Sunteți pe pagina 1din 40

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

1

Transportation Law Review Based on the lectures of:

Atty. Melissa Romana Suarez

Starring: Shyler, the cab beetle. 
Starring: Shyler, the cab beetle. 

APPLICABLE LAWMelissa Romana Suarez Starring: Shyler, the cab beetle.  Art. 1766 . In all matters not

Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.

The primary law in transportation law is the civil code, particularly the provisions on common carriers. The suppletory laws are the Code of Commerce, and special laws like the COGSA (Carriage of Goods by Sea Act), Salvage Law, Warsaw Convention, Tariff and Customs Code.

What is transportation? It is a movement of things or persons from one place to another; a carrying across.

What does transportation include?

1. Waiting time - just because a person is in the

airport waiting for the flight to board, does not mean

that transportation has not started.

2. Loading and unloading transportation of goods

with

respect

to

3. Stopping in transit - when one takes a long flight,

transit stops are also included even if passenger is required to disembark and take all his belongings with him.

4. All other accessorial services in connection with the

loaded movement -- so it could be anything, like when

you are in HK, you are allowed to check-in the City, the movement of your luggage from the city check in to the airport is already included in the term transportation.

DEFINITION OF COMMON CARRIER (CC)the airport is already included in the term transportation. Art. 1732. Common carriers are persons, corporations,

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

Elements:

1. must be a person, association, corporation, or firms

2. Engaged in a business

3. Transports persons or goods or both by land, water

or air

4. Offers service to the public

5. Accepts compensation for services

If one element is missing, then it is not a common carrier.

National Steel vs. CA 283 SCRA 45 (True test of Common carrier)

The carriage of goods and passengers provided it has space for all who opt to avail themselves of its transportation for a fee.

This means that if you are a carrier, you cannot discriminate. You have to provide space for everyone

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

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

A: No. Still considered common carrier ---

1.) De Guzman vs. CA - even if the carriage of goods or pax is only an ancillary or sideline, that person can still be considered a cc. Even if the transportation is merely occasional, sporadic or not on a regular basis. Even though the transporation is offered only to a narrow segment of the general population. And lastly, even if he has not secured a certificate of public convenience.

Fx: Facts: Ernesto Cendaña, a junk dealer, was

engaged in buying up used bottles and scrap metal in

Pangasinan. Upon gathering sufficient quantities of

such scrap material, Cendaña would bring such

material to Manila for resale. He utilized 2 six-wheeler

trucks which he owned for hauling the material to

Manila. On the return trip to Pangasinan, Cendaña

would load his vehicles with cargo which various

merchants wanted delivered to differing

establishments in Pangasinan. For that service,

Cendaña charged

freight rates which were commonly lower than regular

commercial rates. Sometime in November 1970,

Pedro de Guzman, a merchant and authorized dealer

of General Milk Company (Philippines), Inc. in

Urdaneta, Pangasinan, contracted with Cendaña for

the hauling of 750 cartons of Liberty filled milk from a

warehouse of General Milk in Makati, Rizal, to de Guzman‘s establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970, Cendaña loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by Cendaña himself; while 600 cartons were placed on board the other truck which was driven by Manuel Estrada, Cendaña ‘s driver and employee. Only 150 boxes of Liberty filled milk were delivered to de Guzman. The other 600 boxes never reached de Guzman, since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo.

Held: Article 1732 of the Civil Code makes no distinction between one whose principal business activity is the carrying of persons or goods or both,

and one who does such carrying only as an ancillary activity (in local idiom, as ―a sideline‖). Article 1732 also carefully avoids making any distinction between

a person or enterprise offering transportation service

on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between

a carrier offering its services to the ―general public,‖

i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. Article 1733 deliberately refrained from making such distinctions.

Cendaña is properly characterized as a common carrier even though he merely ―back-hauled‖ goods for other merchants from Manila to Pangasinan, although such backhauling was done on a periodic or occasional rather than regular or scheduled manner,

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

2

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

A certificate of public convenience is not a requisite

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

public convenience or other franchise.

2. FPIC vs. CA - still a common carrier even if the

mode of transportation is not a motor vehicle (in this case, pipeline) for as long as all the requisites/elements of a cc are present. Here, it is not the pipeline that moves, it is the oil.

3. Asia Lighterage vs. CA (2003) -- even if it has no

fixed and publicly known route, maintains no terminals and issues no tickets

4. Calvo vc. UCPB - even if it is not in the business

of public transportation; here, Calvo was a customs broker.

5. Schmitz vs. TVI - even if the mode of transport is

not owned by him

6. Bascos vs. CA - even if the contract is not a

contract of carriage. Here, what was entered into was a contract of lease of the truck. The goods were lost and the defense was that what was entered into was a lease contract. According to the SC, the name of the contract does not matter, for as long as the requisites are present, then that person is considered a common carrier.

present, then that person is considered a common carrier. WHO ARE NOT CONSIDERED COMMON CARRIER? FGU

WHO ARE NOT CONSIDERED COMMON CARRIER?

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

GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no other individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms or associations engaged

in the business of carrying or transporting passengers

or goods or both, by land, water, or air, for hire or compensation, offering their services to the public,[8] whether to the public in general or to a limited clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of

passengers or goods, providing space for those who opt to avail themselves of its transportation service for

a fee.Given accepted standards, GPS scarcely falls

within the term ―common carrier.‖ BUT GPS is still

liable based on the contract. However, there is no presumption of negligence in case of loss.

2. Crisostomo vs. CA (2003) Is a travel agency a

common carrier?

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

Petitioner‘s contention has no merit.

By definition, a contract of carriage or transportation is one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. Such person or association of persons are regarded as carriers and are classified as private or special carriers and common or public carriers. A common carrier is defined under Article 1732 of the Civil Code as persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their services to the public.

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

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

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

A

t

e

n

e

o

d

submission is premised on a wrong assumption. A t e n e o d DILIGENCE REQUIRED:

DILIGENCE REQUIRED:

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

Such extraordinary diligence in the vigilance over the

goods is further expressed in Articles 1734, 1735, and

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

3

1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.

Notes:

1. What is Extra Ordinary Diligence (XOD)? That

extreme measure of care and caution which persons of which unusual prudence and circumspection use for securing and preserving their own properties or rights. (National Trucking and Forwarding Corp. vs. Lorenzo Shipping (2005))

Facts: DOH and CARE signed an agreement where CARE would acquire from the US donations to be transported to the Philippines. To deliver the goods within the Phil, DOH entered into a contract with NTFC. NTFC shipped the goods through Lorenzo Shipping. The consignee was A, NTFC‘s branch manager. LS delivered the goods but when it requested A to return the bills of ladings, A merely returned certified true copies thereof. Every after delivery, A and his subordinates signed a delivery receipt. Despite delivery however, it was alleged that the goods were never received.

LS invoked that it exercised XOD, and thus was not liable for the loss.

Held: Is LS presumed to be at fault for the loss of the goods? No - Article 173 of the Civil Code demands that a common carrier observe extraordinary diligence over the goods transported by it. Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights. This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Hence, in case of loss of goods in transit, the common carrier is presumed under the law to have been at fault or negligent. However, the presumption of fault or negligence, may be overturned by competent evidence showing that the common carrier has observed extraordinary diligence over the goods. In the instant case, we agree with the court a quo that the respondent adequately proved that it exercised extraordinary diligence. Although the original bills of lading remained with petitioner, respondent‘s agents demanded from Abdurahman the certified true copies of the bills of lading. They also asked the latter and in his absence, his designated subordinates, to sign the cargo delivery receipts. This practice, which respondent‘s agents testified to be their standard operating procedure, finds support in Article 353 of the Code of Commerce. Conformably with the aforecited provision, the surrender of the original bill of lading is not a condition precedent for a common carrier to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible, acknowledgment of the delivery by signing the delivery receipt suffices.

2. In PAL vs. CA 106 S 391 - SC said that the duty of

to exercise the duty of utmost diligence on the part of the CC is for the safety of passengers, as well as members of the crew.

If you are part of the crew, and you are injured, you can sue the the CC and the CC cannot invoke that it is

not required to exercise XOD. So there is no discrimination between crew and passengers.

The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier, the airplane in the present case. And this must be so for any omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to all aboard the plane, passengers and crew members alike.

3. Benedicto vs. IAC - The prevailing doctrine on

common carriers makes the registered owner liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof It would be very difficult and often impossible as a practical matter, for members of the general public to enforce the rights of action that they may have for injuries inflicted by the vehicles being negligently operated if they should be required to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner's claim, private respondent is not required to go beyond the vehicle's certificate of registration to ascertain the owner of the carrier.

4. BA Finance vs. CA - the registered owner, the

defendant-appellant herein, is primarily responsible for the damage caused to the vehicle of the plaintiff- appellee, but he (defendant-appellant) has a right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused to the plaintiff-appellant. (File a 3rd party complaint)

Reason: Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. A victim of recklessness on the public highways is usually without means to discover or Identify the person actually causing the injury or damage. He has no means other then by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove the contrary to the prejudice of the person injured, that is, to prove that a third person or another has become the owner, so that he may thereby be relieved of the responsibility to the injured person.

be relieved of the responsibility to the injured person. STATE REGULATION OF COMMON CARRIER Art. 1765.

STATE

REGULATION

OF

COMMON

CARRIER

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

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

4

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

Notes:

public

replaced by the following bodies:

1. So

the

service

commission

has

been

LTO - private vehicles LTFRB- common carrier Civil Aeronautics Board - public airplanes ATO- private planes (according to Lyndon) MARINA - common carriers for sea

2. Note: The cancellation of certificate of public

convenience cannot be done without hearing; although these bodies have the power to initiate

hearing motu propio. Take note of the ground for cancellation as provided under Art. 1765.

3. Pantranco vs. Public Service Commission 70 P

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

4. Medina vs. Cresencia- The sale of CPC without

approval of the governing bodies is not binding

against the public. So there has to be approval first. It

is binding between the parties only. In contemplation

of the law, the grantee of record continues to be responsible under the CPC in relation to the governing body or the public.

5. PAL vs. CAB 270 S 538 - PAL alleged that CAB

abused its discretion when it granted to Grand Air a Temporary Operating Permit. Accdg. to PAL, Grand Air has not been granted a legislative franchise to operate.

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

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

There is nothing in the law nor in the Constitution,

which indicates that a legislative franchise is an indispensable requirement for an entity to operate as

a domestic air transport operator. Although Section 11

of Article XII recognizes Congress' control over any franchise, certificate or authority to operate a public

utility, it does not mean Congress has exclusive authority to issue the same. Franchises issued by Congress are not required before each and every public utility may operate. In many instances, Congress has seen it fit to delegate this function to government agencies, specialized particularly in their respective areas of public service.

A reading of Section 10 of the same reveals the clear

intent of Congress to delegate the authority to

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

 
  Distinctions between CC and Private

Distinctions

between

CC

and

Private

 

Carrier

 

1.

Definition

 

Cf:

Art. 1766

Involves

a

single

   

undertaking

2.

As

to

 

Bound

to

carry

May choose person with whom it may contract

whom it may

all

pax

who

contract

choose

to

employ it

 

3.

Degree of

 

Observe XOD

GFOF

 

diligence

   

required

4.

As

to

 

Negligence is presumed if pax

Person

 

who

presumption

alleges negligence

of

or

goods do not

must

prove

the

negligence

reach

final

same

 

destination

 

5.

As to how

     

to

escape

liability

 

6.

As

to

 

A

CC performs

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

state

public service and is subject to State regulation

regulation

CC OF GOODS (CCOG)service and is subject to State regulation regulation Art. 1753 . The law of the country

Art. 1753. The law of the country to which the goods

are to be transported shall govern the liability of the common carrier for their loss, destruction or

deterioration.

NOTES:

1. If foreign voyage or flight from foreign country inbound to Phil - governed by Phil laws. If outbound, carrier lands in US and there is complaint, can pax sue CCOG here? Yes, apply conflicts of laws. (Saudia

Airlines case)

here? Yes, apply conflicts of laws. (Saudia Airlines case) TEST TO DETERMINE IF ONE IS CCOG

TEST TO DETERMINE IF ONE IS CCOG

a. He must be engaged in the business of carrying

goods for others as a public employment, and must

hold himself out as ready to engage in the

transportation of goods for person generally as a

business and not as a casual occupation;

b. He must undertake to carry goods of the kind to

which his business is confined;

c. He must undertake to carry by the method by which

his business is conducted and over his established

roads; and

d. The transportation must be for hire. (FPIC VS. CA)

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods X X X

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.

Notes:

What is XOD in the vigilance of goods?

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

5

Extraordinary diligence requires rendering service with the greatest skill and foresight to avoid damage and destruction to the goods entrusted for carriage and delivery. (Leamer vs. Malayan, 2005)

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
Art. 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2)
Act
of
the
public
enemy in
war,
whether
international or civil;

Notes:

1. Gen Rule is the first sentence; the exceptions are

the 5 cases enumerated.

2. Does it mean that if goods are lost, damaged or

destroyed, is the CCOG automatically responsible?

NO. There is no automatic liability or responsibility for loss/deterioration/damage of goods. What arises is AUTOMATIC PRESUMPTION of negligence.

3. How to rebut presumption/escape liability?

The CCOG must prove that it exercised XOD. (Note:

Do not say "by exercising XOD" because that is different from proving CCOG exercised XOD.)

Art. 1735. In all cases other than those mentioned in

Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article

1733.

4. If any of the 5 instances arises, the presumption of

negligence WILL NOT ARISE. The effect is that there is no automatic presumption of negligence. What is

the effect? The effect is that the CCOG no longer needs to prove that it exercised XOD.

5. Q: Is the CCOG automatically exempt from liability

in cases of the 5 instances mentioned in Art. 1734?

A: NO. The CCOG must still

complied with the requirements of Art. 1739, 1740,

prove that it

have to

1741, 1742.

6. YNCHAUSTI VS. DEXTER - What does the shipper/consignee have to show in order to have a prima facie case against the carrier?

1. Actual receipt of goods by the carrier;

2. Failure to deliver the goods in the same conditions

as it was received.

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

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

that the loss was due to accident or some other circumstance inconsistent with its liability.

is

'containarized'? (Bankers and Manufacturers vs. CA)

7.

