makes itself liable assuming the
obligations and acquiring as well the rights and
causes of action of those which preceded it.
MARITIME COMMERCE
(Arts. 573-869)
IMPORTANT CONCEPTS:
1. Merchant vessel
2. Maritime lien and Preference of Credit
3. Doctrine of limited liability
4. Causes of revocation of voyage
5. Participants in maritime commerce
6. Charter party
7. Loans on bottomry and respondentia
8. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
It is the system of laws which particularly relates
to the affairs and business of the sea, to ships,
their crews and navigation, and to maritime
conveyance of persons and property. (Notes and
Cases on the Law on Transportation and Public
Utilities, Aquino & Hernando, citing Francisco,
p.254)
>Maritime laws apply only to maritime trade and
sea voyages.
>Arrastre service is not maritime in character. It
refers to a contract for the unloading of goods
from a vessel. (ICTSI vs. Prudential Guarantee,
320 SCRA 244)
CHARACTERISTICS OF MARITIME TRANSACTION
1. Real - similar to transactions over real
property with respect to effectivity against third
persons which is done through registration.
(Rubiso vs. Rivera, 37 Phil. 72). The evidence of
real nature is shown by: 1) the limitation of the
liability of the agents to the actual value of the
vessel and the freight money; and 2) the right to
retain the cargo and embargo and detention of
the vessel (Luzon Stevedoring Corp v. CA, 156
SCRA 169);
2. Hypothecary - the liability of the owner of the
value of the vessel is limited to the vessel itself
(Doctrine of Limited Liability).
Elva T. Depano JD301
Transportation Reviewer
>The real and hypothecary nature of maritime
law simply means that the liability of the carrier
in connection with losses related to maritime
contracts is confined to the vessel, which stands
as the guaranty for their settlement. (Aboitiz
Shipping Corp. vs. General Accident Fire and Life
Assurance Corp. 217 SCRA 359).
MERCHANT VESSEL
>Vessel engaged in maritime commerce,
whether foreign or otherwise. (Bar Review
Materials in Commercial Law, Jorge Miravite,
2002 ed.)
>Constitutes property which may be acquired
and transferred by any of the means recognized
by law. They shall continue to be considered as
personal property. (Arts. 573, 585)
> They are susceptible to maritime liens such as
for the repair, equipping and provisioning of the
vessel in the preparation of a voyage, as well as
mortgage liabilities, in satisfaction of which a
vessel may be validly arrested and sold. (Ship
Mortgage Decree of 1978)
MARITIME LIEN
> It constitutes a present right of property in the
ship, a jus in re, to be afterward enforced in
admiralty by process in rem. (PNB vs. CA, 337
SCRA 381)
> If the maritime lien arose prior to the recording
of a preferred mortgage, it shall have priority
over the said mortgage lien. (PNB vs. CA, 337
SCRA 381)
7. Preferred mortgage registered prior in time.
DOCTRINE OF LIMITED LIABILITY
(HYPOTHECARY RULE)
Cases where applicable:
1. Art. 587 – civil liability for indemnities to
third persons
2. Art. 590 – indemnities from negligent
acts of the captain (not the shipowner or ship
agent)
3. Art. 837 – collision
4. Art. 643 – liability for wages of the
captain and the crew and for advances made by
the ship agent if the vessel is lost by shipwreck or
capture
GENERAL RULE: The liability of shipowner and
ship agent is limited to the amount of interest in
said vessel such that where vessel is entirely lost,
the obligation is extinguished. (Luzon
Stevedoring v. Escano, 156 SCRA 169) The
interest extends to: 1) the vessel itself; 2)
equipments; 3) freightage; and 4) insurance
proceeds. (Chua v. IAC, 166 SCRA 183)
EXCEPTIONS:
1. Claims under Workmen’s Compensation
(Abueg vs. San Diego 77 Phil 730);
2. Injury or damage due to shipowner or to
the concurring negligence of the shipowner and
the captain;
3. The vessel is insured (Vasquez vs. CA 138
SCRA 553).
4. Expenses for repair on vessel completed
before loss;
5. In case there is no total loss and the
vessel is not abandoned;
6. Collision between two negligent vessels;
Elva T. Depano JD301
Transportation Reviewer

>Abandonment of the vessel is necessary to limit
the liability of the shipowner. The only instance
were abandonment is dispensed with is when
the vessel is entirely lost (Luzon Stevedoring vs.
CA 156 SCRA 169).
RIGHT OF SHIPOWNER OR SHIP AGENT TO
ABANDON VESSEL
2. In case of (2), the insurer must pay the
insured as if there was actual total loss of the
vessel. 1. Transfer of ownership on the
goods from the shipper to the carrier.
2. Carrier should pay the shipper the
market value of the goods at the point of
destination.

Instances: CAUSES OF REVOCATION OF VOYAGE

1. In case of civil liability from indemnities 1. War or interdiction of commerce;

to third persons (Art. 587);
2. Blockade;
2. In case of leakage of at least ¾ of the
3. Prohibition to receive cargo at
contents of a cargo containing liquids (Art. 687);
destination;
and
4. Embargo;
3. In case of constructive loss of the vessel
(Sec. 138, Insurance Code). 5. Inability of the vessel to navigate. (Art.
640)

RIGHT OF ABANDONMENT
Instances
1. In case of civil liability from indemnities to
third persons (Art. 587);
2. Sec. 138, Insurance Code;
3. In case of leakage of at least ¾ of the contents
of a cargo containing liquids (Art. 687)
1. Partial non-delivery, where the goods
are useless without the others (Art. 363);
2. Goods are rendered useless for sale or
consumption for the purposes for which they are
properly destined (Art. 365); and
3. In case of delay through the fault of the carrier
(Art. 371).
Terms:
1. Interdiction of commerce – A
governmental prohibition of commercial
intercourse intended to bring about an entire
cessation for the time being of all trade
whatever.
2. Blockade – A sort of circumvallation of a
place by which all foreign connection and
correspondence is, as far as human power can
effect it, to be cut off.
3. Embargo – A proclamation or order of a
state, usually issued in time of war or threatened
hostilities, prohibiting the departure of ships or
goods from some or all the ports of such state
until further order.

