Finals Discussion On Transpo

TRANSPORTATION LAW FINALS
DISCUSSIONS NI SIR: SEPARATE DOCUMENT ANG ANSWERS TO POINTERS...
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CHAPTER 6: CONCEPTS (MARITIME LAW) February 7, 2014
Maritime Law – is the system of laws which particularly relates to the affairs and business of the sea, to ships, their crews and navigation and to
marine conveyance of persons and property
Real and Hypothecary Nature
 Reasons: universal doctrine that has been adapted involving the limited liability rule
 The risk to which the thing is exposed

 The real nature of maritime law, exclusively real, according to which the liability of the parties is limited to a thing to which is at mercy of
the waves
 “Real”: Perils meaning you cannot dispense with those perils if they exists and continue to exists;
 “Hypothecary”- collateral or security referring to the vessel
 Concepts: no vessel, no liability rule – same with the Real and Hypothecary nature; where the interest of the ship owner or the ship agent is
confined on the vessel itself such that if the vessel is lost then the ship owner or ship agent has no more responsibility.
Governing Laws:
1. New Civil Code – primary law on maritime commerce

2. Book III Code of Commerce – applied suppletorily
3. Special Laws
a. Salvage Law (Act no. 2616)
b. Carriage of Goods by Sea Act (CA no. 65)
c. Ship Mortgage Decree of 1978 (PD 1521)
Civil Law v. Maritime Law
 Precautions: cases
 Madriaga cases: the distinction is on liability:
o Civil law – personal action can be filed
o Maritime Law – using the Real and Hypothecary nature, no such personal action can be filed; if there is total loss of the
vessel then the liability of the ship owner is extinguished.
No vessel, no liability rule vs. Real and Hypothecary Nature
Concept &Substance When Explained

No vessel, no liability same if there is no vessel there is no liability
Real and Hypothecary Nature same is about the interest of the ship owner which is co-
extensive/dependent on the vessel and the freight earned
Who can invoke limited liability rule?
 Ship owner or ship agent
Ship agent – in International Maritime Commerce: foreign ship owner based outside the Philippines they have a ship agent in the locality or in the
Philippines; Same liability as of the foreign ship owner.
YANGCO VS. LASERNA: There was typhoon signal no. 2; The captain was duly advised, the attention was called the passenger themselves; the boat
was overloaded; the baggage, trunks and equipment were hip on the deck; All connotes negligence; whose negligence?
Compared to Chua Yek Hong case (nalunod ang copra): in Yangco the SC upheld CA decision that the ship owner can limit liability because there
was a total loss.
 Issue: whether a ship owner can limit a liability?

 Sir: Is negligence not an issue? It depends:
TLD-HYC 13-14 -------------------------------------------------------------------------------- Everything comes to you in the right moment, be patient. - tara
 Ship captain: negligence was a collorary or inherent issue of the limited liability rule issue (art. 587)
 Ship owner:negligence was never an issue.
 SC: “may the shipowner or agent notwithstanding the total loss of the vessel as a result of the negligence of its captain be properly
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held liable in damages for the consequent death of its passengers” (issue)
 There was negligence of the ship captain; SC is guided by limited liability rule, art. 587; exceptions (negligence of the ship owner and
the concurrent negligence of ship owner and ship captain)
o Presumption of negligence of ship owner (effect on limited liability rule under maritime law): no case yet; not been raised as
an issue. There is a need for expressed findings of negligence because presumption of negligence under NCC cannot be
applied. Why? On the real and Hypothecary nature, NCC is not the governing law; it is the Code of Commerce.
CASES:
 Monarch, New India, Aboitiz vs. CA: Presumption of Negligence, extra-ordinary diligence.
 Chua yek Hong; 766: loss of vessel, not cargo – maritime law governs.
SUMMARY (REMEMBER):
1. Real and Hypothecary nature: Yangco, Chua Yek Hong & Aboitiz Cases (Distinction of interest among the cases)
2. Trend of the SC starting to the fluck from Aboitiz is to mix the principles under NCC with Maritime Law. Specially the Aboitiz cases (read all)
3. Issues:
a. Limited liability (applicability) - Yangco case
b. Negligence – Amparo de los Santos case
c. Connection of NCC and Maritime Law – Chua Yek Hong
d. Burden of Proof – Monarch & Aboitiz
e. Ship owner did not overcome presumption of negligence – New India (ship owner cannot invoke limited liability rule under the
Maritime law )
CHUA YEK HONG: right of abandonment of the vessel; SC cited art.587: it is the right granted to moderate and limit liability; basis of that right: it is
the universal principle of limited liability under maritime law; what is the effect of the invocation of such right: it is the cessation of the responsibility of
the ship agent and ship owner. SC: Relation between limited liability rule under maritime law and provisions of NCC in common carriers:”considering the
real and Hypothecary nature of maritime law this NCC provisions would not have any effect on the principle of limited liability… assuming petitioner is
liable for breach of contract, the exclusively real and Hypothecary nature operates to limit such liability to the value of the vessel.”
 There is Limited liability rule because of the three provisions in the code of Commerce: art. 587, 590, 837; if these provisions are amended or
repealed, there is no more limited liability good.
 Cases: 587 (talks about care of goods): deficiency of language: not only apply to goods but injury or death in the care of passengers; Monarch - it
applies in all cases (goods and passengers).
 The rest is in the book: no vessel, no liability; rationale; exceptions
SUB-CHARTERER (LIMITED LIABILITY): SC: dominion still rests on the ship owner (de la Torre case) – ship owner files cases against sub-
charterer and sub-charterer invoke limited liability rule, regardless of type of charter party.
 Issue: defense invoke by the sub-charterer is invoke not against the ship owner but against the third party (filed against the sub-party). Sub-
charterer has interest over the vessel by virtue of the charter party.
 Aboitiz cases:
Continuation On Chapter 6- General Concepts February 10, 2014
Focus on SC cases:
 Yangco vs Laserna:
 Ship captain – there is negligence
 Shipowner - no findings of negligence
 Aboitiz cases – Two aspects to apply:
 Issue: the propriety of the execution of a final judgement against a ship owner and the defense of a ship owner or the ground to oppose
the motion for execution is the limitation of the liability
 Question on the findings of the trial courts: other Aboitiz cases: New India
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CHAPTER 7 AND 8: FEBRUARY 14, 2014
*WHY SHOULD WE BE CONCERNED ABOUT WHAT IS A VESSEL?
- The questions are different
LOPEZ VS. DURUELO
SC: When it comes to vessels, it should refer to merchant or sea-going vessels distinguishing it from those craft which are engaged in river or bay craft.
Entirely correct in maritime law because whether we like it or not, under the new civil code, whether it is a vessel, merchant vessel, or minor craft under
maritime law, if a person falls under common carrier, with respect to Article 1742 of the NCC (common carrier vs. Private carrier, presumption of
negligence, extraordinary or ordinary diligence), then the question is different.
If the issue is (not under maritime protest, maritime law, mortgage, PD 1521) whether the person operating the craft of vessel is a common carrier,
private carrier, presumption of negligence, then do not focus on vessel on maritime law.
2 ASPECTS TO EMPHASIZE WITH RESPECT TO VESSELS
1) Requirement in a MARITIME PROTEST

2) For purposes of MORTGAGE
On the FIRST ASPECT:
WHEN IS PROTEST NOT REQUIRED?
1) Where what is involved is NOT a vessel