What

does

it

mean

if

the

shipment

It must be underscored that the shipment involved in

the case at bar was "containerized". The goods under this arrangement are stuffed, packed, and loaded by the shipper at a place of his choice, usually his own warehouse, in the absence of the carrier. The container is sealed by the shipper and thereafter picked up by the carrier. Consequently, the recital of the bill of lading for goods thus transported ordinarily would declare "Said to Contain", "Shipper's Load and Count", "Full Container Load", and the amount or

quantity of goods in the container in a particular package is only prima facie evidence of the amount or quantity which may be overthrown by parol evidence.

A shipment under this arrangement is not inspected

or inventoried by the carrier whose duty is only to transport and deliver the containers in the same condition as when the carrier received and accepted

the containers for transport.

What is the requirement to hold the CCOG liable if goods are damaged under this arrangement?

In order to hold the carrier liable for whatever loss, damage or deterioration that happened on the goods inside the container, it has to be opened in front of the carrier and inspected. If the consignee receives the container, does not check it, brings it to ihs warehouse and complains days later, then that is no longer allowed. The inspection should be done in front of the carrier.

If the inspection is done upon arrival, there

presumption that the goods were received in good order. The carrier then will have to prove that the goods were received otherwise.

a

is

8. What is an arrastre operator?

Is an arrastre operator legally liable for the loss of a

shipment in its custody? If so, what is the extent of its liability? (Summa Insurance vs. CA)

H: In the performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman as enunciated under Article 1733 of the Civil Code and Section 3(8) of the Warehouse Receipts Law, respectively. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.

to turn them over to the party entitled to their possession. Flood, storm, earthquake, lightning, or

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

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

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

6

be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2.

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

Notes:

1. CCOG need not prove it exercised XOD; however,

CCOG must prove that: (Philamgen vs. MCG Marine)

a. the natural calamity or disaster must have been the

proximate and only cause of the loss; and

b. the CCOG exercised due diligence to prevent or

minimize the loss and

c.

CCOG did not incur delay in transporting the goods.

2.

Is fire a natural calamity? (This was not clearly

answered by Atty. Suarez; In response to the suggested answer that fire is considered natural calamity if caused by lightning, the answer given by Ma'am S was: When you say natural, it has to be natural. Obviously if it was caused by something that has some kind of human intervention, it cannot fall under natural disaster.)

EASTERN SHIPPING VS. IAC

As a general rule, fire is not a natural disaster.

Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or calamity. " However, we are of the opinion that fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

Of course the exception is unless it was naturally caused, such as lightning, or if there was an earthquake and suddenly the cement rubbed against each other.

This was reiterated in Cokaliong vs. UCPB (2003)

Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. Broadly speaking, force majeure generally applies to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a public enemy. Hence, fire is not considered a natural disaster or calamity.

3. What about heavy rains, are they considered natural disasters? NO. Vessels are built to withstand heavy rains and seas.

Eastern Shipping vs. CA: The heavy seas and rains referred to in the master's report were not caso fortuito, but normal occurrences that an ocean-going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage.

4. DSR Senator vs. Phoenix (2003) - same ruling as

Eastern Shipping that fire is not a natural calamity.

5. Illustration of Art. 1740: Philamgen vs. CA 222

SCRA 414 - Here, the goods arrived in port but because of the heavy rains, they were not discharged and so the goods were destroyed. The issue is did the CCOG negligently incur in delay?

No, the cause of the delay was not the fault of the carrier. The delay was caused by the decision of the board (construction of catwalks, etc), customs of the place and heavy, intermittent rains.

Other cases:

7. Schmitz Transport vs. Transventure: the natural

calamity was not the only and proximate cause of the loss.

Act of the public enemy in war, whether international or civil;calamity was not the only and proximate cause of the loss. Requirements: a. the natural act

Requirements:

a. the natural act of public enemy must have been the proximate and only cause of the loss; and b. the CCOG exercised due diligence to prevent or minimize the loss

Act of omission of the shipper or owner of the goods in relation to:exercised due diligence to prevent or minimize the loss Art. 1741. If the shipper or owner

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Notes:

1. In order to totally escape liability, the CCOG must

prove that the act/negligence of the shipper is the only and proximate cause of the loss. Otherwise, Art. 1741

applies. If the CCOG is not able to prove that the only and proximate cause of the loss is the act of the shipper then, there will be an equitable reduction of the liability.

2. COMPANIA MARITIMA VS. CA: Here, the shipper

stated the weight of the payloader was 2.5 tons when it was 7.5 tons in reality. CCOG used a lifting apparatus with a 5 ton capacity, so the payloader fell and was damaged.

H: We are not persuaded by the proferred explanation of petitioner alleged to be the proximate cause of the fall of the payloader while it was being unloaded at the Cagayan de Oro City pier. Petitioner seems to have overlooked the extraordinary diligence required of common carriers in the vigilance over the goods transported by them by virtue of the nature of their business, which is impressed with a special public duty.

And circumstances clearly show that the fall of the payloader could have been avoided by petitioner's crew. Evidence on record sufficiently show that the crew of petitioner had been negligent in the performance of its obligation by reason of their having failed to take the necessary precaution under the circumstances which usage has established among careful persons, more particularly its Chief Officer, Mr. Felix Pisang, who is tasked with the over-all

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

7

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

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

Act of omission of the shipper or owner of the goods;has a capacity of lifting 20 to 25 tons of heavy cargoes. The character of the

The character of the goods or defects in the packing or in the containers;Act of omission of the shipper or owner of the goods; ARTICLE 1742. Even if the

ARTICLE 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

Notes:

1. If there is a defect in the packaging or character of

the goods, for example in a case, grain was loaded and they were already halfway to rotting, i.e. there were already molds, then the requisite for CCOG to escape liability is that it must prove that it exercised due diligence to forsetall or lessen the loss. That is under Art. 1742.

2. But a perusal of the cases will show that the SC is

saying that CCOG should do something more than just Art. 1742:

a. Southern Lines vs. CA: Petitioner claims exemption from liability by contending that the shortage in the shipment of rice was due to such factors as the shrinkage, leakage or spillage of the rice on account of the bad condition of the sacks at the time it received the same and the negligence of the agents of respondent City of Iloilo in receiving the shipment.

Held: The contention is untenable, for, if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting thereform.

Furthermore, according to the Court of Appeals, "appellant (petitioner) itself frankly admitted that the strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves." This finding, which is binding upon this Court, shows that the shortage resulted from the negligence of petitioner.

Therefore, if goods are delivered to the CCOG and the defect in the goods/packaging is apparent, then the CC may accept the goods with reservation or exception. It must be indicated in the bill of lading that

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

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

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

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

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

c. Iron bulk Shipping vs. Remington

under Art. 1735 holds. c. Iron bulk Shipping vs. Remington Order authority. or act of competent

Order

authority.

or

act

of

competent

public

ARTICLE 1743.If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order

Note:

1. First requisite: Person issuing order must have

power to issue such.

2. Second requisite: The order must be lawful or

must have been issued under legal process or authority

(Ganzon vs. CA - A,owner of the the CCOG was unloading the iron. Mayor B demanded P5,000 and when A refused, B shot A. After several days, the unloading resumed and Acting Mayor C ordered X and the crew of the vessel to dump the iron. The issue is, can the CCOG be held liable for the loss of the cargo?

Held: YES. We cannot sustain the theory of caso fortuito. In the courts below, the petitioner's defense was that the loss of the scraps was due to an "order or act of competent public authority," and this contention was correctly passed upon by the Court of Appeals which ruled that:

In the second place, before the appellee Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to

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

8

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

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

of the obligation is not considered force majeure. DURATION OF LIABILITY (from what point to what

DURATION OF LIABILITY (from what point to what point is a carrier liable?)

ARTICLE 1736.The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738.

ARTICLE 1737.The common carrier's duty to observe extraordinary diligence in the vigilance over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.

ARTICLE 1738.The extraordinary liability of the

common carrier continues to be operative even during

the time the goods are stored in a warehouse of the

carrier at the place of destination, until the consignee

has

been advised of the arrival of the goods and has

had

reasonable opportunity thereafter to remove them

or otherwise dispose of them.

Notes:

are

unconditionally placed in the possession of, and received by the carrier for transportation.

From when: from

the

time

the

goods

Not actually place on the ship, it is enough even if

custody is transferred to the office/receiving office of

the carrier.

It ends: When the goods are delivered, actually or

constructively, by the carrier to the consignee, or to

the person who has a right to receive them, without

prejudice to the provisions of article 1738.

1. Compania Maritima vs. Icna - Since the vessel of

CM was too large for the Sasa Warf, CM sent a lighter

to pick up the hemp. Before the hemp could be loaded

to the vessel, the lighter sank. CM alleged that it could

not be liable for the loss as the goods were not yet

loaded on the vessel. Besides, there was no bill of

lading yet issued to the shipper.

H: The claim that there can be no contract of

affreightment because the hemp was not actually loaded on the ship that was to take it from Davao City to Manila is of no moment, for the delivery of the hemp to the carrier‘s lighter is in line with the contract.

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

The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation, and not merely with the formal

execution of a receipt or bill of lading; the issuance of

a bill of lading is not necessary to complete delivery

and acceptance. Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient

to bind the carrier.

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

2. In relation to Art. 1738, what if the goods are in the customs warehouse and they get destroyed, deteriorated or damaged because the processing of papers take too long to process? Can the carrier be held liable?

LU DO & LU YM CORP VS. BINAMIRA -- NO.

A

t

e

n

e

o

d

e

D

a

v

a

o

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

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

While we agree with the Court of Appeals that while delivery of the cargo to the consignee, or to the

person who has a right to receive them",

contemplated in Article 1736, because in such case

the goods are still in the hands of the Government

and the owner cannot exercise dominion over them,

we believe however that the parties may agree to limit

the liability of the carrier considering that the goods

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

9

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

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

3. SERVANDO VS. PHIL STEAM NAVIGATION CO

Here, the goods were delivered in good order in the warehouse of the customs authority. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice. Is the carrier liable?

H: No. Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. "

The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant.

It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the

sea or other waters; war; public enemies;

fire

In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event.

So in this case, the burning of the customs warehouse was considered as a fortuitous event in so far as the carrier is concerned.

4. SAMAR MINING VS. NORDEUTCHER LLOYD

The bill of lading provided that it was effective only for the transport of the goods for Germany to Manila. From Manila, the goods were to be further transported to Davao. The carrier had unloaded and delivered the good in the bonded warehouse in Manila. They never reached Davao. Is Nordeutcher Lloyd liable?

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

There is no doubt that Art. 1738 finds no applicability to the instant case. The said article contemplates a

situation where the goods had already reached their

place of destination and are stored in the warehouse

of the carrier. The subject goods were still awaiting

transshipment to their port of destination, and were

stored in the warehouse of a third party when last

seen and/or heard of. However, Article 1736 is

applicable to the instant suit. Under said article, the

carrier may be relieved of the responsibility for loss or

damage to the goods upon actual or constructive

delivery of the same by the carrier to the consignee,

or to the person who has a right to receive them. In

sales, actual delivery has been defined as the ceding

of corporeal possession by the seller, and the actual

apprehension of corporeal possession by the buyer or

by some person authorized by him to receive the

goods as his representative for the purpose of

custody or disposal. By the same token, there is

actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. The court a quo found that there was actual delivery to the consignee through its duly authorized agent, the carrier.

It becomes necessary at this point to dissect the complex relationship that had developed between appellant and appellee in the course of the transactions that gave birth to the present suit. Two undertakings appeared embodied and/or provided for in the Bill of Lading 19 in question. The first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila. The second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with appellant acting as agent of the consignee. At the hiatus between these two undertakings of appellant which is the moment when the subject goods are discharged in Manila, its personality changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the case before Us.

But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods, It is true that the transshipment of the goods, which was the object of the agency, was not fully performed. However, appellant had commenced said performance, the completion of which was aborted by circumstances beyond its control. An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit

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

10

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

5. Macam vs. CA

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

Held: YES. Delivery to GPC is delivery to the consignee. The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to the consignee or his agent.

Pakistan was indicted as consignee and GPC was the notify party. However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his demand letter to respondent and his complaint before the court. This premise brings into conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore, there was a valid delivery.

So here, even if there was no delivery to the consignee but there were instructions from the shipper then the goods are deemed delivered and the CCOG can no longer be held liable for the loss of the goods.

6. SCHMITZ TRANSPORT VS. TVI: The cargo was

on board MV Alexander that was parked outside the breakwater. The goods were loaded on a barge that was supposed to be pulled by the tugboat. According to Schmitz, Black Sea, the owner of MV Alexander, should be liable because the goods have not yet been delivered to the consignee.

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

to receive them, Schmitz -- as an agent of the consignee. VALIDITY OF STIPULATIONS Can the

VALIDITY OF STIPULATIONS

Can the CCOG and the shipper agree that the CCOG will not be required to exercise XOD?

YES. As to the diligence required,

General rule: the CCOG and the shipper may enter into an agreement/stipulation which lessens the diligence required, but there are requisites:

ARTICLE 1744.A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be:

(1)

In writing,

(2)

signed by the shipper or owner;

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

Can the parties stipulate that there shall be no diligence to be excercised by the CCOG?

NO. Under Art. 1745, these are void stipulations because they are against public policy.

ARTICLE 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

(1) That the goods are transported at the risk of the owner or shipper; (2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; (3) That the common carrier need not observe any diligence in the custody of the goods; (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported; (5) That the common carrier shall not be responsible for the acts or omission of his or its employees; (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

Notes:

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

A

t

e

n

e

o

d

e

D

a

v

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

Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's goods. Petitioner argues that in the circumstances of this case, private respondent should have hired a security guard presumably to ride with the truck carrying the 600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at

the risk of his own life and the lives of the driver and

his helper.

Under Article 1745 (6) above, a common carrier is

held responsible and will not be allowed to divest or

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

11

to diminish such responsibility even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force."

The 500-peso limitation is only applicable when the shipper has not declared a higher value and paid a higher freight.

A

stipulation which exempts the carrier from any or all

liability from loss or damage occasioned by its own

negligence is not valid.

A

stipulation which provides for an unqualified

Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper, detaining them for several days and later releasing them in another province (in Zambales). In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence.

limitations, like 10 pesos per kilo (only) and thus limits liability to an agreed valuation is not valid. (Meaning, wala yung stipulation that if the shipper pays a higher freight, etc.)