Effects PARTICIPANTS IN MARITIME COMMERCE

1. Transfer of ownership of the vessel from A. Shipowners and ship agents

the shipowner to the shippers or insurer.
B. Captains and masters of the vessel
Elva T. Depano JD301
Transportation Reviewer

C. Officers and crew of the vessel themselves from liability by abandoning the
vessel to the creditors. (Art. 587)
D. Supercargoes

E. Pilot
SHIPOWNERS AND SHIP AGENTS
Shipowner (proprietario)
> Person who has possession, control and
management of the vessel and the consequent
right to direct her navigation and receive freight
earned and paid, while his possession continues.
Duty of Ship Agent to Discharge the Captain and
Members of the Crew
> If the seamen contract is not for a definite
period or voyage, he may discharge them at his
discretion. (Art. 603)
> If for a definite period, he may not discharge
them until after the fulfillment of their contracts,
except on the following grounds:

Ship agent (naviero) a. Insubordination in serious matters;

> Person entrusted with provisioning and b. Robbery;

representing the vessel in the port in which it
c. Theft;
may be found; also includes the shipowner.
d. Habitual drunkenness;
> Not a mere agent under civil law; he is solidarily
liable with the ship owner. e. Damage caused to the vessel or to its
cargo through malice or manifest or proven
>Powers and functions:
negligence. (Art. 605)
1. Capacity to trade;

2. Discharge duties of the captain, subject

to Art.609;
3. Contract in the name of the owners with
respect to repairs, details of equipment,
armament, provisions of food and fuel, and
freight of the vessel, and all that relate to the
requirements of navigation;
4. Order a new voyage, make a new charter
or insure the vessel after obtaining authorization
from the shipowner or if granted in certificate of
appointment.
Civil Liabilities of the Shipowner And Ship Agent
1. All contracts of the captain, whether
authorized or not, to repair, equip and provision
the vessel; (Art. 586)
2. Loss and damage to the goods loaded on
the vessel without prejudice to their right to free
B. CAPTAINS AND MASTERS
> They are the chiefs or commanders of ships.
> The terms have the same meaning, but are
particularly used in accordance with the size of
the vessel governed and the scope of
transportation, i.e., large and overseas, and
small and coastwise, respectively.
> Nature of position (3-fold character):
1. General agent of the shipowner;
2. Technical director of the vessel;
3. Representative of the government of the
country under whose flag he navigates.
>Qualifications:
1. Filipino citizen;
Elva T. Depano JD301
Transportation Reviewer

2. Legal capacity to contract; 5. Be on deck while leaving or entering the

port;
3. Must have passed the required physical
and mental examinations required for licensing 6. Protest arrivals under stress and in case
him as such. (Art. 609) of shipwreck;

> Inherent powers: 7. Follow instructions of and render an

accounting to the ship agent;
1. Appoint crew in the absence of ship
agent; 8. Leave the vessel last in case of wreck;

2. Command the crew and direct the vessel 9. Hold in custody properties left by
to its port of destination; deceased passengers and crew members;

3. Impose correctional punishment on 10. Comply with the requirements of

those who, while on board vessel, fail to comply customs, health, etc. at the port of arrival;
with his orders or are wanting in discipline;
11. Observe rules to avoid collision;
4. Make contracts for the charter of vessel
12. Demand a pilot while entering or leaving
in the absence of ship agent.
a port. (Art. 612)
5. Supply, equip, and provision the vessel;
and
> A ship’s captain must be accorded a reasonable
6. Order repair of vessel to enable it to
measure of discretionary authority to decide
continue its voyage. (Art. 610)
what the safety of the ship and of its crew and
>Sources of funds to comply with the inherent cargo specifically requires on a stipulated ocean
powers of the captain (in successive order): voyage (Inter-Orient Maritime Enterprises Inc.
vs. CA).
1. From the consignee of the vessel;

2. From the consignee of the cargo;

No liability for the following:
3. By drawing on the ship agent;
1. Damages caused to the vessel or to the
4. By a loan on bottomry;
cargo by force majeure;
5. By sale of part of the cargo. (Art. 611)
2. Obligations contracted for the repair,
Duties: equipment, and provisioning of the vessel unless
he has expressly bound himself personally or has
1. Bring on board the proper certificate and signed a bill of exchange or promissory note in
documents and a copy of the Code of Commerce; his name. (Art. 620)
2. Keep a Log Book, Accounting Book and Solidary Liabilities of the Ship Agent/Shipowner
Freight Book; for Acts Done by the Captain towards Passengers
3. Examine the ship before the voyage; and Cargoes

4. Stay on board during the loading and 1. Damages to vessel and to cargo due to
unloading of the cargo; lack of skill and negligence;
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Transportation Reviewer

2. Thefts and robberies of the crew; 2. Keep the Binnacle Book;

3. Losses and fines for violation of laws; 3. Change the course of the voyage on
consultation with the captain and the officers of
4. Damages due to mutinies;
the boat, following the decision of the captain in
5. Damages due to misuse of power; case of disagreement;

6. For deviations; 4. Responsible for all the damages caused

7. For arrivals under stress;
8. Damages due to non-observance of
marine regulations. (Art. 618)
to the vessel and the cargo by reason of his
negligence. (Arts. 628 - 631)
Second Mate

> Takes command of the vessel in case of the

OFFICERS AND CREW inability or disqualification of the captain and the
1. Sailing Mate/First Mate sailing mate, assuming in such case their powers
and responsibilities.
2. Second Mate
> Third in command
3. Engineers
Duties:
4. Crew
1. Preserve the hull and rigging of the
No liability under the following circumstances: vessel;
1. If, before beginning voyage, captain 2. Arrange well the cargo;
attempts to change it, or a naval war with the
power to which the vessel was destined occurs; 3. Discipline the crew;

2. If a disease breaks out and be officially 4. Assign work to crew members;

declared an epidemic in the port of destination; 5. Inventory the rigging and equipment of
3. If the vessel should change owner or the vessel, if laid up. (Art. 632)
captain. (Art. 647)

Sailing Mate/First Mate
> Second chief of the vessel who takes the place
of the captain in case of absence, sickness, or
death and shall assume all of his duties, powers
and responsibilities. (Art. 627)
> Duties:
1. Provide himself with maps and charts
with astronomical tables necessary for the
discharge of his duties;
Engineers
Officers of the vessel but have no authority
except in matters referring to the motor
apparatus. When two or more are hired, one of
them shall be the chief engineer.
Duties:
1. In charge of the motor apparatus, spare
parts, and other instruments pertaining to the
engines;
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Transportation Reviewer

2. Keep the engines and boilers in good Rules in case of Death of a Seaman
condition;
The seaman’s heirs are entitled to payment as
3. Not to change or repair the engine follows:
without authority of the captain;
1. If death is natural:
4. Inform the captain of any damage to the
a. compensation up to time of death if
motor apparatus;
engaged on wage
5. Keep an Engine Book;
b. if by voyage - half of amount if death
6. Supervise all personnel maintaining the occurs on voyage out; and full, if on voyage in
engine. (Art. 632)
c. if by shares - none, if before departure;
full, if after departure

Crew 2. if death is due to defense of vessel - full

payment;
>The aggregate of seamen who man a ship, or
the ship’s company. 3. if captured in defense of vessel - full
payment;
>Hired by the ship agent, where he is present
and in his absence, the captain hires them, 4. if captured due to carelessness - wages
preferring Filipinos, and in their absence, he may up to the date of the capture. (Art. 645)
take in foreigners, but not exceeding 1/5 of the
crew. (Art. 634)
Complement of the Vessel

All persons on board, from the captain to the

Classes of Seaman’s Contracts
cabin boy, necessary for the management,
1. By the voyage; maneuvers, and service, thus including the crew,
the sailing mates, engineers, stokers and other
2. By the month; and
employees on board not having specific
3. By share of profits or freightage. designations.