2) When the action involved is QUASI-DELICT  not based on Code of Commerce but rather on the New Civil Code
PD 760: Charter or Lease of Ships which are foreign-owned but this law was passed because of the assumption that Filipinos may have a difficulty of
purchasing vessels (lack of financial capacity). The law allows the temporary registration of a foreign-owned vessel to be registered in MARINA but
subject to certain requirements and qualifications (Under Memorandum Circular No. 182).
Memorandum Circular No. 182 likewise provides for the following basic rules: (page 312)
1) Any foreign-owned ship bareboat chartered by a Philippine national may be entered under the Philippine Register of Ships upon approval by
the Administration
2) The registration of a ship under a lease-irrevocable purchase arrangement shall be governed by this Circular. A ship subject of a lease-
irrevocable purchase arrangement shall be treated as a bareboat chartered ship; it shall be considered an owned ship only after the full
purchase price had been paid.
3) The documentation of ships registered under PD 760, as amended shall be governed by the provisions of this Circular and Chapter XV of the
1997 PMMRR.
4) Companies without owned ships which qualify under Regulation V.I shall be allowed to acquired and register ships pursuant to PD 760, as
amended, up to a maximum of ten (10) ships while shipowning companies have no limit as to the number of ships to be chartered
5) Ships registered under the Philippine flag pursuant to this Memorandum Circular shall be issued a Certificate of Philippine Registry (CPR)
consistent with Regulation XV/3.2 of the 1997 Philippine Merchant Marine Rules and Regulations (PMMRR).
On the SECOND ASPECT:
Vessel as a personal property and therefore can be an object in a Chattel Mortgage and you have a specific law which governs the mortgage.
MARITIME LIEN: A claim upon a maritime property and which claim travels with that property and maybe enforced by an action in rem.
IMPORTANT POINTS UNDER PD 1521:
Who may constitute a SHIP MORTGAGE:
SECTION 2: Who may Constitute a Ship Mortgage. – Any citizen of the Philippines, or any association or corporation organized under the laws of the
Philippines, at least sixty per cent of the capital of which is owned by citizens of the Philippines may, for the purpose of financing the construction,
acquisition, purchase of vessels or initial operation of vessels, freely constitute a mortgage or any other lien or encumbrance on his or its vessels and its 4
equipment with any bank or other financial institutions, domestic or foreign.
Section 2 does not refer expressly to preferred mortgage. Preferred mortgage and its requisites are found on Section 4.
PREFERRED MORTGAGE
SECTION 4: Preferred Mortgages ---
(a) A valid mortgage which at the time it is made includes the whole of any vessel of domestic ownership shall have, in respect to such vessel and as of
the date of recordation, the preferred status given by the provisions of Section 17 hereof, if
1. The mortgage is recorded as provided in Section 3 hereof;

2. An affidavit is filed with the record of such mortgage to the effect that the mortgage is made in good faith and without any design to
hinder, delay, or defraud any existing or future creditor of the mortgagor or any lien or of the mortgaged vessel;
3. The mortgage does not stipulate that the mortgagee waives the preferred status thereof;
(b) Any mortgage which complies with the above conditions is hereafter called a "preferred mortgage". For purposes of this Decree, a vessel holding a
Provisional Certificate of Philippine Registry is considered a vessel of domestic ownership such that it can be subject of preferred mortgage. The
Philippine Coast Guard is hereby authorized to enter a vessel holding a Provisional Certificate of Philippine Registry in the Registry of Vessels and to
record any mortgage executed thereon. Such mortgage shall have the preferred status as of the date of recordation upon compliance with the above
conditions.
(c) There shall be endorsed upon the documents of a vessel covered by a preferred mortgage
1. The names of the mortgagor and mortgagee;

2. The time and date the endorsement is made;
3. The amount and date of maturity of the mortgage; and
4. Any amount required to be endorsed by the provisions of paragraphs (e) or (f) of this Section.
(d) Such endorsement shall be made (1) by the Coast Guard District or Station Commander of the port of documentation of the mortgaged vessel, or
(2) by the Coast Guard District or Station Commander of any port in which the vessel is found, if such Coast Guard District or Station Commander is
directed to make the endorsement by the Coast Guard District or Station Commander of the port of documentation. The Coast Guard District or Station
Commander of the port of documentation shall give such direction by wire of letter at the request of the mortgagee and upon the tender of the cost of
communication of such direction. Whenever any new document is issued for the vessel, such endorsement shall be transferred to and endorsed upon
the new document by the Coast Guard District or Station Commander.
In the case of a vessel holding a provincial certificate of Philippine Registry, the endorsement shall be made by the Philippine consul abroad upon
direction by wire or letter from the Maritime Industry Authority at the request of the mortgagee and upon tender of the cost of communication of such
direction. A certificate of such endorsement, giving the place, time and description of the endorsement, shall be recorded with the records of
registration to be maintained at the Philippine Consulate.
(e) A mortgage which includes property other than a vessel shall not be held a preferred mortgage unless the mortgage provides for the separate
discharge of such property by the payment of a specified portion of the mortgage indebtedness. If a preferred mortgage so provides for the separate
discharge, the amount of the portion of such payment shall be endorsed upon the documents of the vessel.
(f) A preferred mortgage includes more than one vessel and provides for the separate discharge of each vessel by the payment of a portion of mortgage
indebtedness, the amount of such portion of such payment shall be endorsed upon the documents of the vessel. In case such mortgage does not
provide for the separate discharge of a vessel and the vessel is to be sold upon the order of a district court of the Philippines in a suit in rem in
admiralty, the court shall determine the portion of the mortgage indebtedness increased by 20 per centum (1) which, in the opinion of the court, the
approximate value of all the vessels covered by the mortgage, and (2) upon the payment of which the vessel shall be discharged from the mortgage.
POLIAND INDUSTRIAL VS. MTC
SC: If mortgage is instituted for purpose of construction, acquisition, purchase or initial operation of vessels, mortgage is preferred and Section 4
requisites are complied with.
Implication: For a mortgage to be considered preferred, the mortgage must comply with both Section 4 requisites and the purposes under Section 2.
Lien of Repairs? Repairs have nothing to do with CAPI (Construction, Acquisition, Purchase of vessels, Initial Operation of vessels). You have another
section (21) which refers to repairs as maritime lien on necessaries which is also a lien over the vessel.
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SECTION 21: Maritime Lien for Necessaries: persons entitled to such lien Any person furnishing repairs, supplies, towage, use of dry dock or marine
railway, or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the
owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given
to the vessel.
PREFERRED CLAIMS:
SECTION 17: Preferred Maritime Lien, Priorities, Other Liens
(a) Upon the sale of any mortgaged vessel in any extra-judicial sale or by order of a district court of the Philippines in any suit in rem in admiralty for
the enforcement of a preferred mortgage lien thereon, all pre-existing claims in the vessel, including any possessory common-law lien of which a lien or
is deprived under the provisions of Section 16 of this Decree, shall be held terminated and shall thereafter attach in like amount and in accordance with
the priorities established herein to the proceeds of the sale. The preferred mortgage lien shall have priority over all claims against the vessel, except the
following claims in the order stated: (1) expenses and fees allowed and costs taxed by the court and taxes due to the Government; (2) crew's wages;
(3) general average; (4) salvage; including contract salvage; (5) maritime liens arising prior in time to the recording of the preferred mortgage; (6)
damages arising out of tort; and (7) preferred mortgage registered prior in time.
(b) If the proceeds of the sale should not be sufficient to pay all creditors included in one number or grade, the residue shall be divided among them
pro rata. All credits not paid, whether fully or partially shall subsist as ordinary credits enforceable by personal action against the debtor. The record of
judicial sale or sale by public auction shall be recorded in the Record of Transfers and Encumbrances of Vessels in the port of documentation.
The 7 preferred claims under Section 17 are over and above the preferred mortgage in Section 4.
Implication: The preferred mortgage shall have priority over all claims against the vessel.
- That means if the vessel will be sold in an auction, then all proceeds in that auction will have to be applied first to the preferred mortgage
unless there are preferred claims.
- If there are preferred claims, proceeds will be applied FIRST TO THE PREFERRED CLAIMS before they shall be applied to the preferred
mortgage.
SECTION 17-a(5): Maritime Liens arising prior in time to the recording of the preferred mortgage
PNB VS. CA:
ISSUES: (1) Whether the repairs made on the vessel is a maritime lien
(2) Whether it is a preferred claim
SC: The law says “arising prior”
Whether the maritime liens of Chinabank prevail over PNBs?
SC: The moment the claim attaches, it is inchoate and when carried into effect by a proceeding in rem, it relates back to the period when it first
attached.
How will you prove that the lien arose prior to the recording of the preferred mortgage?
The SC noted of the date of the contract for the repair of the vessel (March 12, 1979). Whereas the preferred mortgage in favour of PNB was recorded
on September 25, 1979. The Court concluded that CBC has a preferred claim over the vessel.
- PNB will foreclose the vessel and out of the proceeds of the auction, PNB will pay first the claim of CBC and the remaining will be for PNB.
- So, theoretically, it is possible na wala nay mahabilin para sa PNB if there are several preferred mortgages... 
POLIAND INDUSTRIAL
Japanese lenders; Ang gigamit was a deed of undertaking executed by DBP.
SC: DBP has a preferred mortgage over the vessel. It was observed that the Japanese lenders would not have given the accommodation where it not
for the deed of undertaking executed by DBP.
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Under Section 17, it is also provided, if the proceeds of the sale should not be sufficient to pay all the creditors, the unpaid portion shall be enforceable
by personal action. Thus, an authority says that Section 17 is an exception to the hypothecary nature of maritime transactions.
- Review: Real hypothecary nature  there can be no personal action against the owner of the vessel.
FORECLOSURE (Review Mortgage on Credits guys... )
2 Kinds of Property:
1) Real  Real Estate Mortgage