(Heacock vs. Macondray) where the SC enumerated

the

three kinds of stipulation:

1.

No liability -- the carrier will not be liable at all for

the

negligent acts of its crew and employees -- void

2.

Limited Liability -- regardless of the value of the

cargo, the maximum liability of the carrier will by only

to

a certain amount, i.e. 500 per kilo -- void.

3.

Qualified liability- this is the only stipulation in a bill

 

of

lading/ticket which can validly limit liability; here, the

ARTICLE 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.

ARTICLE 1747.If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.

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

liability for delay on account of strikes or riots is valid. Stipulation lessening the amount of

Stipulation

lessening

the

amount

of

liability

Valid: Provided follow the requisites under 1749 and

1750

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

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

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

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

carrier fixes a maximul liability in the event the shipper doe snot delcare any value, or a value upto a certain

amount. Should shipper declare a higher value and willing to pay higher freightage, the carrier shall accordingly be liable for greater damage.

Other cases cited in ppt: Eastern vs. IAC (150 SCRA 463), Sea-Land Services vs. IAC (153 SCRA), Cokaliong Shipping vs. UCPB (2003)

Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case

of the loss, destruction, or deterioration of the goods.

Even if there is any limitation limiting the liability of the carrier, this cannot be availed of by the carrier if it without just cause, delays the transportation of the goods, or etc.

What if there is a stipulation limiting the liability and

the flight is from Davao to Manila. But because there

was a typhoon in Manila, it was unable to land there

so it landed in Cebu. Can the carrier avail of the

stipulation?

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

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

Art. 1749. A stipulation that the common carrier's

liability is limited to the value of the goods appearing

in the bill of lading, unless the shipper or owner

declares a greater value, is binding.

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

Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into

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

12

consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy.

Art. 1752. Even when there is an agreement limiting

the

liability of the common carrier in the vigilance over

the

goods, the common carrier is disputably presumed

to

have been negligent in case of their loss,

destruction or deterioration.

That presumption of negligence will still arise despite

the

fact that there is an agreement. The carrier still

has

to prove that it exercised EXOD to escape liability.

If the carrier does not want to prove it, it will just accept the liability, then the carrier will be liable for the amount stipulated in the agreement. Of course, unless any of the circumstances like natural disaster, etc. are

present.

the circumstances like natural disaster, etc. are present. Baggage of passengers With respect to baggage of

Baggage of passengers

With respect to baggage of passengers, we recognize checked-in baggage and hand-carried baggages. Passenger is responsible for his hand-carry baggages.

Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in

his personal custody or in that of his employee. As to

other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers

shall be applicable.

With respect to check in baggages, the applicable

provisions are the provisions we took up. However, if

the

luggage is hand-carried, different provisions of the

CC

will apply. (1998, 2000- 2003)

What is the summary for hand-carried items?

1. Art. 1998: The carrier shall be responsible for

hand-carried baggages as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the passengers and that, on the part of the latter, they take the precautions which said carriers or their substitutes advised relative to the care and vigilance of their effects.

2. Art. 2000. The responsibility referred to in the

preceding article shall include the loss of, or injury to

the personal property of the passenger caused by the

servants or employees of the carrier as well as strangers; but not that which may proceed from any force majeure.

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

3. Art. 2001. The act of a thief or robber, who has

entered the carrier is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (n)

Art. 2002. The carrier is not liable for compensation if

the loss is due to the acts of the passenger, his family,

servants or visitors, or if the loss arises from the character of the things brought. (n)

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

he is not liable for the articles brought by the passengers. CARRIAGE OF PASSENGERS Art. 1755.

CARRIAGE OF PASSENGERS

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

Automatic presumption of negligence, rebutted by proving that carrier excercised extraordinary diligence for the safety of passengers according to the circumstances of each case.

Under the provisions of carriage of goods, in carriage of passengers, there are no exceptions as to the presumption of negligence. They will be automatically presumed to be negligent under 1756, there are no exceptions. So that is the first distinction between COG and COP, but the presumption can be rebutted.

Take note that proving extraordinary diligence is not the only way of escaping liability. We all know that under the general provisions of the Civil Code, a fortuitous event will always exempt the obligor from liability, if the fortuitous event is the cause of the death, injury of the passenger. Just memorize the requisites of fortuitous events.

Issue: If A is a passenger of a taxi and taxi figured in an accident. A sues the taxi for breach of contract of carriage, does A have to prove that the taxi driver is at fault for A to collect damages from the operator of the taxi?

Answer: In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay damages to the passenger. Because of the automatic presumption of negligence, the burden of proof is on the carrier. If the carrier rebuts the presumption, then it is absolved. If it does not rebut that presumption, there is no need for the passenger or his heirs to prove negligence.

What kind of fortuitous event will exempt a carrier from liability? Is a tire blow out a fortuitous event?

It depends. Remember that even the SC did not

categorically

fortuitous event. You always have to look requisites.

at the

a

state

that

a

tire

blow

out

is

not

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

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

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

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

13

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

What about hi-jacking? Is it a fortuitous event?

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

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

PILAPIL VS. CA: It was held that a CC is not liable for failure to install window grills on its buses to protect its passengers from injuries hurled at the bus by lawless elements.

FORTUNE EXPRESS VS. CA: The SC said that FE was liable because there was an early warning already. So the element of unforseeability was missing.

already. So the element of unforseeability was missing. DURATION OF LIABILITY No provision for CC of

DURATION OF LIABILITY

No provision for CC of pax for the duration of liability; only cases

1. Bataclan vs. Medina (overturned bus which leaked gasoline and was set on fire when villagers who wanted to help brought torches)

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

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

2. La Mallorca vs. CA (the child of a Pax was run

over by the bus when she followed her father who was getting their baggages. The bus was already moving steadily after it had dropped off the Pax even though the baggages were still on board the truck.)

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

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

3. PAL vs. Zapatos: Even if the pax are in transit, this

will not terminate the contractual relations.

Held: Undisputably, PAL's diversion of its flight due to

inclement weather was a fortuitous event.

Nonetheless, such occurrence did not terminate

PAL's contract with its passengers. Being in the

business of air carriage and the sole one to operate in

the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one

case once again must be stressed, i.e., the relation of

carrier and passenger continues until the latter has

been landed at the port of destination and has left the

carrier's premises. Hence, PAL necessarily would

still have to exercise extraordinary diligence in

safeguarding the comfort, convenience and safety of

its stranded passengers until they have reached their

final destination.

until they have reached their final destination. DOCTRINE OF LAST CLEAR CHANCE: This doctrine calls for

DOCTRINE OF LAST CLEAR CHANCE:

This doctrine calls for application in suits between owners of two colliding vehicles. It does not apply where a pax demands responsibility from a carrier to enforce its contractual obligations.

The principle of last clear chance is inapplicable in the instant case, as it only applies in a suit between the owners and drivers of two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations, for it would be inequitable to exempt the negligent driver and its owner on the ground that the other driver was likewise guilty of negligence. The common law notion of last clear chance permitted courts to

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

14

grant recovery to a plaintiff who has also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult to see what role, if any, the common law of last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code. (Tiu vs. Arriesgado)

VALIDITY OF STIPULATIONSbeen in Article 2179 of the Civil Code. (Tiu vs. Arriesgado) Two kinds: 1. As to

Two kinds:

1. As to the diligence required

2. As to the amount of liability

AS TO THE DILIGENCE REQUIRED

Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise.

Remember:

Diligence required: XOD What kind of XOD: Utmost diligence of a very cautious person

(1)

(2)

CC of Goods are allowed to lessened the degree of diligence, but NOT do away with the same completely.

CC of Pax CANNOT dispense with nor lessen the degree of diligence.

AS TO AMOUNT OF LIABILITY

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

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

General Rule: Cannot be limited But under 1758, there are circumstances where this liability is limited:

1. Pax carried gratuitously

2. Existence of stipulation limiting liability

3. Accident/Breach not caused by willful acts or gross

negligence.

Remember: Minimum amount that heirs of pax can collect from CC is P 50,000 because this is indemnity for death. CC is automatically liable for this minimum amount; if it wants to lessen this amount, CC must follow Art. 1758.

LIABILITY FOR ACTS OF EESif it wants to lessen this amount, CC must follow Art. 1758. Art. 1759. Common carriers

Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a

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

Notes:

1. There is no express provision in CC of Goods

exactly like Art. 1759. BUT, the absence of express stipulation does not mean that CC of Goods not liable for acts of ees. Under Art. 1775, par. 5, the CC cannot stipulate that it shall not be responsible for the acts of its ees. So this means that CC of goods still liable;

2. If driver is drunk and figures in an accident, CC

cannot say that it is not liable because driver violated

company rules of no drinking while driving.

3. Defense of Diligence of Good father of family is

available if the cause of action is culpa acquiliana (Art.

2176, 2180 of NCC), But if the cause of action is for breach of contract of carriage, this defense of GFOF cannot be invoked.

of carriage, this defense of GFOF cannot be invoked. CONTRIBUTORY NEGLIGENCE Art. 1761. The passenger must

CONTRIBUTORY NEGLIGENCE

Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.

Notes:

1. Definition of Contributory Negligence: It is the

principle that negligence, no matter how slight, on the part of the person injured which is one of the causes proximately contributing to his negligence equitably reduces the liability of the CC.

2. Estacion vs. Bernardo (2006): (Pax of Jeepney

was seated in extension seat initially but gave his seat up to an old lady. A then hung/stood outside the jeepney. When jeepney stopped at the curve, an isuzu truck with a faulty break hit the jeepney causing injury to A's leg which had to be amputated.)

Held: There was contributory negligence on the part of A, and both truck and jeepney were found to be negligent. Sharing of liability: 20-40-40. 20 to be borne by A.

Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.

When is one considered to have contributed to his injuries: It has been held that “to hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his

injuries

an

in

disregard

of

warning

or

signs

of

impending danger to health and body. Respondent Noe’s act of hanging on the Fiera is definitely dangerous to his life and limb.

3. CANGCO VS. MRR ( Jose Cangco, herein plaintiff, was an employee of the defendant in this case, manila Railroad Company. Upon the occasion in question, plaintiff was returning home by rail from his daily labors. As the train drew up to the station, plaintiff arose from his seat. As the train slowed down, plaintiff stepped off, but one or both of his feet came in

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

15

contact with a sack of watermelons. As a result, his feet slipped from under him and he fell violently on the platform.)

Held: The act of the plaintiff in stepping off the train while it as yet slowly moving was not characterized by imprudence so as to hold him guilty of contributory negligence.

In arriving to such conclusion, the court used the best of negligence enunciated in the case of Picart vs. Smith (37 PHIL 809) which was stated as follow: Was there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would have admitted a person of average prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff should have deserted from alighting; and his failure so to desist was contributory negligence.

In the case at bar, the plaintiff was ignorant of the fact that the obstruction which was caused by the sacks of melds piled on the platform existed. Moreover, the place was dark or dimly lighted. Thus, he was a failure on the part of the defendant to afford to its passengers facilities for safe egress from its trains.

It is not negligence per se for a traveler to alight from

a slowly moving train.

4. Del Prado vs. MRR

Held: Defendant should still be held liable for the damages sustained by the plaintiff. The contributory negligence upon the latter was not the proximate cause of the injury. The proximate cause was the act of the motorman in putting off on the power prematurely. A person moving boarding a moving car must be taken to assure the risk of injury from boarding the car, but he cannot fairly be held to assume the risk that the motorman will increase his peril by accelerating the speed of the car before he is planted on the platform. The motorman‘s negligence succeeded the negligence of herein plaintiff. Under the doctrine of ―last clear chance‖, the contributory negligence of the party injured will not defeat the action if it be shown that the carrier might be the exercise of reasonable care and prudence have avoided the consequences of the negligence of the injured party.

5. Brinas vs. People (old woman and her granddaughter bound for Losacan. Conductor announced their stop so the lola stood up and carried her "apo" and went to exit. When train door opened, before they could go down, the train picked up speed and they both fell and died)

Held: It is a matter of common knowledge and experience about common carriers like trains and buses that before reaching a station or flagstop they slow down and the conductor announces the name of the place. It is also a matter of common experience that as the train or bus slackens its speed, some

passengers usually stand and proceed to the nearest exit, ready to disembark as the train or bus comes to

a full stop. This is especially true of a train because

passengers feel that if the train resumes its run before they are able to disembark, there is no way to stop it as a bus may be stopped.

It was negligence on the conductor's part to announce

the next flag stop when said stop was still a full three

minutes ahead. As the respondent Court of Appeals correctly observed, "the appellant's announcement was premature and erroneous and was the proximate cause of the death of the victims. Any negligence of the victims was at most contributory and does not exculpate the accused from criminal liability.

6. Dangwa vs. CA - (There was no contributory negligence on the part of the victim in this case)

Held: The foregoing testimonies show that the place of the accident and the place where one of the passengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear right tires of the vehicle, as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. Under such circumstances, it cannot be said that the deceased was guilty of negligence. LLphil The contention of petitioners that the driver and the conductor had no knowledge that the victim would ride on the bus, since the latter had supposedly not manifested his intention to board the same, does not merit consideration. When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same. The premature acceleration of the bus in this case was a breach of such duty.

It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so.

Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered negligent under the circumstances. As clearly explained in the testimony of the aforestated witness for petitioners, Virginia Abalos, the bus had "just started" and "was still in slow motion" at the point where the victim had boarded and was on its platform.

It is not negligence per se, or as a matter of law, for one to attempt to board a train or streetcar which is moving slowly. An ordinarily prudent person would have made the attempt to board the moving conveyance under the same or similar circumstances. The fact that passengers board and alight from a slowly moving vehicle is a matter of common experience and both the driver and conductor in this case could not have been unaware of such an ordinary practice. The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled to all the rights and protection pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those alighting therefrom.

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

16

7. Isaac vs. Al Ammen

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

Issue: Whether or not the common carrier is liable.

Held: The bus was running at a moderate speed. The driver of the bus upon the speeding pick-up truck swerved the bus to the very extreme right of the road. Said driver would not move the bus further without endangering the safety of his passengers. Notwithstanding all these efforts, the rear left side was hit. This finding of the lower court was sustained. Also, of the carrier‘s employee is confronted with a sudden emergency, he is not held to the same degree of care he would otherwise, he required in the absence of such emergency.

