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San Beda College of Law54

MEMORYAIDIN COMMERCIAL LAW

TRANSPORTATION LAWS

CONTRACT OF TRANSPORTATION/CARRIAGE

A contract whereby a person, natural or juridical, obligates to transport persons,goods, or both, from one place to another, byland, air or water, for a price orcompensation.Classifications:

1. Common or Private2. Goods or Passengers3. For a fee (for hire) or Gratuitous4. Land, Water/maritime, or Air5. Domestic/inter-island/coastwise or

International/foreign

It is a relationship which is imbued with thepublic interest.

COMMON CARRIER

Persons, corporations, firms or associationsengaged in the business of carrying ortransporting passengers or goods or both, byland, water, or air, for compensation, offeringtheir services to the public (Art. 1732, CivilCode).

Art. 1732 of the New Civil Code avoids anydistinction between one whose principalbusiness activity is the carrying of persons orgoods or both and one who does suchcarrying only as an ancillary activity(sideline). It also avoids a distinctionbetween a person or enterprise offeringtransportation service on a regular orscheduled basis and one offering such serviceon an occasional, episodic or unscheduled

basis.Neither does the law distinguish between

a carrier offering its services to the generalpublic that is the general community orpopulation and one who offers services orsolicits business only from a narrow segmentof the general population.

A person or entity is a common carriereven if he did not secure a Certificate ofPublic Convenience (De Guzman vs. CA, 168SCRA 612).

It makes no distinction as to the means oftransporting, as long as it is by land, water orair. It does not provide that thetransportation should be by motor vehicle.(First Philippine Industrial Corporation vs. CA)

One is a common carrier even if he has nofixed and publicly known route, maintains noterminals, and issues no tickets (AsiaLighterage Shipping, Inc. vs. CA).Characteristics:

1. Undertakes to carry for all peopleindifferently and thus is liable forrefusal without sufficient reason(Lastimoso vs. Doliente, October 20,1961);

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

3. No monopoly is favored (BatangasTrans. vs. Orlanes, 52 PHIL 455);

4. Provides public convenience.

PRIVATE CARRIER One which, without being engaged in thebusiness of carrying as a public employment,undertakes to deliver goods or passengers forcompensation. (Home Insurance Co. vs.American Steamship Agency, 23 SCRA 24)

TESTS WHETHER CARRIER IS COMMONOR PRIVATE: The SC in First Philippine IndustrialCorporation vs. CA (1995) reiterated thefollowing tests:

1. It must be engaged in the businessof carrying goods for others as apublic employment and must holditself out as ready to engage in the

transportation of goods generally asa business and not as a casualoccupation;

2. It must undertake to carry goods ofthe kind to which its business inconfined;

3. It must undertake to carry by themethod by which his business isconducted and over its establishedroads; and

4. The transportation must be for hire.

In National Steel Corp. vs. CA (1997) the SCheld that the true test of a common carrier isthe carriage of goods or passengers providedit has space for all who opt to availthemselves of its transportation for a fee.

COMMON CARRIER PRIVATECARRIER

1. As to availability

Holds himself out forall peopleindiscriminately

Contracts withparticular individualsor groups only

2. As to required diligence

Extraordinarydiligence is required

Ordinary diligence isrequired

3. As to regulation

Subject to Stateregulation

Not subject to Stateregulation

4. Stipulation limiting liability

Parties may not agreeon limiting thecarriers liabilityexcept whenprovided by law

Parties may limit thecarriers liability,provided it is notcontrary to law,morals or goodcustoms

5. Exempting circumstance

Prove extraordinarydiligence and Art.1733, NCC

caso fortuito, Art.1174 NCC

6.Presumption of negligence

There is apresumption of faultor negligence

No presumption offault or negligence

7.Governing law

COMMERCIAL LAW COMMITTEECHAIRPERSON: Garny Luisa Alegre ASST. CHAIRPERSON: Jayson OS Ramos EDP: Beatrix I. Ramos SUBJECT HEADS:Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario(Transportation Laws);Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John LemuelGatdula (Banking Laws); Robespierre CU (Law on Intellectual Property)

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Law on commoncarriers

Law on obligationsand contracts

GOVERNING LAWSA. Domestic/inter-island/coastwise

Applicable to Land, Water, and Airtransportation

1. Civil Code - primary2. Code of Commerce (Arts. 349, 379,

573-734, 580, 806-845) - suppletory

B. International/foreign/overseas(Foreign country to Philippines) Applicable to Water/maritime and Airtransportation

The law of the country of destinationgenerally applies.

1. Civil Code - primary2. Code of Commerce - suppletory3. Others - suppletory

a. Water/maritime: Carriage ofGoods by Sea Act (COGSA)

b. Air: Warsaw Convention

I. NEW CIVIL CODE(Arts. 1732-1766)

REQUIREMENT OF EXTRAORDINARYDILIGENCE Rendition of service with the greatest skilland utmost foresight. (Davao Stevedore Co.v. Fernandez)Rationale:

1. From the nature of the business andfor reasons of public policy (Art.1733)

2. Relationship of trust3. Business is impressed with a specialpublic duty

4. Possession of the goods5. Preciousness of human life A common carrier is not an absolute

insurer of all risks of travel.

COVERAGE1. Vigilance over goods (Arts. 1734-1754);and2. Safety of passengers (Arts. 1755-1763).

PASSENGER A person who has entered into a contractof carriage, express or implied, with the

carrier. They are entitled to extraordinarydiligence from the common carrier.

The following are not consideredpassengers, and are entitled to ordinarydiligence only:

a. One who has not yet boarded anypart of a vehicle regardless ofwhether or not he has purchased aticket;

b. One who remains on a carrier for anunreasonable length of time after hehas been afforded every safeopportunity to alight;

c. One who has boarded by fraud,stealth, or deceit;

d. One who attempts to board a

moving vehicle, although he has a

ticket, unless the attempt be withthe knowledge and consent of thecarrier;

e. One who has boarded a wrongvehicle, has been properly informed

of such fact, and on alighting, isinjured by the carrier;f. Invited guests and accommodation

passengers. (Lara vs. Valencia)g. One who rides any part of the

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

DEFENSES OF A COMMON CARRIER INTHE CARRIAGE OF GOODSCASO FORTUITO/FORCE MAJEURERequisites:a. Must be the proximate and only cause of

the lossb. Exercise of due diligence to prevent or

minimize the loss before, during or afterthe occurrence of the disaster (Art. 1739)c. Carrier has not negligently incurred in

delay in transporting the goods (Art.1740)

Fire is not considered a natural disaster orcalamity as it arises almost invariably fromsome act of man. (Eastern Shipping Lines Inc.vs. IAC)

Mechanical defects are not force majeure ifthe same was discoverable by regular andadequate inspections. (Notes and Cases onthe Law on Transportation and Public Utilities,Aquino, T. & Hernando, R.P. 2004 ed. p.120-122)

2. ACTS OF PUBLIC ENEMYRequisites:a. Must be the proximate and onlycause of the lossb. Exercise of due diligence to preventor minimize the loss before, during orafter the act causing the loss,deterioration or destruction of the goods(Art. 1739)

3. NEGLIGENCE OF THE SHIPPER OR OWNERa. Sole and proximate cause: absolute

defenseb. Contributory: partial defense. (Art.

1741)

4. CHARACTER OF THE GOODS OR DEFECTSIN THE PACKING OR IN THE CONTAINER Even if the damage should be caused bythe inherent defect/character of the goods,the common carrier must exercise duediligence to forestall or lessen the loss. (Art.1742) The carrier which, knowing the fact ofimproper packing of the goods upon ordinaryobservation, still accepts the goodsnotwithstanding such condition, is notrelieved of liability or loss or injury resultingtherefrom. (Southern Lines, Inc. v. CA, 4 SCRA258)

5. ORDER OR ACT OF PUBLIC AUTHORITY


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Said public authority must have the powerto issue the order (Art. 1743).Consequently,where the officer acts without legal process,the common carrier will be held liable.(Ganzon v. CA 161 SCRA 646)

Diligence in the selection and supervisionof employees under Article 2180 of the CivilCode cannot be interposed as a defense bythe common carrier because the liability ofthe carriers arises from the breach of thecontract of carriage. The defense under saidarticles is applicable to negligence in quasi-delicts under Art. 2176. (Del Prado v. ManilaElectric Co., 52 Phil 900)

LIABILITY OF A COMMON CARRIER FORDEATH OR INJURIES TO PASSENGERSDUE TO ACTS OF ITS EMPLOYEES ANDOTHER PASSENGERS OR STRANGERS

FOR ACTS OF ITSEMPLOYEES

FOR ACTS OFOTHER

PASSENGERS ORSTRANGERS

Required diligence and defense

Extraordinarydiligence

Ordinary diligence

Nature of liability

Tort; however, The employee mustbe on duty at thetime of the act.(Maranan v. Perez)

Not absolute; limitedby Art. 1763

The carrier is liable when its personnelallowed a passenger to drive the vehiclecausing it to collide with another vehicleresulting to the injuries suffered by the otherpassengers. (MRR vs. Ballesteros, 16 SCRA641)

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Parties1. Common carrier2. Shipper3. Consignee

1. Common carrier2. Passenger

Cause of liabilityDelay in delivery, loss, destruction, ordeterioration of the goods

Death or injury to the passengers

Duration of liability

From the time the goods are unconditionallyplaced in the possession of, and received by thecarrier for transportation until the same aredelivered actually or constructively by the

carrier to the consignee or to the person whohas the right to receive them. (Art. 1736) It remains in full force and effect even whenthey are temporarily unloaded or stored intransit unless the shipper or owner has madeuse of the right of stoppage in transitu. (Art.1737) It continues to be operative even during thetime the goods are stored in a warehouse of thecarrier at the place of destination until theconsignee has bee advised of the arrival of thegoods and has had reasonable opportunitythereafter to remove them or otherwise disposeof them. (Art. 1738)

Delivery of goods to the custom authorities isnot delivery to the consignee. (Lu Do v.

