Commercial law reviewer/TRANSPORTATION LAW
TRANSPORTATION LAWS
Commercial law reviewer/TRANSPORTATION LAW
Contract of Transportation/ CARRIAGE A contract whereby a
person, natural or juridical, obligates to transport persons,
goods, or both, from one place to another, by land, air or water,
for a price or compensation. Classifications:1. Common or Private1.
Goods or Passengers1. For a fee (for hire) or Gratuitous1. Land,
Water/maritime, or Air 1. Domestic/inter-island/coastwise or
International/foreign It is a relationship which is imbued with the
public interest.
Common Carrier 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 (Art. 1732, Civil Code).
Art. 1732 of the New Civil Code avoids any 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 (sideline). It also avoids a 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 the law distinguish between a carrier offering its
services to the general public that is the general community or
population and one who offers services or solicits business only
from a narrow segment of the general population.
A person or entity is a common carrier even if he did not secure
a Certificate of Public Convenience (De Guzman vs. CA, 168 SCRA
612).
It makes no distinction as to the means of transporting, as long
as it is by land, water or air. It does not provide that the
transportation should be by motor vehicle. (First Philippine
Industrial Corporation vs. CA)
One is a common carrier even if he has no fixed and publicly
known route, maintains no terminals, and issues no tickets (Asia
Lighterage Shipping, Inc. vs. CA).
Characteristics:1. Undertakes to carry for all people
indifferently and thus is liable for refusal without sufficient
reason (Lastimoso vs. Doliente, October 20, 1961);2. Cannot
lawfully decline to accept a particular class of goods for carriage
to the prejudice of the traffic in these goods; 3. No monopoly is
favored (Batangas Trans. vs. Orlanes, 52 PHIL 455);4.Provides
public convenience.
Private Carrier One which, without being engaged in the business
of carrying as a public employment, undertakes to deliver goods or
passengers for compensation. (Home Insurance Co. vs. American
Steamship Agency, 23 SCRA 24)
TESTS WHETHER CARRIER IS COMMON OR PRIVATE: The SC in First
Philippine Industrial Corporation vs. CA (1995) reiterated the
following tests:1. It must be engaged in the business of carrying
goods for others as a public employment and must hold itself out as
ready to engage in the transportation of goods generally as a
business and not as a casual occupation;1. It must undertake to
carry goods of the kind to which its business in confined;1. It
must undertake to carry by the method by which his business is
conducted and over its established roads; and1. The transportation
must be for hire.
In National Steel Corp. vs. CA (1997) the SC held that the true
test of a common carrier is the carriage of goods or passengers
provided it has space for all who opt to avail themselves of its
transportation for a fee. COMMON CARRIERPRIVATE CARRIER
1. As to availability
Holds himself out for all people indiscriminatelyContracts with
particular individuals or groups only
2. As to required diligence
Extraordinary diligence is requiredOrdinary diligence is
required
3. As to regulation
Subject to State regulationNot subject to State regulation
4. Stipulation limiting liability
Parties may not agree on limiting the carriers liability except
when provided by lawParties may limit the carriers liability,
provided it is not contrary to law, morals or good customs
5. Exempting circumstance
Prove extraordinary diligence and Art. 1733, NCCcaso fortuito,
Art. 1174 NCC
6.Presumption of negligence
There is a presumption of fault or negligenceNo presumption of
fault or negligence
7.Governing law
Law on common carriersLaw on obligations and contracts
GOVERNING LAWSA. Domestic/inter-island/coastwise Applicable to
Land, Water, and Air transportation1. Civil Code - primary2. Code
of Commerce (Arts. 349, 379, 573-734, 580, 806-845) -
suppletory
B.International/foreign/overseas (Foreign country to
Philippines) Applicable to Water/maritime and Air transportation
The law of the country of destination generally applies.1. Civil
Code - primary2. Code of Commerce - suppletory3. Others -
suppletorya. Water/maritime: Carriage of Goods by Sea Act (COGSA)b.
Air: Warsaw Convention
I. NEW CIVIL CODE(Arts. 1732-1766)
Requirement OF EXTRAORDINARY DILIGENCE Rendition of service with
the greatest skill and utmost foresight. (Davao Stevedore Co. v.
Fernandez) Rationale:1. From the nature of the business and for
reasons of public policy (Art. 1733)1. Relationship of trust1.
Business is impressed with a special public duty1. Possession of
the goods1. Preciousness of human life A common carrier is not an
absolute insurer of all risks of travel.
COVERAGE1. Vigilance over goods (Arts. 1734-1754); and2. Safety
of passengers (Arts. 1755-1763).
PASSENGER A person who has entered into a contract of carriage,
express or implied, with the carrier. They are entitled to
extraordinary diligence from the common carrier.
The following are not considered passengers, and are entitled to
ordinary diligence only:1. One who has not yet boarded any part of
a vehicle regardless of whether or not he has purchased a ticket;1.
One who remains on a carrier for an unreasonable length of time
after he has been afforded every safe opportunity to alight;1. One
who has boarded by fraud, stealth, or deceit;1. One who attempts to
board a moving vehicle, although he has a ticket, unless the
attempt be with the knowledge and consent of the carrier;1. One who
has boarded a wrong vehicle, has been properly informed of such
fact, and on alighting, is injured by the carrier;1. Invited guests
and accommodation passengers. (Lara vs. Valencia)1. One who rides
any part of the vehicle which is unsuitable or dangerous or which
he knows is not designed or intended for passengers.
DEFENSES OF A COMMON CARRIER IN THE CARRIAGE OF GOODS1. CASO
FORTUITO/FORCE MAJEURE Requisites:1. Must be the proximate and only
cause of the loss 1. Exercise of due diligence to prevent or
minimize the loss before, during or after the occurrence of the
disaster (Art. 1739)1. Carrier has not negligently incurred in
delay in transporting the goods (Art. 1740) Fire is not considered
a natural disaster or calamity as it arises almost invariably from
some act of man. (Eastern Shipping Lines Inc. vs. IAC) Mechanical
defects are not force majeure if the same was discoverable by
regular and adequate inspections. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. & Hernando,
R.P. 2004 ed. p.120-122)
2.ACTS OF PUBLIC ENEMY Requisites:1. Must be the proximate and
only cause of the loss1. Exercise of due diligence to prevent or
minimize the loss before, during or after the act causing the loss,
deterioration or destruction of the goods (Art. 1739)
3. NEGLIGENCE OF THE SHIPPER OR OWNERa. Sole and proximate
cause: absolute defenseb. Contributory: partial defense. (Art.
1741)
4. CHARACTER OF THE GOODS OR DEFECTS IN THE PACKING OR IN THE
CONTAINER Even if the damage should be caused by the inherent
defect/character of the goods, the common carrier must exercise due
diligence to forestall or lessen the loss. (Art. 1742) The carrier
which, knowing the fact of improper packing of the goods upon
ordinary observation, still accepts the goods notwithstanding such
condition, is not relieved of liability or loss or injury resulting
therefrom. (Southern Lines, Inc. v. CA, 4 SCRA 258)
5.ORDER OR ACT OF PUBLIC AUTHORITY Said public authority must
have the power to issue the order (Art. 1743). Consequently, where
the officer acts without legal process, the common carrier will be
held liable. (Ganzon v. CA 161 SCRA 646) Diligence in the selection
and supervision of employees under Article 2180 of the Civil Code
cannot be interposed as a defense by the common carrier because the
liability of the carriers arises from the breach of the contract of
carriage. The defense under said articles is applicable to
negligence in quasi-delicts under Art. 2176. (Del Prado v. Manila
Electric Co., 52 Phil 900)
Liability OF A COMMON CARRIER fordeath or injuries to passengers
due to acts of ITS employees and other passengers or strangers
For acts of ITS EmployeesFOR ACTS OF OTHER PASSENGERS or
STRANGERS
Required diligence and defense
Extraordinary diligenceOrdinary diligence
Nature of liability
Tort; however,The employee must be on duty at the time of the
act. (Maranan v. Perez)Not absolute; limited by Art. 1763
The carrier is liable when its personnel allowed a passenger to
drive the vehicle causing it to collide with another vehicle
resulting to the injuries suffered by the other passengers. (MRR
vs. Ballesteros, 16 SCRA 641)
CARRIAGE OF GOODS
CARRIAGE OF PASSENGERS
Parties
1. Common carrier1. Shipper1. Consignee1. Common carrier1.
Passenger
Cause of liability
Delay in delivery, loss, destruction, or deterioration of the
goodsDeath or injury to the passengers
Duration of liability
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 the right to receive them.