Does not include the passengers or the persons

whom the vessel is transporting.
Just Causes for the Discharge of Seaman While
Contract Subsists

1. Perpetration of a crime; D. SUPERCARGOES

2. Repeated insubordination, want of Persons who discharges administrative duties

discipline; assigned to him by ship agent or shippers,
keeping an account and record of transaction as
3. Repeated incapacity and negligence; required in the accounting book of the captain.
4. Habitual drunkenness; (Art. 649)

5. Physical incapacity;

6. Desertion. (Art. 637)

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Transportation Reviewer

E. PILOT 2. Countermand or overrule by the master of the

vessel in which case the registered owner of the
A person duly qualified, and licensed, to conduct
vessel is liable. (Sec.11, Art.III PPA Admin Order
a vessel into or out of ports, or in certain waters.
03-85)
The term generally connotes a person taken on
board at a particular place for the purpose of
conducting a ship through a river, road or SPECIAL CONTRACTS OF MARITIME COMMERCE
channel, or from a port.
1. Charter party
> Master pro hac vice for the time being in the
2. Bill of lading
command and navigation of the ship.
3. Contract of transportation of passengers
>While in exercising his functions a pilot is in sole
on sea voyages
command of the ship and supersedes the master
for the time being in the command and 4. Loan on bottomry
navigation of the ship, the master does not
surrender his vessel to the pilot and the pilot is 5. Loan on respondentia
not the master. There are occasions when the 6. Marine insurance
master may and should interfere and even
displace the pilot, as when the pilot is obviously
incompetent or intoxicated (Far Eastern Shipping CHARTER PARTY
Company vs. CA).
A contract by virtue of which the owner or agent
> Compulsory Pilotage – States possessing binds himself to transport merchandise or
harbors have enacted laws or promulgated rules persons for a fixed price.
requiring vessels approaching their ports to take
on board pilots licensed under the local laws. A contract by which an entire ship, or some
(Notes and Cases on the Law on Transportation principal part thereof is let/leased by the owner
and Public Utilities, Aquino, T. & Hernando, R.P. to another person for a specified time or use.
2004 ed. p. 518) (Planters Products, Inc. vs. CA, 226 SCRA 476)

Parties:

Liablity of Pilot 1. Ship owner or ship agent

GENERAL RULE: On compulsory pilotage 2. Charterer

grounds, the Harbor Pilot is responsible for
damage to a vessel or to life or property due to
his negligence.
EXCEPT:
1. Accident caused by force majeure or natural
calamity provided the pilot exercised prudence
and extra diligence to prevent or minimize
damages.
Classes:
1. Bareboat or demise – The charterer provides
crew, food and fuel. The charterer is liable as if
he were the owner, except when the cause arises
from the unworthiness of the vessel. The
shipowner leases to the charterer the whole
vessel, transferring to the latter the entire
command, possession and consequent control
over the vessel’s navigation, including the
master and the crew, who thereby become the
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Transportation Reviewer
charter’s servants. It transforms a common
carrier into a private carrier.
The charterer becomes the owner of the vessel
pro hac vice, just for that one particular purpose
only. Because the charterer is treated as owner
pro hac vice, the charterer assumes the
customary rights and liabilities of the shipowner
to third persons and is held liable for the expense
of the voyage and the wages of the seamen.
2. Contract of Affreightment – A contract
whereby the owner of the vessel leases part or
all of its space to haul goods for others.
>The shipowner retains the possession,
command and navigation of the ship, the
charterer merely having use of the space in the
vessel in return for his payment of the charter
hired.
Kinds:
a. Time charter – vessel is chartered for a
fixed period of time or duration of voyage.
b. Voyage or trip charter – the vessel is
leased for one or series of voyages usually for
purposes of transporting goods for charterer.
LEASE CHARTER PARTY
If for a definite period, lessee cannot give up the
lease by paying a portion of the amount agreed
upon. Charterer may rescind charter party by
paying half of the freightage agreed upon.
If the leased property is sold to one who knows
of the existence of the lease, the new owner
must respect the lease. The new owner is not
compelled to respect the charter party so long as
he can load the vessel with his own cargo. (Art.
689)
PERSONS WHO MAY MAKE A CHARTER
1. Owner or owners of the vessel, either in
whole or in majority part, who have legal control
and possession of the vessel
2. Charterer may subcharter entire vessel
to 3rd person only if not prohibited in original
charter. (Art.679)
3. Ship agent if authorized by the owner/s
or given such power in the certificate of
appointment. (Art.598)
4. Captain in the absence of the ship agent
or consignee and only if he acts in accordance
with the instructions of the agent or owner and
protects the latter’s interests. (Art.609)
REQUISITES OF A VALID CHARTER PARTY
1. Consent of the contracting parties
2. Existing vessel which should be placed at
the disposition of the shipper
3. Freight
4. Compliance with Art. 652 of the Code of
Commerce
Clauses Which May Be Included In a Charter
Party
Jason clause:
A stipulation in a charter party that in case of a
maritime accident for which the shipowner is not
responsible by law, contract or otherwise, the
cargo shippers, consignees or owners shall
contribute with the shipowner in general
average. (Pandect of Commercial Law and
Jurisprudence, Justice Jose Vitug, 1997 ed.)
Clause paramount or paramount clause:
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A clause in a charter party providing that Rescission of a Charter Party

the COGSA shall apply, even though the
>At charterer’s request
transportation is domestic, subject to the extent
that any term of the bill of lading is repugnant to 1. By abandoning the charter and paying half of
the COGSA or applicable law, then to the extent the freightage;
thereof the provision of the bill of lading is void.
(Pandect of Commercial Law and Jurisprudence, 2. Error in tonnage or flag;
Justice Jose Vitug, 1997 ed.) 3. Failure to place the vessel at the charterer’s
disposal;