By placing his left arm on the window, he is guilty of contributory negligence cannot relieve the carrier but can only reduce its liability, this is a circumference which further mistakes against plaintiff‘s position. It is a prevailing rule that it is negligence per se for passengers on a railroad to protrude any part of his body and that no recovery can be had for an inquiry.‖

his body and that no recovery can be had for an inquiry.‖ Responsibility for acts of

Responsibility for acts of strangers

Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

Notes:

1. This is one instance wherein the carrier need not

prove that it exercised XOD to escape liability. If the injury/death of pax was caused by the act of a stranger (somebody who is not an ee of the carrier) the carrier need only prove that its ees exercised diligence of GFOF to prevent or stop the act or omission.

Why? It is not the responsibility of the CC of Pax to ensure that no injury from outside forces will be caused to the pax, i.e. when a bomb is thrown from the roadside.

2. MRR vs. Ballesteros - Here, the driver of the bus

allowed a stranger to take the wheel of the bus. After awhile, the driver struggled with him as the stranger did not want to give the wheel back. The bus met an accident. Can this provision be invoked?

What kind of diligence does the CC of Pax have to prove here? XOD because by actually allowing a stranger to drive the bus even if that person caused the accident, but still the driver did not exercise the diligence of GFOF to prevent or stop the act or omission. (yan talaga sa lecture)

3. Fortune Express vs. CA- Fortune express cannot

invoke this provision.

As already stated, despite the report of PC agent Generalao that the Maranaos were planning to burn some of petitioner‘s buses and the assurance of petitioner‘s operations manager (Diosdado Bravo) that the necessary precautions would be taken, nothing was really done by petitioner to protect the safety of passengers.

Issue: Are there other causes for breach of contract of carriage aside from Art. 1755 and 1756?

Answer: Yes.

1. If a passenger is bumped off his flight and he

has a confirmed booking, that is a breach because the carrier in the ticket ensured that it will deliver the pax to its destination on the time and date stipulated.

2. Air France vs. Carrascoso Rebooked to a lower class without pax consent. Pax seated in first class from Mla to Bangkok. Upon arrival in Bangkok, he was downgraded to economy to give way to a "white man". There is a breach because his ticket says first class, and by booking the pax to economy class without his consent, what happens is that there is no more consent in the contract.

3. Singson vs. Cathay Pacific - On 24 May 1988

CARLOS SINGSON and his cousin Crescentino Tiongson bought from Cathay Pacific Airways, Ltd. (CATHAY), at its Metro Manila ticket outlet two (2) open-dated, identically routed, round trip plane tickets for the purpose of spending their vacation in the United States. Each ticket consisted of six (6) flight coupons corresponding to this itinerary: flight coupon no. 1 - Manila to Hongkong; flight coupon no. 2 - Hongkong to San Francisco; flight coupon no. 3 - San Francisco to Los Angeles; flight coupon no. 4 - Los Angeles back to San Francisco; flight coupon no. 5 - San Francisco to Hongkong; and, finally, flight coupon no. 6 - Hongkong to Manila. The procedure was that at the start of each leg of the trip a flight coupon corresponding to the particular sector of the travel would be removed from the ticket booklet so that at the end of the trip no more coupon would be left in the ticket booklet.

On 6 June 1988 CARLOS SINGSON and Crescentino Tiongson left Manila on board CATHAY‘s Flight No.

902. They arrived safely in Los Angeles and after

staying there for about three (3) weeks they decided to return to the Philippines. On 30 June 1988 they arranged for their return flight at CATHAY‘s Los Angeles Office and chose 1 July 1988, a Friday, for their departure. While Tiongson easily got a booking for the flight, SINGSON was not as lucky. It was discovered that his ticket booklet did not have flight coupon no. 5 corresponding to the San Francisco- Hongkong leg of the trip. Instead, what was in his ticket was flight coupon no. 3 - San Francisco to Los Angeles - which was supposed to have been used and removed from the ticket booklet. It was not until 6 July 1988 that CATHAY was finally able to arrange for his return flight to Manila.

H: CATHAY undoubtedly committed a breach of contract when it refused to confirm petitioner's flight reservation back to the Philippines on account of his missing flight coupon. Its contention that there was no contract of carriage that

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

17

was breached because petitioner‘s ticket was open- dated is untenable. To begin with, the round trip ticket issued by the carrier to the passenger was in itself a complete written contract by and between the carrier and the passenger. It had all the elements of a complete written contract, to wit: (a) the consent of the contracting parties manifested by the fact that the passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hongkong back to the Philippines, and the carrier‘s acceptance to bring him to his destination and then back home; (b) cause or consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object, which was the transportation of the passenger from the place of departure to the place of destination and back, which are also stated in his ticket.

Interestingly, it appears that CATHAY was responsible for the loss of the ticket. One of two (2) things may be surmised from the circumstances of this case: first, US Air (CATHAY‘s agent) had mistakenly detached the San Francisco-Hongkong flight coupon thinking that it was the San Francisco- Los Angeles portion; or, second, petitioner‘s booklet of tickets did not from issuance include a San Francisco-Hongkong flight coupon. In either case, the loss of the coupon was attributable to the negligence of CATHAY‘s agents and was the proximate cause of the non-confirmation of petitioner's return flight on 1 July 1988.

With regard to the second issue, we are of the firm view that the appellate court seriously erred in disallowing moral and exemplary damages. Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages, such as in the instant case.

4. PAL vs. CA (Sept. 22, 2008) - Here, two unaccompanied minors were not able to board the plane because PAL was not able to produce the indemnity bond executed by the minors' parents since they were travelling unaccompanied.

Here, there was definitely a breach of contract even if the flight that the minors were supposed to take is in another airline. It was because of PAL's negligence that they were not able board the other airline.

H: When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he be transported on that flight and on that date, and it becomes the airline's obligation to carry him and his luggage safely to the agreed destination without delay. If the passenger is not so transported or if in the process of transporting, he dies or is injured, the carrier may be held liable for a breach of contract of carriage.

Private respondents and petitioner entered into a contract of air carriage when the former purchased two plane tickets from the latter. Under this contract, petitioner obliged itself (1) to transport Deanna and Nikolai, as unaccompanied minors, on 2 May 1980 from Manila to San Francisco through one of its

planes, Flight 106; and (2) upon the arrival of Deanna and Nikolai in San Francisco Airport on 3 May 1980, to transport them on that same day from San Francisco to Los Angeles via a connecting flight on United Airways 996. As it was, petitioner failed to transport Deanna and Nikolai from San Francisco to Los Angeles on the day of their arrival at San Francisco. The staff of United Airways 996 refused to take aboard Deanna and Nikolai for their connecting flight to Los Angeles because petitioner's personnel in San Francisco could not produce the indemnity bond accomplished and submitted by private respondents.It was established in the instant case that since Deanna and Nikolai would travel as unaccompanied minors, petitioner required private respondents to accomplish, sign and submit to it an indemnity bond. Private respondents complied with this requirement. Petitioner gave a copy of the indemnity bond to one of its personnel on Flight 106, since it was required for the San Francisco-Los Angeles connecting flight of Deanna and Nikolai. Petitioner's personnel lost the indemnity bond during the stop-over of Flight 106 in Honolulu, Hawaii. Thus, Deanna and Nikolai were not allowed to take their connecting flight.

Evidently, petitioner was fully aware that Deanna and Nikolai would travel as unaccompanied minors and, therefore, should be specially taken care of considering their tender age and delicate situation. Petitioner also knew well that the indemnity bond was required for Deanna and Nikolai to make a connecting flight from San Francisco to Los Angeles, and that it was its duty to produce the indemnity bond to the staff of United Airways 996 so that Deanna and Nikolai could board the connecting flight. Yet, despite knowledge of the foregoing, it did not exercise utmost care in handling the indemnity bond resulting in its loss in Honolulu, Hawaii. This was the proximate cause why Deanna and Nikolai were not allowed to take the connecting flight and were thus stranded overnight in San Francisco. Further, petitioner discovered that the indemnity bond was lost only when Flight 106 had already landed in San Francisco Airport and when the staff of United Airways 996 demanded the indemnity bond. This only manifests that petitioner did not check or verify if the indemnity bond was in its custody before leaving Honolulu, Hawaii for San Francisco.

The foregoing circumstances reflect petitioner's utter lack of care for and inattention to the welfare of Deanna and Nikolai as unaccompanied minor passengers. They also indicate petitioner's failure to exercise even slight care and diligence in handling the indemnity bond. Clearly, the negligence of petitioner was so gross and reckless that it amounted to bad faith.

It is worth emphasizing that petitioner, as a common carrier, is bound by law to exercise extraordinary diligence and utmost care in ensuring for the safety and welfare of its passengers with due regard for all the circumstances.[19] The negligent acts of petitioner signified more than inadvertence or inattention and thus constituted a radical departure from the extraordinary standard of care required of common carriers.

Petitioner's claim that it cannot be entirely blamed for the loss of the indemnity bond because it gave the indemnity bond to the immigration office of Honolulu, Hawaii, as a matter of procedure during the stop-over, and the said immigration office failed to return the

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

18

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

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

of exemplary damages is warranted.

5. Cathay Pacific vs. Vasquez- Is an involuntary upgrading of an airline passenger‘s accommodation from one class to a more superior class at no extra cost a breach of contract of carriage that would entitle the passenger to an award of damages?

H: We resolve the first issue in the affirmative.

A contract is a meeting of minds between two persons

whereby one agrees to give something or render some service to another for a consideration. There is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the obligation which is established.[4] Undoubtedly, a contract of carriage existed between Cathay and the Vazquezes. They voluntarily and freely gave their consent to an agreement whose object was the transportation of the Vazquezes from Manila to Hong Kong and back to Manila, with seats in the Business Class Section of the aircraft, and whose cause or consideration was the fare paid by the Vazquezes to Cathay.

The only problem is the legal effect of the upgrading of the seat accommodation of the Vazquezes. Did it constitute a breach of contract?

Breach of contract is defined as the ―failure without legal reason to comply with the terms of a contract.‖ It is also defined as the ―[f]ailure, without legal excuse, to perform any promise which forms the whole or part of the contract.‖

The Vazquezes never denied that they were members of Cathay‘s Marco Polo Club. They knew that as members of the Club, they had priority for upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just like other privileges, such priority could be waived. The Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege or would consent to a change of seat accommodation before their seat assignments were given to other passengers. Normally, one would appreciate and accept an upgrading, for it would mean a better accommodation. But, whatever their reason was and however odd it might be, the Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for

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

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

DISTINCTIONS BETWEEN CCOG AND

DISTINCTIONS

BETWEEN

CCOG

AND

CCOP

Diligence

extraordinary

 

Utmost diligence of very cautious person.

required

diligence

When

Loss, destruction or deterioration and non-arrival of the goods at destination and negligent delay

death or injury

presumption of

and

non-

negligence

fulfillment of the

arises

contract

 

When presumption of negligence does not arise automatically

in

the

five

(5)

NONE,

the

instances

presumption of

mentioned;

negligence will

natural calamity,

ALWAYS arise

etc.

in

case

the

 

carriage of PAX

W/N degree of diligence can be dispensed with

For both, it cannot be dispensed.

W/N degree of diligence can be lessened

yes,

under

the

NO

requisites

previously

 

discussed

W/N liability in case of breach

yes, under Art. 1748, 1749 and

a general

rule, NO, unless carried gratuitously; stipulation but only for simple negligence.

As

can

be

1750;

 

lessened?

 

VIP: When we talk about transportation laws we should not only focus on breach of : When we talk about transportation laws we should not only focus on breach of contract of carriage. We should also include that there are other causes of action which may arise.

Example: A car owned by E and driven by F was speeding along JP Laurel hit a Taxi driven by D which in turn hit C. B the passenger of the taxi was also injured. The taxi is owned by A.

Question: How many causes of action are available to B and to C? What are the defenses available to E, D and F? 1

and to C? What are the defenses available to E, D and F? 1 MARITIME COMMERCE

MARITIME COMMERCE

Applicable laws: Code of Commerce; COGSA; Salvage Law

Applicable laws: Code of Commerce; COGSA; Salvage Law Governing body: Marina (Maritime Industry Authority) 1 I

Governing body: Marina (Maritime Industry Authority)

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

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

19

Prepared by: Hanniyah Sevilla 4 Manresa ’08 - ‘09 19 Functions of Marina: CF PD 474

Functions of Marina: CF PD 474

1. Issue certificate of public conveniece for the operation of domestic and overseas water carriers;

2. Register and issue certificate, licenses, or documents necessary or incident thereto.

Q: What is the requirement for a carrier to operate domestic sea voyages?

A: Certificate of Public Convenience (CPC)

Kinds of VESSELS (under PD 474)sea voyages? A: Certificate of Public Convenience (CPC) "Vessels" or "Watercraft" Any barge,

"Vessels" or "Watercraft" Any barge, lighter, bulk

carrier, passenger ship freighter, tanker, container ship, fishing boats or other artificial contrivance utilizing any source of motive power, designed, used or capable of being used as a means of water transportation operating either as common contract carrier, including fishing vessels covered under Presidential Decree No. 43, except

(1)

those owned and/or operated by the

(2)

Armed Forces of the Philippines and by foreign governments for military purposes, and bancas, sailboats and other waterborne contrivance of less than three gross tons capacity and not motorized.

HOW OWNERSHIP OF A VESSEL MAY BE ACQUIRED

HOW OWNERSHIP OF A VESSEL MAY BE ACQUIRED

ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by any of the means recognized by law 2 .

The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if not recorded in the mercantile registry.

The ownership of a vessel shall also be acquired by the possession thereof in good faith for three years, with a good title duly recorded.

any

uninterrupted possession for ten years shall be

necessary in order to acquire ownership.

these requisites,

In the

absence

of

of

A captain can not acquire by prescription the ship of which he is in command.

Notes:

1. Q: Kind of property is a vessel?

A: Movable, but ownership must be evidenced by certificate of ownership and transfers must be registered in the proper registry to bind 3rd persons.