(Art. 1736) It 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. (Art.
1737) It 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 bee advised of the arrival of
the goods and has had reasonable opportunity thereafter to remove
them or otherwise dispose of them. (Art. 1738) Delivery of goods to
the custom authorities is not delivery to the consignee. (Lu Do v.
Binamira, 101 Phil 120)The duty of a common carrier to provide
safety to its passengers so obligates it not only during the course
of the trip, but for so long as the passengers are within its
premises and where they ought to be in pursuance to the contract of
carriage. (LRTA v. Navidad, [2003]) All persons who remain on the
premises within a reasonable time after leaving the conveyance are
to be deemed passengers, and what is a reasonable time or a
reasonable delay within this rule is to be determined from all the
circumstances, and includes a reasonable time to see after his
baggage and prepare for his departure. (La Mallorca v. CA, 17 SCRA
739 ; Abiotiz Shipping Corporation v. CA, 179 SCRA 95) It is the
duty of common carriers of passengers to stop their conveyances a
reasonable length of time in order to afford passengers an
opportunity to enter, and they are liable for injuries suffered
from the sudden starting up or jerking of their conveyances while
doing so. The duty which the carrier of passengers owes to its
patrons extends to persons boarding the cars as well as to those
alighting therefrom (Dangwa Trans Co., Inc. vs. CA 202 SCRA
574).
Presumption of negligence
Art.1735 Civil CodeReason: As to when and how goods were damaged
in transit is a matter peculiarly within the knowledge of the
carrier and its employees. (Mirasol v. Dollar, 53 PHIL 124)Mere
proof of delivery of goods to a carrier in good order and the
subsequent arrival of the same goods at the place of destination in
bad order makes for a prima facie case against the carrier.
(Coastwise Lighterage Corp. v. CA, 245 SCRA 796)Art.1755 Civil
CodeReason: The contract between the passenger and the carrier
imposes on the latter the duty to transport the passenger safely;
hence the burden of explaining should fall on the carrier.
Defenses
1. Ordinary circumstance: Exercise of extraordinary diligence
(Art. 1735)1. Special circumstances:1. Flood, storm, earthquake,
lighting, or other natural disaster or calamity (plus force
majeure)1. Act of the public enemy in war, whether international or
civil1. Act or omission of the shipper or the owner of goods1. The
character of the goods or defects in the packing or in the
containers1. Order or act of competent public authority (Art.
1734)4. Exercise of extraordinary diligence (Art. 1756)4. Caso
fortuito
Valid stipulations
1. Reduction of degree of diligence to ordinary diligence,
provided it be:1. In writing, signed by the shipper or owner;1.
Supported by a valuable consideration other than the service
rendered by the carriers; and1. Reasonable, just and not contrary
to public policy. (Art. 1744)2. Fixed amount of liability: A
contract fixing the sum to be recovered by the owner or shipper for
the loss, destruction or deterioration of the goods, if it is
reasonable and just under the circumstances and has been fairly and
freely agreed upon. (Art. 1750)3. Limited liability for delay: An
agreement limiting the common carriers liability for delay on
account of strikes or riots (Art. 1748)4. Stipulation limiting
liability to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value. (Art.
1749)
The diligence required in the carriage of the goods may be
reduced by only one degree, from extraordinary to ordinary
diligence or diligence of a good father of a family. (Art. 1744,
Art. 1745, no. 4)Stipulation limiting liability when a passenger is
carried gratuitously, but not for willful acts or gross negligence.
(Art. 1758)
Void stipulations
1. That the goods are transported at the risk of the owner or
shipper;1. That carrier will not be liable for any loss,
destruction or deterioration of the goods;1. That the carrier need
not observe any diligence in the custody of the goods;1. That the
carrier shall exercise a degree of diligence less than that of a
good father of a family over the movable transported;1. That the
carrier shall not be responsible for the acts or omissions of his
or its employees;1. That the carriers liability for acts committed
by thieves or robbers who do not act with grave or irresistible
threat, violence or force is dispensed with or diminished;1. That
the carrier is not responsible for the loss, destruction or
deterioration of the goods on account of the defective condition of
the car, vehicle, ship or other equipment used in the contract of
carriage. (Art. 1745)Dispensing with or lessening the extraordinary
responsibility of a common carrier for the safety of passengers
imposed by law by stipulation, by posting of notices, by statements
on tickets or otherwise. (Art. 1757)
Rules on Passengers Baggage
IN THE CUSTODY OF THE PASSENGERS (HAND-CARRIED)IN THE CUSTODY OF
THE COMMON CARRIER(CHECKED-IN)
Legal nature of the baggage
Necessary depositConsidered as goods
Required diligence by the common carrier
Diligence of a depositary (ordinary diligence)Extraordinary
diligence
Applicable rules
Arts. 1998 and 2000-2003Arts. 1733-1753
CONCURRING CAUSES OF ACTION ARISING FROM THE NEGLIGENT ACT OF
THE COMMON CARRIER1. Culpa contractual (breach of contract) Only
the carrier is primarily liable and not the driver, because there
is no privity between the driver and the passenger. Basis:
Art.1759, NCC. No defense of due diligence in the selection and
supervision of employees.
2. Culpa aquiliana (quasi-delict) The carrier and driver are
solidarily liable as joint tortfeasors. Basis: Art. 2180, NCC.
Defense of due diligence in the selection and supervision of
employees is available. Exception: maritime tort resulting in
collision. (See notes on Collision)
3. Culpa criminal (criminal negligence) The driver is primarily
liable. The carrier is subsidiarily liable only if the driver is
convicted and declared insolvent. Basis: Art. 100, RPC.
In case of injury to a passenger due to the negligence of the
driver of the bus on which he is riding and of the driver of
another vehicle, the drivers as well as the owners of the two
vehicles are jointly and severally liable for damages. It makes no
difference that the liability of the bus driver and owner springs
from contract while that of the owner and driver of the other
vehicle arises from quasi-delict. (Fabre vs. CA)
LIMITATIONS AS TO CARRIERS LIABILITY INVALID AS BEING CONTRARY
TO PUBLIC POLICYVALID & ENFORCEABLE
1. One exempting the carrier from any and all liability for loss
or damage occasioned by its own negligence.2. An unqualified
limitation of liability to an agreed valuation.
1. One limiting the liability of the carrier to an agreed
valuation, unless the shipper declares a higher value and pays a
higher rate of freight(H.E. Heacock Company vs. Macondray &
Company Inc.)
However, the carrier cannot limit its liability for injury to,
or loss of, goods shipped where such injury or loss was caused by
its own negligence. (Shewaram vs. PAL, 17 SCRA 606)
SPECIAL RULES ON LiabilitES of AirLINE CARRIERs1. In case of
flight diversion due to bad weather or other circumstances beyond
the pilots control, the relation between the carrier and the
passenger continues until the latter has been landed at the port of
destination and has left the carriers premises. The carrier should
necessarily exercise extraordinary diligence in safeguarding the
comfort, convenience and safety of its stranded passengers until
they have reached their final destination. (Philippine Airlines vs.
CA, 226 SCRA 423)
2. Even where overbooking of passengers is allowed as a
commercial practice, the airline company would still be guilty of
bad faith and still be liable for damages if it did not properly
inform passenger that it could breach the contract of carriage even
if they were confirmed passengers. (Zalamea vs. CA, 228 SCRA
23)
3. An open-dated ticket constitutes a complete contract between
the carrier and passenger. Hence, the airline company is liable if
it refused to confirm a passengers flight reservation. (Singson vs.
CA, 282 SCRA 149)
4. An airline company which issued a confirmed ticket to a
passenger covering successive trips on different airlines can be
held liable for damages occasioned by bumping off by one of the
successive airlines. (Lufthansa German Airlines vs. CA, 238 SCRA
290)
5. An airline ticket providing that carriage by successive air
carriers is to be regarded as a single operation is to make the
issuing carrier liable for the tortuous conduct of the other
carrier. A printed provision in the ticket limiting liability only
to its own conduct is not enough to rebut that liability. (KLM
Royal Dutch Airlines vs. CA, 65 SCRA 237)
II. CODE OF COMMERCE
1. OVERLAND TRANSPORTATION(Arts. 349-379)
Applicability1. Domestic land and water/maritime transportation.
(Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug,
1997 ed.)2. Domestic Air Transportation. (Commercial Law Review,
Cesar Villanueva, 2004 ed.) IMPORTANT CONCEPTS:1. Bill of lading1.