2) Personal  Chattel Mortgage
Law: Vessels are to be regarded as personal property (Chattel Mortgage).
PD 1521 talks about 3 options:
1) Judicial Foreclosure
2) Extrajudicial Foreclosure
3) Personal Action  in case the proceeds will not be enough to satisfy the obligation.
Judicial  longer because you need to prove, in the course of trial that there was a promissory note, Mortgage, Default, Non-payment of obligation,
and present witness
Extrajudicial  there is no need to prove in trial; you have to file a petition, complete all the formalities, file it with the office of the clerk of court, it
will be assigned to a sheriff, the sheriff will post a notice and publicize indicating the obligation, the parties and when is the auction dates. It is provided
in the SC circular that two auction dates will be posted in case there will be no bidder in the first auction.
*In a chattel mortgage, you cannot sell extrajudicially the chattel unless you are in actual possession of the property.
PD 1521: ORDER OF ARREST  to gain possession of the vessel because vessel is a PERSON (mao arrest)
- Similar to writ of replevin or attachment in civil cases

- Main action is to file a Replevin  special civil case  give possession to mortgagee-creditor
CRESCENT PETROLEUM: Defendant is M/V Lok Maheshwari  because in the eyes of the maritime law, a vessel is a person, a FEMALE.
CHAPTER 9: PERSONS WHO TAKE PART IN MARITIME COMMERCE February 21, 2014
Harbor Pilot - by tradition: former ship captain
REMEMBER: Inter-Orient case
Maritime Pilot/ Harbour Pilot:
 FAR EASTERN SHIPPING CASE

The discretion of the ship captain when there is a harbour pilot on board; mechanics:
PORT IS GOVERN BY COMPULSORY PILOTAGE NOT GOVERN BY COMPULSORY PILOTAGE

 SHIP OWNER HAS NO OPTION; ship owner is required to have a  Ship owner has a choice to bring in a harbour pilot or not
ship owner on board;
 Payment for the Harbour Pilot is by ship owner. Allowed: ship owner is liable for whatever that may be caused by the
 Charter – to know if it is compulsory: CPA (Cebu Port Authority); harbour pilot in a port/area not covered by compulsory pilotage.
a special authority who govern the port
 If compulsory: there is a charter: governed by CPA: PPA has no
jurisdiction
 Compulsory pilotage port: a harbour pilot is required: ship owner
has no choice
PERSONS WHO TAKE PART IN MARITIME COMMERCE (4):
1. Ship owners and ship agents
2. Captains and Masters
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3. Officers and Crew of the vessel
4. Supper cargo: defined under Code of Commerce
SHIP AGENT: (Definition under ART. 586, Code of Commerce)
The ship owner and the ship 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 for the benefit of the same.
By ship agent is understood the person entrusted with provisioning of the vessel or representing the vessel in the port in which it may be found.
ACE NAVIGAION CASE VS MACONDRAY CASE
ACE NAVIGATION MACONDRAY
Issue : whether the person would be considered a ship agent Sir: there were several facts that the court noticed and which convinced
the court to say that petitioner was considered a ship agent. Although you
SC: “Based on the evidence established, the role of the person who was will note, the trial court according to the SC found the petitioner as a local
sued in the capacity as a ship agent but was merely to inform the agent of the vessel.
consignee as to the arrival of the goods”;
Wing Kee case: agent was called operating agent, has to be based on
He was an agent but not a ship agent; an agent of the consignee but not what is your role
a ship agent in contemplation of the code of commerce such that we are
not closing the possibility that if a person I found to be performing a SC: “these acts: preparation of the notices, presence of the employees…
function which is to inform the consignee but if aside from that function point to the conclusion that it was the entity that represented the vessel”.
there are other characteristics that may point out that indeed he/she/ it
represents the vessel in accordance with the definition then it is likely
that that person can be considered a ship agent under the code of
commerce but in the Ace navigation case, based on the evidence, that
was only his role then the court said he is not a ship agent. The
implication if he is not a ship agent, ha cannot be held liable, he cannot be
held solitarily liable together with the ship owner.
LIABILITIES OF THE SHIP OWNER
Under what instances the ship owner is primarily liable:
 Acts of captain
 Yu Con v. Ipli case: gibilin ang kwart, nawala, ship owner was liable
 Sweet Lines Case: ang destination is Samar kay ang kasagaran sa mga pasahero nangnaog sa Tagcloban. Napugos ang kadtong
pasahero going to Samar na mukanaog sa Tacloban. Ship owner was held liable because that was the decision of the ship captain. Of
course the ship owner was liable for the acts of the ship captain.
 But do not forget: the ship owner’s lability may be moderated or may be limited by limited liability rule or by real and Hypothecary nature,
that is, if applicable. Kay if wala na.lunod, unsaun pag apply sa real and Hypothecary nature diba? The ancient nature of real and
Hypothecary nature still requires the physical sinking, the actual and physical loss of the vessel.
 Contracts entered into by captain:

I think this is where art. 588 will come. Obligation contracted by the captain. The law says if the contracting exceeds the authority of the
captain then the ship owner is not liable unless it redounded in the benefit of the vessel. I don’t think Art. 588 includes obligations arising
from or may arise from of care of passengers. I think care of passengers is govern by art. 1759, which demand absolute responsibility o the
part of the ship owner. Because art. 1759 talks about death or injury to passengers. So there is no case however that elaborates art. 588.
But in my own opinion, I think what may have been conceived by art. 588 are financial obligations (but, don not quote me for that, quote
art. 588)
 In the case of Wing Kee: this is about a contract entered into for the provision of the vessel. Who signed the contract?it was sthe
master and the first steward. What contract was signed? Bills for supplies. Now how the SC did ruled that Admiral line, being the
owner of the vessel, should be held liable? Gitan.aw nila ang bills, ang heading sa bills where Admiral Lines. The requisition says
“please deliver… send your bills to the Admiral Line… the requisition must be receipted by either the chief steward and chief
engineer and return to the Admiral line”. SC: based on this, Admiral line is considered as a ship agent therefore, it is liable.
Although there was an issue kay ingon man ang Admiral line na na.terminate na ang iyang power so gi.publish ang special
power. So ang iyahang liability would only be up to the time of the termination of the power of attorney.
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3. Indemnities in favour of third persons

 Ohta Development case: the one who claimed for the loss cargo was not a third party, he was the party (shipper) to the contract.
What happened was Wala nahikot ang barko ngado sa kahoy. So ang nahitabo kay gi.load nila ang cargo, gi.butang nila sa port. Tungod
s aka.bugat sa carg, nalunod ang port. Nag.reklamo ang shipper. The Court said: there was no delivery yet.
TRIPLE ROLES OF CAPTAIN (Inter-Orient Maritime Case)
1. He is a GENERAL AGENT OF THE SHIPOWNER;