Rights and Obligations of Parties 4. Return of the vessel due to pirates, enemies or
bad weather;
Shipowner or ship agent:
5. Arrival at a port for repairs.
1. If the vessel is chartered wholly, not to
accept cargo from others; >At shipowner’s request

2. To observe represented capacity; 1. If the extra lay days terminate without the
cargo being placed alongside the vessel;
3. To unload cargo clandestinely placed
2. Sale by the owner of the vessel before loading
4. To substitute another vessel if load is by the charterer;
less than 3/5 of capacity;

5. To leave the port if the charterer does

not bring the cargo within the lay days and extra >Fortuitous causes
lay days allowed; 1. War or interdiction of commerce;
6. To place in a vessel in a condition to 2. Blockade;
navigate;
3. Prohibition to receive cargo;
7. to bring cargo to nearest neutral port in
case of war or blockade. (Arts. 669-678) 4. Embargo; and

5. Inability of the vessel to navigate.

CHARTERER:

1. To pay the agreed charter price; Terms:

2. To pay freightage on unboarded cargo; 1. Primage - bonus to be paid to the captain

after the successful voyage.
3. To pay losses to others for loading
uncontracted cargo and illicit cargo; 2. Demurrage – the sum fixed in the
charter party as a remuneration to the owner of
4. To wait if the vessel needs repair; the ship for the detention of his vessel beyond
5. To pay expenses for deviation. (Arts. the number of days allowed by the charter party
679-687) for loading or unloading or for sailing.

3. Deadfreight – the amount paid by or

recoverable from a charterer of a ship for the
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Transportation Reviewer
portion of the ship’s capacity the latter
contracted for but failed to occupy.
4. Lay Days - days allowed to charter
parties for loading and unloading the cargo.
5. Extra Lay Days – days which follow after
the lay days have elapsed.
USUAL FORMS OF CONSUMMATING
CONTRACTS
1. C.I.F. – cost, insurance and freight;
2. F.O.B. - free on board;
3. F.A.S. - free alongside ship; and
4. C. & F. - cost and freight.
TRANSSHIPMENT OF GOOD
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.
It is not dependent on the ownership of the
transporting ships or in the change of carriers,
but rather on the fact of actual physical transfer
of cargo from one vessel to another.
If done without legal excuse, however
competent and safe the vessel into which the
transfer is made, is a violation of contract and
infringement of right of shipper and subjects
carrier to liability if freight is lost event by cause
otherwise excepted. (Magellan Manufacturing
vs. CA, 201 SCRA 102)
LOAN ON BOTTOMRY AND RESPONDENTIA
A real, unilateral, aleatory contract, by virtue of
which one person lends to another a certain
amount of money or goods on things exposed to
maritime risks, which amount, with its earnings,
is to be returned if the things are safely
transported, and which is lost if the latter are
lost.
LOAN ON BOTTOMRY
Loan made by shipowner or ship agent
guaranteed by vessel itself and repayable upon
arrival of vessel at destination. (Art. 719)
LOAN ON RESPONDENTIA
Loan taken on security of the cargo laden on a
vessel, and repayable upon safe arrival of cargo
at destination. (Art. 719)
WHEN LOAN ON BOTTOMRY OR RESPONDENTIA
REGARDED AS SIMPLE LOAN
1. Lender loaned an amount larger than
the value of the object due to fraudulent means
employed by the borrower. (ART.726)
2. Full amount of the loan is not used for
the cargo or given on the goods if all of them
could not have been loaded, the balance will be
considered a simple loan. (ART.727)
3. If the effects on which the money is
taken is not subjected to any risk. (ART.729)
> Under existing laws, the parties to a loan,
whether ordinary or maritime, may agree on any
rate of interest. (CB Circular 905)
Hypothecary Nature of Bottomry/ Respondentia
GENERAL RULE: The obligation of the borrower
to pay the loan is extinguished if the goods given
as security are absolutely lost by reason of an
accident of the sea, during the voyage
designated, and if it is proven that the goods
were on board.
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Transportation Reviewer

EXCEPTIONS:

1. Loss due to inherent defect; AVERAGE

2. Loss due to the barratry on the part of An extraordinary or accidental expense incurred
the captain; during the voyage in order to preserve the cargo,
vessel or both, and all damages or deterioration
3. Loss due to the fault or malice of the
suffered by the vessel from departure to the port
borrower;
of destination, and to the cargo from the port of
4. The vessel was engaged in contraband; loading to the port of consignment. (Art. 806)
and
The person whose property has been saved
5. The cargo loaded on the vessel be must contribute to reimburse the damage
different in from that agreed upon. caused or expense incurred if the situation
constitutes general average.

Classes:
Concurrence of Marine Insurance and Loan on
Bottomry/Respondentia 1. Particular or Simple Average

1. The insurable interest of the owner of a 2. Gross or General Average

ship hypothecated by bottomry is only the
excess of the value over the amount secured by
bottomry. (Sec. 101, Insurance Code)
2. The value of what may be saved in case
of shipwreck shall be divided between the lender
and the insurer in proportion to the interest of
each one. (Art. 735)
>If a vessel is hypothecated by bottomry only the
excess is insurable, since a loan on bottomry
partakes of the nature likewise of an insurance
coverage to the extent of the loan
accommodation. The same rule would apply to
the hypothecation of the cargo by respondentia.
(Pandect of Commercial Law and Jurisprudence,
Justice Jose Vitug, 1997 ed.)
Where both vessel and cargo are saved, it is
general average; where only the vessel or only
the cargo is saved, it is particular average.
Expenses incurred to refloat a vessel, which
accidentally ran aground, in order to continue its
voyage, do not constitute general average. Not
only is there absence of a marine peril, common
safety factor, and deliberateness. It is the safety
of the property, and not the voyage, which
constitutes the true foundation of general
average. (A. Magsaysay, Inc. vs. Agan, G.R.No. L-
6393, Jan. 31, 1955)
GOODS NOT COVERED BY GENERAL AVERAGE
EVEN IF SACRIFICED