Obligations of the carrier1. Right of abandonment1. Notice of
damage1. Combined carrier agreement
Bill of Lading The written acknowledgment of receipt of goods
and agreement to transport them to a specific place to a person
named or to his order. Rules: 1. It is not indispensable for the
creation of a contract of carriage. (Compania Maritima vs.
Insurance Company of North America, 12 SCRA 213)
2. Ambiguity is construed against the carrier, the contract
being one of adhesion.
3. The consignee, although the instrument is oftentimes drawn up
only by the consignor and carrier, becomes bound by all the
stipulations contained therein by making a claim for loss on the
basis of said bill of lading. (Sea-Land Services Inc. vs. IAC)
4. The right of a party to recover for loss of shipment
consigned to him under a bill of lading drawn up only by and
between the shipper and the carrier, springs from either a relation
of agency between him and the shipper, or his status as stranger in
whose favor some stipulation is made in said contract, and who
becomes a party thereto when he demands fulfillment of that
stipulation. (Art. 1311 (2), (Mendoza vs. PAL Inc.)
5. Acceptance of the bill of lading without dissent raises the
presumption that all the terms therein where brought to the
knowledge of the shipper and agreed to by him and, in the absence
of fraud or mistake; he is estopped from thereafter denying that he
assented to such terms. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. & Hernando,
R.P. 2004 ed. p.261)
Kinds:1. On board - issued when the goods have been actually
placed aboard the ship with very reasonable expectation that the
shipment is as good as on its way.
1. Received - one in which it is stated that the goods have been
received for shipment with or without specifying the vessel by
which the goods are to be shipped.
1. Negotiable - one in which it is stated that the goods
referred to therein will be delivered to the bearer or to the order
of any person named therein.
1. Non-negotiable - One in which it is stated that the goods
referred to therein will be delivered to a specified person.
1. Clean One which does not indicate any defect in the
goods.
1. Foul One which contains a notation thereon indicating that
the goods covered by it are in bad condition.
1. Spent One which covers goods that already have been delivered
by the carrier without a surrender of a signed copy of the
bill.
1. Through One issued by the carrier who is obliged to use the
facilities of other carriers as well as his own facilities for the
purpose of transporting the goods from the city of the seller to
the city of the buyer, which bill of lading is honored by the
second and other interested carriers who do not issue their own
bills.
1. Custody One wherein the goods are already received by the
carrier but the vessel indicated therein has not yet arrived in the
port.
1. Port One which is issued by the carrier to whom the goods
have been delivered, and the vessel indicated in the bill of lading
by which the goods are to be shipped is already in the port where
the goods are held for shipment.
Functions:1. Best evidence of the existence of the contract of
carriage of cargo (Art. 353)1. Document of title1. Receipt of cargo
1. Contract to transport and deliver goods as stipulated1. Symbol
of the goods
OBLIGATIONS OF THE CARRIERA. Duty to accept the goodsGENERAL
RULE: A common carrier cannot ordinarily refuse to carry a
particular class of goods.EXCEPTION: For some sufficient reason the
discrimination against the traffic in such goods is reasonable and
necessary. (Fisher vs. Yangco Steamship Co. 31 Phil 1). Instances
when the carrier may validly refuse to accept the goods include the
ff: 1.) Goods sought to be transported are dangerous objects, or
substances including dynamite and other explosives2.) Goods are
unfit for transportation3.) Acceptance would result in
overloading4.) Contrabands or illegal goods5.) Goods are injurious
to health6.) Goods will be exposed to untoward danger like flood,
capture by enemies and the like7.) Goods like livestock will be
exposed to disease8.) Strike9.) Failure to tender goods on time.
(Notes and Cases on the Law on Transportation and Public Utilities,
Aquino, T. & Hernando, R.P. 2004 ed. p.68)
In case of carriage by railway, the carrier is exempted from
liability if carriage is insisted upon by the shipper, provided its
objections are stated in the bill of lading.
However, when a common carrier accepts cargo for shipment for
valuable consideration, it takes the risk of delivering it in good
condition as when it was loaded. (PAL vs. CA)
B. Duty to deliver the goods Not only to transport the goods
safely but to the person indicated in the bill of lading. The goods
should be delivered to the consignee or any other person to whom
the bill of lading was validly transferred or negotiated.
Time of deliveryStipulated in Contract/Bill of LadingNo
stipulation
1. Carrier is bound to fulfill the contract and is liable for
any delay; no matter from what cause it may have arisen.
1. Within a reasonable time. 2. Carrier is bound to forward them
in the 1st shipment of the same or similar goods which he may make
to the point of delivery. (ART. 358 Code of Commerce)
Effects of delay0. Merely suspends and generally does not
terminate the contract of carriage 0. Carrier remains duty bound to
exercise extraordinary diligence0. Natural disaster shall not free
the carrier from responsibility (Art.1740)0. If delay is without
just cause, the contract limiting the common carriers liability
cannot be availed of in case of loss or deterioration of the goods
(Art.1747)
RIGHT OF CONSIGNEE TO ABANDON GOODS Instances:1. Partial
non-delivery, where the goods are useless without the others (Art.
363);1. Goods are rendered useless for sale or consumption for the
purposes for which they are properly destined (Art. 365); and1. In
case of delay through the fault of the carrier (Art. 371).
NOTICE OF DAMAGE (ART. 366) Requisites for applicability:1.
Domestic/inter-island/coastwise transportation1. Land/water/air
transportation1. Carriage of goods1. Goods shipped are damaged
Rules:a. Patent damage: shipper must file a claim against the
carrier immediately upon delivery (it may be oral or written)b.
Latent damage: shipper should file a claim against the carrier
within 24 hours from delivery.
Note: These rules does not apply to misdelivery of goods.
(Roldan vs. Lim Ponzo)Purpose of notice: To inform the carrier that
the shipment has been damaged, and it is charged with liability
therefore, and to give it an opportunity to make an investigation
and fix responsibility while the matter is fresh. The filing of
notice of claim is a condition precedent for recovery. Shorter
period may be stipulated by the parties because it merely affects
the shippers remedy and does not affect the liability of the
carrier. (PHILAMGEN vs. Sweetlines, Inc.) Prescriptive Period Not
provided by Article 366. Thus, in such absence, Civil Code rules on
prescription apply. If despite the notice of claim, the carrier
refuses to pay, action must be filed in court.6. No bill of lading
was issued: within 6 years6. Bill of lading was issued: within 10
years.ARTICLE 366COGSA Sec.3 (6)
Applicability
1. Domestic/inter-island/coastwise transportation1. Land, water,
air transportation1. Carriage of goods1.
International/overseas/foreign (from foreign country to
Phils.)Note: subject to the rule on Paramount Clause2.
Water/maritime transportation3. Carriage of goods
Notice of damage
1. Condition precedent1. 24-hour period for claiming latent
damage1. Not a condition precedent1. 3-day period for claiming
latent damage
Prescriptive period
None provided; Civil Code applies.One year from the date of
delivery (delivered but damaged goods), or date when the vessel
left port or from the date of delivery to the arrastre
(non-delivery or loss).
COMBINED CARRIER AGREEMENT (ART. 373)GENERAL RULE: In case of a
contract of transportation of several legs, each carrier is
responsible for its particular leg in the contract.EXCEPTION: A
combined carrier agreement where a carrier makes itself liable
assuming the obligations and acquiring as well the rights and
causes of action of those which preceded it.
MARITIME COMMERCE(Arts. 573-869)
IMPORTANT CONCEPTS:1. Merchant vessel1. Maritime lien and
Preference of Credit1. Doctrine of limited liability1. Causes of
revocation of voyage1. Participants in maritime commerce1. Charter
party1. Loans on bottomry and respondentia1. Accidents in maritime
commerce
MARITIME/ADMIRALTY LAW It is the system of laws which
particularly relates to the affairs and business of the sea, to
ships, their crews and navigation, and to maritime conveyance of
persons and property. (Notes and Cases on the Law on Transportation
and Public Utilities, Aquino & Hernando, citing Francisco,
p.254)
Maritime laws apply only to maritime trade and sea voyages.
(Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug,
1997 ed.)
Arrastre service is not maritime in character. It refers to a
contract for the unloading of goods from a vessel. (ICTSI vs.
Prudential Guarantee, 320 SCRA 244)
CHARACTERISTICS OF MARITIME TRANSACTION1. Real - similar to
transactions over real property with respect to effectivity against
third persons which is done through registration. (Rubiso vs.