2. Requisites for Legal Acquisition of a Merchant

Vessel:

2 In relation to Art. 712 of the Civil Code:

a. Donation;

b. law

c. Testate or intestate succession;

d. As a consequence of certain contracts

e. By tradition

f. By prescription (3 years if possession in good faith, with just title duly recorded, otherwise, 10 years)

1. Must appear in a written instrument;

2. Recorded in the proper registry -- under EO 125, transaction must be registered with the Marina but now this is being conducted by the PPA.

3. Robiso vs. Rivera: It is undeniable that the defendant Rivera acquired by purchase the pilot boat Valentina on a date prior to that of the purchase and adjudication made at public auction, by and on behalf of the plaintiff Rubiso; but it is no less true that the sale of the vessel by Sy Qui to Florentino E. Rivera, on January 4, 1915, was entered in the customs registry only on March 17, 1915, while its sale at public auction to Fausto Rubiso on the 23d of January of the same year, 1915, was recorded in the office of the Collector of Customs on the 27th of the same month, and in the commercial registry on the 4th of March, following; that is, the sale on behalf of the defendant Rivera was prior to that made at public auction to Rubiso, but the registration of this latter sale was prior by many days to the sale made to the defendant.

The requisite of registration in the registry, of the purchase of a vessel, is necessary and indispensable in order that the purchaser's rights may be maintained against a claim filed by a third person.

In view of said legal provisions, it is undeniable that the defendant Florentino E. Rivera's rights cannot prevail over those acquired by Fausto Rubiso in the ownership of the pilot boat Valentina, inasmuch as, though the latter's acquisition of the vessel at public auction, on January 23, 1915, was subsequent to its purchase by the defendant Rivera, nevertheless said sale at public auction was antecedently recorded in the office of the Collector of Customs, on January 27, and entered in the commercial registry-an unnecessary proceeding--on March 4th; while the private and voluntary purchase made by Rivera on a prior date was not recorded in the office of the Collector of Customs until many days afterwards, that is, not until March 17, 1915.

many days afterwards, that is, not until March 17, 1915. Repair and Maintenance of Vessel during

Repair and Maintenance of Vessel during the Voyage (Art. 583)

ARTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Philippine territory, and otherwise to the Filipino Consul should there be one, and, in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contracted.

The judge or court, the consul or the local authority as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness.

The lack of this formality shall make the captain

prejudiced through his fault.

personally

liable

to

the

creditors

who

may

be

Notes:

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

20

1. Article 580 Nos. 8 and 9 3 = contract obligations for

the repair and equipment of the vessel and obtain loans and bottomry.

2. Why are these formalities required for the captain?

Because omission to follow these requirements will make the captain personally liable. He cannot ask for a refund from the carrier.

liable. He cannot ask for a refund from the carrier. Persons who take part in marine

Persons

who

take

part

in

marine

commerce

I. SHIP OWNER II. SHIP AGENT - By agent is understood the person intrusted with the provisioning of a vessel, or who represents her in the port in which she happens to be.

ARTICLE 586. The owner of a vessel and the agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested therein.

Notes:

1. Macondray vs. Provident (2004) - Canpotex, shipper, shipped and loaded on board the vessel M/V ‗Trade Carrier‘, 5000 metric tons of Standard Grade Muriate of Potash in bulk for transportation to and delivery at the port of Sangi, Toledo City, Cebu, in favor of ATLAS FERTILIZER CORPORATION, Consignee. Upon arrival, it was discovered that the shipment sustained losses.

MACONDRAY filed ANSWER, denying liability over the losses, having NO absolute relation with defendant TRADE AND TRANSPORT, the alleged operator of the vessel who transported the subject shipment; that accordingly, MACONDRAY is the local representative of the SHIPPER; the charterer of M/V TRADE CARRIER and not party to this case; that it has no control over the acts of the captain and crew of the Carrier and cannot be held responsible for any damage arising from the fault or negligence of said captain and crew.

The CA affirmed the trial court‘s finding that petitioner was not the agent of Trade and Transport. The appellate court ruled, however, that petitioner could still be held liable for the shortages of the shipment, because the latter was the ship agent of Canpotex Shipping Services Ltd. -- the shipper and charterer of the vessel M/V Trade Carrier.

H: In the present case, we find no compelling reason to overturn the Court of Appeals in its categorical finding that petitioner was the ship agent. Such factual finding was not in conflict with the trial court‘s ruling, which had merely stated that petitioner was not the agent of Trade and Transport. Indeed, although it

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

is not an agent of Trade and Transport, petitioner can still be the ship agent of the vessel M/V Trade Carrier.

Article 586 of the Code of Commerce states that a ship agent is ―the person entrusted with provisioning or representing the vessel in the port in which it may be found.‖

Hence, whether acting as agent of the owner of the vessel or as agent of the charterer, petitioner will be considered as the ship agent and may be held liable as such, as long as the latter is the one that provisions or represents the vessel.

The trial court found that petitioner ―was appointed as local agent of the vessel, which duty includes arrangement for the entrance and clearance of the vessel.‖ Further, the CA found and the evidence shows that petitioner represented the vessel. The latter prepared the Notice of Readiness, the Statement of Facts, the Completion Notice, the Sailing Notice and Custom‘s Clearance. Petitioner‘s employees were present at Sangi, Toledo City, one day before the arrival of the vessel, where they stayed until it departed. They were also present during the actual discharging of the cargo. Moreover, Mr. de la Cruz, the representative of petitioner, also prepared for the needs of the vessel, like money, provision, water and fuel.

These acts all point to the conclusion that it was the entity that represented the vessel in the Port of Manila and was the ship agent within the meaning and context of Article 586 of the Code of Commerce.

III. CAPTAIN- one who governs vessels and navigates the high seas or of large dimension and importance.

vs. Master- commands small ships and engages exclusively in coastwide trade.

But For purposes of maritime commerce, captain, master, patron, they all mean the same.

commerce, captain, master, patron, they all mean the same. Qualifications of Captain ARTICLE 609. Captains and

Qualifications of Captain

ARTICLE 609. Captains and masters of vessels must be Filipino having legal capacity to bind themselves in accordance with this Code, and must prove that they have the skill, capacity, and qualifications required to command and direct the vessel, as established by marine laws, ordinances, or regulations, or by those of navigation, and that they are not disqualified according to the same for the discharge of the duties of that position.

If the owner of a vessel desires to be the captain thereof and does not have the legal qualifications therefor, he shall limit himself to the financial administration of the vessel, and shall intrust her navigation to a person possessing the qualifications required by said ordinances and regulations.

Notes:

1. Coastwise Lighterage vs. CA - Here, the patron of the lighter admitted that he was not licensed.

H: Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates Art. 609. It cannot safely claim to have

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

21

exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed, he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18.

As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence.

by proof of its exercise of extraordinary diligence. General Functions of a Captain: ARTICLE 610. The

General Functions of a Captain:

ARTICLE 610. The following powers are inherent in the position of captain or master of a vessel:

1.

To appoint or make contracts with the

crew in the absence of the agent and propose said crew, should said agent be present; but the agent shall not be permitted to employ any member against the captain's express refusal.

2.

To command the crew and direct the

vessel to the port of its destination, in accordance with the instructions he may have received from the agent.

3.

To impose, in accordance with the

agreements and the laws and regulations of the merchants marine, on board the vessel, correctional punishment upon those who do not comply with his orders or who conduct themselves against discipline, holding a preliminary investigation on the crimes committed

on board the vessel on the high seas, which shall be turned over to the authorities, who are to take cognizance thereof, at the first port touched.

4.

To make contracts for the charter of the

vessel in the absence of the agent or of her consignee, acting in accordance with the instructions received and protecting the interests of the owner most carefully.

5.

To adopt all the measures which may be

necessary to keep the vessel well supplied and

equipped, purchasing for the purpose all that may be necessary, provided there is no time to request instructions of the agent.

6.

To make, in similar urgent cases and on a

voyage, the repairs to the hull and engines of the vessel and to her rigging and equipment which are absolutely necessary in order for her to be able to continue and conclude her voyage; but if she should arrive at a point where there is a consignee of the vessel, he shall act in concurrence with the

latter.

Notes:

1. Inter-orient Maritime vs. NLRC- Here, the captain refused to leave the port, contrary to the ship agent's instructions, until the supplies he requested necessary for the welding-repair of the turbo-charger and the economizer were delivered. Subsequently, the captain was dismissed. Issue: Was the captain remiss of his duties?

H: NO. The captain has the authority to decide. The captain of a vessel is a confidential and managerial employee within the meaning of the above doctrine. A

master or captain, for purposes of maritime commerce, is one who has command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical director of the vessel; and (3) he is a representative of the country under whose flag he navigates. Of these roles, by far the most important is the role performed by the captain as commander of the vessel; for such role (which, to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day corporate enterprise) has to do with the operation and preservation of the vessel during its voyage and the protection of the passengers (if any) and crew and cargo. In his role as general agent of the shipowner, the captain has authority to sign bills of lading, carry goods aboard and deal with the freight earned, agree upon rates and decide whether to take cargo. The ship captain, as agent of the shipowner, has legal authority to enter into contracts with respect to the vessel and the trading of the vessel, subject to applicable limitations established by statute, contract or instructions and regulations of the shipowner. 17 To the captain is committed the governance, care and management of the vessel. Clearly, the captain is vested with both management and fiduciary functions.

More importantly, a ship's captain must be accorded a reasonable measure of discretionary authority to decide what the safety of the ship and of its crew and cargo specifically requires on a stipulated ocean voyage. The captain is held responsible, and properly so, for such safety. He is right there on the vessel, in command of it and (it must be presumed) knowledgeable as to the specific requirements of seaworthiness and the particular risks and perils of the voyage he is to embark upon. The applicable principle is that the captain has control of all departments of service in the vessel, and reasonable discretion as to its navigation. It is the right and duty of the captain, in the exercise of sound discretion and in good faith, to do all things with respect to the vessel and its equipment and conduct of the voyage which are reasonably necessary for the protection and preservation of the interests under his charge, whether those be of the shipowners, charterers, cargo owners or of underwriters. It is a basic principle of admiralty law that in navigating a merchantman, the master must be left free to exercise his own best judgment. The requirements of safe navigation compel us to reject any suggestion that the judgment and discretion of the captain of a vessel may be confined within a straitjacket, even in this age of electronic communications.

2. Far Eastern Shipping vs. CA- There was a Russian vessel that arrived in Manila, owned by Far Eastern Shipping. It was assigned berth no. 4. There is such a thing as compulsory pilotage -- there is a pilot assigned to pilot the vessel outside the break water until it reaches its birth. In this case, A was assigned to the vessel. The captain of the vessel was beside A. Under the rules of compulsory pilotage, once a pilot takes over the helm, the captain will have to stand aside and surrender all his authority to the pilot who is more familiar with the docking maneuvers. Now, A hit the pier. PPA filed a complaint against Far Eastern Shipping. Issue: Can the captain of the vessel be considered negligent in this case? Because the only way that Far Eastern shipping can be held liable is for the courts to declare the captain negligent.

HELD: YES.

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

22

A pilot, in maritime law, is a person duly qualified, and

licensed, to conduct a vessel into or out of ports, or in certain waters. In a broad sense, the term "pilot" includes both (1) those whose duty it is to guide vessels into or out of ports, or in particular waters and (2) those entrusted with the navigation of vessels on the high seas. However, the term "pilot" is more generally understood as a person taken on board at a particular place for the purpose of conducting a ship through a river, road or channel, or from a port.

Under English and American authorities, generally speaking, the pilot supersedes the master for the time being in the command and navigation of the ship, and his orders must be obeyed in all matters connected with her navigation. He becomes the master pro hac vice and should give all directions as to speed, course, stopping and reversing, anchoring, towing

and the like. And when a licensed pilot is employed in

a place where pilotage is compulsory, it is his duty to

insist on having effective control of the vessel, or to

decline to act as pilot. Under certain systems of foreign law, the pilot does not take entire charge of the vessel, but is deemed merely the adviser of the master, who retains command and control of the navigation even on localities where pilotage is compulsory.

While it is indubitable that in exercising his functions a pilot-is in sole command of the ship[69] and supersedes the master for the time being in the command and navigation of a ship and that he becomes master pro hac vice of a vessel piloted by him,[70] there is overwhelming authority to the effect that the master does not surrender his vessel to the pilot and the pilot is not the master. The master is still in command of the vessel notwithstanding the presence of a pilot. There are occasions when the master may and should interfere and even displace the pilot, as when the pilot is obviously incompetent or intoxicated and the circumstances may require the master to displace a compulsory pilot because of incompetency or physical incapacity. If, however, the master does not observe that a compulsory pilot is incompetent or physically incapacitated, the master is justified in relying on the pilot, but not blindly.

The master is not wholly absolved from his duties while a pilot is on board his vessel, and may advise with or offer suggestions to him. He is still in command of the vessel, except so far as her navigation is concerned, and must cause the ordinary work of the vessel to be properly carried on and the usual precaution taken. Thus, in particular, he is bound to see that there is sufficient watch on deck, and that the men are attentive to their duties, also that engines are stopped, towlines cast off, and the anchors clear and ready to go at the pilot's order.

A perusal of Capt. Kabankov's testimony makes it

apparent that he was remiss in the discharge of his

duties as master of the ship, leaving the entire docking procedure up to the pilot, instead of maintaining watchful vigilance over this risky maneuver.

In sum, where a compulsory pilot is in charge of a ship, the master being required to permit him to

navigate it, if the master observes that the pilot is incompetent or physically incapable, then it is the duty

of the master to refuse to permit the pilot to act. But if

no such reasons are present, then the master is

justified in relying upon the pilot, but not blindly. Under the circumstances of this case, if a situation arose where the master, exercising that reasonable vigilance which the master of a ship should exercise, observed, or should have observed, that the pilot was so navigating the vessel that she was going, or was likely to go, into danger, and there was in the exercise of reasonable care and vigilance an opportunity for the master to intervene so as to save the ship from danger, the master should have acted accordingly. The master of a vessel must exercise a degree of vigilance commensurate with the circumstances.

In general, a pilot is personally liable for damages caused by his own negligence or default to the owners of the vessel, and to third parties for damages sustained in a collision. Such negligence of the pilot in the performance of duty constitutes a maritime tort. At common law, a shipowner is not liable for injuries inflicted exclusively by the negligence of a pilot accepted by a vessel compulsorily.The exemption from liability for such negligence shall apply if the pilot is actually in charge and solely in fault. Since, a pilot is responsible only for his own personal negligence, he cannot be held accountable for damages proximately caused by the default of others, or, if there be anything which concurred with the fault of the pilot in producing the accident, the vessel master and owners are liable.