2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel (most important role for this has something 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 );
3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he navigates.
CHAPTER 10: CHARTER PARTY
The effect of the Charter party on the nature or characteristic of the common carrier
 Bar: Planter’s Products case: if there is a carrier and a charter party, it must be distinguished between bareboat or demise and affreightment.
 It may happen that there is a bill of lading and a charter party. If there is a charter party, the bill of lading loses its character as a contract but
it remains it character as a receipt. Because the term now of the contract will not be govern by the bill of lading but will be govern by charter
party. (three fold characteristic of the bill of lading in previous topics)
*Under Charter party: The charterer may invoke limited liability
CHAPTER 11: LOANS ON BOTTOMRY AND RESPONDENTIA
CHAPTER 12 and 13: AVERAGES AND COLLISIONS
AVERAGES – an extra-ordinary or accidental expense incurred during the voyage in order to preserve the cargo, vessel or both; and all damages or
deterioration suffered by the vessel from departure to the port of destination, and to the cargo from the port of loading to the port consignment. (Art.
806)
- Extraordinary expenses and damages
*What if there were expenses incurred in towing the vessel? (Trans-Asia). Assuming there is a fee, who will shoulder the costs?
CLASSES OF AVERAGES:
1) PARTICULAR OR SIMPLE AVERAGE

2) GROSS OR GENERAL AVERAGE
Nothing about common danger, deliberate sacrifice, successful saving or the compliance of the legal requisites from 813-815. Therefore, the expense or
the cost is not general  Particular
WHO WILL SHOULDER THE LOSS?
General Rule: (Hernandez, et.al)
- Particular  Loss will lie on where it falls

o i.e. if cargo was damaged due to seawater, loss lies on the cargo and therefore the shipper or the consignee will suffer the loss
- General  loss will be shared proportionally
o Special circumstances
o Not the owner of the cargo that was jettisoned will shoulder the loss but he will be compensated by those owners of the cargo and
the ship owners of the vessel.
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GENERAL AVERAGE:
Example: jettisoning of cargo (antique/traditional), fire on the vessel and another vessel helps put out the fire causing damage to the cargo (modern),
storm
PHILIPPINE HOME ASSURANCE VS. CA: (Acetylene gas case)  vessel was already on fire, another vessel rescued it and towed it to the nearest
port in Japan
SC: Even if the expenses incurred in fighting the fire and bringing the vessel to the nearest port in Japan, the expenses are not general because the
formalities prescribed were not compiled.
REQUISITES OF GENERAL AVERAGE: memorize
1) There must be a common danger

2) That for the common safety part of the vessel or of the cargo or both is sacrificed deliberately
3) That from the expenses or damages caused follows the successful saving of the vessel and cargo
4) That the expenses or damages should have been incurred or inflicted after taking proper legal steps and authority
*3rd requisite (successful saving)  not sure whether vessel or cargo lang or both. But the book says “VESSEL MUST BE SAVED”
AMERICAN HOME VS. CA: Nalunod, ang cargo nawagtang, American home paid the consignees. American Home filed a case. Motion to dismiss was
filed for the reason that it was only 0.18% of 17.20M which did not exceed the 5% pursuant to Article 848, therefore, complaint cannot be admitted as
provided for by law.
- Instead of presenting proof, filed Motion to Dismiss  hypothetically admitting the allegations.
Article 848 (Code of Commerce): Claims for averages shall not be admitted if they do not exceed 5 per cent of the interest which the claimant may
have in the vessel or in the cargo if it be gross average and 1 per cent of the goods damaged if particular average, deducting in both cases the expense
of appraisal, unless there is an agreement to the contrary.
- American Home: respondent court failed to consider that respondent National Marine Corp., being a common carrier is regulated by the New
Civil Code primarily and suppletorily by the Code of Commerce.
- Private Respondent: In all matters not covered by the Civil Code, rights and obligations shall be governed by the Code of Commerce. Articles
826, etc., should be applied as they provide for the extent of the common carrier’s liability.
SC: You do not talk about averages under the Code of Commerce unless we will settle first on the issue of NEGLIGENCE. If the shipowner is negligent,
rule on averages will apply, but if not negligent, rule on averages will not apply.
The law on averages in the Code of Commerce cannot be applied in determining liability where there is negligence.
NDC vs. CA: Collision between two vessels because of negligence of captains. In avoiding liability, the ship owner and ship agent argues that the law
on averages should be applied in determining liability. Is this tenable?
SC: The negligence being the cause and cargoes not being jettisoned, the trial courts and CA acted correctly in not applying the law on averages.
LIQUIDATION
Under the law, it should be initiated by the captain but even if there is no initiation, this does not prevent shippers from filing appropriate complaints.
The ship owner will be the one to go after the ship captain for not initiating.
How does a captain force shippers and consignees in contributing under the law? (If the ship captain is of the opinion that the average is
general)
- Ship captain will not release the cargo to the consignee unless you contribute.
- Shippers/Consignees: pay under protest and ask for reimbursement or file damages in court (though goods may become “bahaw” already)
COLLISIONS
RULES on collision of vessels under Code of Commerce:

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1. One vessel at fault – such vessel is liable for damage caused to innocent vessel as well as damages suffered by the owners of cargo of both
vessels.
The collision may be due to the fault, negligence or lack of skill of the captain, sailing mate, or any other member of the complement of the vessel. The
owner of the vessel at fault be liable for losses or damage. (Art. 826)
2. Both vessels at fault – each vessel must bear its own loss, but the shippers of both vessels may go against the ship owners who will be solidarily
liable.
The collision may be due to the fault of both vessels. Each vessel shall suffer its own losses, but as regards the owner of cargoes both vessels shall be
jointly and severally liable. (Art. 827)
3. Vessel at fault not known – same as rule as (2). (Doctrine of Inscrutable Fault)
If it cannot be determined which vessel is at fault. Each vessel shall also suffer its own losses and both shall be solidarily liable for losses o damages on
the cargoes. (Art. 828)
4. Third vessel at fault – same rule as (1).
Two vessels may collide with each other without their fault by reason of a third vessel. The third vessel will be liable for losses and damages. (Art. 831)
5. Fortuitous event – no liability. Each bears its own loss.
The vessels may collide with each other through fortuitous event or force majeure. In this case each shall bear its own damage. (Art. 830)
A vessel which is properly anchored and moored may collide with those nearby reasons of storm or other cause of force majeure. The vessel run into
shall suffer its own damage and expense. (Art. 832)
Last clear chance and contributory negligence do NOT apply.  do NOT use as defense
- WHY? There is NO PROVISION of last clear chance or contributory negligence in the Code of Commerce.
- Only applies in land transportation
NDC vs. CA: Collision occurred in foreign waters but the cargo was from San Francisco to the Philippines
- SC: it is immaterial if collision occurred in foreign waters. Since destination is the Philippines, the law that will govern will be Philippine Laws.
SMITH BELL: Gothong was held responsible for the collision for violation of RULE 18 of the International Rules of the Road. Why?
1. Instead of turning to star board (right), he turned port side (left).

2. No lookout
3. Second mate was the one in command of the vessel even if there was a captain on board
MECENAS (1989): Collision between passenger vessel and tanker. *Peculiar Case*
SC: Court did not apply international rules. Applied presumption of gross negligence (New Civil Code).
- Under these circumstances, a presumption of gross negligence arises. This presumption was never rebutted by Negros Navigation.
In other words, "route observance" of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been
avoided by proper care and skill on her part or even by a departure from the rules.
- Grossness of negligence was underscored by:

o Don Juan was more than twice as fast
o Don Juan carried full complement
o Don Juan has radar
o Don Juan’s Officer on watch had sited Tacloban on his radar while the latter was still 4 nm away
In the total set of circumstances which existed in the instant case, the "Don Juan," had it taken seriously its duty of extraordinary diligence, could have
easily avoided the collision with the "Tacloban City,"
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3 Zones of Time in the Collision of vessels:
1. First zone – all time up to the moment when risk of collision begins;
2. Second zone – time between moment when risk of collision begins and moment it becomes a practical certainty;
3. Third zone – time when collision is certain and time of impact.
MARINE PROTEST
GR: Ship Captain should file marine protest

EX: if Shipper is not on board the vessel
*Can you force the ship captain to file the protest?