Rivera, 37 Phil. 72). The evidence of real nature is shown by: 1)
the limitation of the liability of the agents to the actual value
of the vessel and the freight money; and 2) the right to retain the
cargo and embargo and detention of the vessel (Luzon Stevedoring
Corp v. CA, 156 SCRA 169);2. Hypothecary - the liability of the
owner of the value of the vessel is limited to the vessel itself
(Doctrine of Limited Liability).
The real and hypothecary nature of maritime law simply means
that the liability of the carrier in connection with losses related
to maritime contracts is confined to the vessel, which stands as
the guaranty for their settlement. (Aboitiz Shipping Corp. vs.
General Accident Fire and Life Assurance Corp. 217 SCRA 359).
MERCHANT VESSEL Vessel engaged in maritime commerce, whether
foreign or otherwise. (Bar Review Materials in Commercial Law,
Jorge Miravite, 2002 ed.) Constitutes property which may be
acquired and transferred by any of the means recognized by law.
They shall continue to be considered as personal property. (Arts.
573, 585) They are susceptible to maritime liens such as for the
repair, equipping and provisioning of the vessel in the preparation
of a voyage, as well as mortgage liabilities, in satisfaction of
which a vessel may be validly arrested and sold. (Ship Mortgage
Decree of 1978)
MARITIME LIEN It constitutes a present right of property in the
ship, a jus in re, to be afterward enforced in admiralty by process
in rem. (PNB vs. CA, 337 SCRA 381) If the maritime lien arose prior
to the recording of a preferred mortgage, it shall have priority
over the said mortgage lien. (PNB vs. CA, 337 SCRA 381)
ORDER OF PREFERENCE IN CASE OF SALE OF VESSELR.A. 6106P.D.
1521
Effectivity date
19691978
Applicability
Overseas shipping onlyBoth domestic and overseas shipping
Kind of sale
JudicialJudicial and extrajudicial
Order of Preference
A preferred mortgage shall have priority over all claims against
the vessel, except the following preferences in the order stated:1.
Judicial costs of the proceedings;2. Taxes due the Philippine
Government;3. Salaries and wages of the Captain and Crew of the
vessel during its last voyage;4. General average or salvage
including contract salvage, bottomry loans, and indemnity due
shippers for the value of goods transported but which were not
delivered to the consignee;5. Costs of repair and equipment of the
vessel, and provisioning of food, supplies and fuel during its last
voyage; and6. Preferred mortgages registered prior in time.The
preferred mortgage lien shall have priority over all claims against
the vessel, except the following preferences in the order stated:1.
Expenses and fees allowed and costs taxed by the court and taxes
due to the Government;2. Crews 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; and7. Preferred mortgage registered prior in time.
Effect of sale: All pre-existing claims in the vessel are
terminated. They will then be satisfied from the proceeds of the
sale subject to the order of preference.
DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE) Cases where
applicable:1. Art. 587 civil liability for indemnities to third
persons1. Art. 590 indemnities from negligent acts of the captain
(not the shipowner or ship agent)1. Art. 837 collision1. Art. 643
liability for wages of the captain and the crew and for advances
made by the ship agent if the vessel is lost by shipwreck or
capture
GENERAL RULE: The liability of shipowner and ship agent is
limited to the amount of interest in said vessel such that where
vessel is entirely lost, the obligation is extinguished. (Luzon
Stevedoring v. Escano, 156 SCRA 169) The interest extends to: 1)
the vessel itself; 2) equipments; 3) freightage; and 4) insurance
proceeds. (Chua v. IAC, 166 SCRA 183)EXCEPTIONS: 1. Claims under
Workmens Compensation (Abueg vs. San Diego 77 Phil 730);1. Injury
or damage due to shipowner or to the concurring negligence of the
shipowner and the captain;1. The vessel is insured (Vasquez vs. CA
138 SCRA 553).1. Expenses for repair on vessel completed before
loss;1. In case there is no total loss and the vessel is not
abandoned;1. Collision between two negligent vessels;
Abandonment of the vessel is necessary to limit the liability of
the shipowner. The only instance were abandonment is dispensed with
is when the vessel is entirely lost (Luzon Stevedoring vs. CA 156
SCRA 169).
RIGHT OF SHIPOWNER OR SHIP AGENT TO ABANDON VESSEL Instances:1.
In case of civil liability from indemnities to third persons (Art.
587);1. In case of leakage of at least of the contents of a cargo
containing liquids (Art. 687); and1. In case of constructive loss
of the vessel (Sec. 138, Insurance Code).
RIGHT OF ABANDONMENTSHIPOWNER OR SHIP AGENTCONSIGNEE
What may be abandoned
VesselGoods shipped
Instances
1. In case of civil liability from indemnities to third persons
(Art. 587);2. Sec. 138, Insurance Code;3. In case of leakage of at
least of the contents of a cargo containing liquids (Art. 687)
1. Partial non-delivery, where the goods are useless without the
others (Art. 363);2. Goods are rendered useless for sale or
consumption for the purposes for which they are properly destined
(Art. 365); and3. In case of delay through the fault of the carrier
(Art. 371).
Effects
1. Transfer of ownership of the vessel from the shipowner to the
shippers or insurer.1. In case of (2), the insurer must pay the
insured as if there was actual total loss of the vessel.1. Transfer
of ownership on the goods from the shipper to the carrier.1.
Carrier should pay the shipper the market value of the goods at the
point of destination.
CAUSES OF REVOCATION OF VOYAGE1. War or interdiction of
commerce;1. Blockade;1. Prohibition to receive cargo at
destination;1. Embargo;1. Inability of the vessel to navigate.
(Art. 640)
Terms:1. Interdiction of commerce A governmental prohibition of
commercial intercourse intended to bring about an entire cessation
for the time being of all trade whatever.1. Blockade A sort of
circumvallation of a place by which all foreign connection and
correspondence is, as far as human power can effect it, to be cut
off. 1. Embargo A proclamation or order of a state, usually issued
in time of war or threatened hostilities, prohibiting the departure
of ships or goods from some or all the ports of such state until
further order.
PARTICIPANTS IN MARITIME COMMERCEA. Shipowners and ship agentsB.
Captains and masters of the vesselC. Officers and crew of the
vesselD. SupercargoesE. Pilot
A. SHIPOWNERS AND SHIP AGENTS Shipowner (proprietario) Person
who has possession, control and management of the vessel and the
consequent right to direct her navigation and receive freight
earned and paid, while his possession continues.
Ship agent (naviero) Person entrusted with provisioning and
representing the vessel in the port in which it may be found; also
includes the shipowner. Not a mere agent under civil law; he is
solidarily liable with the ship owner. Powers and functions:1.
Capacity to trade;1. Discharge duties of the captain, subject to
Art.609;1. Contract in the name of the owners with respect to
repairs, details of equipment, armament, provisions of food and
fuel, and freight of the vessel, and all that relate to the
requirements of navigation;1. Order a new voyage, make a new
charter or insure the vessel after obtaining authorization from the
shipowner or if granted in certificate of appointment.
Civil Liabilities of the Shipowner And Ship Agent1. All
contracts of the captain, whether authorized or not, to repair,
equip and provision the vessel; (Art. 586)1. Loss and damage to the
goods loaded on the vessel without prejudice to their right to free
themselves from liability by abandoning the vessel to the
creditors. (Art. 587)
Duty of Ship Agent to Discharge the Captain and Members of the
Crew If the seamen contract is not for a definite period or voyage,
he may discharge them at his discretion. (Art. 603) If for a
definite period, he may not discharge them until after the
fulfillment of their contracts, except on the following grounds:1.
Insubordination in serious matters;1. Robbery;1. Theft;1. Habitual
drunkenness;1. Damage caused to the vessel or to its cargo through
malice or manifest or proven negligence. (Art. 605)
B. CAPTAINS AND MASTERS They are the chiefs or commanders of
ships. The terms have the same meaning, but are particularly used
in accordance with the size of the vessel governed and the scope of
transportation, i.e., large and overseas, and small and coastwise,
respectively. Nature of position (3-fold character):1. General
agent of the shipowner;1. Technical director of the vessel;1.
Representative of the government of the country under whose flag he
navigates. Qualifications:1. Filipino citizen;1. Legal capacity to
contract;1. Must have passed the required physical and mental
examinations required for licensing him as such. (Art. 609)
Inherent powers:1. Appoint crew in the absence of ship agent;1.
Command the crew and direct the vessel to its port of destination;
1. Impose correctional punishment on those who, while on board
vessel, fail to comply with his orders or are wanting in
discipline;1. Make contracts for the charter of vessel in the
absence of ship agent.1. Supply, equip, and provision the vessel;
and1. Order repair of vessel to enable it to continue its voyage.