Binamira, 101 Phil 120)

The duty of a common carrier to provide safetyto its passengers so obligates it not only duringthe course of the trip, but for so long as thepassengers are within its premises and where

they ought to be in pursuance to the contractof carriage. (LRTA v. Navidad, [2003]) All persons who remain on the premiseswithin a reasonable time after leaving theconveyance are to be deemed passengers, andwhat is a reasonable time or a reasonable delaywithin this rule is to be determined from all thecircumstances, and includes a reasonable timeto see after his baggage and prepare for hisdeparture. (La Mallorca v. CA, 17 SCRA 739 ;Abiotiz Shipping Corporation v. CA, 179 SCRA95) It is the duty of common carriers ofpassengers to stop their conveyances areasonable length of time in order to affordpassengers an opportunity to enter, and they

are liable for injuries suffered from the suddenstarting up or jerking of their conveyanceswhile doing so. The duty which the carrier ofpassengers owes to its patrons extends topersons boarding the cars as well as to thosealighting therefrom (Dangwa Trans Co., Inc. vs.CA 202 SCRA 574).


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Presumption of negligence

Art.1735 Civil CodeReason: As to when and how goods weredamaged in transit is a matter peculiarly within

the knowledge of the carrier and its employees.(Mirasol v. Dollar, 53 PHIL 124)

Mere proof of delivery of goods to a carrier ingood order and the subsequent arrival of thesame goods at the place of destination in badorder makes for a prima facie case against thecarrier. (Coastwise Lighterage Corp. v. CA, 245SCRA 796)

Art.1755 Civil CodeReason: The contract between the passengerand the carrier imposes on the latter the duty

to transport the passenger safely; hence theburden of explaining should fall on the carrier.

Defenses

1. Ordinary circumstance: Exercise ofextraordinary diligence (Art. 1735)

2. Special circumstances:a. Flood, storm, earthquake,

lighting, or other natural disasteror calamity (plus force majeure)

b.Act of the public enemy in war,whether international or civil

c. Act or omission of the shipper orthe owner of goods

d.The character of the goods ordefects in the packing or in thecontainers

e. Order or act of competent publicauthority (Art. 1734)

1. Exercise of extraordinary diligence(Art. 1756)

2. Caso fortuito

Valid stipulations

1. Reduction of degree of diligence to ordinarydiligence, provided it be:

a) In writing, signed by the shipper orowner;

b) Supported by a valuable considerationother than the service rendered by thecarriers; and

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

2. Fixed amount of liability: A contract fixing thesum to be recovered by the owner or shipper forthe loss, destruction or deterioration of thegoods, if it is reasonable and just under thecircumstances and has been fairly and freelyagreed upon. (Art. 1750)3. Limited liability for delay: An agreementlimiting the common carriers liability for delayon account of strikes or riots (Art. 1748)4. Stipulation limiting liability to the value of thegoods appearing in the bill of lading, unless theshipper or owner declares a greater value. (Art.1749)

The diligence required in the carriage of thegoods may be reduced by only one degree, fromextraordinary to ordinary diligence or diligenceof a good father of a family. (Art. 1744, Art.1745, no. 4)

Stipulation limiting liability when a passenger iscarried gratuitously, but not for willful acts orgross negligence. (Art. 1758)

Void stipulations4. That the carrier shall exercise a degree ofdiligence less than that of a good father of afamily over the movable transported;5. That the carrier shall not be responsible

for the acts or omissions of his or its

Dispensing with or lessening the extraordinaryresponsibility of a common carrier for thesafety of passengers imposed by law by

stipulation, by posting of notices, by


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employees;6. That the carriers liability for actscommitted by thieves or robbers who do notact with grave or irresistible threat, violence orforce is dispensed with or diminished;

7. That the carrier is not responsible for theloss, destruction or deterioration of the goodson account of the defective condition of thecar, vehicle, ship or other equipment used inthe contract of carriage. (Art. 1745)

statements on tickets or otherwise. (Art. 1757)


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RULES ON PASSENGERS BAGGAGE

IN THE CUSTODY OFTHE PASSENGERS(HAND-CARRIED)

IN THE CUSTODYOF THE COMMON

CARRIER(CHECKED-IN)

Legal nature of the baggageNecessary deposit Considered asgoods

Required diligence by the commoncarrier

Diligence of adepositary (ordinarydiligence)

Extraordinarydiligence

Applicable rulesArts. 1998 and 2000-2003

Arts. 1733-1753

CONCURRING CAUSES OF ACTIONARISING FROM THE NEGLIGENT ACT OFTHE COMMON CARRIER1. Culpa contractual (breach of contract)

Only the carrier is primarily liable and notthe driver, because there is no privitybetween the driver and the passenger. Basis: Art.1759, NCC. No defense of due diligence in theselection and supervision of employees.

2. Culpa aquiliana (quasi-delict) The carrier and driver are solidarily liableas joint tortfeasors. Basis: Art. 2180, NCC. Defense of due diligence in the selectionand supervision of employees is available.Exception: maritime tort resulting in collision.(See notes on Collision)

3. Culpa criminal (criminal negligence) The driver is primarily liable. The carrier issubsidiarily liable only if the driver isconvicted and declared insolvent. Basis: Art. 100, RPC. In case of injury to a passenger due to thenegligence of the driver of the bus on whichhe is riding and of the driver of anothervehicle, the drivers as well as the owners ofthe two vehicles are jointly and severallyliable for damages. It makes no differencethat the liability of the bus driver and ownersprings from contract while that of the ownerand driver of the other vehicle arises from

quasi-delict. (Fabre vs. CA)

LIMITATIONS AS TO CARRIERS LIABILITY

INVALID AS BEINGCONTRARY TOPUBLIC POLICY

VALID &ENFORCEABLE

1. One exempting thecarrier from any andall liability for loss ordamage occasioned byits own negligence.2. An unqualifiedlimitation of liability toan agreed valuation.

1. One limiting theliability of the carrierto an agreedvaluation, unless theshipper declares ahigher value andpays a higher rate offreight(H.E. HeacockCompany vs.

Macondray &Company Inc.)

However, the carrier cannot limit itsliability for injury to, or loss of, goods shipped

where such injury or loss was caused by itsown negligence.(Shewaram vs. PAL, 17 SCRA 606)

SPECIAL RULES ON LIABILITES OFAIRLINE CARRIERS1. In case of flight diversion due to badweather or other circumstances beyond thepilots control, the relation between thecarrier and the passenger continues until thelatter has been landed at the port ofdestination and has left the carrierspremises. The carrier should necessarilyexercise extraordinary diligence insafeguarding the comfort, convenience andsafety of its stranded passengers until they

have reached their final destination.(Philippine Airlines vs. CA, 226 SCRA 423)2. Even where overbooking of passengers isallowed as a commercial practice, the airlinecompany would still be guilty of bad faith andstill be liable for damages if it did not properlyinform passenger that it could breach thecontract of carriage even if they wereconfirmed passengers. (Zalamea vs. CA, 228SCRA 23)3. An open-dated ticket constitutes acomplete contract between the carrier andpassenger. Hence, the airline company isliable if it refused to confirm a passengersflight reservation. (Singson vs. CA, 282 SCRA149)

4. An airline company which issued aconfirmed ticket to a passenger coveringsuccessive trips on different airlines can beheld liable for damages occasioned bybumping off by one of the successiveairlines. (Lufthansa German Airlines vs. CA,238 SCRA 290)5. An airline ticket providing that carriage bysuccessive air carriers is to be regarded as asingle operation is to make the issuingcarrier liable for the tortuous conduct of theother carrier. A printed provision in the ticketlimiting liability only to its own conduct is notenough to rebut that liability. (KLM RoyalDutch Airlines vs. CA, 65 SCRA 237)

II. CODE OF COMMERCE

A. OVERLAND TRANSPORTATION(Arts. 349-379)

Applicability1. Domestic land and water/maritimetransportation. (Pandect of Commercial Lawand Jurisprudence, Justice Jose Vitug, 1997ed.)2. Domestic Air Transportation. (CommercialLaw Review, Cesar Villanueva, 2004 ed.)IMPORTANT CONCEPTS:

1. Bill of lading

2. Obligations of the carrier

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3. Right of abandonment4. Notice of damage5. Combined carrier agreement

BILL OF LADINGThe written acknowledgment of receipt ofgoods and agreement to transport them to a

specific place to a person named or to hisorder.Rules:1. It is not indispensable for the creation of a

contract of carriage. (Compania Maritima vs.Insurance Company of North America, 12SCRA 213)

2. Ambiguity is construed against the carrier,the contract being one of adhesion.

3. The consignee, although the instrument isoftentimes drawn up only by the consignorand carrier, becomes bound by all the

stipulations contained therein by making aclaim for loss on the basis of said bill oflading. (Sea-Land Services Inc. vs. IAC)

4. The right of a party to recover for loss ofshipment consigned to him under a bill oflading drawn up only by and between theshipper and the carrier, springs from either arelation of agency between him and theshipper, or his status as stranger in whosefavor some stipulation is made in saidcontract, and who becomes a party theretowhen he demands fulfillment of thatstipulation. (Art. 1311 (2), (Mendoza vs. PALInc.)