- No, but the captain will lose his license and employment
CHAPTER 15: SALVAGE (No discussion on Salvage  refer to book or pointers)
CHAPTER 16: COGSA
Commonwealth Act no. 65 (PHIL-1936) adopted  Public Act no. 521 (US-1936) adopted  Hague Rules (1924)
MARITIME CODES:
HAGUE RULES HAGUE-VISBY RULES HAMBURG RULES

Year 1924 1968 1978
Description and US and Phil adopted this rule - Amendment to the Hague Rules Existing Protocols but US and Phil did not
Adoption adopt this
- Existing Protocols but US and Phil did
not adopt this
Prescription In respect of LOSS OR DAMAGE In respect of GOODS In relation to CONTRACT OF

CARRIAGE OF GOODS
- ANY damage that will result to the
goods whether it’s depreciation, - encompasses everything
economic, etc.
Prescriptive 1 year 1 year 2 years

Period
Period of Carriage of Goods Carriage of Goods The moment a carrier takes charge of
Responsibility - Tackle-to-tackle rule - Tackle-to-tackle rule the goods, at the time of port loading,
carriage and discharge  broader
- Provision on discharge is the same

under the New Civil Code (delivery to
consignee or a reasonable opportunity for
the consignee to use the goods)
Applicability of Only foreign trade  not domestic Is the country from where the ship Common carrier
COGSA departs and a party of COGSA
Goods No live animals Included live animals
Defines only “carrier” Defines “Actual carrier”
Favors common carriers  Unification Rights of Shipper

- Limited Liability Doctrine  only due
diligence required
- no presumption of negligence
 one of the immunities of a common
carrier is the “act or neglect of the
master/captain”
PRESCRIPTION
MITSUI: Interpretation of SC of the phrase “In respect of Loss or Damage”  This has something to do with the PHYSICAL damage (not economic,
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not including the depreciation of the value of the goods upon arrival on the port of destination)
LIAO: NO such distinction. Whatever damage that may be suffered by the consignee or the shipper, there is damage pursuant to the
Hague rules.
PERIOD OF RESPONSIBILITY
Tackle-to-tackle Rule: Literally the loading of the goods going to the vessel and coming out of the vessel (Definition under the Hague Rules)
Once goods passes through

this side of the vessel, this is
where the liability of the
carrier starts and the
responsibility is also
discharged once it passes out
this side of the vessel
Hull of the Vessel
COGSA: CONTRACT OF CARRIAGE  not a real contract
SECTION 1: xxx (b) The term "contract of carriage" applies only to contracts of carriage by covered by a bill of lading or any similar document of
title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or
pursuant to a character party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a
holder of the same. (COGSA)
- Not a real contract  talks about a reference to the Bill of Lading

- Bill of Lading “only” (If no Bill of Lading, it cannot be considered a Contract of Carriage for purposes of COGSA)
- The passage/adoption of COGSA by the Philippines should not be considered as repealing or amending the provisions of the Code of
Commerce.
o In case of conflict, Code of Commerce applies.
o In the absence of any provision in the Code of Commerce, COGSA applies (only when there is a bill of lading or any document of
title similar to BOL)
o Liabilities or rights will be governed by Code of Commerce or general law, NCC
CARRIAGE OF GOODS:
SECTION 1. xxx (e) The term "carriage of goods" covers the period from the time when the goods are loaded on to the time when they are
discharged from the ship. (COGSA)
TACKLE-TO-TACKLE RULE: literal loading and discharge ( pls. refer to my ever naning drawing above)
APPLICABILITY:
- Always involves FOREIGN TRADE, not domestic

- Consider: Is the country from where the ship departs and from where the vessel is destined, a contractive party of COGSA?
o The common carrier who issued the bill comes from what country? Is it a contracting party under COGSA?
- Law is explicit: To and From the Philippines
o If Foreign to Philippines  Philippine Laws
o If Philippines to Foreign  Country of Destination
AMERICAN INSURANCE VS. COMPANIA MARITIMA: Transshipment has NO effect. It does not remove the operation of COGSA.
-
-
Transshipment involves only delivery from one vessel to another. It does not concern ownership of vessel.
FACTS: Shipment from New York to Cebu City but there was a transshipment in Manila. It was argued that goods were shipped from Manila
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to Cebu so as not to be covered by COGSA.
- Was there a BOL covering shipment from Manila to Cebu? Assuming that there is, is it a foreign trade? It is not, therefore it will not fall under
COGSA. (Realizations... if...)
PRESCRIPTIVE PERIOD: 1 year from Delivery
UNION CARBIDE: 1 year from delivery to arrastre operator
INSURANCE CO. OF NA VS. ASIAN: COGSA does NOT apply to arrastre operators
- Arrastre operator cannot invoke the prescriptive period of 1 year.
- JUSTIFICATION: Under the definition of CARRIER in CA 65
SECTION 1: xxx (a) The term "carrier" includes the owner or the charterer who enters into a contract of carriage with a shipper.
- Carrier  owner or charterer (arrastre operator is NOT there)
SECTION 1: xxx (c) The term "goods" includes goods, wares, merchandise, and articles of every kind whatsoever, except live animals and cargo
which by the contract of carriage is stated as being carried on deck and is so carried.
“CARRIER” AND “ACTUAL CARRIER”
MENDOZA (Warsaw): Naay carrier na kuhaon imong ticket, but dunay “performance or execution of the contract may be performed by other carriers”
SITUATION: Going to New York, one carrier will carry you to HongKong, then another carrier will carry you from Hong Kong to New York  Actual
carrier. WHO WILL YOU SUE?
- HAMBURG: Regardless of who is the actual carrier, it is the responsibility of the carrier who will take charge of the goods within the period of
responsibility.
SUSPENSION OF PRESCRIPTIVE PERIOD:
UNIVERSAL SHIPPING VS. IAC: Exchange of correspondence
CUA VS. WALLEM: Implied admission

- Petitioner alleged in the complaint that respondent agreed to extend the filing of claim and that allegation was not specifically denied by the
respondent  deemed admitted
HAMBURG PROVISION  Modification in the Prescriptive Period  Provision recognizing the party’s right to extend the prescriptive period.
WALLEN PHIL VS. S.R. FARMS: Complaint filed  amended complaint filed: Insofar as the Newly impleaded defendant is concerned  1 year from
date of the filing of amended complaint.
- Petitioner was only impleaded on June 7, 1993 (1 year, 1 month and 23 days from April 15, 1992  the time that the cargo was unloaded)
- SC: 1 year period has already lapsed.
COGSA: INAPPLICABLE IN THESE CASES
MAYER STEEL VS. CA: suit is based on contract of insurance, COGSA does not apply
ANG VS. AMERICAN STEAMSHIP: misdelivery
MITSUI VS. CA: contract of carriage (from Philippines to France)
- When there is delay in voyage  results in depreciation of goods  no longer in demand

- Case brought by the aggrieved shipper is not one for loss or damage. Therefore it is not covered by the one year statute of limitations
- SC: There is neither deterioration, nor disappearance, nor destruction caused by the carrier’s breach of contract. Whatever reduction there
may have been to the value is not due to their deterioration or disappearance.
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INSURANCE: 1 year prescriptive period cannot apply to arrastre operator.
INTERACTION OF DEFENSES
Meaning of Interaction: there are different laws there; New Civil Code, Code of Commerce and COGSA
CODE OF COMMERCE/NCC COGSA