3. WILDVALLEY SHIPPING VS. CA - Almost same facts, except in this case the vessel was Filipino owned and it arrived in Velenzuela. There was a compulsory pilotage. When the pilot boarded the vessel, the captain left the bridge. When it entered the Venezuelan channel, the vessel experienced some vibration and the pilot assured the captain that the vibrations were normal - the result of the shallowness of the channel. But the vessel ran aground thereafter.

Held: The captain in this case was not negligent.

We find that the grounding of the vessel is attributable to the pilot. When the vibrations were first felt the watch officer asked him what was going on, and pilot Vasquez replied that "(they) were in the middle of the channel and that the vibration was as (sic) a result of the shallowness of the channel.

The law does provide that the master can countermand or overrule the order or command of the harbor pilot on board. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop the vessel. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop the vessel, mayhap, because the latter had assured him that they were navigating normally before the grounding of the vessel. Based on these declarations, it comes as no surprise to us that the master chose not to regain control of the ship. Admitting his limited knowledge of the Orinoco River, Captain Colon relied on the knowledge and experience of pilot Vasquez to guide the vessel safely.

So the SC gave conflicting decisions, but if you look at it, the SC ruled in these ways only for one reason -- ruling in favor of Filipinos. (Very good, Lyndon!:D)

-- ruling in favor of Filipinos. (Very good, Lyndon!:D) Books to be carried by the captain

Books to be carried by the captain

ARTICLE 612. The following obligations are inherent in the office of captain: x x x

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

23

3. To have three folioed and stamped books,

placing at the beginning of each one a note of the number of folios it contains, signed by the maritime official, and in his absence by the competent authority.

In the first book, which shall be called "log book," he shall enter every day the condition of the atmosphere, the prevailing winds, the course sailed, the rigging carried, the horsepower of the engines, the distance covered, the maneuvers executed, and other incidents of navigation. He shall also enter the damage suffered by the vessel in her hull, engines, rigging, and tackle, no matter what is its cause, as well as the imperfections and averages of the cargo, and the effects and consequence of the jettison, should there be any; and in cases of grave resolutions which require the advice or a meeting of the officers of the vessel, or even of the passengers and crew, he shall record the decision adopted. For the informations indicated he shall make use of the binnacle book, and of the steam or engine book kept by the engineer.

In the second book, called the "accounting book," he shall enter all the amounts collected and paid for the account of the vessel, entering specifically article by article, the sources of the collection, and the amounts invested in provisions, repairs, acquisition of rigging or goods, fuel, outfits, wages, and all other expenses. He shall furthermore enter therein a list of all the members of the crew, stating their domiciles, their wages and salaries, and the amounts they may have received on account, either directly or by delivery to their families.

In the third book, called "freight book," he shall record the entry and exit of all the goods, stating their marks and packages, names of the shippers and of the consignees, ports of loading and unloading, and the freight earned. In the same book he shall record the names and places of sailing of the passengers and the number of packages of which their baggage consists, and the price of the passage.

Notes:

1. Of

important;

the three books,

the log book

is

the most

2. Haverton Shipping vs. NLRC - What is the

probative value of the entries in the logbook? Can you use the log book as evidence? YES. It is an official record of entries made by a person in the performance of his duty required by law and are prima facie evidence of the facts entered therein.

But in:

3. Centennial vs. Dela Cruz: In Wallem Maritime

Services, Inc. v. National Labor Relations Commission, citing Haverton Shipping Ltd. v. National Labor Relations Commission, the Court ruled that a copy of an official entry in the logbook is legally binding and serves as an exception to the hearsay rule. In the said case, however, there was no controversy as to the genuineness of the said entry and the authenticity of the copy presented in evidence.

In the instant case, respondent has consistently assailed the genuineness of the purported entry and the authenticity of such copy. He alleged that before his repatriation, there was no entry in the ship's official logbook regarding any incident that might have caused his relief; that Captain Kowalewski's signature

in such purported entry was forged. In support of his allegations, respondent submitted three official documents bearing the signature of Capt. Sczepan Kowalewski which is different from the one appearing in Annex E. Thus, it was incumbent upon petitioners to prove the authenticity of Annex E, which they failed to do. Likewise, the purported report of Capt. Kowalewski dated September 1, 2000 and the statements of Safety Officer Khaldun Nacem Faridi and Chief Officer Josip Milin also cannot be given weight for lack of authentication.

Although technical rules of evidence do not strictly apply to labor proceedings, however, in the instant case, authentication of the above-mentioned documents is necessary because their genuineness is being assailed, and since petitioners offered no corroborating evidence. These documents and their contents have to be duly identified and authenticated lest an injustice would result from a blind adoption of such contents. Thus, the unauthenticated documents relied upon by petitioners are mere self-serving statements of their own officers and were correctly disregarded by the Court of Appeals.

DURATION OF LIABILITY of Captainand were correctly disregarded by the Court of Appeals. Do not forget the duration of liability

Do not forget the duration of liability under the Civil Code, Art. 1736. With respect to the captain:

ARTICLE 619. The captain shall be liable for the cargo from the time it is turned over to him at the dock, or afloat alongside the ship, at the port of loading until he delivers it on the shores or on the discharging wharf, of the port of unloading unless the contrary has been expressly agreed upon.

Notes:

1. If the goods are delivered to Aboitiz in the warehouse, does the liability of Aboitiz start? Yes, because the goods are transferred already to Aboitize. Does the liability of the captain start? NO. Only once the goods are at the dock and until the goods are delivered to the shore. So the captain has a shorter period of responsibility as compared to the carrier. Of course, unless is a stipulation to the contrary.

MARITIME PROTESTcarrier. Of course, unless is a stipulation to the contrary. Definition: This has to be done

Definition: This has to be done by the captain if the vessel/cargo is lost or injured. It is a written statement under oath, made by the captain or master of the vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or injured with respect to circumstances attending such ocurrence.

Purpose:

or damge resulted from a peril of the sea or some other cause for shich neither the master or owner was responsible. It concludes with the protestation against

It is usually intended to show that the loss

any liablity of the owner for such loss or damage.

ARTICLE 624. A captain whose vessel has gone through a hurricane or who believes that the cargo has suffered damages or averages, shall make a protest thereon before the competent authority at the first port he touches within the twenty-four hours following his arrival, and shall ratify it within the same period when he arrives at the place of his destination, immediately proceeding with the

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

24

proof of the facts, it not being permitted to open the hatches until this has been done.

The captain shall proceed in the same manner if, the vessel having been wrecked, he is saved alone or with part of his crew, in which case he shall appear before the nearest authority, and make a sworn statement of the facts.

The authority or the consul abroad shall verify the said facts, receiving a sworn statement of the members of the crew and passengers who may have been saved, and taking the other steps which may assist in arriving at the facts, drafting a certificate of the result of the proceedings in the log book and in that of the sailing mate, and shall deliver the original records of the proceedings to the captain, stamped and folioed, with a memorandum of the folios, which he must rubricate, for their presentation to the judge or court of the port of destination. The statement of the captain shall be believed if it is in accordance with those of the crew and passengers; if they disagree, the latter shall be accepted, unless there is proof to the contrary

Procedure:

1.

Protest must be made with a competent authority at first port he touches;

2.

within 24 hours following his arrival

3.

Captain must ratify it within 24 hours when he arrives at the place of destination where he

must proceed immediately with the proof of the facts

4.

He must not open the hatches until all of the above are done.

IV. OFFICERS AND CREW OF THE VESSEL

SAILING MATE - He is the 2nd chief of the vessel; takes place of the captain and assumes all his duties and powers in case of absence, sickness or death.

ARTICLE 627. The sailing mate, as the second chief of the vessel and unless the agent orders otherwise, shall take the place of the captain in cases of absence, sickness, or death, and shall then assume all his powers, obligations, and responsibilities.

Notes:

1. Centennial vs. Dela Cruz, supra. (2008) - Petitioners allege loss of trust and confidence due to incompetence as the ground for respondent's dismissal. Loss of trust and confidence is premised on the fact that the employee holds a position whose functions may only be performed by someone who has the confidence of management. Such employee may be managerial or rank-and-file, but the nature of his position determines the requirements for a valid dismissal.

Article 627 of the Code of Commerce defines the Chief Mate, also called Chief Officer or Sailing Mate, as "the second chief of the vessel, and unless the agent orders otherwise, shall take the place of the captain in cases of absence, sickness, or death, and shall then assume all his powers, duties, and responsibilities." A Chief Officer, therefore, is second in command, next only to the captain of the vessel.

Chief Mate is a managerial employee because the said officer performed the functions of an executive officer next in command to the captain; that in the performance of such functions, he is vested with powers or prerogatives to lay down and execute management policies.

The exercise of discretion and judgment in directing a ship's course is as much managerial in nature as decisions arrived at in the confines of the more conventional board room or executive office. Important functions pertaining to the navigation of the vessel like assessing risks and evaluating the vessel's situation are managerial in nature. Thus, respondent, as Chief Officer, is a managerial employee; hence, petitioners need to show by substantial evidence the basis for their claim that respondent has breached their trust and confidence.

Petitioners' basis for dismissing respondent was the alleged entry by Captain Kowalewski in the ship's logbook regarding respondent's inexperience and inefficiency. A ship's log/logbook is the official record of a ship's voyage which its captain is obligated by law to keep wherein he records the decisions he has adopted, a summary of the performance of the vessel, and other daily events. A logbook is a respectable record that can be relied upon when the entries therein are presented in evidence. (Connect with page 16)

SECOND MATE (which is actually the 3rd mate since the sailing mate is the 2nd mate)

In case of disability, disqualification of the captain and the sailing mate, he takes over. Relevant provisions:

Art 632-633, Code of Commerce

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

are hired by the carrier. Relevant provisions: Art. 634-637 DISCHARGE: Who can discharge? The shipowner or

DISCHARGE:

Who can discharge? The shipowner or the captain can discharge the crew (Art. 637)

What is the effect if the captain or the crew is discharged during the voyage? Example, voyage from Manila to San Francisco and en route to SF they are discharged:

ARTICLE 604. If the captain or any other member of the crew should be discharged during the voyage, they shall receive their salary until the return to the place where the contract was made, unless there are good reasons for the discharge, all in accordance with Articles 636 et seq. of this Code.

Gen Rule: They shall continue to receive their salaries until their return to the port where the contract was made. They have to be paid the full round trip.

Except: If there is a just cause or just motive.

Rule in case of discharge if the contract is for a definite period or voyage:

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

25

ARTICLE 605. If the contracts of the captain and members of the crew with the agent should be for

a definite period or voyage, they can not be

discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.

Notes:

1. Madrigal vs. Ogilvie - The services of Jesus G. Ogilvie, Salvador Ortile, Antonio C. Militar and Miguel M. Fermin were engaged by Manuel Mascuñana, master or captain employed by the petitioner Madrigal Shipping Company, Inc., to man and fetch the vessel "S.S. Bridge" from Sasebu, Japan. Pursuant thereto the respondents were flown to Sasebu, Japan, and they manned the vessel out of the port of Sasebu. On 16 March 1948, when the vessel reached Hongkong,

the respondents were dismissed and replaced by a crew of Chinese nationality. The respondents were flown back to Manila and paid their respective salaries

up to the date of their dismissal.(So they were only

paid from Japan to Hongkong)

H:The services of the respondents were engaged by the petitioner to man its vessel for a determinate time or voyage, with an express stipulation that "this

contract expires on the arrival of this boat at the port

of Manila." Not having been discharged for any of the

causes enumerated in the Art. 605, the respondents are entitled to the amounts they respectively seek to

collect from the petitioner.

2. Wallem vs. Minister of Labor: Wallem hired X and

Y as seamen for 10 months. For instigating the

International Transport Federation (ITF) Chapter to

demand higher wages they were dismissed. Was the dismissal proper?

No, the seamen cannot be dismissed without legal

cause because the contract was for a definite period

of 10 months. What X and Y did was not a legal cause

under Art. 605 but an exercise of the rights of all workmen to seek better rights and higher benefits x x

x

Grounds if captain discharges crew:(of course, the captain cannot discharge himself!)

ARTICLE 636. Should a fixed period for which a sailor has signed not be stated, he can not be discharged until the end of the return voyage to the port where he enrolled.

ARTICLE 637. Neither can the captain discharge a sailor during the time of his contract except for sufficient cause, the following being considered

as such:

1. The perpetration of a crime which disturbs

order on the vessel.

2. Repeated offenses of insubordination, against

discipline, or against the fulfillment of the service.

3. Repeated incapacity or negligence in the

fulfillment of the service to be rendered.

4.

Habitual drunkenness.

5.

Any occurrence which incapacitates the sailor

to

carry out the work under his charge, with the

exception of the provisions contained in Article

644.

6. Desertion.

ARTICLE 644. A sailor who falls sick shall not lose his right to wages during the voyage, unless the sickness is the result of his own fault. At any rate, the costs of the attendance and cure shall be defrayed from the common funds, in the form of a loan. If the sickness should be caused by an injury received in the service or defense of the vessel the sailor shall be attended and cured from the common funds, there being deducted before anything else from the proceeds of the freight, the cost of the attendance and cure.

of the freight, the cost of the attendance and cure. WHAT IS A SUPERCARGO? A person

WHAT IS A SUPERCARGO? A person specially employed by the owner of a cargo to take charge of and sell to the best advantage merchandise which has been shipped, and to purchase returning cargoes and to receive freight, as he may be authorized.

ARTICLE 649. Supercargoes shall discharge on board the vessel the administrative duties which the agent or shippers may have assigned them; they shall keep an account and record of their transactions in a book which shall have the same conditions and requisites as required for the accounting book of the captain, and shall respect the latter in his duties as chief of the vessel.

The powers and liabilities of the captain shall cease, when there is a supercargo, with regard to that part of the administration legitimately conferred upon the latter, but shall continue in force for all acts which are inseparable from his authority and office.

ARTICLE 650. All the provisions contained in the second section of Title III, Book II, with regard to qualifications, manner of making contracts, and liabilities of factors shall be applicable to supercargoes.