5. Acceptance of the bill of lading withoutdissent raises the presumption that all theterms therein where brought to theknowledge of the shipper and agreed to byhim and, in the absence of fraud or mistake;he is estopped from thereafter denying thathe assented to such terms. (Notes and Caseson the Law on Transportation and PublicUtilities, Aquino, T. & Hernando, R.P. 2004 ed.p.261)

Kinds:1.On board - issued when the goodshave been actually placed aboard theship with very reasonable expectationthat the shipment is as good as on its

way.2.Received - one in which it is statedthat the goods have been received forshipment with or without specifyingthe vessel by which the goods are tobe shipped.

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

4.Non-negotiable - One in which it is

stated that the goods referred totherein will be delivered to a specifiedperson.

5.Clean One which does not indicate

any defect in the goods.

6. Foul One which contains a notationthereon indicating that the goodscovered by it are in bad condition.

7.Spent One which covers goods thatalready have been delivered by thecarrier without a surrender of a signedcopy of the bill.

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

9.Custody One wherein the goodsare already received by the carrier but

the vessel indicated therein has notyet arrived in the port.

10. Port One which is issuedby the carrier to whom the goods havebeen delivered, and the vesselindicated in the bill of lading by whichthe goods are to be shipped is alreadyin the port where the goods are heldfor shipment.Functions:1. Best evidence of the existence of the contract ofcarriage of cargo (Art. 353)2. Document of title

3. Receipt of cargo

4. Contract totransport and deliver goods asstipulated5. Symbol of thegoods

OBLIGATIONS OF THE CARRIERA. Duty to accept the goods

GENERAL RULE: A common carrier cannotordinarily refuse to carry a particular class ofgoods.

EXCEPTION: For some sufficient reason thediscrimination against the traffic in suchgoods is reasonable and necessary. (Fishervs. Yangco Steamship Co. 31 Phil 1).

Instances when the carrier may validlyrefuse to accept the goods include the ff:1.) Goods sought to be transported aredangerous objects, or substances includingdynamite and other explosives2.) Goods are unfit for transportation3.) Acceptance would result in overloading4.) Contrabands or illegal goods5.) Goods are injurious to health6.) Goods will be exposed to untoward dangerlike flood, capture by enemies and the like7.) Goods like livestock will be exposed todisease8.) Strike9.) Failure to tender goods on time. (Notesand Cases on the Law on Transportation and

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Public Utilities, Aquino, T. & Hernando, R.P.2004 ed. p.68)

In case of carriage by railway, the carrier isexempted from liability if carriage is insistedupon by the shipper, provided its objections

are stated in the bill of lading. However, when a common carrier acceptscargo for shipment for valuable consideration,it takes the risk of delivering it in goodcondition as when it was loaded. (PAL vs. CA)

B. Duty to deliver the goods Not only to transport the goods safely butto the person indicated in the bill of lading. The goods should be delivered to theconsignee or any other person to whom thebill of lading was validly transferred ornegotiated.

Time of delivery

Stipulated in

Contract/Bill ofLading

No stipulation

1. Carrier is bound tofulfill the contractand is liable for anydelay; no matterfrom what cause itmay have arisen.

1. Within areasonable time.2. Carrier is bound toforward them in the1st shipment of thesame or similargoods which he maymake to the point ofdelivery. (ART. 358Code of Commerce)

Effects of delaya. Merely suspends and

generally does not

terminate the contract ofcarriage

b. Carrier remains duty boundto exercise extraordinarydiligence

c. Natural disaster shall notfree the carrier fromresponsibility (Art.1740)

d. If delay is without justcause, the contract limitingthe common carriersliability cannot be availed ofin case of loss ordeterioration of the goods(Art.1747)

RIGHT OF CONSIGNEE TO ABANDONGOODSInstances:

1. Partial non-delivery, wherethe goods areuseless withoutthe others (Art.363);

2. Goods arerendered uselessfor sale orconsumption forthe purposes forwhich they areproperly

destined (Art.365); and

3. In case of delaythrough the faultof the carrier

(Art. 371).

NOTICE OF DAMAGE (ART. 366)Requisites for applicability:1. Domestic/inter-island/coastwise transportation2. Land/water/airtransportation3. Carriage of goods4. Goods shippedare damagedRules:

a. Patent damage: shipper must file a claimagainst the carrier immediately upondelivery (it may be oral or written)

b. Latent damage: shipper should file a claimagainst the carrier within 24 hours fromdelivery.

Note: These rules does not apply tomisdelivery of goods. (Roldan vs. Lim Ponzo)Purpose of notice: To inform the carrier thatthe shipment has been damaged, and it ischarged with liability therefore, and to give itan opportunity to make an investigation andfix responsibility while the matter is fresh. The filing of notice of claim is a conditionprecedent for recovery.

Shorter period may be stipulated by theparties because it merely affects theshippers remedy and does not affect theliability of the carrier. (PHILAMGEN vs.

Sweetlines, Inc.)Prescriptive Period Not provided by Article 366. Thus, in suchabsence, Civil Code rules on prescriptionapply. If despite the notice of claim, the carrierrefuses 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.

ARTICLE 366 COGSA Sec.3 (6)Applicability

1. Domestic/inter-

island/coastwisetransportation

2. Land,water,airtransportation

3. Carriage ofgoods

1. International/

overseas/foreign(from foreigncountry to Phils.)Note: subject to therule on ParamountClause2. Water/maritimetransportation3. Carriage of goods

Notice of damage1.C

1.Not

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2.2

2.3-

Prescriptive periodNone provided; Civil

Code applies.

One year from the

date of delivery(delivered butdamaged goods), ordate when thevessel left port orfrom the date ofdelivery to thearrastre (non-delivery or loss).

COMBINED CARRIER AGREEMENT (ART.373)

GENERAL RULE: In case of a contract oftransportation of several legs, each carrier isresponsible for its particular leg in thecontract.

EXCEPTION: A combined carrier agreementwhere a carrier makes itself liable assumingthe obligations and acquiring as well therights and causes of action of those whichpreceded it.

A. MARITIME COMMERCE(Arts. 573-869)

IMPORTANT CONCEPTS:1. Merchant vessel2. Maritime lien and Preference of

Credit3. Doctrine of limited liability4. Causes of revocation of voyage

5. Participants in maritime commerce6. Charter party7. Loans on bottomry and respondentia8. Accidents in maritime commerce

MARITIME/ADMIRALTY LAW It is the system of laws which particularlyrelates to the affairs and business of the sea,to ships, their crews and navigation, and tomaritime conveyance of persons andproperty. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino &Hernando, citing Francisco, p.254)

Maritime laws apply only to maritime tradeand sea voyages. (Pandect of Commercial

Law and Jurisprudence, Justice Jose Vitug,1997 ed.)

Arrastre service is not maritime incharacter. It refers to a contract for theunloading of goods from a vessel. (ICTSI vs.Prudential Guarantee, 320 SCRA 244)

CHARACTERISTICS OF MARITIMETRANSACTION1. Real - similar to transactions over realproperty with respect to effectivity againstthird persons which is done throughregistration. (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 freightmoney; and 2) the right to retain the cargoand embargo and detention of the vessel(Luzon Stevedoring Corp v. CA, 156 SCRA169);

2. Hypothecary - the liability of the owner ofthe value of the vessel is limited to the vesselitself(Doctrine of Limited Liability).

The real and hypothecary nature ofmaritime law simply means that the liabilityof the carrier in connection with lossesrelated to maritime contracts is confined tothe vessel, which stands as the guaranty fortheir settlement. (Aboitiz Shipping Corp. vs.General Accident Fire and Life AssuranceCorp. 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 beacquired and transferred by any of the meansrecognized by law. They shall continue to beconsidered as personal property. (Arts. 573,585) They are susceptible to maritime liens suchas for the repair, equipping and provisioningof the vessel in the preparation of a voyage,as well as mortgage liabilities, in satisfactionof which a vessel may be validly arrested andsold. (Ship Mortgage Decree of 1978)

MARITIME LIEN It constitutes a present right of property inthe ship, a jus in re, to be afterward enforcedin admiralty by process in rem. (PNB vs. CA,337 SCRA 381) If the maritime lien arose prior to therecording of a preferred mortgage, it shallhave priority over the said mortgage lien.(PNB vs. CA, 337 SCRA 381)

ORDER OF PREFERENCE IN CASE OF SALEOF VESSEL

R.A. 6106 P.D. 1521Effectivity date

1969 1978

Applicability

Overseas shippingonly

Both domestic andoverseas shipping

Kind of saleJudicial Judicial and

extrajudicial

Order of PreferenceA preferredmortgage shall havepriority over allclaims against thevessel, except thefollowingpreferences in theorder stated:1. Judicial costs ofthe proceedings;

The preferredmortgage lien shallhave priority over allclaims against thevessel, except thefollowingpreferences in theorder stated:1. Expenses andfees allowed and

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2. Taxes due thePhilippineGovernment;3. Salaries andwages of the

Captain and Crew ofthe vessel during itslast voyage;4. General averageor salvage includingcontract salvage,bottomry loans, andindemnity dueshippers for thevalue of goodstransported butwhich were notdelivered to theconsignee;5. Costs of repairand equipment of

the vessel, andprovisioning of food,supplies and fuelduring its lastvoyage; and6. Preferredmortgagesregistered prior intime.

costs taxed by thecourt and taxes dueto the Government;2. Crews wages;3. General average;

4. Salvage, includingcontract salvage;5. Maritime liensarising prior in timeto the recording ofthe preferredmortgage;6. Damages arisingout of tort; and7. Preferredmortgage registeredprior in time.