(Art. 610) Sources of funds to comply with the inherent powers of
the captain (in successive order):1. From the consignee of the
vessel;1. From the consignee of the cargo;1. By drawing on the ship
agent;1. By a loan on bottomry;1. By sale of part of the cargo.
(Art. 611) Duties:1. Bring on board the proper certificate and
documents and a copy of the Code of Commerce;1. Keep a Log Book,
Accounting Book and Freight Book;1. Examine the ship before the
voyage;1. Stay on board during the loading and unloading of the
cargo;1. Be on deck while leaving or entering the port;1. Protest
arrivals under stress and in case of shipwreck;1. Follow
instructions of and render an accounting to the ship agent;1. Leave
the vessel last in case of wreck;1. Hold in custody properties left
by deceased passengers and crew members;1. Comply with the
requirements of customs, health, etc. at the port of arrival;1.
Observe rules to avoid collision;1. Demand a pilot while entering
or leaving a port. (Art. 612)
A ships 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 (Inter-Orient Maritime Enterprises Inc. vs. CA).
No liability for the following:1. Damages caused to the vessel
or to the cargo by force majeure;1. Obligations contracted for the
repair, equipment, and provisioning of the vessel unless he has
expressly bound himself personally or has signed a bill of exchange
or promissory note in his name. (Art. 620)
Solidary Liabilities of the Ship Agent/Shipowner for Acts Done
by the Captain towards Passengers and Cargoes1. Damages to vessel
and to cargo due to lack of skill and negligence;1. Thefts and
robberies of the crew;1. Losses and fines for violation of laws;1.
Damages due to mutinies;1. Damages due to misuse of power;1. For
deviations;1. For arrivals under stress;1. Damages due to
non-observance of marine regulations. (Art. 618)
C. OFFICERS AND CREW1. Sailing Mate/First Mate1. Second Mate1.
Engineers1. Crew No liability under the following circumstances:1.
If, before beginning voyage, captain attempts to change it, or a
naval war with the power to which the vessel was destined occurs;1.
If a disease breaks out and be officially declared an epidemic in
the port of destination;1. If the vessel should change owner or
captain. (Art. 647)
Sailing Mate/First Mate Second chief of the vessel who takes the
place of the captain in case of absence, sickness, or death and
shall assume all of his duties, powers and responsibilities. (Art.
627) Duties:1. Provide himself with maps and charts with
astronomical tables necessary for the discharge of his duties;1.
Keep the Binnacle Book;1. Change the course of the voyage on
consultation with the captain and the officers of the boat,
following the decision of the captain in case of disagreement;1.
Responsible for all the damages caused to the vessel and the cargo
by reason of his negligence. (Arts. 628 - 631)
Second Mate Takes command of the vessel in case of the inability
or disqualification of the captain and the sailing mate, assuming
in such case their powers and responsibilities. Third in command
Duties:1. Preserve the hull and rigging of the vessel;1. Arrange
well the cargo;1. Discipline the crew;1. Assign work to crew
members;1. Inventory the rigging and equipment of the vessel, if
laid up. (Art. 632)
Engineers Officers of the vessel but have no authority except in
matters referring to the motor apparatus. When two or more are
hired, one of them shall be the chief engineer. Duties:1. In charge
of the motor apparatus, spare parts, and other instruments
pertaining to the engines;1. Keep the engines and boilers in good
condition;1. Not to change or repair the engine without authority
of the captain;1. Inform the captain of any damage to the motor
apparatus;1. Keep an Engine Book;1. Supervise all personnel
maintaining the engine. (Art. 632)
Crew The aggregate of seamen who man a ship, or the ships
company. Hired by the ship agent, where he is present and in his
absence, the captain hires them, preferring Filipinos, and in their
absence, he may take in foreigners, but not exceeding 1/5 of the
crew. (Art. 634)
Classes of Seamans Contracts1. By the voyage;1. By the month;
and3. By share of profits or freightage.
Just Causes for the Discharge of Seaman While Contract
Subsists1. Perpetration of a crime;1. Repeated insubordination,
want of discipline;1. Repeated incapacity and negligence;1.
Habitual drunkenness;1. Physical incapacity;1. Desertion. (Art.
637)
Rules in case of Death of a Seaman The seamans heirs are
entitled to payment as follows:1. If death is natural:1.
compensation up to time of death if engaged on wage1. if by voyage
- half of amount if death occurs on voyage out; and full, if on
voyage in1. if by shares - none, if before departure; full, if
after departure1. if death is due to defense of vessel - full
payment;1. if captured in defense of vessel - full payment;1. if
captured due to carelessness - wages up to the date of the capture.
(Art. 645)
Complement of the Vessel All persons on board, from the captain
to the cabin boy, necessary for the management, maneuvers, and
service, thus including the crew, the sailing mates, engineers,
stokers and other employees on board not having specific
designations. Does not include the passengers or the persons whom
the vessel is transporting.
D. SUPERCARGOES Persons who discharges administrative duties
assigned to him by ship agent or shippers, keeping an account and
record of transaction as required in the accounting book of the
captain. (Art. 649)
E. PILOT A person duly qualified, and licensed, to conduct a
vessel into or out of ports, or in certain waters.
The term generally connotes a person taken on board at a
particular place for the purpose of conducting a ship through a
river, road or channel, or from a port.
Master pro hac vice for the time being in the command and
navigation of the ship.
While in exercising his functions a pilot is in sole command of
the ship and supersedes the master for the time being in the
command and navigation of the ship, the master does not surrender
his vessel to the pilot and the pilot is not the master. There are
occasions when the master may and should interfere and even
displace the pilot, as when the pilot is obviously incompetent or
intoxicated (Far Eastern Shipping Company vs. CA).
Compulsory Pilotage States possessing harbors have enacted laws
or promulgated rules requiring vessels approaching their ports to
take on board pilots licensed under the local laws. (Notes and
Cases on the Law on Transportation and Public Utilities, Aquino, T.
& Hernando, R.P. 2004 ed. p. 518)
Liablity of PilotGENERAL RULE: On compulsory pilotage grounds,
the Harbor Pilot is responsible for damage to a vessel or to life
or property due to his negligence.EXCEPT: 1. Accident caused by
force majeure or natural calamity provided the pilot exercised
prudence and extra diligence to prevent or minimize damages. 2.
Countermand or overrule by the master of the vessel in which case
the registered owner of the vessel is liable. (Sec.11, Art.III PPA
Admin Order 03-85)
SPECIAL CONTRACTS OF MARITIME COMMERCE1. Charter party1. Bill of
lading1. Contract of transportation of passengers on sea voyages1.
Loan on bottomry1. Loan on respondentia1. Marine insurance
CHARTER PARTY A contract by virtue of which the owner or agent
binds himself to transport merchandise or persons for a fixed
price. A contract by which an entire ship, or some principal part
thereof is let/leased by the owner to another person for a
specified time or use. (Planters Products, Inc. vs. CA, 226 SCRA
476)
Parties:1. Ship owner or ship agent1. Charterer
Classes: 1. Bareboat or demise The charterer provides crew, food
and fuel. The charterer is liable as if he were the owner, except
when the cause arises from the unworthiness of the vessel. The
shipowner leases to the charterer the whole vessel, transferring to
the latter the entire command, possession and consequent control
over the vessels navigation, including the master and the crew, who
thereby become the charters servants. It transforms a common
carrier into a private carrier.
The charterer becomes the owner of the vessel pro hac vice, just
for that one particular purpose only. Because the charterer is
treated as owner pro hac vice, the charterer assumes the customary
rights and liabilities of the shipowner to third persons and is
held liable for the expense of the voyage and the wages of the
seamen.
2. Contract of Affreightment A contract whereby the owner of the
vessel leases part or all of its space to haul goods for
others.
The shipowner retains the possession, command and navigation of
the ship, the charterer merely having use of the space in the
vessel in return for his payment of the charter hired. Kinds:1.
Time charter vessel is chartered for a fixed period of time or
duration of voyage. 1. Voyage or trip charter the vessel is leased
for one or series of voyages usually for purposes of transporting
goods for charterer.
LEASECHARTER PARTY
If for a definite period, lessee cannot give up the lease by
paying a portion of the amount agreed upon.Charterer may rescind
charter party by paying half of the freightage agreed upon.