1. Goods carried on deck. (ART.855)

ACCIDENTS IN MARITIME COMMERCE
2. Goods not recorded in the books or
1. Averages
records of the vessel. (ART.855 (2))
2. Arrival Under Stress
3. Fuel for the vessel if there is more than
3. Collision sufficient fuel for the voyage. (Rule IX, York-
Antwerp Rule)
4. Shipwreck
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Transportation Reviewer
Jettison
Act of throwing cargo overboard in order to
lighten the vessel.
Order of goods to be cast overboard:
1. Those which are on the deck, preferring
the heaviest one with the least utility and value;
2. Those which are below the upper deck,
beginning with the one with greatest weight and
smallest value. (Art. 815)
>Jettisoned goods are not res nullius nor deemed
“abandoned” within the meaning of civil law so
as to be the object of occupation by salvage.
(Pandect of Commercial Law and Jurisprudence,
Justice Jose Vitug, 1997 ed.)
>In order that the jettisoned goods may be
included in the gross or general average, the
existence of the cargo on board should be
proven by means of the bill of lading. (Art. 816)
York-Antwerp (Y-A) Rules on Determining
Liability for Averages With Regard To Deck Cargo
1. Deck cargo is allowed only in
domestic/coastwise/inter-island shipping, and is
prohibited in international/overseas/foreign
shipping.
2. If deck cargo is loaded with the consent
of the shipper on overseas trade, it must always
contribute to general average, but should the
same be jettisoned, it would not be entitled to
reimbursement because there is violation of the
Y-A Rules.
3. If deck cargo is loaded with the consent
of the shipper on coastwise shipping, it must
always contribute to general average and if
jettisoned would be entitled to reimbursement.
Reason: In domestic shipping, voyages are
usually short and the seas are generally not
rough. In overseas shipping, the vessel is
exposed for many days to perils of the sea.
ARRIVAL UNDER STRESS (ARRIBADA)
The arrival of a vessel at the nearest and most
convenient port instead of the port of
destination, if during the voyage the vessel
cannot continue the trip to the port of
destination.
COLLISION
Impact of two vessels both of which are moving.
Allision
Impact between a moving vessel and a stationary
one.
Nautical Rules to Determine Negligence
1. When two vessels are about to enter a
port, the farther one must allow the nearer to
enter first; if they collide, the fault is presumed
to be imputable to the one who arrived later,
unless it can be proved that there was no fault
on its part.
2. When two vessels meet, the smaller
should give the right of way to the larger one.
3. A vessel leaving port should leave the
way clear for another which may be entering the
same port.
4. The vessel which leaves later is
presumed to have collided against one which has
left earlier.
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5. There is a presumption against the
vessel which sets sail in the night.
6. There is a presumption against the
vessel with spread sails which collides with
another which is at anchor and cannot move,
even when the crew of the latter has received
word to lift anchor, when there was not
sufficient time to do so or there was fear of a
greater damage or other legitimate reason.
7. There is a presumption against an
improperly moored vessel.
8. There is a presumption against a vessel
which has no buoys to indicate the location of its
anchors to prevent damage to vessels which may
approach it.
9. Vessels must have “proper look-outs” or
persons trained as such and who have no other
duty aside therefrom. (Smith Bell v. CA)
Nautical Rules as to Sailing Vessel and Steamship
1. Where a steamship and a sailing vessel
are approaching each other from opposite
directions, or on intersecting lines, the
steamship from the moment the sailing vessel is
seen, shall watch with the highest diligence her
course and movements so as to be able to adopt
such timely means of precaution as will
necessarily prevent the two boats from coming
in contact.
2. The sailing vessel is required to keep her
course unless the circumstances require
otherwise.
Zones of Time in the Collision of Vessels
1. First zone – all time up to the moment
when risk of collision begins.
No rule is as yet applicable for none is
necessary.
2. Second zone – time between moment
when risk of collision begins and moment it
becomes a practical certainty.
It is in this period where conduct of the vessels
is primordial. It is in this zone that vessels must
strictly observe nautical rules, unless a departure
therefrom becomes necessary to avoid
imminent danger.
3. Third zone – time when collision is
certain and time of impact.
An error in this zone would no longer be legally
consequential.
Error in Extremis - sudden movement made by a
faultless vessel during the third zone of collision
with another vessel which is at fault during the
2nd zone. Even if such sudden movement is
wrong, no responsibility will fall on said faultless
vessel. (Urrutia and Co. v. Baco River Plantation
Co., 26 PHIL 632)
Cases Covered By Collision and Allision
1. One vessel at fault
Vessel at fault is liable for damage caused to
innocent vessel as well as damages suffered by
the owners of cargo of both vessels. (Art. 826)
2. Both vessels at fault
Each vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. (Art.
827)
3. Vessel at fault not known
Each vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. (Art.
828)
Doctrine of Inscrutable Fault – In case of collision
where it cannot be determined which between
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Transportation Reviewer
the two vessels was at fault, both vessels bear
their respective damage, but both should be
solidarily liable for damage to the cargo of both
vessels.
4. Third vessel at fault-
The third vessel will be liable for losses and
damages. (Art. 831)
5. Fortuitous event/force majeure-
No liability. Each bears its own loss. (Art. 830)
The doctrine of res ipsa loquitur applies in case a
moving vessel strikes a stationary object, such as
a bridge post, dock, or navigational aid. (Far
Eastern Shipping v. CA, Luzon Stevedoring vs. CA)
Even if the cause of action against the common
carrier is based on quasi-delict, the defense of
due diligence in the selection and supervision of
employees is unavailing in case of a maritime tort
resulting in collision. It is not a civil tort governed
by the Civil Code but a maritime one governed by
Arts. 826-839 of the Code of Commerce. (Manila
Steamship vs. Insa Abdulhaman)
Doctrine of Last Clear Chance and Rule on
Contributory Negligence cannot be applied in
collision cases because of Art.827 of the Code of
Commerce. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
Hernando, R.P. 2004 ed.)
MARITIME PROTEST
Condition precedent or prerequisite to recovery
of damages arising from collisions and other
maritime accidents.
It is a written statement made under oath by the
captain of a vessel after the occurrence of an