Effect of sale: All pre-existing claims in thevessel are terminated. They will then besatisfied from the proceeds of the salesubject to the order of preference.

DOCTRINE OF LIMITED LIABILITY(HYPOTHECARY RULE) Cases where applicable:

1. Art. 587 civilliability for indemnities to thirdpersons

2. Art. 590

indemnities from negligent acts ofthe captain (not the shipowner orship agent)3. Art. 837 collision4. Art. 643 liability for wages of the captain andthe crew and for advances made bythe ship agent if the vessel is lost by

shipwreck or capture

GENERAL RULE:The liability of shipownerand ship agent is limited to the amount ofinterest in said vessel such that where vesselis 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) insuranceproceeds. (Chua v. IAC, 166 SCRA 183)

EXCEPTIONS:1. Claims under Workmens Compensation

(Abueg vs. San Diego 77 Phil 730);

2. Injury or damage due to shipowner or tothe concurring negligence of theshipowner and the captain;

3. The vessel is insured (Vasquez vs. CA138 SCRA 553).

4. Expenses for repair on vessel completedbefore loss;

5. In case there is no total loss and the

vessel is not abandoned;

6. Collision between two negligent vessels;

Abandonment of the vessel is necessary tolimit the liability of the shipowner. The onlyinstance were abandonment is dispensedwith is when the vessel is entirely lost (LuzonStevedoring vs. CA 156 SCRA 169).

RIGHT OF SHIPOWNER OR SHIP AGENTTO ABANDON VESSEL Instances:

1. In case of civil liability fromindemnities to third persons (Art.587);

2. In case of leakage of at least ofthe contents of a cargo containingliquids (Art. 687); and

3. In case of constructive loss of thevessel (Sec. 138, Insurance Code).

RIGHT OF ABANDONMENT

SHIPOWNER ORSHIP AGENT

CONSIGNEE

What may be abandonedVessel Goods shipped

Instances1. In case of civilliability fromindemnities to third

persons (Art. 587);2. Sec. 138,Insurance Code;3. In case of leakageof at least of thecontents of a cargocontaining liquids(Art. 687)

1. Partial non-delivery, where thegoods are useless

without the others(Art. 363);2. Goods arerendered useless forsale or consumptionfor the purposes forwhich they areproperly destined(Art. 365); and3. In case of delaythrough the fault ofthe carrier (Art.371).

Effects1. Transfer of

ownership of

the vesselfrom theshipowner tothe shippersor insurer.

2. In case of (2), theinsurer mustpay theinsured as ifthere wasactual totalloss of thevessel.

1. Transferof

ownership onthegoodsfromtheshipperto thecarrier.

2. Carriershouldpay theshipperthemarketvalue of

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thegoodsat thepoint ofdestinat

ion.

CAUSES OF REVOCATION OF VOYAGE1. War or interdiction of commerce;2. Blockade;3. Prohibition to receive cargo at

destination;4. Embargo;5. Inability of the vessel to navigate. (Art.

640)

Terms:1. Interdiction of commerce A governmental prohibitionof commercial intercourse intended tobring about an entire cessation for the

time being of all trade whatever.2. Blockade Asort of circumvallation of a place bywhich all foreign connection andcorrespondence is, as far as humanpower can effect it, to be cut off.3. Embargo Aproclamation or order of a state, usuallyissued in time of war or threatenedhostilities, prohibiting the departure ofships or goods from some or all the portsof such state until further order.

PARTICIPANTS IN MARITIME COMMERCEA. Shipowners and ship agentsB. Captains and masters of the vessel

C. Officers and crew of the vesselD. SupercargoesE. Pilot

A. SHIPOWNERS AND SHIP AGENTSShipowner (proprietario) Person who has possession, control andmanagement of the vessel and theconsequent right to direct her navigation andreceive freight earned and paid, while hispossession continues.

Ship agent (naviero) Person entrusted with provisioning andrepresenting the vessel in the port in which itmay be found; also includes the shipowner.

Not a mere agent under civil law; he issolidarily liable with the ship owner.Powers and functions: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 thatrelate to the requirements of navigation;

4. Order a new voyage, make a new charteror insure the vessel after obtainingauthorization from the shipowner or ifgranted in certificate of appointment.

Civil Liabilities of the Shipowner AndShip Agent1. All contracts of the captain, whether

authorized or not, to repair, equip andprovision the vessel; (Art. 586)

2. Loss and damage to the goods loaded onthe vessel without prejudice to their rightto free themselves from liability byabandoning the vessel to the creditors.(Art. 587)

Duty of Ship Agent to Discharge theCaptain and Members of the Crew If the seamen contract is not for a definiteperiod or voyage, he may discharge them athis discretion. (Art. 603) If for a definite period, he may notdischarge them until after the fulfillment oftheir contracts, except on the followinggrounds:a. Insubordination in serious matters;

b. Robbery;c. Theft;d. Habitual drunkenness;

e. Damage caused to the vessel or to itscargo through malice or manifest orproven negligence. (Art. 605)

B. CAPTAINS AND MASTERS They are the chiefs or commanders ofships. The terms have the same meaning, but areparticularly used in accordance with the sizeof the vessel governed and the scope oftransportation, i.e., large and overseas, andsmall and coastwise, respectively. Nature of position (3-fold character):

1. General agent of theshipowner;2. Technical director of thevessel;3. Representative of thegovernment of the country underwhose flag he navigates. Qualifications:1. Filipino citizen;2. Legal capacity to contract;3. Must have passed therequired physical and mentalexaminations required for licensinghim as such. (Art. 609) Inherent powers:1. Appoint crew in theabsence of ship agent;2. Command the crew anddirect the vessel to its port ofdestination;3. Impose correctionalpunishment on those who, while onboard vessel, fail to comply with hisorders or are wanting in discipline;4. Make contracts for thecharter of vessel in the absence ofship agent.5. Supply, equip, and provisionthe vessel; and6. Order repair of vessel toenable it to continue its voyage. (Art.

610)

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Sources of funds to comply with theinherent powers of the captain (in successiveorder):

1. From the consignee of thevessel;

2. From the consignee of thecargo;3. By drawing on the shipagent;4. By a loan on bottomry;5. By sale of part of the cargo.(Art. 611) Duties:1. Bring on board the propercertificate and documents and acopy of the Code of Commerce;2. Keep a Log Book,Accounting Book and Freight Book;3. Examine the ship before thevoyage;4. Stay on board during the

loading and unloading of the cargo;5. Be on deck while leaving orentering the port;6. Protest arrivals under stressand in case of shipwreck;7. Follow instructions of andrender an accounting to the shipagent;8. Leave the vessel last incase of wreck;9. Hold in custody propertiesleft by deceased passengers andcrew members;10. Comply with therequirements of customs, health,etc. at the port of arrival;

11. Observe rules to avoidcollision;

12. Demand a pilot whileentering or leaving a port.(Art. 612)

A ships captain must be accorded areasonable measure of discretionaryauthority to decide what the safety of theship and of its crew and cargo specificallyrequires on a stipulated ocean voyage (Inter-Orient Maritime Enterprises Inc. vs. CA).