If the leased property is sold to one who knows of the existence
of the lease, the new owner must respect the lease.The new owner is
not compelled to respect the charter party so long as he can load
the vessel with his own cargo. (Art. 689)
Civil law conceptCommercial law concept
CHARTER PARTYBILL OF LADING
An entire or complete contract.More like a private receipt which
the captain gives to accredit goods received from persons
Consensual contractReal contract
BAREBOAT OR DEMISE CHARTERCONTRACT OF AFFREIGHTMENT (TIME OR
VOYAGE CHARTER)
Charterer becomes liable to others caused by its negligenceOwner
remains liable as carrier and must answer for any breach of
duty
Charterer regarded as owner pro hac vice for the voyageCharterer
is not regarded as owner.
Owner of vessel relinquishes possession, command and navigation
to chartererThe vessel owner retains possession, command and
navigation of the ship
Common carrier is converted to private carrier.Common carrier is
not converted to a private carrier.
PERSONS WHO MAY MAKE A CHARTER1. Owner or owners of the vessel,
either in whole or in majority part, who have legal control and
possession of the vessel 1. Charterer may subcharter entire vessel
to 3rd person only if not prohibited in original charter.
(Art.679)1. Ship agent if authorized by the owner/s or given such
power in the certificate of appointment. (Art.598)1. Captain in the
absence of the ship agent or consignee and only if he acts in
accordance with the instructions of the agent or owner and protects
the latters interests. (Art.609)
REQUISITES OF A VALID CHARTER PARTY1. Consent of the contracting
parties1. Existing vessel which should be placed at the disposition
of the shipper1. Freight1. Compliance with Art. 652 of the Code of
Commerce
Clauses Which May Be Included In a Charter Party Jason
clauseClause paramount or paramount clause
A stipulation in a charter party that in case of a maritime
accident for which the shipowner is not responsible by law,
contract or otherwise, the cargo shippers, consignees or owners
shall contribute with the shipowner in general average. (Pandect of
Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.)
A clause in a charter party providing that the COGSA shall
apply, even though the transportation is domestic, subject to the
extent that any term of the bill of lading is repugnant to the
COGSA or applicable law, then to the extent thereof the provision
of the bill of lading is void. (Pandect of Commercial Law and
Jurisprudence, Justice Jose Vitug, 1997 ed.)
Rights and Obligations of PartiesSHIPOWNER OR SHIP
AGENTCHARTERER
1. If the vessel is chartered wholly, not to accept cargo from
others;1. To observe represented capacity;1. To unload cargo
clandestinely placed1. To substitute another vessel if load is less
than 3/5 of capacity;1. To leave the port if the charterer does not
bring the cargo within the lay days and extra lay days allowed;1.
To place in a vessel in a condition to navigate;1. to bring cargo
to nearest neutral port in case of war or blockade. (Arts.
669-678)
1. To pay the agreed charter price;1. To pay freightage on
unboarded cargo;1. To pay losses to others for loading uncontracted
cargo and illicit cargo;1. To wait if the vessel needs repair;1. To
pay expenses for deviation. (Arts. 679-687)
Rescission of a Charter PartyAt charterers request(Art 688)
At shipowners request(Art. 689)Fortuitous causes(Art. 690)
1. By abandoning the charter and paying half of the
freightage;2. Error in tonnage or flag;3. Failure to place the
vessel at the charterers disposal;4. Return of the vessel due to
pirates, enemies or bad weather;5. Arrival at a port for repairs.
1. If the extra lay days terminate without the cargo being placed
alongside the vessel;2. Sale by the owner of the vessel before
loading by the charterer;
1. War or interdiction of commerce;2. Blockade;3. Prohibition to
receive cargo;4. Embargo; and5. Inability of the vessel to
navigate.
Terms:1. Primage - bonus to be paid to the captain after the
successful voyage.1. Demurrage the sum fixed in the charter party
as a remuneration to the owner of the ship for the detention of his
vessel beyond the number of days allowed by the charter party for
loading or unloading or for sailing. 1. Deadfreight the amount paid
by or recoverable from a charterer of a ship for the portion of the
ships capacity the latter contracted for but failed to occupy.1.
Lay Days - days allowed to charter parties for loading and
unloading the cargo.1. Extra Lay Days days which follow after the
lay days have elapsed.
Usual forms of Consummating Contracts1. C.I.F. cost, insurance
and freight;1. F.O.B. - free on board;1. F.A.S. - free alongside
ship; and1. C. & F. - cost and freight.
TranSshipment of Goods The act of taking cargo out of one ship
and loading it in another, or the transfer of goods from the vessel
stipulated in the contract of affreightment to another vessel
before the place of destination named in the contract has been
reached, or the transfer for further transportation from one ship
or conveyance to another. It is not dependent on the ownership of
the transporting ships or in the change of carriers, but rather on
the fact of actual physical transfer of cargo from one vessel to
another. If done without legal excuse, however competent and safe
the vessel into which the transfer is made, is a violation of
contract and infringement of right of shipper and subjects carrier
to liability if freight is lost event by cause otherwise excepted.
(Magellan Manufacturing vs. CA, 201 SCRA 102)
Loan oN Bottomry AND RESPONDENTIA A real, unilateral, aleatory
contract, by virtue of which one person lends to another a certain
amount of money or goods on things exposed to maritime risks, which
amount, with its earnings, is to be returned if the things are
safely transported, and which is lost if the latter are lost.
LOAN ON BOTTOMRYLOAN ON RESPONDENTIA
Definition
Loan made by shipowner or ship agent guaranteed by vessel itself
and repayable upon arrival of vessel at destination. (Art. 719)Loan
taken on security of the cargo laden on a vessel, and repayable
upon safe arrival of cargo at destination. (Art. 719)
Who may contract
Shipowner or ship agent. Outside of the residence of the owners
- the captain.Only the owner of the cargo.
Common elements:1. Exposure of security to marine peril;1.
Obligation of the debtor conditioned only upon safe arrival of the
security at the point of destination.
Forms:1. Public instrument1. Policy signed by the contracting
parties and the broker taking part therein1. Private instrument
(Art. 720)
Contents:1. Kind, name and registry of the vessel;1. Name,
surname and domicile of the captain;1. Names, surnames and
domiciles of the borrower and the lender;1. Amount of the loan and
the premium stipulated;1. Time for repayment;1. Goods pledged to
secure repayment;1. Voyage during which the risk is run
(Art.721)
BOTTOMRY/ RESPONDENTIAORDINARY LOAN (MUTUUM)
Not subject to Usury LawSubject to Usury Law
Liability of the borrower is contingent on the safe arrival of
the vessel or cargo at destinationNot subject to any contingency
(absolute liability)
The last lender is a preferred creditorThe first lender is a
preferred creditor
WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED AS SIMPLE LOAN1.
Lender loaned an amount larger than the value of the object due to
fraudulent means employed by the borrower. (ART.726)1. Full amount
of the loan is not used for the cargo or given on the goods if all
of them could not have been loaded, the balance will be considered
a simple loan. (ART.727)1. If the effects on which the money is
taken is not subjected to any risk. (ART.729)
Note: Under existing laws, the parties to a loan, whether
ordinary or maritime, may agree on any rate of interest. (CB
Circular 905)
MARINE INSURANCELOAN ON BOTTOMRY OR RESPONDENTIA
Indemnity is paid after the loss has occurredIndemnity is paid
in advance by way of a loan
In case of loss of the vessel due to a risk insured against, the
obligation of the insurer becomes absoluteIn case of loss of the
vessel due to a marine peril, the obligation of the borrower to pay
is extinguished
Consensual contractReal contract
Hypothecary Nature of Bottomry/ RespondentiaGENERAL RULE: The
obligation of the borrower to pay the loan is extinguished if the
goods given as security are absolutely lost by reason of an
accident of the sea, during the voyage designated, and if it is
proven that the goods were on board.EXCEPTIONS:1. Loss due to
inherent defect;1. Loss due to the barratry on the part of the
captain;1. Loss due to the fault or malice of the borrower;1. The
vessel was engaged in contraband; and1. The cargo loaded on the
vessel be different in from that agreed upon.
Concurrence of Marine Insurance and Loan on
Bottomry/Respondentia1. The insurable interest of the owner of a
ship hypothecated by bottomry is only the excess of the value over
the amount secured by bottomry. (Sec. 101, Insurance Code)1. The
value of what may be saved in case of shipwreck shall be divided
between the lender and the insurer in proportion to the interest of
each one. (Art. 735)
Note: If a vessel is hypothecated by bottomry only the excess is
insurable, since a loan on bottomry partakes of the nature likewise
of an insurance coverage to the extent of the loan accommodation.