accident or disaster in which the vessel or cargo
is lost or damaged, with respect to the
circumstances attending such occurrence, for
the purpose of recovering losses and damages.
Excuses for not filing protest: 1) where the
interested person is not on board the vessel; and
2) on collision time, need not be protested. (Art.
836)
Cases applicable:
1. Collision (Art. 835);
2. Arrival under stress (Art. 612(8));
3. Shipwrecks (Arts. 612(15), 843);
4. Where the vessel has gone through a
hurricane or when the captain believes that the
cargo has suffered damages or averages (Art.
624).
Who makes: Captain
When made: within 24 hours from the time the
collision took place.
Before whom made: competent authority at the
point of collision or at the first port of arrival, if
in the Philippines and to the Philippine consul, if
the collision took place abroad. (Art. 835)
SHIPWRECK
It is the loss of the vessel at sea as a
consequence of its grounding, or running against
an object in sea or on the coast. It occurs when
the vessel sustains injuries due to a marine peril
rendering her incapable of navigation.
If the wreck was due to malice, negligence or
lack of skill of the captain, the owner of the
vessel may demand indemnity from said captain.
(Art. 841)
The rules on collision or allision, as may be
pertinent, can equally apply to shipwrecks.
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Transportation Reviewer
STEVEDORING SERVICE
The carriage of goods from the warehouse or
pier to the holds of the vessel. (Chief of Staff vs.
CIR)
As understood in the port business, the term
consists of the handling of cargo from the hold of
the ship to the dock, in case of pier-side
unloading; or to a barge, in case of unloading at
sea. (Anglo-Fil Trading Corp. vs. Lazaro)
The loading on the ship of outgoing cargo is also
part of stevedoring work. (Ibid.)
CONTAINERIZATION/ “SAID-TO-CONTAIN”/
“SHIPPER’S LOAD AND COUNT” SYSTEM
System whereby the shipper loads his cargoes in
a specially designed container, seals the
container and delivers it to the carrier for
transportation. The carrier does not participate
in the counting of the merchandise for loading
into the container, the actual loading, and the
sealing of the container. (US Lines v. Comm. Of
Customs, ICTSI v. Prudential Guarantee)
The matter of quantity, description and
conditions of the cargo inside the container is the
sole responsibility of the shipper, unless there is
stipulation to the contrary. (US Lines vs. Comm.
Of Customs, Reyma Brokerage v. Phil. Home
Assurance)
Note: In order to attribute to the carrier any
damage to the shipment that may be found,
inspection of the goods should be done at pier-
side. (Bankers vs. CA)
III. CARRIAGE OF GOODS BY SEA ACT/COGSA
(C.A. No. 65)
APPLICABILITY
The transportation must be:
1. Water/maritime transportation;
2. for the carriage of goods; and
3. overseas/international/foreign (from
foreign port to Philippine port).
It can be applied in domestic sea transportation
if agreed upon by the parties. (Clause paramount
or paramount clause)
IMPORTANT FEATURES:
1. Amount of carrier’s liability
2. Notice of damage
3. Prescriptive period
AMOUNT OF CARRIER’S LIABILITY
Under the Sec. 4(5), the liability limit is set at
$500 per package or customary freight unit
unless the nature and value of such goods is
declared by the shipper. This is deemed
incorporated in the bill of lading even if not
mentioned in it. (Eastern Shipping vs. IAC, 150
SCRA 463)
Note that Art. 1749, NCC applies to
domestic/inter-island/coastwise trade.
NOTICE OF DAMAGE (SEC. 3(6))
Rules:
a. Patent damage: shipper should file a
claim with the carrier immediately upon delivery
b. Latent damage: shipper should file a
claim with the carrier within three days from
delivery.
Elva T. Depano JD301
Transportation Reviewer
Note: The filing of a notice of claim is not a
condition precedent.
PRESCRIPTIVE PERIOD
Action for loss or damage to the cargo should be
brought within one year after:
a. Delivery of the goods (delivered but
damaged goods); or
b. The date when the goods should have
been delivered (non-delivery). (Sec. 3[6])
“Loss or Damage” as applied to the COGSA
contemplates a situation where no delivery at all
was made by the shipper of the goods because
the same had perished, gone out of commerce,
or disappeared in such a way that their existence
is unknown or they cannot be recovered. Thus, it
is inapplicable in case of misdelivery or
conversion. (Ang vs. American Steamship
Agencies Inc.) and damage arising from delay or
late delivery (Mitsui O.S.K. Lines Ltd. vs. CA). In
such instance the, Civil Code rules on
prescription shall apply.
The one-year prescriptive period is suspended
by:
1. The express agreement of the parties
(Universal Shipping Lines, Inc. vs. IAC, 188 SCRA
170)
2. The filing of an action in court until it is
dismissed. (Stevens & Co. vs. Nordeutscher
Lloyd, 6 SCRA 180)
The one-year period shall run from delivery of
the last package and is not suspended by
extrajudicial demand. (Dole Phils.,Inc. vs.
Maritime Co.,148 SCRA 118)
The one-year period shall run from delivery to
the arrastre operator and not to the consignee.
(Union Carbide Phils, Inc. vs. Manila Railroad
Co.,SCRA 359)
The insurer exercising its right of subrogation is
bound by the one-year prescriptive period.
However, it does not apply to the claim against
the insurer for the insurance proceeds. (Fil.
Merchants Ins. Co. vs. Alejandro; Mayer Steel
Pipe Corp. vs. CA)
IV. WARSAW CONVENTION OF 1929 (WC)
PURPOSE: To protect the emerging air
transportation industry and to secure the
uniformity of recovery by the passengers.
APPLICABILITY
The transportation must be:
1. International transportation;
2. Air transportation; and
3. Carriage of passengers, baggage or
goods.
The WC shall also apply to fortuitous
transportation by aircraft performed by an air
transportation enterprise.
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
Elva T. Depano JD301
Transportation Reviewer
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. (“round trip”, Am. Jur.)
Transportation to be performed by several
successive air carriers shall be deemed to be one
undivided transportation, if it has been regarded
by the parties as a single operation, whether it
has been agreed upon under the form of a single
contract or of a series of contracts, and it shall
not lose its international character merely
because one contract or a series of contracts is
to be performed entirely within a territory
subject to the sovereignty, suzerainty, mandate,
or authority of the same High Contracting Party.
(Art. 1 Sec.3)
WHEN INAPPLICABLE
1. When public policy is contradicted;
2. If the requirements under the
Convention are not complied with.
IMPORTANT CONCEPTS:
1. Transportation documents
a. Passenger ticket
b. Baggage check
c. Air way bill
2. Liability of the carrier for damages
a. Death or injury to passengers
b. Loss or damage to baggage or goods
c. Delay
3. Successive carrier agreement
4. Jurisdiction
5. Combined transportation agreement