No liability for the following:1. Damages caused to thevessel or to the cargo by forcemajeure;

2. Obligations contracted forthe repair, equipment, andprovisioning of the vessel unless hehas expressly bound himselfpersonally or has signed a bill ofexchange or promissory note in hisname. (Art. 620)

Solidary Liabilities of the ShipAgent/Shipowner for Acts Done by theCaptain towards Passengers andCargoes

1. Damages to vessel and tocargo due to lack of skill andnegligence;

2. Thefts and robberies of thecrew;3. Losses and fines forviolation of laws;4. Damages due to mutinies;

5. Damages due to misuse of power;6. For deviations;7. For arrivals under stress;8. Damages due to non-observance of marine regulations.(Art. 618)

C. OFFICERS AND CREW1. Sailing Mate/First Mate2. Second Mate3. Engineers4. Crew No liability under the followingcircumstances:1. If, before beginning voyage, captain

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

2. If a disease breaks out and be officiallydeclared an epidemic in the port ofdestination;

3. If the vessel should change owner orcaptain. (Art. 647)

Sailing Mate/First Mate Second chief of the vessel who takes theplace of the captain in case of absence,sickness, or death and shall assume all of hisduties, powers and responsibilities. (Art. 627) Duties:

1. Provide himself with maps

and charts with astronomical tablesnecessary for the discharge of hisduties;2. Keep the Binnacle Book;3. Change the course of thevoyage on consultation with thecaptain and the officers of the boat,following the decision of the captainin case of disagreement;4. Responsible for all thedamages caused to the vessel andthe cargo by reason of hisnegligence. (Arts. 628 - 631)

Second Mate Takes command of the vessel in case ofthe inability or disqualification of the captainand the sailing mate, assuming in such casetheir powers and responsibilities. Third in command Duties:

1. Preserve the hull andrigging of the vessel;2. Arrange well the cargo;3. Discipline the crew;4. Assign work to crewmembers;5. Inventory the rigging andequipment of the vessel, if laid up.(Art. 632)

Engineers

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Officers of the vessel but have no authorityexcept in matters referring to the motorapparatus. When two or more are hired, oneof them shall be the chief engineer. Duties:

1. In charge of the motorapparatus, spare parts, and otherinstruments pertaining to theengines;2. Keep the engines andboilers in good condition;3. Not to change or repair theengine without authority of thecaptain;4. Inform the captain of anydamage to the motor apparatus;5. Keep an Engine Book;6. Supervise all personnelmaintaining the engine. (Art. 632)

Crew

The aggregate of seamen who man a ship,or the ships company. Hired by the ship agent, where he ispresent and in his absence, the captain hiresthem, preferring Filipinos, and in theirabsence, he may take in foreigners, but notexceeding 1/5 of the crew. (Art. 634)

Classes of Seamans Contracts1. By the voyage;2. By the month; and3. By share of profits or freightage.

Just Causes for the Discharge of SeamanWhile Contract Subsists1. Perpetration of a crime;

2. Repeated insubordination, want ofdiscipline;

3. Repeated incapacity and negligence;4. Habitual drunkenness;5. Physical incapacity;6. Desertion. (Art. 637)

Rules in case of Death of a Seaman The seamans heirs are entitled topayment as follows:1. If death is natural:

a. compensation up to time of death if engaged on wageb. if by voyage - half of amount if death occurs on voyageout; and full, if on voyage in

c. if by shares - none, if beforedeparture; full, if after departure

2. if death is due to defense of vessel - fullpayment;

3. if captured in defense of vessel - fullpayment;

4. if captured due to carelessness - wagesup to the date of the capture. (Art. 645)

Complement of the Vessel All persons on board, from the captain tothe cabin boy, necessary for themanagement, maneuvers, and service, thusincluding the crew, the sailing mates,engineers, stokers and other employees onboard not having specific designations.

Does not include the passengers or thepersons whom the vessel is transporting.

D. SUPERCARGOES Persons who discharges administrativeduties assigned to him by ship agent orshippers, keeping an account and record oftransaction as required in the accountingbook of the captain. (Art. 649)

E. PILOT A person duly qualified, and licensed, toconduct a vessel into or out of ports, or incertain waters. The term generally connotes a persontaken on board at a particular place for thepurpose of conducting a ship through a river,road or channel, or from a port. Master pro hac vice for the time being inthe command and navigation of the ship. While in exercising his functions a pilot is insole command of the ship and supersedes themaster for the time being in the commandand navigation of the ship, the master doesnot surrender his vessel to the pilot and thepilot is not the master. There are occasionswhen the master may and should interfereand even displace the pilot, as when the pilotis obviously incompetent or intoxicated (FarEastern Shipping Company vs. CA).

Compulsory Pilotage States possessingharbors have enacted laws or promulgatedrules requiring vessels approaching theirports to take on board pilots licensed underthe local laws. (Notes and Cases on the Lawon Transportation and Public Utilities, Aquino,T. & Hernando, R.P. 2004 ed. p. 518)

Liablity of Pilot

GENERAL RULE: On compulsory pilotagegrounds, the Harbor Pilot is responsible fordamage to a vessel or to life or property dueto his negligence.

EXCEPT:1. Accident caused by force majeure ornatural calamity provided the pilot exercisedprudence and extra diligence to prevent orminimize damages.2. Countermand or overrule by the master of

the vessel in which case the registered ownerof the vessel is liable. (Sec.11, Art.III PPAAdmin Order 03-85)

SPECIAL CONTRACTS OF MARITIMECOMMERCE

1. Charter party2. Bill of lading3. Contract of transportation of

passengers on sea voyages4. Loan on bottomry5. Loan on respondentia6. Marine insurance

CHARTER PARTY A contract by virtue of which the owner oragent binds himself to transport merchandiseor persons for a fixed price. A contract by which an entire ship, or someprincipal part thereof is let/leased by the

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owner to another person for a specified timeor use. (Planters Products, Inc. vs. CA, 226SCRA 476)Parties:

1. Ship owner or ship agent

2. ChartererClasses:1. Bareboat or demise The chartererprovides crew, food and fuel. The charterer isliable as if he were the owner, except whenthe cause arises from the unworthiness of thevessel. The shipowner leases to the chartererthe whole vessel, transferring to the latter theentire command, possession and consequentcontrol over the vessels navigation, includingthe master and the crew, who therebybecome the charters servants. It transformsa common carrier into a private carrier.

The charterer becomes the owner ofthe vessel pro hac vice, just for that oneparticular purpose only. Because the

charterer is treated as owner pro hacvice, the charterer assumes thecustomary rights and liabilities of theshipowner to third persons and is heldliable for the expense of the voyage andthe wages of the seamen.

2. Contract of Affreightment A contractwhereby the owner of the vessel leases partor all of its space to haul goods for others.

The shipowner retains the possession,command and navigation of the ship, thecharterer merely having use of the spacein the vessel in return for his payment ofthe charter hired. Kinds:

a. Time

charter vessel is chartered for afixed period of time or duration ofvoyage.b. Voyage or trip charter the vessel isleased for one or series of voyagesusually for purposes of transportinggoods for charterer.

LEASE CHARTER PARTY If for a definiteperiod, lessee cannotgive up the lease bypaying a portion ofthe amount agreedupon.

Charterer mayrescind charter partyby paying half of thefreightage agreedupon.

If the leased propertyis sold to one whoknows of theexistence of thelease, the new ownermust respect thelease.

The new owner is notcompelled to respectthe charter party solong as he can loadthe vessel with hisown cargo. (Art. 689)

Civil law concept Commercial lawconcept

CHARTER PARTY BILL OF LADINGAn entire or completecontract.

More like a privatereceipt which the

captain gives to

accredit goodsreceived frompersons

Consensual contract Real contract

BAREBOAT ORDEMISE CHARTER CONTRACT OFAFFREIGHTMENT(TIME OR VOYAGE

CHARTER)Charterer becomesliable to otherscaused by itsnegligence

Owner remains liableas carrier and mustanswer for anybreach of duty

Charterer regardedas owner pro hacvice for the voyage

Charterer is notregarded as owner.

Owner of vesselrelinquishespossession,command andnavigation to

charterer

The vessel ownerretains possession,command andnavigation of the ship

Common carrier isconverted to privatecarrier.

Common carrier isnot converted to aprivate carrier.

PERSONS WHO MAY MAKE A CHARTER1. Owner or owners of the vessel,

either in whole or in majority part,who have legal control andpossession of the vessel

2. Charterer may subcharter entirevessel to 3rd person only if notprohibited in original charter.(Art.679)

3. Ship agent if authorized by theowner/s or given such power in thecertificate of appointment. (Art.598)

4. Captain in the absence of the shipagent or consignee and only if heacts in accordance with theinstructions of the agent or ownerand protects the latters interests.(Art.609)

REQUISITES OF A VALID CHARTER PARTY1. Consent of the contracting parties2. Existing vessel which should be

placed at the disposition of theshipper

3. Freight4. Compliance with Art. 652 of the

Code of Commerce

Clauses Which May Be Included In aCharter Party

Jason clause Clause paramountor paramount

clause

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

responsible by law,contract orotherwise, the cargoshippers, consigneesor owners shallcontribute with theshipowner in generalaverage. (Pandect ofCommercial Law andJurisprudence, JusticeJose Vitug, 1997 ed.)

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

domestic, subject tothe extent that anyterm of the bill oflading is repugnant tothe COGSA orapplicable law, thento the extent thereofthe provision of thebill of lading is void.(Pandect of Commercial Law and Jurisprudence, JusticeJose Vitug, 1997 ed.)

Rights and Obligations of Parties

SHIPOWNER ORSHIP AGENT

CHARTERER

1. If thevesselischarteredwholly,not toacceptcargofrom

others;2. To

observerepresentedcapacity;

3. Tounloadcargoclandestinelyplaced

4. Tosubstitute

anothervessel ifload islessthan 3/5ofcapacity;

5. Toleavethe portif thecharterer doesnotbring

the

1. To pay theagreed charterprice;2. To payfreightage onunboarded cargo;3. To pay losses toothers for loadinguncontracted cargoand illicit cargo;

4. To wait if thevessel needs repair;5. To payexpenses fordeviation. (Arts. 679-687)

cargowithinthe laydaysand

extralay daysallowed;

6. Toplace ina vesselin acondition tonavigate;

7. to bringcargo tonearestneutralport in

case ofwar orblockade. (Arts.669-678)

Rescission of a Charter PartyAt

charterersrequest

(Art 688)

Atshipowners

request(Art. 689)

Fortuitouscauses

(Art. 690)

1. Byabandoning

the charterand payinghalf of thefreightage;2. Error intonnage orflag;3. Failure toplace thevessel at thecharterersdisposal;4. Return ofthe vesseldue topirates,

enemies orbad weather;5. Arrival at aport forrepairs.