The same rule would apply to the hypothecation of the cargo by
respondentia. (Pandect of Commercial Law and Jurisprudence, Justice
Jose Vitug, 1997 ed.)
ACCIDENTS IN MARITIME COMMERCE1. Averages 1. Arrival Under
Stress 1. Collision 1. Shipwreck
AVERAGE An extraordinary 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 of consignment. (Art. 806) The person whose property
has been saved must contribute to reimburse the damage caused or
expense incurred if the situation constitutes general average.
Classes:1. Particular or Simple Average1. Gross or General Average
Where both vessel and cargo are saved, it is general average; where
only the vessel or only the cargo is saved, it is particular
average. Expenses incurred to refloat a vessel, which accidentally
ran aground, in order to continue its voyage, do not constitute
general average. Not only is there absence of a marine peril,
common safety factor, and deliberateness. It is the safety of the
property, and not the voyage, which constitutes the true foundation
of general average. (A. Magsaysay, Inc. vs. Agan, G.R.No. L-6393,
Jan. 31, 1955)
PARTICULAR OR SIMPLEGROSS OR GENERAL
Definition
Damages or expenses caused to the vessel or cargo that did not
inure to the common benefit, and borne by respective owners. (Art.
809)Damages or expenses deliberately caused in order to save the
vessel, its cargo or both from real and known risk. (Art. 811)
Requisites
1. common danger; 1. deliberate sacrifice; 1. success; 1. proper
formalities and legal steps.
Liability
The owner of the goods which gave rise to the expense or
suffered the damage shall bear this average. (Art. 810)All the
persons having an interest in the vessel and the cargo therein at
the time of the occurrence of the average shall contribute to
satisfy this average. (Art. 812) The insurers (Art.859) and lenders
on bottomry and respondentia shall likewise contribute.
(Art.732).
Number of interests involved
Only one interest involvedSeveral interests involved
Share in the damage or expense
100% shareIn proportion to the value of the owners property
saved
Right to recover
No reimbursementThere may be reimbursement
Kinds (not exclusive)
Art. 809Art. 811
Procedure for recovery
1. Assembly and deliberation1. Resolution of the captain1. Entry
of the resolution in the logbook1. Detailed minutes1. Delivery of
the minutes to the maritime judicial authority of the first port,
within 24 hours from arrival,1. Ratification by captain under oath.
(Arts. 813-814)
GOODS NOT COVERED BY GENERAL AVERAGE EVEN IF SACRIFICED 1. Goods
carried on deck. (ART.855)1. Goods not recorded in the books or
records of the vessel. (ART.855 (2))1. Fuel for the vessel if there
is more than sufficient fuel for the voyage. (Rule IX, York-Antwerp
Rule)
Jettison Act of throwing cargo overboard in order to lighten the
vessel. Order of goods to be cast overboard:1. Those which are on
the deck, preferring the heaviest one with the least utility and
value; 1. Those which are below the upper deck, beginning with the
one with greatest weight and smallest value. (Art. 815)
Jettisoned goods are not res nullius nor deemed abandoned within
the meaning of civil law so as to be the object of occupation by
salvage. (Pandect of Commercial Law and Jurisprudence, Justice Jose
Vitug, 1997 ed.) In order that the jettisoned goods may be included
in the gross or general average, the existence of the cargo on
board should be proven by means of the bill of lading. (Art.
816)
York-Antwerp (Y-A) Rules on Determining Liability for Averages
With Regard To Deck Cargo1. Deck cargo is allowed only in
domestic/coastwise/inter-island shipping, and is prohibited in
international/overseas/foreign shipping.1. If deck cargo is loaded
with the consent of the shipper on overseas trade, it must always
contribute to general average, but should the same be jettisoned,
it would not be entitled to reimbursement because there is
violation of the Y-A Rules.1. If deck cargo is loaded with the
consent of the shipper on coastwise shipping, it must always
contribute to general average and if jettisoned would be entitled
to reimbursement. Reason: In domestic shipping, voyages are usually
short and the seas are generally not rough. In overseas shipping,
the vessel is exposed for many days to perils of the sea.
DOMESTICINTERNATIONAL
Deck cargo is allowedDeck cargo is not allowed
With shippers consent
General averageParticular average
Without shippers consent
Captain is liableCaptain is liable
ARRIVAL UNDER STRESS (ARRIBADA) The arrival of a vessel at the
nearest and most convenient port instead of the port of
destination, if during the voyage the vessel cannot continue the
trip to the port of destination.
When lawful When unlawfulWho bears expenses:
The inability to continue voyage is due to lack of provisions,
well-founded fear of seizure, privateers, pirates, or accidents of
the sea disabling it to navigate. (Art. 819)
1. Lack of provisions due to negligence to carry according to
usage and customs;1. Risk of enemy not well known or manifest1.
Defect of vessel due to improper repair; and1. Malice, negligence,
lack of foresight or skill of captain. (Art. 820)The shipowner or
ship agent is liable in case of unlawful arrival under stress. But
they shall not be liable for the damages caused by reason of a
lawful arrival. (Art. 821)
It is the duty of the captain to continue the voyage without
delay after the cause of the arrival under stress has ceased
failing in such duty renders him liable. However, in case the cause
has been risk of enemies, there must first be an assembly before
departure. (Art. 825) Steps:1. Captain should determine during the
voyage if there is well founded fear of seizure, privateers and
other valid grounds;1. Captain shall assemble the officers and
summon the persons interested in the cargo who may attend the
meeting but without a right to vote;1. The officers shall determine
and agree if there is well-founded reason after examining the
circumstances. The captain shall have the deciding vote;1. The
agreement shall be drafted and the proper minutes shall be signed
and entered in the log book;1. Objections and protests shall
likewise be entered in the minutes.
COLLISION Impact of two vessels both of which are moving.
Allision Impact between a moving vessel and a stationary
one.
Nautical Rules to Determine Negligence 1. When two vessels are
about to enter a port, the farther one must allow the nearer to
enter first; if they collide, the fault is presumed to be imputable
to the one who arrived later, unless it can be proved that there
was no fault on its part.1. When two vessels meet, the smaller
should give the right of way to the larger one.1. A vessel leaving
port should leave the way clear for another which may be entering
the same port.1. The vessel which leaves later is presumed to have
collided against one which has left earlier.1. There is a
presumption against the vessel which sets sail in the night.1.
There is a presumption against the vessel with spread sails which
collides with another which is at anchor and cannot move, even when
the crew of the latter has received word to lift anchor, when there
was not sufficient time to do so or there was fear of a greater
damage or other legitimate reason.1. There is a presumption against
an improperly moored vessel.1. There is a presumption against a
vessel which has no buoys to indicate the location of its anchors
to prevent damage to vessels which may approach it.1. Vessels must
have proper look-outs or persons trained as such and who have no
other duty aside therefrom. (Smith Bell v. CA)
Nautical Rules as to Sailing Vessel and Steamship1.Where a
steamship and a sailing vessel are approaching each other from
opposite directions, or on intersecting lines, the steamship from
the moment the sailing vessel is seen, shall watch with the highest
diligence her course and movements so as to be able to adopt such
timely means of precaution as will necessarily prevent the two
boats from coming in contact. 2.The sailing vessel is required to
keep her course unless the circumstances require otherwise.
Zones of Time in the Collision of Vessels1. First zone all time
up to the moment when risk of collision begins. No rule is as yet
applicable for none is necessary.1. Second zone time between moment
when risk of collision begins and moment it becomes a practical
certainty. It is in this period where conduct of the vessels is
primordial. It is in this zone that vessels must strictly observe
nautical rules, unless a departure therefrom becomes necessary to
avoid imminent danger.1. Third zone time when collision is certain
and time of impact. An error in this zone would no longer be
legally consequential. Error in Extremis - sudden movement made by
a faultless vessel during the third zone of collision with another
vessel which is at fault during the 2nd zone. Even if such sudden
movement is wrong, no responsibility will fall on said faultless
vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL
632)
Cases Covered By Collision and Allision1. One vessel at fault
Vessel at fault is liable for damage caused to innocent vessel as
well as damages suffered by the owners of cargo of both vessels.