ARTICLE 651. Supercargoes can not, without special authorization or agreement, make any transaction for their own account during the voyage, with the exception of the ventures which, in accordance with the custom of the port of destination, they are permitted to do. Neither shall they be permitted to invest in the return trip more than the profits from the ventures, unless there is a special authorization thereto from the principals.

is a special authorization thereto from the principals. ABANDONMENT/DOCTRINE OF LIMITED LIABILITY IN MARINE

ABANDONMENT/DOCTRINE OF LIMITED LIABILITY IN MARINE TRANSPORTATION

As already discussed, the CCOG can limit its liability by stipulation. (Art. 1749-1750) For CCOP, liability can only be limited when Pax is carried for free and there is a stipulation. Under Maritime Commerce, there is a way for a CC to limits its liability even without a stipulation because it is the law itself which proves for this liability.

Recall: ARTICLE 586 and 583 (SO/SA civilly liable for acts of captain and obligations contracted)

ARTICLE 587. The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with

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

26

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

Other provisions providing for abandonment:

ARTICLE 590. The owners of a vessel shall be civilly liable in the proportion of their contribution to the common fund, for the results of the acts of the captain, referred to in Article 587. Each part owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belonging to him.

And in cases of collision if the same is caused by the captain alone, under

Art. 837: The civil liability contracted by the shipowners in the cases prescribed in this section, shall be understood as limited to the value of the vessel with all her appurtenances and all the freight earned during the voyage.

Notes:

1. What is abandonment? It is equivalent to an offer of the value of the vessel, her equipment and freigth earne in return for an exemption from liability.

So if the vessel sank and the sinking of the vessel was caused entirely by the negligence of the captain, the SO or SA can be held liable. But if SO or SA abandons the vessel, then the liability will only be limited to the value of the vessel, the freightage and the equipment.

2. The real and hypothecary nature of maritime law,

therefore, distinguishes it from Civil law and commercial law because of this doctrine. A shipping transportation contract is "real and hypothecary" in nature under Art. 587 which accord/issue a shipowner/agent the right of abandonment and by necessary implication, his liability is confined to that to which he is entitled as of right to abandon, meaning the vessel and all her equipment and the freight she may have earned during the voyage.

Read:

abandonment.

Yangco vs. Laserna for history of

right of

3. Reasons why SO/SA are given the right to abandonment (Heirs of Amparo vs. delos Santos)

a. To offset against the innumerable hazards and perils of the sea; b. To encourage ship building and marine commerce

4. Note that when abandonment is made in the instances provided by law, it cannot be refused.

5. Can a charterer make an abandonment? NO,

because he cannot be considered in place of the owner or the shipagent in matters regarding to the

reponsibility pertaining to ownership and possession

the charter is a bareboat or

of the vessel. Even if demise charter.

is a bareboat or of the vessel. Even if demise charter. OF ABANDONMENT (meaning even if

OF

ABANDONMENT (meaning even if the right to abandonment exists, the SO/SA will still pay for more than the value of the vessel)

EXCEPTIONS TO RIGHT

1. When the vessel is properly insured - the insurance

will take care of the liability, the value of which may be more than the value of the vessel, freight, etc.

2. When the liability for repairs of the vessel was

incureed before the loss of such vessel (favorite BQ)

3. When the liability is one which arises from the

provisions of the labor code.

is one which arises from the provisions of the labor code. When abandonment CANNOT BE MADE

When abandonment CANNOT BE MADE

1. When the voyage is not maritime, but only in a

river, bay, or gulf

2. When the vessel is not acting as a common carrier

but a private carrier.

3. When the SO/SA is at fault, i.e. when there is lack

of proper equipment, lack of technical training of the crew, unlicensed crew members, captain. So any kind of negligence, no matter how minute will remove the right of abandonment.

cases:

a. Heirs of Amparo delos Santos vs. CA: The vessel left late because the carrier decided to load more unmanifested passengers and cargo. Because the vessel left late, it encountered a typhoon and the vessel sank. According to the Board of Marine Inquiry (BMI) the sinking was caused by the fault of the captain and its officers in operating the vessel. The SO/SA claimed the right to abandon, but the SC said that the doctrine of limited liability cannot be invoked in this case because there was fault or negligence on the part of the carrier because it overloaded the vessel even if it was cleared to leave. And everytime it is discovered that a vessel is overloaded with cargo/pax, goodbye abandonment.

It must be stressed at this point that Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. In cases where the shipowner is likewise to be blamed, Article 587 does not apply. Such a situation will be covered by the provisions of the New Civil Code on Common Carriers. Owing to the nature of their business and for reasons of public policy, common carriers are tasked to observe extraordinary diligence in the vigilance over the goods and for the safety of its passengers (Article 1733, New Civil Code). Further, they are bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances (Article 1755, New Civil Code). Whenever death or injury to a passenger occurs, common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as prescribed by Articles 1733 and 1755

b. PHILAMGEN VS. CA- According to the SC, despite the fact that the vessel was sea worthy, it was not cargo worthy. The cases and cases of coca-cola bottles were loaded on deck and the vessel was top heavy making it easy to tilt in case of strong winds.

Q: What if the sinking of the vessel is caused by fortuitous event, is the right of abandonment present? A: No, the SO or SA will be exempt from liability.

Other important cases:

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

27

1. Aboitiz Shipping v. General Accident (1993)- The sinking of this vessel caused a lot of cases to be filed against aboitiz. In this case, the SC applied the findings of the BMI where it was found that the sinking of the vessel was caused by a fortuitous event. The SC even exonerated the captain and crew so nothing could be collected from Aboitiz

2. Monarch Insurance vs. CA (2000)- It was discovered that Aboitiz was negligent. So the sinking of the ship was not caused by fortuitous event and it was not also caused by the captain of the ship. So therefore the right of abandonment does not exist as there was fault or negligence on the part of the CC.

BUT in this case, there was so many claimants, about 110 claimants, the claim amounting to about 43 Million and the insurance proceeds were only 14 million. The SC said that the claimants cannot get their 43 million claims. They have to share pro-rata the proceeds of the insurance. There is no preference of credit.

In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be given precedence over the others by the simple expedience of having completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even these already final and executory must be stayed pending completion of all cases occasioned by the subject sinking. Then and only then can all such claims be simultaneously settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims.

3. Aboitiz Shipping vs. New India (2006) - The SC changed its mind again.

Our ruling in Monarch may appear inconsistent with the exception of the limited liability doctrine, as explicitly stated in the earlier part of the Monarch decision. An exception to the limited liability doctrine is when the damage is due to the fault of the shipowner or to the concurrent negligence of the shipowner and the captain. In which case, the shipowner shall be liable to the full-extent of the damage. We thus find it necessary to clarify now the applicability here of the decision in Monarch. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. Therefore, we agree with the appellate court in sustaining the trial court's ruling that petitioner is liable for the total value of the lost cargo.

4. Aboitiz Shipping vs. Equitable (2008) which affirmed the New India ruling. Here, the SC traced the history starting from GAFLAC to New India. So no pro-rata sharing of the insurance proceeds.

The Court declared in the 1993 GAFLAC case that

claims against Aboitiz arising from the sinking of M/V

P. Aboitiz should be limited only to the extent of the

value of the vessel. Thus, the Court held that the execution of judgments in cases already resolved with finality must be stayed pending the resolution of all

the other similar claims arising from the sinking of M/V

P. Aboitiz. Considering that the claims against Aboitiz

had reached more than 100, the Court found it necessary to collate all these claims before their payment from the insurance proceeds of the vessel and its pending freightage. As a result, the Court

exhorted the trial courts before whom similar cases remained pending to proceed with trial and adjudicate these claims so that the pro-rated share of each claim could be determined after all the cases shall have been decided.

In Monarch Insurance, the Court deemed it fit to settle once and for all this factual issue by declaring that the sinking of M/V P. Aboitiz was caused by the concurrence of the unseaworthiness of the vessel and the negligence of both Aboitiz and the vessel's crew and master and not because of force majeure. Notwithstanding this finding, the Court did not reverse but reiterated instead the pronouncement in GAFLAC to the effect that the claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the totality of claims against it."

However, on 02 May 2006, the Court rendered a decision in Aboitiz Shipping Corporation v. New India Assurance Company, Ltd. (New India), reiterating the well-settled principle that the exception to the limited liability doctrine applies when the damage is due to the fault of the shipowner or to the concurrent negligence of the shipowner and the captain. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. In New India, the Court clarified that the earlier pronouncement in Monarch Insurance was not an abandonment of the doctrine of limited liability and that the circumstances therein still made the doctrine applicable.

In New India, the Court declared that Aboitiz failed to discharge its burden of showing that it exercised extraordinary diligence in the transport of the goods it had on board in order to invoke the limited liability doctrine. Thus, the Court rejected Aboitiz's argument that the award of damages to respondent therein should be limited to its pro rata share in the insurance proceeds from the sinking of M/V P. Aboitiz.

The instant petitions provide another occasion for the Court to reiterate the well-settled doctrine of the real and hypothecary nature of maritime law. As a general rule, a ship owner's liability is merely co-extensive with his interest in the vessel, except where actual fault is attributable to the shipowner. Thus, as an exception to the limited liability doctrine, a shipowner or ship agent may be held liable for damages when the sinking of the vessel is attributable to the actual fault or negligence of the shipowner or its failure to ensure the seaworthiness of the vessel. The instant petitions cannot be spared from the application of the exception to the doctrine of limited liability in view of the unanimous findings of the courts below that both Aboitiz and the crew failed to ensure the seaworthiness of the M/V P. Aboitiz.

failed to ensure the seaworthiness of the M/V P. Aboitiz. SPECIAL CONTRACTS IN MARITIME COMMERCE: (Charter

SPECIAL CONTRACTS IN MARITIME COMMERCE: (Charter party, bill of lading, loans on bottomry and respondentia)

1. CHARTER PARTY - a contract wherein the entire ship or some principal part thereof is let by the owner to another person for a specified time or use, in consideration of the payment of a fee.

Two kinds of C/P: a. Contract of Affreightment -

he

provides the crew, what is being leased is only the space of the vessel. A contract of affreightment can

be a time charter

a voyage charter. b.

here the owner retains control of the vessel,

or

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

28

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

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

Formal/Substantial requirements:

ARTICLE 652. A charter party must be drawn in duplicate and signed by the contracting parties, and when either does not know how or can not do so, by two witnesses at their request. The charter party shall include, besides the conditions unrestrictedly stipulated, the following statements:

1.The kind, name, and tonnage of the vessel. 2.Her flag and port of registry. 3.The name, surname, and domicile of the captain. 4.The name, surname, and domicile of the agent, if the latter should make the charter party. 5.The name, surname, and domicile of the charterer, and if he states that he is acting by commission, that of the person for whose account he makes the contract. 6.The port of loading and unloading. 7.The capacity, number of tons or weight, or measure which they respectively bind themselves to load and transport, or whether it is the total cargo. 8.The freightage to be paid, stating whether it is to be a fixed amount for the voyage or so much per month, or for the space to be occupied, or for the weight or measure of the goods of which the cargo consists, or in any other manner whatsoever agreed upon.

compensation

payable to the master or owner of the vessel for the use of its cables to load and unload the goods and to the mariners for lading and unlading in port. So what you pay those who load; DEMURRAGE - an amount stipulated in the charter

(PRIMAGE-

a

small

allowance

or

party to be paid by the charter/shipper to the ship owner for any delay. )

9.The amount of primage to be paid to the captain.

10.The days agreed upon for loading and unloading. (laydays- no. of days between unloading and departure) 11.The lay days and extra lay days to be allowed and the rate of demurrage.

and extra lay days to be allowed and the rate of demurrage. WHO CAN RESCIND A

WHO CAN RESCIND A CHARTER PARTY:

Either party

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

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

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

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

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

In the second and third cases the person from whom the vessel was chartered shall indemnify the charterer for the losses he may suffer. In the fourth case the person from whom the vessel was chartered shall have a right to the freightage in full for the voyage out. If the charter should have been made by the months, the charterers shall pay the full freightage for one month, if the voyage were to a port in the same waters, and two months, if the voyage were to a port in different waters. From one port to another of the Peninsula and adjacent islands, the freightage for one month only shall be paid.

5.If a vessel should make a port during the voyage in order to make urgent repairs and the freighters should prefer to dispose of the merchandise.(pay for voyage out)

When the delay does not exceed thirty days, the freighters shall pay the full freight for the voyage out. Should the delay exceed thirty days, they shall only pay the freight in proportion to the distance covered by the vessel.

ARTICLE 689. At the request of the person from whom the vessel is chartered the charter party may be rescinded:

1.If the charterer at the termination of the extra lay days does not place the cargo alongside the vessel. In such case the charterer must pay half the freight stipulated besides the demurrage for the lay days and extra lay days elapsed.

2.If the person from whom the vessel was chartered should sell her before the charterer has begun to load her and the purchaser should load her for his own account. In such case the vendor shall indemnify the charterer for the losses he may suffer.

If the new owner of the vessel should not load her for his own account the charter party shall be respected (in such case, the charter party is not rescinded) and the vendor shall indemnify the purchaser if the former did not inform him of the charter pending at the time of making the sale. Otherwise, if he informed him, then no need to indemnify.

 

Charter Party

Ordinary

 

Lease

Contract

 

Period

If for definite period, the charterer may rescind the charter party by paying half of the freightage

If the lease

is

for

a

definite period, the lessee cannot terminate the contract

Effect

New owner cannot be compelled to respect the charter party.

If the leased property

of sale

is

sold

to

one

who

to

3 rd

knows

of

the

person

existence of the lease

 

contract,

 

the

new

owner

must

respect

the lease

 

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

29

Case:

Santiago Lighterage vs. CA: Seaworthiness cannot be agreed to between the parties (parang jurisdiction of the court) because it is a fact which has to be proven.

Fx: In this case two charter parties were entered into. The owner of the vessel was Santiago. He chartered the vessel to B (bareboat charter). B chartered the vessel to C (voyage charter). The vessel was supposed to carry an ore to South Korea. On the way to pick up the ore from Manila to Zambales, the vessel had to undergo repairs. In short it never reached Korea.