1.A) Diligence required Extraordinary Due Diligence
1.B) Absolutory causes NCC: Article 1734. Common carriers are Section 4. (1) Neither the carrier nor the ship shall be liable for
responsible for the loss, destruction, or deterioration loss or damage arising or resulting from unseaworthiness unless
of the goods, unless the same is due to any of the caused by want of due diligence on the part of the carrier to
following causes only: make the ship seaworthy, and to secure that the ship is properly
manned, equipped, and supplied, and to make to the holds,
refrigerating and cool chambers, and all other parts of the ship in
(1) Flood, storm, earthquake, lightning, or
which goods are carried fit and safe for their reception, carriage,
other natural disaster or calamity;
and preservation in accordance with the provisions of paragraph
(1) of section 3. Whenever loss or damage has resulted from
(2) Act of the public enemy in war, unseaworthiness, the burden of proving the exercise of due
whether international or civil; diligence shall be on the carrier or other persons claiming
exemption under the section.
(3) Act or omission of the shipper or owner
of the goods; (2) Neither the carrier nor the ship shall be responsible for loss or
damage arising or resulting from —
(4) The character of the goods or defects
in the packing or in the containers; (a) Act, neglect, or default of the master, mariner, pilot, or
the servants of the carrier in the navigation or in the
(5) Order or act of competent public management of the ship;
authority.
(b) Fire, unless caused by the actual fault or privity of the
carrier;
(c) Perils, dangers, and accidents of the sea or other

navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or seizure

under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the goods, his

agent or representative;
(j) Strikes or lockouts or stoppage or restraint of labor from

whatever cause, whether partial or general; Provided, That
nothing herein contained shall be construed to relieve a
carrier from responsibility for the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at sea;
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(m) Wastage in bulk or weight or any other loss or damage
arising from inherent defect, quality, or vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due diligence; and
(q) Any other cause arising without the actual fault and
privity of the carrier and without the fault or neglect of the
agents or servants of the carrier, but the burden of proof
shall be on the person claiming the benefit of this exception
to show that neither the actual fault or privity of the carrier
nor the fault or neglect of the agents or servants of the
carrier contributed to the loss or damage.
2) Period of Responsibility From the time goods are received by the common Tackle-to-tackle rule :
carrier up to the time they are delivered to the The term "carriage of goods" covers the period from the time
consignee or to the person who has the right to when the goods are loaded on to the time when they are
receive them. discharged from the ship.
3.A) Effect of notice of - If apparent  immediately - Apparent  immediately from the time of delivery
claim (right of action) - If not apparent  24 hours - Not apparent  3 days (for carrier to verify)
- Different from
prescription (another
ground to dismiss the
case )
3.B) Effect if you cannot - NO RIGHT - HAVE RIGHT

comply with notice of
claim
4) Limitation of liability 1749: NO exact amount but it gives the parties - Not exceeding $500 U.S.
discretion to fix the amount - Trivia: Original currency was Sterling
NCC: 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 1748. An agreement limiting the common

carrier's liability for delay on account of strikes or
riots is valid.
CC: Art. 587. The ship agent shall also be civilly

liable for the indemnities in favor of third persons
which may arise from the conduct of the captain in
the care of the goods which he loaded on the vessel;
but he may exempt himself therefrom by abandoning
the vessel with all her equipment and the freight it
may have earned during the voyage.
CC: Art. 837. The civil liability incurred by

shipowners in the case prescribed in this section,
shall be understood as limited to the value of the
vessel with all its appurtenances and freightage
served during the voyage.
5) Prescriptive Period - 10 years: written - 1 year

- 6 years: not written
- 4 years: torts, quasi-delict
CHAPTER 17 & 18 (AVIATION): March 14, 2014
We will have to consider that of the 2 categories that mentioned _ because any international flight that does not fall under any of the 2 categories that
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will never be considered as international carriage or international transportation under the WARSAW convention.
SO WHAT SHALL WE REMEMBER UNDER WARSAW CONVENTION:
Definition of International Transportation or International Carriage
1. The place of departure and the place of destination are within the territories of two contracting countries regardless of whether or not there was
a break in the transportation or transhipment;
2. The place of departure and the place of destination are within the territory of a single contracting country if there is an agreed stopping place
within a territory subject to the sovereignty, mandate or authority of another power, even though the power is not a party to the Convention.
So, if there is International Transportation or International Carriage then WARSAW convention applies. If the is not, WARSAW will not apply and
therefore, other laws will apply like the New Civil Code.
There was only one case that was asked in the bar examination in WARSAW and that is the case of American airlines. The others were not yet tested.
ow, you will have to note because when you will be obtaining a ticket from the airline and it is a transportation outside of the Philippines by air there is
always that provision in the ticket that the WARSAW convention, Guadalahara Protocol, etc. will apply. The very reason is if there is not stipulation in
the ticket then the common carrier cannot avail of limited liability.
PROPER PROVISION OF HAGUE PROTOCOL AND OTHER PROTOCOLS

So you have the WARSAW convention that was signed on 1929. So originally the Philippines was not a party, it was only on 1950 that we acceded by
the instrument of accession. So there were already modifications:
 Hague Protocol (1955)

 What are the important items in the Hague Protocol: The increase of the limits of recovery for passengers
 Guadalajara Convention (talks about the Contracting carrier and the Actual carrier)
1. So if you will remember that principle nga the transportation shall be considered a single operation, under the convention there are
already 2 parties involved:
1. Contracting party/carrier - the one who will issue the ticket.
2. Actual carrier - who actually performs the transportation; actually performs the different legs of the trip.
2. It says that the limitation of the liability applies to BOTH CARRIERS.
WARSAW CONVENTION
DEFINITION
It applies to all international transportation of persons, baggage or goods performed by an aircraft gratuitously or for hire. (It applies to international
transportation; persons, baggage or goods; it is performed by an aircraft; and for reward or gratuitously.)
Although in yellow book: in other countries WARSAW convention already includes live animals but in our jurisdiction it is EXCLUDED because with
respect to good it excludes animals.
INTERNATIONAL CARRIAGE: 2 CATEGORIES (MAPA CASE):
1. Place of departure (where the carriage begins)