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)
2. Destruction, loss or damage to any baggage or
goods, if it took place during the “transportation
by air”; (Art. 18) and
Transportation by air – The period during which
the baggage or goods are in the charge of the
carrier, whether in an airport or on board an
aircraft, or, in case of a landing outside an
airport, in any place whatsoever.
It includes any transportation by land or water
outside an airport if such takes place in the
performance of a contract for transportation by
air, for the purpose of loading, delivery, or
transshipment.
3. Delay in the transportation of passengers,
baggage or goods. (Art. 19)
>The Hague Protocol amended the WC by
removing the provision that if the airline took all
necessary steps to avoid the damage, it could
exculpate itself completely (Art. 20(1)). (Alitalia
vs. IAC, 192 SCRA 9)
LIMIT OF LIABILITY (Art. 22, as amended by
Guatemala Protocol, 1971; Alitalia vs. IAC)
1. Passengers
GENERAL RULE: $100,000 per passenger
Elva T. Depano JD301
Transportation Reviewer
EXCEPTION: Agreement to a higher limit
2. Checked-in baggage
GENERAL 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 the sum is greater
than actual value.
3. Hand-carried baggage
$1000/passenger
4. Goods to be shipped
GENERAL 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 the sum is greater
than actual value.
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)
Thus, the WC does not operate as an exclusive
enumeration of the instances of an absolute limit
of the extent of liability. It does not preclude the
application of the Civil Code and other pertinent
local laws. It does not regulate or exclude
liability for other breaches of contract by the
carrier, or misconduct of its employees, or for
some particular or exceptional type of damage.
(Alitalia vs. CA)
> In PanAm v. IAC, the WC was applied as regards
the limitation on the carrier’s liability, there
being a simple loss of baggage without any
improper conduct on the part of the officials or
employees of the airline or other special injury
sustained by the passenger.
> In KLM Royal v. Tuller, the WC has invariably
been held inapplicable, or as not restrictive of
the carrier’s liability, where there was
satisfactory evidence of malice or bad faith
attributable to its officers and employees.
(Alitalia vs. IAC)
ACTION FOR DAMAGES
1. Notice of claim
A written complaint must me made within:
a. 3 days from receipt of baggage
b. 7 days from receipt of goods
c. In case of delay, 14 days from receipt of
baggage/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)
2. Prescriptive period
Action must be filed within 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation
stopped. (Art. 29)
Elva T. Depano JD301
Transportation Reviewer
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
GENERAL 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.
These carriers are jointly and severally liable.
(Art. 30)
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 easy access to airlines which are
otherwise inaccessible in some parts of the
world. (American Airlines vs. CA)
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)
JURISDICTION
At the option of the plaintiff, the action for
damages may be filed in the:
a. Court of domicile of the carrier;
b. Court of its principal place of business;
c. Court where it has a place of business
through which the contract has been made; or
d. 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 forum of action provided in Art. 28(1) is a
matter of jurisdiction rather than of venue.
(Santos III vs. Northwest; 2A C.J.S.)
V. SALVAGE LAW (Act No. 2616)
SALVAGE
> Two concepts:
1. Services one person renders to the
owner of a ship or goods, by his own labor,
preserving the goods or the ship which the
owner or those entrusted with the care of them
have either abandoned in distress at sea, or are
unable to protect or secure.
2. Compensation allowed to persons by
whose voluntary assistance a ship at sea or her
cargo or both have been saved in whole or in part
from impending sea peril, or such property
Elva T. Depano JD301
Transportation Reviewer
recovered from actual peril or loss, as in cases of
shipwreck, derelict or recapture.
Requisites:
1. Valid object of salvage;
2. Object must have been exposed to
marine peril (not perils of the ship);
3. Services rendered voluntarily (neither an
existing duty nor out of a pre-existing contract);
4. Services are successful, total or partial.
Subjects of Salvage:
1. Ship itself;
2. Jetsam – goods which are cast into the sea,
and there sink and remain under water;
3. Floatsam or Flotsam – goods which float upon
the sea when cast overboard;
4. Ligan or Lagan – goods cast into the sea tied to
a buoy, so that they may be found again by the
owners (p.173, Judge Diaz).
Persons who have no right to a reward for
salvage:
1. Crew of the vessel saved;
2. Person who commenced Salvage in spite of
opposition of the Captain or his representative;
3. In accordance with Sec. 3 of the Salvage Law,
a person who fails to deliver a salvaged vessel or
cargo to the Collector of Customs.
Derelict – a ship or her cargo which is
abandoned and deserted at sea by those who are
in charge of it, without any hope of recovering it,
or without any intention of returning to it.
The intention of those in charge must be
ascertained. If those in charge left with the
intention of returning, or of procuring assistance,
the property is not derelict, but if they quitted
the property with the intention of finally leaving
it, it is derelict and a change of their intention
and an attempt to return will not change its
nature (Erlanger & Galinger vs. Swedish East
Asiatic Co. Ltd.).
If it is clear that the intention to return is slight,
the salvage which was done thereafter is
considered valid. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
Hernando, R.P. 2004 ed. p. 616)
CONTRACT OF TOWAGE
A contract whereby one vessel, usually
motorized, pulls another, whether loaded or not
with merchandise, from one place to another,
for a compensation. It is a contract for services
rather than a contract of carriage.
RULES ON SALVAGE REWARD
1. The reward is fixed by the RTC judge in
the absence of agreement or where the latter is
excessive. (Sec. 9)
2. The reward should constitute a sufficient
compensation for the outlay and effort of the
salvors and should be liberal enough to offer an
inducement to others to render services in
similar emergencies in the future.
3. If sold (no claim being made within 3
months from publication), the proceeds, after
deducting expenses and the salvage claim, shall
go to the owner; if the latter does not claim it
within 3 years, 50% of the said proceeds shall go
to the salvors, who shall divide it equitably, and
the other half to the government. (Secs. 11-12)
4. If a vessel is the salvor, the reward shall
be distributed as follows:
a. 50% to the shipowner;
b. 25% to the captain; and
Elva T. Depano JD301
Transportation Reviewer