The pertinent provisions of the contract between Santiago and B reads: "3. Delivery The VESSEL shall be delivered and taken over by the CHARTERERS at the port of the City of Manila, in such ready berth as the CHARTERERS may direct.

The OWNER shall before and at the time of delivery exercise due diligence to make the VESSEL seaworthy and in every respect ready in hull, machinery and equipment for service hereunder. The VESSEL shall be properly documented at time of delivery.

The delivery to the CHARTERERS of the VESSEL and the taking over of the VESSEL by the

CHARTERERS shall constitute a full performance by

hereunder, and thereafter the CHARTERERS shall not be entitled to make or assert any claim against the

warranties expressed or implied with respect to the VESSEL but the OWNER shall be responsible for repairs or renewals occasioned by latent defects in the VESSEL, her machinery or appurtenances existing at the time of delivery under this Agreement, provided such defects have manifested before turn- over."

What is the liability of Santiago as the owner?

Held: The mere physical transfer of MV Christine Gay from petitioner to Pelaez does not constitute full performance of its obligation under their bareboat charter agreement. Neither is it considered a delivery. Under the agreement, physical transfer of a seaworthy vessel is necessary to satisfy delivery. Seaworthiness is a relative term. The degree of seaworthiness varies in relation to the contemplated voyage.

To be seaworthy, a vessel ―must have that degree of fitness which an ordinary, careful and prudent owner would require his vessel to have at the commencement of her voyage, having regard to all the probable circumstances of it.‖ Thus the degree of seaworthiness varies in relation to the contemplated voyage. Crossing the Atlantic calls for stronger equipment than sailing across the Visayan Sea. It is essential to consider that once the necessary degree of seaworthiness has been ascertained, this obligation is an absolute one, i.e. the undertaking is that the vessel actually is seaworthy. It is no excuse that the shipowner took every possible precaution to make her so, if in fact he failed.

the

OWNER

of

all

the

OWNER‘S

obligations

OWNER

on

account

of

the

representations

or

In examining what is meant by seaworthiness we must bear in mind the dual nature of the carrier‘s obligations under a contract of affreightment. To satisfy these duties the vessel must (a) be efficient as an instrument of transport and (b) as a storehouse for her cargo. The latter part of the obligation is sometimes referred to as cargoworthiness.

A ship is efficient as an instrument of transport if its

hull, tackle and machinery are in a state of good repair, if she is sufficiently provided with fuel and ballast, and is manned by an efficient crew.

And a vessel is cargoworthy if it is sufficiently strong and equipped to carry the particular kind of cargo which she has contracted to carry, and her cargo must be so loaded that it is safe for her to proceed on her voyage. A mere right given to the charterer to inspect the vessel before loading and to satisfy himself that she was fit for the contracted cargo does not free the shipowner from his obligation to provide a cargoworthy ship.

shipowner from his obligation to provide a cargoworthy ship. BILLS OF LADING (CF: ART. 356, 357,

BILLS OF LADING (CF: ART. 356, 357, 709,

718)

An intstrument in writing signed by the carrier or his agent, describing the freight so as to identify it, staing the name of the consigor, the terms of the contract of carriage and agreeing or directing that the freight be delivered to the order or assigns of a specified person

at a specified place.

Two fold nature: Serves as a receipt as well as evidence of a contract. BUT it is not important for a contract of carriage to exist between the shipper/pax and the common carrier. It is merely an evidence.

What is the effect of the issuance by a carrier of an unsigned bill of lading when accepted by the shipper or the consignee?and the common carrier. It is merely an evidence. A: Keng Hua Paper Products Co, Inc.

A: Keng Hua Paper Products Co, Inc. vs. CA: A "bill of lading delivered and accepted constitutes the contract of carriage even though not signed," because the "(a)cceptance of a paper containing the

terms of a proposed contract generally constitutes an acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or constructive notice." In a nutshell, the acceptance of

a bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to the presumption that the same was a perfected and binding contract.

that the same was a perfected and binding contract. What must be done to the bill

What must be done to the bill of lading upon fulfillment of the contract?

ARTICLE 353. The legal basis of the contract

between the shipper and the carrier shall be the bills

of lading, by the contents of which all disputes which

may arise with regard to their execution and fulfillment

shall be decided without admission of other exceptions than forgery or material errors in the drafting thereof.

After the contract has been complied with the bill of lading issued by the carrier shall be returned to him, and by virtue of the exchange of this certificate for the article transported, the respective obligations and actions shall be considered as canceled, unless in the same act the claims which the contracting parties

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

30

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

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

AFter the contract has been complied with, the bill of lading shall be returend to the carrier who may have issued it and it (the surrender) is proof that the goods have been delivered.

And after the deliverey or return of the bill of lading, the respective obligations and actions between the parties shall be considered as cancelled.

In case the consignee cannot return upon receive the merchandise the bill of lading, he must give the said carrier a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. (Art. 353)

What is the presumption if the carrier does not hold the bill of lading after the fulfillment of the contract of transportation?

The presumption is that the carrier did not deliver the goods.

Who may change the consignee?

ARTICLE 360. The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided that at the time of making the change of the consignee the bill of lading subscribed by the carrier be returned to him, if one were issued, exchanging it for another containing the novation of the contract.

The expenses arising from the change of consignment shall be defrayed by the shipper.

TRANSSHIPMENT - It is the act of taking - It is the act of taking

cargo from one ship and loading it into another. Transshipment cannot be made if the shipper does not consent because it is

it will expose the goods to

breakage, etc. So the effect if there was transshipment without consent is that there is a breach in the contract of carriage. And the carrier is liable to the shipper in case of loss, even for an otherwise excepted cause.

dangerous

of loss, even for an otherwise excepted cause . dangerous BRINGING THE CARRIER AN ACTION/CLAIM AGAINST

BRINGING

THE CARRIER

AN

ACTION/CLAIM

AGAINST

Under Art. 366, this does not cover loss because it says upon receipt of the goods or merchandise.

ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the indications of the damage or average giving rise to the claim can not be ascertained from the exterior of said packages, in which case said claim would only be admitted on the receipt of the packages. (So if the damage is

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

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

When does the 24 hour period begin to run? When the goods are actually received.

Case: New Zealand vs. Chua Joy - Held: In order that

the condition provided in Article 366 of the Code of Commerce may be demanded there should be a consignment of goods, through a common carrier, by

a consignor in one place to a consignee in another

place. And said article provides that the claim for damages must be made ―within twenty-four hours following the receipt of the merchandise‖ by the consignee from the carrier. In other words, there must be delivery of the merchandise by the carrier to the consignee at the place of destination.

The cargo never reached Manila, its destination, nor was it ever delivered to the consignee, the office of the shipper in Manila, because the ship ran aground upon entering Laoang bay, Samar on the same day of the shipment. Such being the case, it follows that the cargo was never received by the consignee.

Did the Civil Code repeal the prescriptive period to file a claim under the Code of Commerce?follows that the cargo was never received by the consignee. No, the limitations of actions mentioned

No, the limitations of actions mentioned in the Civil Code are without prejudice to those specified in teh Code of Commerce.

Period to file for recovery of undelivered/lost cargo in the courts:(note that under the Code of commerce, it does not cover loss/non delivery of cargo)

If there is a bill of lading, 10 years, otherwise, 6 years.

If it involves overseas trading, 1 year from date when it was supposed to be received.

1 year from date when it was supposed to be received. LOANS RESPONDENTIA ON BOTTOMRY AND

LOANS

RESPONDENTIA

ON

BOTTOMRY

AND

ARTICLE 719. A loan on bottomry or respondentia shall be considered that which the repayment of the sum loaned and the premium stipulated, under any condition whatsoever, depends on the safe arrival in port of the goods on which it is made, or of their value

in case of accident.

Notes:

1. If the collateral is the vessel = bottomry; if collateral is goods = respondentia.

Ex. Loan for 5 Million, en route to San Francisco, the vessel sinks. The loan is extinguished because the collateral is lost.

2. Characteristics of a loan on Bottomry: It is a loan

the security of which

and

is

the

vessel

itself

conditioned

on

the

safe

arrival at the port of

destination.

Also the vessel must

be exposed to

maritime peril. (So it must be destroyed during its

voyage)

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

31

3. Who may contract such loan? On bottomry: The owner of the vessel or the captain (see previous discussion, Art. 580); on respondentia: owner of the cargo.

Ordinary Loan

 

Loan

on

Bottomry/respondentia

May or may not have collateral

Must always have collateral

Collateral may

be

Collateral must be a vessel or a cargo subject to maritime risk

real

or

personal

property

Absolutely repayable

Payment depends on the safe arrival by the collateral at the port of the loan

Need

not

be

in

Must be in writing

writing

To be binding on 3 rd persons, need not be registered

Must be registered in the registry of vessels

Loss of collateral, if any does not extinguish the loan

Loss of collateral extinguishes the loan.

Effect of loss of collateral:

Gen Rule: Extinguishes the loan provided requirements of Art. 731 are complied with.

ARTICLE 731. The actions which may be brought by the lender shall be extinguished by the absolute loss of the goods on which the loan was made, if said loss arose from an accident of the sea at the time and during the voyage designated in the contract, and should it be proven that the cargo was on board;

EXCEPTIONS:

but this shall not take place if the loss were caused by the inherent defect of the thing; or through the fault or malice of the borrower, or through barratry on the part of the captain, or if it were caused by damages suffered by the vessel as a consequence of being engaged in contraband, or if it arose through loading the merchandise on a vessel other than that designated in the contract, unless this change should have been made by reason of force majeure.

The proof of the loss is incumbent upon the person who received the loan, as well as the proof of the existence in the vessel of the goods declared to the lender as the object thereof.

of the goods declared to the lender as the object thereof. RISKS, DAMAGES AND ACCIDENTS OF

RISKS, DAMAGES AND ACCIDENTS OF MARITIME COMMERCE

ARTICLE 806. For the purposes of this Code the following shall be considered averages:

1. All extraordinary or accidental expenses which may

be incurred during the navigation for the preservation of the vessel or cargo, or both.

2. All damages or deterioration the vessel may suffer

from the time she puts to sea from the port of departure until she casts anchor in the port of destination, and those suffered by the merchandise from the time it is loaded in the port of shipment until it is unloaded in the port of consignment.

What are NOT averages? Petty expenses under Art. 807

ARTICLE 807. The petty and ordinary expenses of navigation, such as pilotage of coasts and ports, lighterage and towage, anchorage dues, inspection, health, quarantine, lazaretto, and other so-called port expenses, costs of barges, and unloading, until the merchandise is placed on the wharf, and any other expenses common to navigation shall be considered ordinary expenses to be defrayed by the shipowner, unless there is a special agreement to the contrary.

ARTICLE 808. Averages shall be:

1.Simple or particular. 2.General or gross.

PARTICULAR AVERAGE: Simple or particular averages shall be, as a general rule, all the expenses and damages caused to the vessel or to her cargo which have not redounded to the benefit and common profit of all the persons interested in the vessel and her cargo x x x (Art. 809)

Who bears the loss in P/A? The owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular average (Art. 810)

Examples of P/A:

1. The damages suffered by the cargo from the time of its embarkation until it is unloaded, either on account of the nature of the goods or by reason of an accident at sea or force majeure, and the expenses incurred to avoid and repair the same.

2.The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the same causes and reasons, from the time she puts to sea from the port of departure until she anchored in the port of destination.

3.The damages suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it.

4.The wages and victuals of the crew when the vessel should be detained or embargoed by a legitimate order or force majeure, if the charter should have been for a fixed sum for the voyage.

5.The necessary expenses on arrival at a port, in order to make repairs or secure provisions.

6.The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to cover any other requirement of the vessel against which the proper amount shall be charged.

7.The victuals and wages of the crew during the time the vessel is in quarantine.

8.The damage suffered by the vessel or cargo by reason of an impact or collision with another, if it were accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the damage caused.

9.Any damage suffered by the cargo through the faults, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freight.

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

32

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

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

Example of General Ave:

1. The goods or cash invested in the redemption of

the vessel or cargo captured by enemies, privateers,

or pirates, and the provisions, wages, and expenses of the vessel detained during the time the arrangement or redemption is taking place.

2. The goods jettisoned to lighten the vessel, whether

they belong to the vessel, to the cargo, or to the crew, and the damage suffered through said act by the goods kept.

3.The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned in order to save the cargo, the vessel, or both.

4.The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place her in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred.

5.The damage suffered by the goods of the cargo through the opening made in the vessel in order to drain her and prevent her sinking.

6.The expenses caused through floating a vessel intentionally stranded for the purpose of saving her.

7.The damage caused to the vessel which it is necessary to break open, scuttle, or smash in order to save the cargo.

8.The expenses of curing and maintaining the members of the crew who may have been wounded or crippled in defending or saving the vessel.

9.The wages of any member of the crew detained as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it.

10.The wages and victuals of the crew of a vessel chartered by the month during the time it should be embargoed or detained by force majeure or by order of the Government, or in order to repair the damage caused for the common good.

11.The loss suffered in the value of the goods sold at arrivals under stress in order to repair the vessel because of gross average.

12.The expenses of the liquidation of the average.

12.The expenses of the liquidation of the average. REQUISITES FOR GENERAL AVERAGE: 1. There must be

REQUISITES FOR GENERAL AVERAGE:

1. There must be a COMMON DANGER, a danger in which the ship, cargo and crew all participate;

2. For the common safety or for the purposes of

avoiding imminent peril, part of the cargo or vessel on board is sacrificed deliberately (part of

the crew, pwede? hehe)

3. There must be attempt to avoid the imminent

peril must be successful in a sense that the vessel and some of the cargo are saved;

4. Damages or expenses were incurred after taking the proper legal steps.

Cases:

1. Magsaysay vs. Agan

Facts: The S S ―San Antonio‖, a vessel owned and operated by A. Magsaysay Inc., left Manila on 6 October 1949, bound for Basco, Batanes, via Aparri, Cagayan, with general cargo belonging to different shippers, among them Anastacio Agan. The vessel reached Aparri on the 10th of that month, and after a day‘s stopover in that port, weighed anchor to proceed to Basco. But while still in port, it ran aground at the mouth of the Cagayan river, and, attempts to refloat it under its own power having failed, Magsaysay had it refloated by the Luzon Stevedoring Co. at an agreed compensation. The stranding of Magsaysay‘s vessel w