1. If the extralay days

terminatewithout thecargo beingplacedalongside thevessel;2. Sale bythe owner ofthe vesselbeforeloading bythecharterer;

1. War orinterdiction

of commerce;2. Blockade;3. Prohibitionto receivecargo;4. Embargo;and5. Inability ofthe vessel tonavigate.

Terms:

1. Primage - bonusto be paid to the captain after thesuccessful voyage.2. Demurrage thesum fixed in the charter party as aremuneration to the owner of the ship forthe detention of his vessel beyond thenumber of days allowed by the charter

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party for loading or unloading or forsailing.3. Deadfreight the amount paid by or recoverable froma charterer of a ship for the portion of the

ships capacity the latter contracted forbut failed to occupy.

4. Lay Days - daysallowed to charter parties for loading andunloading the cargo.

5. Extra Lay Days days which follow after the lay days haveelapsed.

USUAL FORMS OF CONSUMMATINGCONTRACTS1. C.I.F. cost, insurance and freight;2. F.O.B. - free on board;3. F.A.S. - free alongside ship; and4. C. & F. - cost and freight.

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

It is not dependent on the ownership of thetransporting ships or in the change ofcarriers, but rather on the fact of actualphysical transfer of cargo from one vessel toanother.

If done without legal excuse, howevercompetent and safe the vessel into which thetransfer is made, is a violation of contract andinfringement of right of shipper and subjectscarrier to liability if freight is lost event bycause otherwise excepted. (MagellanManufacturing vs. CA, 201 SCRA 102)

LOAN ON BOTTOMRY ANDRESPONDENTIA A real, unilateral, aleatory contract, byvirtue of which one person lends to another acertain amount of money or goods on thingsexposed to maritime risks, which amount,with its earnings, is to be returned if thethings are safely transported, and which islost if the latter are lost.

LOAN ONBOTTOMRY

LOAN ONRESPONDENTIA

Definition

Loan made byshipowner or shipagent guaranteedby vessel itself andrepayable uponarrival of vessel atdestination. (Art.719)

Loan taken onsecurity of the cargoladen on a vessel,and repayable uponsafe arrival of cargoat destination. (Art.719)

Who may contract

Shipowner or shipagent. Outside ofthe residence of theowners - thecaptain.

Only the owner ofthe cargo.

Common elements:1. Exposure of security to marine peril;2. Obligation of the debtor conditioned

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

Forms:1. Public instrument2. Policy signed by the contracting parties

and the broker taking part therein3. Private instrument (Art. 720)

Contents:1. Kind, name and registry of the vessel;2. Name, surname and domicile of the

captain;3. Names, surnames and domiciles of the

borrower and the lender;

4. Amount of the loan and the premiumstipulated;

5. Time for repayment;6. Goods pledged to secure repayment;7. Voyage during which the risk is run

(Art.721)

BOTTOMRY/RESPONDENTIA

ORDINARY LOAN(MUTUUM)

Not subject to UsuryLaw

Subject to UsuryLaw

Liability of theborrower is

contingent on thesafe arrival of thevessel or cargo atdestination

Not subject to anycontingency

(absolute liability)

The last lender is apreferred creditor

The first lender is apreferred creditor

WHEN LOAN ON BOTTOMRY ORRESPONDENTIA REGARDED AS SIMPLELOAN

1. Lender loaned an amount largerthan the value of the object due tofraudulent means employed by theborrower. (ART.726)

2. Full amount of the loan is not usedfor the cargo or given on the goods ifall of them could not have beenloaded, the balance will beconsidered a simple loan. (ART.727)

3. If the effects on which the money istaken is not subjected to any risk.(ART.729)

Note: Under existing laws, the parties to aloan, whether ordinary or maritime, mayagree on any rate of interest. (CB Circular905)

MARINE INSURANCE LOAN ONBOTTOMRY OR

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RESPONDENTIAIndemnity is paid afterthe loss has occurred

Indemnity is paidin advance byway of a loan

In case of loss of the

vessel due to a riskinsured against, theobligation of the insurerbecomes absolute

In case of loss of

the vessel due toa marine peril,the obligation ofthe borrower topay isextinguished

Consensual contract Real contract

Hypothecary Nature of Bottomry/Respondentia

GENERAL RULE: The obligation of theborrower to pay the loan is extinguished if thegoods given as security are absolutely lost byreason of an accident of the sea, during thevoyage designated, and if it is proven that thegoods were on board.

EXCEPTIONS:1. Loss due to inherent defect;2. Loss due to the barratry on the part of

the captain;3. Loss due to the fault or malice of the

borrower;4. The vessel was engaged in contraband;

and5. The cargo loaded on the vessel be

different in from that agreed upon.

Concurrence of Marine Insurance andLoan on Bottomry/Respondentia

1. The insurable interest of the ownerof a ship hypothecated by bottomryis only the excess of the value over

the amount secured by bottomry.(Sec. 101, Insurance Code)

2. The value of what may be saved incase of shipwreck shall be dividedbetween the lender and the insurerin proportion to the interest of eachone. (Art. 735)

Note: If a vessel is hypothecated by bottomryonly the excess is insurable, since a loan onbottomry partakes of the nature likewise ofan insurance coverage to the extent of theloan accommodation. The same rule wouldapply to the hypothecation of the cargo byrespondentia. (Pandect of Commercial Lawand Jurisprudence, Justice Jose Vitug, 1997

ed.)

ACCIDENTS IN MARITIME COMMERCE1. Averages2. Arrival Under Stress3. Collision4. Shipwreck

AVERAGE An extraordinary or accidental expenseincurred during the voyage in order topreserve the cargo, vessel or both, and alldamages or deterioration suffered by thevessel from departure to the port ofdestination, and to the cargo from the port ofloading to the port of consignment. (Art. 806)

The person whose property has been savedmust contribute to reimburse the damagecaused or expense incurred if the situationconstitutes general average. Classes:

1. Particular or Simple Average2. Gross or General Average

Where both vessel and cargo are saved, itis general average; where only the vessel oronly the cargo is saved, it is particularaverage.

Expenses incurred to refloat a vessel,which accidentally ran aground, in order tocontinue its voyage, do not constitute generalaverage. Not only is there absence of amarine peril, common safety factor, anddeliberateness. It is the safety of theproperty, and not the voyage, whichconstitutes the true foundation of generalaverage. (A. Magsaysay, Inc. vs. Agan,G.R.No. L-6393, Jan. 31, 1955)

PARTICULAR ORSIMPLE

GROSS ORGENERAL

DefinitionDamages orexpenses caused tothe vessel or cargothat did not inure tothe common benefit,and borne byrespective owners.(Art. 809)

Damages orexpensesdeliberately causedin order to save thevessel, its cargo orboth from real andknown risk. (Art.811)

Requisites1. common

danger;

2. deliberatesacrifice;

3. success;4. proper

formalities andlegal steps.

Liability The owner of thegoods which gaverise to the expense orsuffered the damageshall bear thisaverage. (Art. 810)

All the personshaving an interest inthe vessel and thecargo therein at thetime of theoccurrence of theaverage shallcontribute to satisfythis average. (Art.812)

The insurers(Art.859) andlenders on bottomryand respondentiashall likewisecontribute.(Art.732).

Number of interests involvedOnly one interestinvolved

Several interestsinvolved

Share in the damage or expense100% share In proportion to the

value of the ownersproperty saved

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Right to recoverNo reimbursement There may be

reimbursement

Kinds (not exclusive)Art. 809 Art. 811

Procedure for recovery1. Assembly and

deliberation2. Resolution of the

captain3. Entry of the

resolution in thelogbook

4. Detailed minutes5. Delivery of the

minutes to themaritime judicialauthority of thefirst port, within24 hours fromarrival,

6. Ratification bycaptain underoath. (Arts. 813-814)

GOODS NOT COVERED BY GENERALAVERAGE EVEN IF SACRIFICED

1. Goods carried on deck. (ART.855)2. Goods not recorded in the books or

records of the vessel. (ART.855 (2))3. Fuel for the vessel if there is more

than sufficient fuel for the voyage.(Rule IX, York-Antwerp Rule)

Jettison Act of throwing cargo overboard in order tolighten the vessel. Order of goods to be cast overboard:

1. Those which are on thedeck, preferring the heaviest onewith the least utility and value;

2. Those which are below theupper deck, beginning with the onewith greatest weight and smallestvalue. (Art. 815)

Jettisoned goods are not res nullius nordeemed abandoned within the meaning ofcivil law so as to be the object of occupationby salvage. (Pandect of Commercial Law andJurisprudence, Justice Jose Vitug, 1997 ed.)

In order that the jettisoned goods may beincluded in the gross or general average, the

existence of the cargo on board should beproven by means of the bill of lading. (Art.816)

York-Antwerp (Y-A) Rules onDetermining Liability for Averages WithRegard To Deck Cargo

1. Deck cargo is allowed only indomestic/coastwise/inter-islandshipping, and is prohibited ininternational/overseas/foreignshipping.

2. If deck cargo is loaded with theconsent of the shipper on overseas

trade, it must always contribute to

general average, but should thesame be jettisoned, it would not beentitled to reimbursement becausethere is violation of the Y-A Rules.