2. Place of destination (the point where carriage ends)
IMPORTANT: because if you have different legs of your trip, it is important to know where the place of destination is. You will remember,
one of the venues where you can file an action is the place of destination. So for example if you have several stopovers in other countries,
whether contracting party or not, then that is not a place of destination for purposes of WARSAW. And you have to be careful especially when
the ticket is round trip or the phrase “and back” (sa ato pa, ang imu place of destination is also the place of departure). So these are the key
areas which you should be cautious with respect to an actual problems sa transportation.
SUCCESSIVE CARRIERS
Carriage to be performed by Successive Carriers (4 cases):
1. AMERICAN AIRLINES V. CA
Note: Only in American airline case where ang gi.kiha kay ang alledged agent, meaning in the Guadalahara convention, the actual carrier. While in the
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other three cases, the carrier which was sued was the contracting carrier.
Now, there is a unique argument in the case of American Airline. Because one, the carrier sued is there is the actual carrier, American airlines, and not
the contracting carrier. What was the contention of American airlines with respect to the contract performed by it? From Geneva Mendoza forgo of his
trip to Copenhagen and to go straight to New York actual. Meaning it is in Geneva where the ticket was issued by American Airlines. The argument now
of American airlines is the contract entered into between them and Mendoza is a separate contract. And that had something to do with the principle that
the transportation shall be regarded as single operation regardless of the number of carriers which actually perform the carriage. The point there of
American airlines is so that the Philippine court will have no jurisdiction over American airlines. Why? Because it the court will believe that the contract
by issuance of the ticket in Geneva would constitute a separate contract then Mendoza cannot file a case in the Philippines. Assuming, American airlines
is supposedly is not domiciled here, it has no principal place of business therefore, you have 2 more venues to choose. The third one, where the
contract is entered into and where the ticket is issued which is in Geneva not in the Philippines. And the other one is the place of destination, New York.
But the Court said that argument is not tenable because carriage to be performed by several or successive carriers would be regarded as a single
operation in accordance with the WARSAW convention.
2. LUFTHANSA GERMAN AIRLINES V. CA
Lufthansa: Lufthansa was also the contracting party. Antiporda was bumped off by Air Kenya. What is bumped off? Wala siya gipasakay kay gihatag sa
laing pasahero. Now, what was the argument of Lufthansa? Lufthansa used article 30. Now the question: Was there accident? Was there delay? And SC
differentiated bumping off and delay. ”Bumping off” is the refusal to transport passengers with confirmed reservation, totally foreclosing the passenger’s
right to be transported. Whereas in delay, it prolongs only the time, merely postpones for a time the enforcement of such right but eventually the
person will be transported. So SC said that art. 30 does not contemplate the instance of bumping off.
3. KLMROYAL DUTCH AIRLIVE V. CA
KLM was the contracting party and Aer lingus airlines was the actual carrier. Thee passenger suffered damages while in the hands of the Aer Lingus
staff. So pag.kiha sa KLM, ni.ingon ang KLM ug art. 30(2) which says it should be the actual carrier na maoy responsible. But the losses against the
carrier who perform the transportation during which the accident or the delay occur, sa ato pa it is only in those 2 cases that the actual carrier can be
liable when a transportation is to be performed by successive carriers. Because that is what the law says, during which where the accident or the delay
occurred. Private respondents in the case of KLM suffered embarrassment. Was there accident? No. was there delay? No. So art. 30 does not apply. SC
said, it does not apply if the damage is caused by wilful conduct misconduct on the part of carrier’s employee, meaning referring to actual carrier.
4. CHINA AIRLINES V. CHIOK
What was the theory of China Airlines? Ang ni.issue sa ticket kay China Airlines. Ang actual carrier was Philippine airlines. Respondent was prevented
from boarding because his name did not appear in the passenger’s list. The argument of China airlines: it merely acted as an issuing agent for the ticket
covering Hongkong to Manila and that is via PAL. So according to China ailrline it should be PAL held liable. Of course SC said, taking a que from
American airlines, that is to be considered a single operation.
[Art. 30(2) of the WARSAW convention reads: “in case of transportation of this nature (meaning transportation that would be performed by various
successive carriers), the passenger or his representative can take action only against the carrier who perform the transportation during which the
accident or the delay occurred … ”. The saving clause it is not material, because there was no proof that there was an express agreement. So what was
important here is under paragraph 2, the contracting carrier, can escape liability because it says that the action should be against the carrier who
performed the transportation.]
ARTICLE 17, 18 19 of the WARSAW Convention.
ART. 17. The carrier shall be liable for damages sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a
passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking
or disembarking.
ART. 18. (1) The carrier shall be liable for damage sustained in the event of the destruction or loss of, or of damage to, any checked baggage, or any
goods, if the occurrence which caused the damage so sustained took place during the transportation by air.
(2) The transportation by air within the meaning of the preceding paragraph shall comprise the period during which the baggage or goods are
in charge of the carrier, whether in an airport or on board an aircraft, or, in the case of a landing outside an airport, in any place whatsoever.
(3) The period of the transportation by air shall not extend to any transportation by land, by sea, or by river performed outside an airport. If,
however, such transportation takes place in the performance of a contract for transportation by air, for the purpose of loading, delivery, or
transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the
transportation by air.
ART. 19. The carrier shall be liable for damage occasioned by delay in the transportation by air of passengers, baggage, or goods.
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*Not an exclusive enumeration; so NCC can be invoked
NORTHWEST AIRLINES V. CUENCA:
Principle: the common carriers cannot just be held liable based on these articles. Meaning the carrier can still be held liable for other violations not
necessarily covered under Art. 17, 18, 19.
And I don’t want to venture specifically on the requirement under art. 17, 18 & 19 because they are so very specific as to coverage, for example:
Art 17: death or wounding of passenger. If the accident sustained took place on board the aircraft or in the course of any of the preparations
of embarking or disembarking, that would be the case. Ay if naa pa ka sa tube or while you are waiting in the airport, that can be considered
as embarking or disembarking. Actually ang uban courts lahi pud ilang mga decisions. Nay uban nga naa sa airport kay pwede. Nay uban nga
kanang dapat naa naka sa atong tube to be liable etc.. But somehow this has to be explained.
Art. 18: with respect to baggage or goods it says, “if the occurrence sustained occur during in the transportation by air”. The question is what
is the extent of “during the transportation by air”?
Pan American v. IAC case: if ang iyahang argument was he did not signed the ticket. What the SC used was the Ong Yu v. CA case, holding that
there is no need to sign the ticket to bound.
UNDER WHAT INSTANCES THE LIMITED LIABILITY RULE DOES NOT APPLY UNDER WARSAW:
1. Wilful misconduct under art. 25

1. Who will determine: it is the law of the forum
2. Art. 3: if there is no delivery of the adequate transportation documents

1. So kung walay passenger ticket nga gi.issue, walay baggage chip na gi.issue for baggage and air-way bill for goods.
3. Transportation outside of the convention