5. Public services owned or operated by

the government, except as to rates fixing;
c. 25% to the officers and crew in
proportion to their salaries. (Sec. 13) 6. Ice plants; and

Taking passengers from a sinking ship, without 7. Public markets.

rendering any service in rescuing the vessel, is
not a salvage service, being a duty of humanity
and not for reward. PUBLIC SERVICE

A person who owns, operates, manages or

controls in the Philippines for hire or
VI. PUBLIC SERVICE ACT
compensation, with general or limited clientele,
(C.A. No. 146) whether permanent, occasional or accidental,
and done for general business purposes, any
common carrier or public utility, ice plants,
PURPOSES: power and water supplies, communication and
similar public services. (Sec. 13b, CA 146)
1. To secure adequate, sustained service
for the public at the least possible cost; A casual or incidental service devoid of public
character and interest is not brought within the
2. To protect the public against category. The question depends on such factors
unreasonable charges and poor, inefficient as the extent of services, whether such person or
service; company has held himself or itself out as ready
3. To protect and secure investments in to serve the public or a portion of the public
public services; generally. (Luzon Stevedoring vs. PSC)

4. To prevent ruinous competition. >The Public Service Commission created under

AUTHORITY TO OPERATE PUBLIC SERVICES
GENERAL RULE: No public service shall operate
without having been issued a certificate of public
convenience or a certificate of public
convenience and necessity.
EXCEPTIONS:
1. Warehouses;
2. Animal drawn vehicles and bancas
moved by oar or sail;
3. Airships, except for the fixing of
maximum rates for fare and freight;
4. Radio companies, except for rates fixing;
the Public Service Law has already been
abolished under P.D. No. 1 and other issuances.
It has been replaced by the following
government agencies: LTO; LTFRB; ATO; BOE;
NTC; NEA; ERB; NWRC; CAB; and MIA.
CERTIFICATE OF PUBLIC CONVENIENCE (CPC)
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.
CERTIFICATE OF PUBLIC CONVENIENCE AND
NECESSITY (CPCN) An authorization issued by
the appropriate government agency for the
operation of public service for which a prior
Elva T. Depano JD301
Transportation Reviewer

franchise is required by law; e.g. telephone and 3. Setting up of standards and

other services. classifications;

A CPC or a CPCN constitutes neither a franchise 4. Establishment of rules to secure

nor a contract, confers no property right, and is
a mere license or a privilege. The holder of said
certificate does not acquire a property right in
the route covered thereby. Nor does it confer
upon the holder any proprietary right or interest
or franchise in the public highways. Revocation
of this certificate deprives him of no vested right.
New and additional burdens, alteration of the
certificate, or even revocation or annulment
thereof is reserved to the State. (Luque vs.
Villegas, 30 SCRA 408)
It is a “property” and has a considerable value
and can be the subject of sale or attachment.
(Cogeo-Cubao Operators and Drivers Assn. vs.
CA, 207 SCRA 343, Raymundo vs. Luneta Motor
Co.)
accuracy of all meters and all measuring
appliances;
5. Issuance of orders requiring
establishment or maintenance of extension of
facilities;
6. Revocation, or modification of CPC or
CPCN;
7. Suspension of CPC or CPCN, except when it is
necessary to avoid serious and irreparable
damage or inconvenience to the public or private
interest, in which case, a suspension not more
than 30 days may be ordered, prior to the
hearing. (Soriano v. Medina, 164 SCRA 36)
POWERS EXERCISABLE WITHOUT PRIOR NOTICE
AND HEARING

1. Investigation any matter concerning

REQUREMENTS FOR GRANTING CPC OR CPCN public service;
1. Applicant must be a citizen of the 2. Requiring operators to furnish safe,
Philippines or a corporation or entity 60% of the adequate, and proper service;
capital of which is owned by such citizens;
3. Requiring public services to pay
2. Applicant must prove public necessity; expenses of investigation;
3. Applicant must prove that the operation 4. Valuation of properties of public utilities;
of the public service proposed and the
authorization to do business will promote the 5. Examination and test of measuring
public interest on a proper and suitable manner; appliances;

4. Applicant must have sufficient financial 6. Grant of special permits to make extra or
capability to undertake the proposed services special trips in territories specified in the
and meeting the responsibilities incident to its certificate;
operation. 7. Uniform accounting system and
POWERS REQUIRING PRIOR NOTICE AND furnishing of annual reports;
HEARING 8. Compelling compliance with the laws
1. Issuance of CPC or CPCN; and regulations.

2. Fixing of rates, tolls, and charges;

Elva T. Depano JD301
Transportation Reviewer
UNLAWFUL ACTS OF PUBLIC UTILITY COMPANIES
1. Engagement in public service business
without first securing the proper certificate;
2. Providing or maintaining unsafe,
improper or inadequate service as determined
by the proper authority;
3. Committing any act of unreasonable and
unjust preferential treatment to any particular
person, corporation or entity as determined by
the proper authority;
4. Refusing or neglecting to carry public
mail upon request. (Secs. 18 and 19)
ACTS REQUIRING PRIOR APPROVAL
1. Establish and maintain individual or joint
rates;
2. Establish and operate new units;
3. Issue free tickets;
4. Issue any stock or stock certificates
representing an increase of capital;
5. Capitalize any franchise in excess of the
amount actually paid to the Government;
6. Sell, alienate, mortgage or lease
property, certificates or franchise.
Under Sec. 20(g) of C.A. No. 146, the sale, etc.
may be negotiated and completed before the
approval by the proper authority. Its approval is
not a condition precedent to the validity of the
contract. The approval is necessary only to
protect public interest.
PRIOR OPERATOR/OLD OPERATOR RULE
The rule allowing an existing franchised
operator to invoke a preferential right within the
authorized territory as long as he renders
satisfactory and economical service.
The policy is not to issue a certificate to a second
operator to cover the same field and in
competition with a first operator who is
rendering sufficient, adequate and satisfactory
service. The prior operator must first be given an
opportunity to improve its service, if inadequate
or deficient.
Purpose: To prevent ruinous and wasteful
competition in order that the interests of the
public would be conserved and preserved.
It subordinates the prior applicant rule which
gives the first applicant priority only if things and
circumstances are equal.
Where the operator either fails or neglects to
make the improvement or effect the increase in
services, especially when given the opportunity,
new operators should be given the chance to
give the services needed by the public.
PRIOR APPLICANT RULE
Presupposes a situation when two interested
persons apply for a certificate to operate a public
utility in the same community over which no
person has as yet granted any certificate. If it
turns out, after the hearing, that the
circumstances between the two applicants are
more or less equal, then the applicant who
applied ahead of the other, will be granted the
certificate.
RATE-FIXING POWER
The rate to be fixed must be just, founded upon
conditions which are fair and reasonable to both
the owner and the public.
A rate is just and reasonable if it conforms to the
following requirements:
Elva T. Depano JD301
Transportation Reviewer

1. One which yields to the carrier a fair

return upon the value of the property employed
in performing the service; and

2. One which is fair to the public for the

service rendered.

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.

The registered owner is not allowed to escape

responsibility by proving that a third person is
the actual and real owner Reason: It would be
easy for him, by collusion with others or
otherwise, to transfer the responsibility to an
indefinite person, or to one who possesses no
property with which to respond financially for
the damage or injury done. (Erezo, et al. vs. Jepte
102 Phil 103).

KABIT SYSTEM

A system whereby a person who has been

granted a certificate of public convenience
allows other persons who own motor vehicles to
operate under such license, for a fee or
percentage of such earnings. It is void and
inexistent under Art. 1409, Civil Code.

Effects:

1. The transfer, sale, lease or assignment of

the privilege granted is valid between the
contracting parties but not upon the public or
third persons. (Gelisan vs. Alday, 154 SCRA 388)