3. If deck cargo is loaded with the

consent of the shipper oncoastwise shipping, it must alwayscontribute to general average andif jettisoned would be entitled toreimbursement.

Reason: In domestic shipping, voyages areusually short and the seas are generally notrough. In overseas shipping, the vessel isexposed for many days to perils of the sea.

DOMESTIC INTERNATIONALDeck cargo is allowed Deck cargo is not

allowed

With shippers consent

General average Particular average

Without shippers consent

Captain is liable Captain is liable

ARRIVAL UNDER STRESS (ARRIBADA)The arrival of a vessel at the nearest andmost convenient port instead of the port ofdestination, if during the voyage the vesselcannot continue the trip to the port ofdestination.

Whenlawful

Whenunlawful

Who bearsexpenses:

The inabilityto continuevoyage isdue to lackof provisions,well-foundedfear of seizure,privateers,pirates, oraccidents ofthe seadisabling itto navigate.(Art. 819)

1. Lack of provisions due tonegligence to carryaccording tousageandcustoms;

2. Risk of enemynot wellknown ormanifest

3. Defect of vesseldue toimproperrepair;and

4. Malice,negligence, lack offoresightor skill ofcaptain.(Art. 820)

Theshipowner orship agent isliable in caseof unlawfularrival understress. Butthey shall notbe liable forthe damagescaused byreason of alawful arrival.(Art. 821)

It is the duty of the captain to continue thevoyage without delay after the cause of thearrival under stress has ceased failing in suchduty renders him liable. However, in case thecause has been risk of enemies, there mustfirst be an assembly before departure. (Art.

825)

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Steps:1. Captain should determine during the

voyage if there is well founded fearof seizure, privateers and other validgrounds;

2. Captain shall assemble the officersand summon the persons interestedin the cargo who may attend themeeting but without a right to vote;

3. The officers shall determine andagree if there is well-founded reasonafter examining the circumstances.The captain shall have the decidingvote;

4. The agreement shall be drafted andthe proper minutes shall be signedand entered in the log book;

5. Objections and protests shalllikewise be entered in the minutes.

COLLISION

Impact of two vessels both of which aremoving.Allision Impact between a moving vessel and astationary one.

Nautical Rules to Determine Negligence1. When twovessels are about to enter a port, thefarther one must allow the nearer toenter first; if they collide, the fault ispresumed to be imputable to the onewho arrived later, unless it can be provedthat there was no fault on its part.2. When two

vessels meet, the smaller should give theright of way to the larger one.3. A vessel leavingport should leave the way clear foranother which may be entering the sameport.4. The vessel whichleaves later is presumed to have collidedagainst one which has left earlier.5. There is apresumption against the vessel whichsets sail in the night.6. There is apresumption against the vessel withspread sails which collides with anotherwhich is at anchor and cannot move,

even when the crew of the latter hasreceived word to lift anchor, when therewas not sufficient time to do so or therewas fear of a greater damage or otherlegitimate reason.7. There is apresumption against an improperlymoored vessel.8. There is apresumption against a vessel which hasno buoys to indicate the location of itsanchors to prevent damage to vesselswhich may approach it.9. Vessels musthave proper look-outs or personstrained as such and who have no other

duty aside therefrom. (Smith Bell v. CA)

Nautical Rules as to Sailing Vessel andSteamship1. Where a steamship and a sailing vessel

are approaching each other from

opposite directions, or on intersectinglines, the steamship from the momentthe sailing vessel is seen, shall watchwith the highest diligence her course andmovements so as to be able to adoptsuch timely means of precaution as willnecessarily prevent the two boats fromcoming in contact.

2. The sailing vessel is required to keep hercourse unless the circumstances requireotherwise.

Zones of Time in the Collision of Vessels

1. First zone all time up to the momentwhen 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 momentit becomes a practical certainty. It is in this period where conduct of the

vessels is primordial. It is in this zone thatvessels must strictly observe nautical rules,unless a departure therefrom becomesnecessary to avoid imminent danger.

3. Third zone time when collision is certainand time of impact. An error in this zone would no longer be

legally consequential.

Error in Extremis - sudden movement madeby a faultless vessel during the third zone of

collision with another vessel which is at faultduring the 2nd zone. Even if such suddenmovement is wrong, no responsibility will fallon said faultless vessel. (Urrutia and Co. v.Baco River Plantation Co., 26 PHIL 632)

Cases Covered By Collision and Allision1. One vessel at faultVessel at fault is liable for damage causedto innocent vessel as well as damagessuffered by the owners of cargo of bothvessels. (Art. 826)

2. Both vessels at fault Each vessel must bear its own loss, but theshippers of both vessels may go against theshipowners who will be solidarily liable. (Art.

827)3. Vessel at fault not known Each vessel must bear its own loss, but theshippers of both vessels may go against theshipowners who will be solidarily liable. (Art.828)

Doctrine of Inscrutable Fault In caseof collision where it cannot bedetermined which between the twovessels was at fault, both vessels beartheir respective damage, but both shouldbe solidarily liable for damage to thecargo of both vessels.

4. Third vessel at fault The third vessel will be liable for losses anddamages. (Art. 831)

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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 stationaryobject, such as a bridge post, dock, ornavigational aid. (Far Eastern Shipping v. CA,Luzon Stevedoring vs. CA)

Even if the cause of action against thecommon carrier is based on quasi-delict, thedefense of due diligence in the selection andsupervision of employees is unavailing incase of a maritime tort resulting in collision. Itis not a civil tort governed by the Civil Codebut a maritime one governed by Arts. 826-839 of the Code of Commerce. (ManilaSteamship vs. Insa Abdulhaman)

Doctrine of Last Clear Chance and Rule on

Contributory Negligence cannot be applied incollision cases because of Art.827 of the Codeof Commerce. (Notes and Cases on the Lawon Transportation and Public Utilities, Aquino,T. & Hernando, R.P. 2004 ed.)

MARITIME PROTEST Condition precedent or prerequisite torecovery of damages arising from collisionsand other maritime accidents. It is a written statement made under oathby the captain of a vessel after theoccurrence of an accident or disaster in whichthe vessel or cargo is lost or damaged, withrespect to the circumstances attending suchoccurrence, for the purpose of recovering

losses and damages. Excuses for not filing protest: 1) where theinterested person is not on board the vessel;and 2) on collision time, need not beprotested. (Art. 836) Cases applicable:

1. Collision (Art. 835);2. Arrival under stress (Art. 612(8));3. Shipwrecks (Arts. 612(15), 843);

4. Where thevessel has gone through a hurricaneor when the captain believes thatthe cargo has suffered damages oraverages (Art. 624). Who makes: Captain

When made: within 24 hours from the timethe collision took place. Before whom made: competent authorityat the point of collision or at the first port ofarrival, if in the Philippines and to thePhilippine consul, if the collision took placeabroad. (Art. 835)

SHIPWRECK It is the loss of the vessel at sea as aconsequence of its grounding, or runningagainst an object in sea or on the coast. Itoccurs when the vessel sustains injuries dueto a marine peril rendering her incapable ofnavigation.

If the wreck was due to malice, negligence

or lack of skill of the captain, the owner of the

vessel may demand indemnity from saidcaptain. (Art. 841)

The rules on collision or allision, as may bepertinent, can equally apply to shipwrecks.

SPECIAL CONCEPTSARRASTRE SERVICE A contract for the unloading of goods froma vessel. Applicability: Overseas trade only.(Commercial Law Review, C. Villanueva, 2004ed.) Significance: When a person brings incargo from abroad, he cannot unload anddeliver the cargo by himself. The unloadingmust be done by the arrastre operator, whichwill then deliver the cargo to the importer.(Commercial Law Review, C. Villanueva, 2004ed.)Nature of business: It is a public utility,discharging functions which are heavily

invested with public interest.Liability:1. Similar to a warehouseman (Lua Kian v.

Manila Railroad)2. Similar to a common carrier (Northern

Motors v. Prince Line)3. Solidary liability with the common carrier

Note: In order that the arrastre operator maybe held liable, the consignee must prove thatthe damage was due to the negligence andwhile the goods are in the custody of thearrastre operator. (Hartford Fire Insurance v.E. Razon, Inc.)

STEVEDORING SERVICE

The carriage of goods from the warehouseor pier to the holds of the vessel. (Chief ofStaff vs. CIR) As understood in the port business, theterm consists of the handling of cargo fromthe hold of the ship to the dock, in case ofpier-side unloading; or to a barge, in case ofunloading at sea. (Anglo-Fil Trading Corp. vs.Lazaro)

The loading on the ship of outgoing cargois also part of stevedoring work. (Ibid.)

CONTAINERIZATION/ SAID-TO-CONTAIN/ SHIPPERS LOAD ANDCOUNT SYSTEM

System whereby the shipper loads hiscargoes in a specially designed container,seals the container and delivers it to thecarrier for transportation. The carrier does notparticipate in the counting of themerchandise for loading into the container,the actual loading, and the sealing of thecontainer. (US Lines v. Comm. Of Customs,ICTSI v. Prudential Guarantee)

The matter of quantity, description andconditions of the cargo inside the container isthe sole responsibility of the shipper, unlessthere is stipulation to the contrary. (US Linesvs. Comm. Of Customs, Reyma Brokerage v.Phil. Home Assurance)

Note: In order to attribute to the carrier any

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damage to the shipment that may be found,inspection of the goods should be done atpier-side. (Bankers vs. CA)

III. CARRIAGE OF GOODS BY SEA

ACT/COGSA (C.A. No. 65)

APPLICABILITY The transportation must be:1. Water/maritimetransportation;

2. for the carriageof goods; and3. overseas/international/foreign (from foreign port toPhilippine port).