 This has to be read in conjuction with the 2 categories in MAPA v. CA case.
 Diba ni.ingon ko na there has to be a statement for the applicability of the WARSAW in the ticket, it says her, “if the carrier accepts
passenger, without passenger ticket, he shall not be entitled to a avail…the carrier accepts baggage with the baggage check etc… a
statement that the transportation is subject to the rules relating to liability established by this convention”. So if walay statement in the
ticket that the liability is established by WARSAW convention, the carrier shall not be entitled to avail of limited liability.
So we don’t have to discuss each case where the SC decided under the NCC because I don’t want you to be frustrated. If I may just cite one case:
LUNA, ET AL. V. CA: SC said, “private respondent may still be held liable for breach of other relevant laws which may provide a different period or
procedure for filing a claim”. The SC did not mention what are those other relevant laws.
Ang kadtong microwave was PAL v. CA (1996) - take note – SC decided that the carrier cannot avail limited liability on one ground because according
to the SC the passenger was prevented from declaring a higher value. Private respondent Mejia could and would have complied with the conditions had
she not been effectively prevented from doing so upon the advice of PAL's personnel. And the testimony quoted by the court, Q: “Did you declare the
value of the shipment?” A: “No. I was advised not to”. So in this case also the SC said, carrier, you cannot avail of limited liability
UNITED AIRLINES V. UY: Difference between embarrassment and the damage to property or goods.
Actually if you go over all these cases decided by the court using NCC that will benefit passengers here in the Philippines but not the carriers.
*There is nothing can escape the Notice of Claim unless you will argue WARSAW does not apply. There is nothing under the NCC about notice of
claim. Notice of claim is only in the Code of Commerce. But you have to be careful also because even if the new civil code does not provide for the
filling of notice of claim, there is only in WARSAW. If it is your argument that NCC applies, careful if there is a requirement in the contract because, the
contract becomes the law. And normally the contract/ ticket stipulates for a longer period.
There is nothing in the WARSAW convention that may benefit the passengers. If you want to be safe you can alleged under WARSAW with alternative
causes of action under NCC. Anyway you are allowed under the remedial law.
CHAPTER 19: PUBLIC UTILITIES
(Due to lack of time and we know gamay ra ang mubasa ani nga document, if naa ba jud, we decided not to transcribe nalang the last hour of sir’s discussion regarding this
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and concentrated sa pointers (which is MORE RELEVANT). Thus, we will attach nalang the notes from ANGEL’s notes... props to her and JP, congrats to atty!!! waley lang)
Public Utility- privately owned and operated business whose service are essential to generic public; impressed with public interest and concern
Public service – (Sec 13 of the Public service Act) includes every person that may own, operate, manage or control in the Philippines, for hire or for
compensation, with general or limited clientele, whether permanent, occasional/ accidental, & done with general business purposes, any common
carrier, etc; will not only refer to land transpo. but also include telecommunications, railroads, vessels etc.
OWNERSHIP V. OPERATION
What constitutes a public utility is not their ownership but their use to serve the public x x x x The Constitution, in no uncertain terms, requires a
franchise for the operation of a public utility. However, it does not require a franchise before one can own the facilities needed to operate a public utility
so long as it does not operate them to serve the public x x x x In law, there is a clear distinction between the "operation" of a public utility
and the ownership of the facilities and equipment used to serve the public. The exercise of the rights encompassed in ownership is
limited by law so that a property cannot be operated and used to serve the public as a public utility unless the operator has a
franchise x x x x The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own
said facilities without operating them as a public utility, or conversely, one may operate a public utility without owning the facilities used to serve the
public. The devotion of property to serve the public may be done by the owner or by the person in control thereof who may not necessarily be the
owner thereof x x x x Indeed, a mere owner and lessor of the facilities used by a public utility is not a public utility x x x x Even the mere formation of a
public utility corporation does not ipso facto characterize the corporation as one operating a public utility ( Tatad v. Garcia)
B. DISCRIMINATION
-it is well noted by the law that common carriers required to carry all persons, either passengers or property, for exactly the same charge for a like and
contemporaneous service in the transportation of like kind of traffic under substantially similar circumstances or conditions
- a common carrier may discriminate between shippers when the amount of goods shipped by one actually costs less to handle and transport , but he
cannot discriminate upon the ground simply that he carries all the goods of one shipper, while he does not carry all of the goods of another.
FRANCHISE AND CERTIFICATE OF PUBLIC CONVENIENCE (CPC)
Franchise- regulation through the legislative department
CPC – a from of regulation through the administrative agencies
 it is not a right but only privilege, thus can be revoked by the agency
 not a franchise nor a contract , confers no property right, and is a mere license or privilege
 on a broader scope: CPC is a property since it can be sold and transferred
Phil Airlines v CAB – SC ruled that a legislative franchise is not necessary for the operation of domestic air transport because 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
3 BASIC REQUIREMENTS IN FILING CPC:
1. Filipino Citizen, if a corporation at least 60% owned by Filipinos - the applicant must be a citizen of the Philippines , or a corporation or co-
partnership, association or joint stock company constituted and organized under the laws of the Philippines, 60 per centum at least of the stock or paid-
up capital of which belong entirely to citizens of the Philippines
2. Financial Capacity - the applicant must be financially capable of undertaking the proposed service and meeting the responsibility incident to its
operation
3. Public need - the applicant must prove that the operation of the public service proposed and the authorization to do business will promote the
public interest in a proper and suitable manner
While public interest, convenience and necessity is the controlling policy in the issuance of a CPC, the administrative body may also
consider:
a. prior operator rule - Public Service Commission (PSC) protects the first licensee’s investment and will not subject it to ruinous competition
- PSC will not issue CPC to a second operator who is rendering sufficient, adequate and satisfactory service, and who in all things and respects
is complying with the rules and regulations of the commission
20
b. prior applicant rule – provides that the priority in the filing of the application of the CPC is, other conditions being equal, an important
factor in determining the rights of the public service companies
c. third operator rule – a variation of prior operator rule; instead of one operator, there are two prior operates who are rendering sufficient
service
d. protection investment rule – protects not only the public but also the operators from unfair, unjustified and ruinous competition
INSTANCES WHEN CPC IS NOT REQUIRED
 WAREHOUSES
 VEHICLES DRAWN BY ANIMALS AND BANCAS MOVED BY OAR OR SAIL, AND TUGBOATS ANG LIGHTER
 AIRSHIPS WITHIN THE PHILIPPINES EXCEPT AS REGARDS THE FIXING OF THEIR MAXIMUM RATES ON FRIEGHT AND PASSENGERS
 RADIO COMPANIES EXCEPT WITH RESPECT TO THE FIXING OF RATES
 PUBLIC SERVICES OWNED BY ANY INSTRUMENTALITY OF THE NATIONAL GOVERNMENT OR BY ANY GOVERNMENT-OWNED OR
CONTROLLED CORPORATION, EXCEPT WITH RESPECT TO THE FIXING OF RATES.
REVOCATION OF CERTIFICATE
1. holder has violated or willfully and maliciously refused to comply the provision of Public Service ACT
2. holder is a mere dummy
3. the operator ceased operations and placed his vehicles in a storage
4. the operator totally abandoned the service
Prior or Old Operator Rule – an existing franchise may claim priority right to render the public service within the authorized territory as long as he
does so satisfactorily and economically. Normally, it prevails over “Prior Applicant Rule” in case of conflict, so long as the interest of the public is best
served.

Finals Discussion On Transpo

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TRANSPORTATION LAW FINALS

DISCUSSIONS NI SIR: SEPARATE DOCUMENT ANG ANSWERS TO POINTERS...

Real and Hypothecary Nature

 The risk to which the thing is exposed

1. New Civil Code – primary law on maritime commerce

Civil Law v. Maritime Law

No vessel, no liability rule vs. Real and Hypothecary Nature

Concept &Substance When Explained

Who can invoke limited liability rule?

 Ship owner or ship agent

 Issue: whether a ship owner can limit a liability?

 The rest is in the book: no vessel, no liability; rationale; exceptions

Continuation On Chapter 6- General Concepts February 10, 2014

 Aboitiz cases – Two aspects to apply:

CHAPTER 7 AND 8: FEBRUARY 14, 2014

*WHY SHOULD WE BE CONCERNED ABOUT WHAT IS A VESSEL?

- The questions are different

LOPEZ VS. DURUELO

2 ASPECTS TO EMPHASIZE WITH RESPECT TO VESSELS

1) Requirement in a MARITIME PROTEST

On the FIRST ASPECT:

WHEN IS PROTEST NOT REQUIRED?

1) Where what is involved is NOT a vessel

On the SECOND ASPECT:

IMPORTANT POINTS UNDER PD 1521:

Who may constitute a SHIP MORTGAGE:

SECTION 4: Preferred Mortgages ---

1. The mortgage is recorded as provided in Section 3 hereof;

1. The names of the mortgagor and mortgagee;

POLIAND INDUSTRIAL VS. MTC

SECTION 17: Preferred Maritime Lien, Priorities, Other Liens

PNB VS. CA:

(2) Whether it is a preferred claim

SC: The law says “arising prior”

Whether the maritime liens of Chinabank prevail over PNBs?

Japanese lenders; Ang gigamit was a deed of undertaking executed by DBP.

FORECLOSURE (Review Mortgage on Credits guys... )

1) Real  Real Estate Mortgage

Law: Vessels are to be regarded as personal property (Chattel Mortgage).

PD 1521 talks about 3 options:

- Similar to writ of replevin or attachment in civil cases

Harbor Pilot - by tradition: former ship captain

REMEMBER: Inter-Orient case

Maritime Pilot/ Harbour Pilot:

 FAR EASTERN SHIPPING CASE

PORT IS GOVERN BY COMPULSORY PILOTAGE NOT GOVERN BY COMPULSORY PILOTAGE

SHIP AGENT: (Definition under ART. 586, Code of Commerce)

ACE NAVIGAION CASE VS MACONDRAY CASE

ACE NAVIGATION MACONDRAY

LIABILITIES OF THE SHIP OWNER

Under what instances the ship owner is primarily liable:

 Contracts entered into by captain:

3. Indemnities in favour of third persons

TRIPLE ROLES OF CAPTAIN (Inter-Orient Maritime Case)

1. He is a GENERAL AGENT OF THE SHIPOWNER;

CHAPTER 10: CHARTER PARTY

*Under Charter party: The charterer may invoke limited liability

CHAPTER 11: LOANS ON BOTTOMRY AND RESPONDENTIA

CHAPTER 12 and 13: AVERAGES AND COLLISIONS

- Extraordinary expenses and damages

1) PARTICULAR OR SIMPLE AVERAGE

WHO WILL SHOULDER THE LOSS?

General Rule: (Hernandez, et.al)