It can be applied in domestic seatransportation if agreed upon by the parties.(Clause paramountorparamount clause)

IMPORTANT FEATURES:

1. Amount of carriers liability2. Notice of damage3. Prescriptiveperiod

AMOUNT OF CARRIERS LIABILITY Under the Sec. 4(5), the liability limit is setat $500 per package or customary freight unitunless the nature and value of such goods isdeclared by the shipper. This is deemedincorporated in the bill of lading even if notmentioned 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 upondelivery

b. Latent damage: shipper should file aclaim with the carrier within three daysfrom delivery.

Note: The filing of a notice of claim is not acondition precedent.

PRESCRIPTIVE PERIOD Action for loss or damage to the cargoshould be brought within one year after:

a. Delivery of the goods(delivered but damaged goods); orb. The date when the goodsshould have been delivered (non-delivery). (Sec. 3[6])

Loss or Damage as applied to the COGSAcontemplates a situation where no delivery atall was made by the shipper of the goodsbecause the same had perished, gone out ofcommerce, or disappeared in such a way thattheir existence is unknown or they cannot berecovered. Thus, it is inapplicable in case ofmisdelivery or conversion. (Ang vs. American

Steamship Agencies Inc.) and damage arising

from delay or late delivery (Mitsui O.S.K. LinesLtd. vs. CA). In such instance the, Civil Coderules on prescription shall apply.

The one-year prescriptive period is

suspended by:1. The expressagreement of the parties (UniversalShipping Lines, Inc. vs. IAC, 188SCRA 170)2. The filing of an action in court until it isdismissed. (Stevens & Co. vs.Nordeutscher Lloyd, 6 SCRA 180)

The one-year period shall run from deliveryof the last package and is not suspended byextrajudicial 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 theconsignee. (Union Carbide Phils, Inc. vs.Manila Railroad Co.,SCRA 359)

The insurer exercising its right ofsubrogation is bound by the one-yearprescriptive period. However, it does notapply to the claim against the insurer for theinsurance proceeds. (Fil. Merchants Ins. Co.vs. Alejandro; Mayer Steel Pipe Corp. vs. CA)

IV. WARSAW CONVENTION OF 1929 (WC)

PURPOSE: To protect the emerging airtransportation industry and to secure theuniformity of recovery by the passengers.

APPLICABILITY The transportation must be:1. International transportation;

2. Air transportation; and3. Carriage of passengers, baggage or

goods.

The WC shall also apply to fortuitoustransportation by aircraft performed by an airtransportation enterprise.

International transportation - anytransportation in which the place of departureand the place of destination are situatedeither:

1. Within the territories of two HighContracting Parties regardless of whetheror not there be a break in thetransportation or transshipment, or2. Within the territory of a single HighContracting Party, if there is an agreedstopping place within a territory subjectto the sovereignty, mandate or authorityof another power, even though thatpower is not a party to the Convention.(round trip, Am. Jur.)

Transportation to be performed by severalsuccessive air carriers shall be deemed to beone undivided transportation, if it has beenregarded by the parties as a single operation,whether it has been agreed upon under the

form of a single contract or of a series of

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contracts, and it shall not lose itsinternational character merely because onecontract or a series of contracts is to beperformed entirely within a territory subjectto the sovereignty, suzerainty, mandate, or

authority of the same High Contracting Party.(Art. 1 Sec.3)

WHEN INAPPLICABLE1. When public policy is contradicted;2. If the requirements under the

Convention are not complied with.

IMPORTANT CONCEPTS:1. Transportation documents

a. Passenger ticketb. Baggage checkc. Air way bill

2. Liability of the carrier for damagesa. Death or injury topassengers

b. Loss or damage to baggageor goodsc. Delay

3. Successive carrier agreement4. Jurisdiction5. Combined transportation agreement

PASSENGERTICKET

BAGGAGECHECK

AIRWAYBILL

Passenger Checked-inbaggage

Goods to beshipped

LIABILITY OF CARRIER FOR DAMAGES1. Death or injury of a passenger if theaccident causing it took place on board theaircraft or in the course of its operations of

embarking or disembarking; (Art. 17)2. Destruction, loss or damage to anybaggage or goods, if it took place during thetransportation by air; (Art. 18) and

Transportation by air The period duringwhich the baggage or goods are in the chargeof the carrier, whether in an airport or onboard an aircraft, or, in case of a landingoutside an airport, in any place whatsoever.

It includes any transportation by land orwater outside an airport if such takes place inthe performance of a contract fortransportation by air, for the purpose ofloading, delivery, or transshipment.3. Delay in the transportation of passengers,baggage or goods.(Art. 19)

Note: The Hague Protocol amended the WCby removing the provision that if the airlinetook 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 amendedby Guatemala Protocol, 1971; Alitalia vs.IAC)1. Passengers

GENERAL RULE: $100,000 per passenger

EXCEPTION: Agreement to a higher limit

2. Checked-in baggage

GENERAL RULE: $20 per kilogram

EXCEPTION: In case of special declaration ofvalue and payment of a supplementary sumby consignor, carrier is liable to not more

than the declared sum unless it proves thesum is greater than actual value.3. Hand-carried baggage $1000/passenger4. Goods to be shipped

GENERAL RULE: $20 per kilogram

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

An agreement relieving the carrier fromliability 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 misconductor default on its part. (Art. 25)

Thus, the WC does not operate as anexclusive enumeration of the instances of anabsolute limit of the extent of liability. It doesnot preclude the application of the Civil Codeand other pertinent local laws. It does notregulate or exclude liability for otherbreaches of contract by the carrier, ormisconduct of its employees, or for someparticular or exceptional type of damage.(Alitalia vs. CA)

In PanAm v. IAC, the WC was applied asregards the limitation on the carriers liability,there being a simple loss of baggage withoutany improper conduct on the part of theofficials or employees of the airline or otherspecial injury sustained by the passenger.

In KLM Royal v. Tuller, the WC hasinvariably been held inapplicable, or as notrestrictive of the carriers liability, wherethere was satisfactory evidence of malice orbad faith attributable to its officers andemployees. (Alitalia vs. IAC)

ACTION FOR DAMAGES

1. Notice of claim A written complaint must me made within:a. 3 days from receipt of baggageb. 7 days from receipt of goodsc. In case of delay, 14 days from

receipt of baggage/goods

The complaint is a condition precedent.Without the complaint, the action is barredexcept in case of fraud on the part of thecarrier. (Art. 26)

2. Prescriptive period Action must be filed within 2 years from:a. date of arrival at the destinationb. date of expected arrivalc. date on which the transportation

stopped. (Art. 29)

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In United Airlines vs. Uy the two-yearprescriptive period was not applied where theairline employed delaying tactics.

RULE IN CASE OF VARIOUS SUCCESSIVECARRIERS1. Carriage of passengers

GENERAL RULE: Action is filed only againstthe carrier in which the accident or delayoccurred.

EXCEPTION: Agreement or contractwhereby the first carrier assumed liability forthe whole journey.2. Carriage of baggage or goods

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

b. Passenger or consignee can file an

action against the last carrier andthe carrier in which the damageoccurred.

These carriers are jointly and severallyliable. (Art. 30)

A contract of international carriage by air,although performed by different carriersunder a series of airline tickets constitutes asingle operation. Members of theInternational Air Transportation Association(IATA) are under a general pool partnershipagreement wherein they act as agent of eachother in the issuance of tickets to contractedpassengers to boost ticket sales worldwideand at the same time provide passengers

easy access to airlines which are otherwiseinaccessible in some parts of the world.(American Airlines vs. CA)

Under a general pool partnershipagreement, the ticket-issuing airline is theprincipal in a contract of carriage while theendorsee-airline is the agent. The obligationof the former remained and did not ceaseeven when the breach occurred not on itsown flight but on that of another airline whichhad undertaken to carry the passengers toone of their destinations. (China Airlines vs.Chiok)

JURISDICTION

At the option of the plaintiff, the action fordamages may be filed in the:a. Court of domicile of thecarrier;b. Court of its principal placeof business;c. Court where it has a placeof business through which thecontract has been made; ord. Court of the place of destination. (Art. 28(1))

NOTE: It is the passengers ultimatedestination not an agreed stopping placethat determines the country where suit is tobe 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)

SALVAGETwo 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 theowner or those entrusted with the care ofthem have either abandoned in distress atsea, or are unable to protect or secure.2. Compensation allowed to persons bywhose voluntary assistance a ship at sea orher cargo or both have been saved in wholeor in part from impending sea peril, or suchproperty recovered from actual peril or loss,as in cases of shipwreck, derelict orrecapture.Requisites:

1. Valid object of salvage;

2. Object must have beenexposed to marine peril (not perils ofthe ship);3. Services renderedvoluntarily (neither an existing dutynor 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 floatupon the sea when cast overboard;4. Ligan or Lagan goods cast into the seatied to a buoy, so that they may be found

again by the owners (p.173, Judge Diaz).Persons who have no right to

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