(Art. 826)1. Both vessels at fault Each vessel must bear its own
loss, but the shippers of both vessels may go against the
shipowners who will be solidarily liable. (Art. 827)1. Vessel at
fault not known Each vessel must bear its own loss, but the
shippers of both vessels may go against the shipowners who will be
solidarily liable. (Art. 828) Doctrine of Inscrutable Fault In case
of collision where it cannot be determined which between the two
vessels was at fault, both vessels bear their respective damage,
but both should be solidarily liable for damage to the cargo of
both vessels.1. Third vessel at fault The third vessel will be
liable for losses and damages. (Art. 831)1. Fortuitous event/force
majeure No liability. Each bears its own loss. (Art. 830)
The doctrine of res ipsa loquitur applies in case a moving
vessel strikes a stationary object, such as a bridge post, dock, or
navigational aid. (Far Eastern Shipping v. CA, Luzon Stevedoring
vs. CA)
Even if the cause of action against the common carrier is based
on quasi-delict, the defense of due diligence in the selection and
supervision of employees is unavailing in case of a maritime tort
resulting in collision. It is not a civil tort governed by the
Civil Code but a maritime one governed by Arts. 826-839 of the Code
of Commerce. (Manila Steamship vs. Insa Abdulhaman)
Doctrine of Last Clear Chance and Rule on Contributory
Negligence cannot be applied in collision cases because of Art.827
of the Code of Commerce. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. & Hernando,
R.P. 2004 ed.)
MARITIME PROTEST Condition precedent or prerequisite to recovery
of damages arising from collisions and other maritime accidents. It
is a written statement made under oath by the captain of a vessel
after the occurrence of an accident or disaster in which the vessel
or cargo is lost or damaged, with respect to the circumstances
attending such occurrence, for the purpose of recovering losses and
damages. Excuses for not filing protest: 1) where the interested
person is not on board the vessel; and 2) on collision time, need
not be protested. (Art. 836) Cases applicable: 1. Collision (Art.
835); 1. Arrival under stress (Art. 612(8)); 1. Shipwrecks (Arts.
612(15), 843); 1. Where the vessel has gone through a hurricane or
when the captain believes that the cargo has suffered damages or
averages (Art. 624). Who makes: Captain When made: within 24 hours
from the time the collision took place. Before whom made: competent
authority at the point of collision or at the first port of
arrival, if in the Philippines and to the Philippine consul, if the
collision took place abroad. (Art. 835)
SHIPWRECK It is the loss of the vessel at sea as a consequence
of its grounding, or running against an object in sea or on the
coast. It occurs when the vessel sustains injuries due to a marine
peril rendering her incapable of navigation. If the wreck was due
to malice, negligence or lack of skill of the captain, the owner of
the vessel may demand indemnity from said captain. (Art. 841) The
rules on collision or allision, as may be pertinent, can equally
apply to shipwrecks.
SPECIAL CONCEPTSARRASTRE SERVICE A contract for the unloading of
goods from a vessel. Applicability: Overseas trade only.
(Commercial Law Review, C. Villanueva, 2004 ed.) Significance: When
a person brings in cargo from abroad, he cannot unload and deliver
the cargo by himself. The unloading must be done by the arrastre
operator, which will then deliver the cargo to the importer.
(Commercial Law Review, C. Villanueva, 2004 ed.) Nature of
business: It is a public utility, discharging functions which are
heavily invested with public interest. Liability:1.Similar to a
warehouseman (Lua Kian v. Manila Railroad)2.Similar to a common
carrier (Northern Motors v. Prince Line) 3.Solidary liability with
the common carrier
Note: In order that the arrastre operator may be held liable,
the consignee must prove that the damage was due to the negligence
and while the goods are in the custody of the arrastre operator.
(Hartford Fire Insurance v. E. Razon, Inc.)
STEVEDORING SERVICE The carriage of goods from the warehouse or
pier to the holds of the vessel. (Chief of Staff vs. CIR) As
understood in the port business, the term consists of the handling
of cargo from the hold of the ship to the dock, in case of
pier-side unloading; or to a barge, in case of unloading at sea.
(Anglo-Fil Trading Corp. vs. Lazaro) The loading on the ship of
outgoing cargo is also part of stevedoring work. (Ibid.)
CONTAINERIZATION/ SAID-TO-CONTAIN/ SHIPPERS LOAD AND COUNT
SYSTEM System whereby the shipper loads his cargoes in a specially
designed container, seals the container and delivers it to the
carrier for transportation. The carrier does not participate in the
counting of the merchandise for loading into the container, the
actual loading, and the sealing of the container. (US Lines v.
Comm. Of Customs, ICTSI v. Prudential Guarantee) The matter of
quantity, description and conditions of the cargo inside the
container is the sole responsibility of the shipper, unless there
is stipulation to the contrary. (US Lines vs. Comm. Of Customs,
Reyma Brokerage v. Phil. Home Assurance)
Note: In order to attribute to the carrier any damage to the
shipment that may be found, inspection of the goods should be done
at pier-side. (Bankers vs. CA) III. CARRIAGE OF GOODS BY SEA
ACT/COGSA (C.A. No. 65)
APPLICABILITY The transportation must be: 1. Water/maritime
transportation;1. for the carriage of goods; and1.
overseas/international/foreign (from foreign port to Philippine
port). It can be applied in domestic sea transportation if agreed
upon by the parties. (Clause paramount or paramount clause)
IMPORTANT FEATURES:1. Amount of carriers liability1. Notice of
damage1. Prescriptive period
AMOUNT OF CARRIERS LIABILITY Under the Sec. 4(5), the liability
limit is set at $500 per package or customary freight unit unless
the nature and value of such goods is declared by the shipper. This
is deemed incorporated in the bill of lading even if not mentioned
in it. (Eastern Shipping vs. IAC, 150 SCRA 463) Note that Art.
1749, NCC applies to domestic/inter-island/coastwise trade.
NOTICE OF DAMAGE (SEC. 3(6)) Rules:1. Patent damage: shipper
should file a claim with the carrier immediately upon delivery1.
Latent damage: shipper should file a claim with the carrier within
three days from delivery.
Note: The filing of a notice of claim is not a condition
precedent.
PRESCRIPTIVE PERIOD Action for loss or damage to the cargo
should be brought within one year after:1. Delivery of the goods
(delivered but damaged goods); or1. The date when the goods should
have been delivered (non-delivery). (Sec. 3[6])
Loss or Damage as applied to the COGSA contemplates a situation
where no delivery at all was made by the shipper of the goods
because the same had perished, gone out of commerce, or disappeared
in such a way that their existence is unknown or they cannot be
recovered. Thus, it is inapplicable in case of misdelivery or
conversion. (Ang vs. American Steamship Agencies Inc.) and damage
arising from delay or late delivery (Mitsui O.S.K. Lines Ltd. vs.
CA). In such instance the, Civil Code rules on prescription shall
apply.
The one-year prescriptive period is suspended by:1. The express
agreement of the parties (Universal Shipping Lines, Inc. vs. IAC,
188 SCRA 170)1. The filing of an action in court until it is
dismissed. (Stevens & Co. vs. Nordeutscher Lloyd, 6 SCRA
180)
The one-year period shall run from delivery of the last package
and is not suspended by extrajudicial demand. (Dole Phils.,Inc. vs.
Maritime Co.,148 SCRA 118)
The one-year period shall run from delivery to the arrastre
operator and not to the consignee. (Union Carbide Phils, Inc. vs.
Manila Railroad Co.,SCRA 359)
The insurer exercising its right of subrogation is bound by the
one-year prescriptive period. However, it does not apply to the
claim against the insurer for the insurance proceeds. (Fil.
Merchants Ins. Co. vs. Alejandro; Mayer Steel Pipe Corp. vs.
CA)
IV. WARSAW CONVENTION OF 1929 (WC)
PURPOSE: To protect the emerging air transportation industry and
to secure the uniformity of recovery by the
passengers.APPLICABILITY The transportation must be:1.
International transportation;1. Air transportation; and1. Carriage
of passengers, baggage or goods. The WC shall also apply to
fortuitous transportation by aircraft performed by an air
transportation enterprise.
International transportation - any transportation in which the
place of departure and the place of destination are situated
either:1. Within the territories of two High Contracting Parties
regardless of whether or not there be a break in the transportation
or transshipment, or 2. Within the territory of a single High
Contracting Party, if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or authority of
another power, even though that power is not a party to the
Convention. (round trip, Am. Jur.)
Transportation to be performed by several successive air
carriers shall be deemed to be one undivided transportation, if it
has been regarded by the parties as a single operation, whether it
has been agreed upon under the form of a single contract or of a
series of contracts, and it shall not lose its international
character merely because one contract or a series of contracts is
to be performed entirely within a territory subject to the
sovereignty, suzerainty, mandate, or authority of the same High
Contracting Party. (Art. 1 Sec.3)
WHEN INAPPLICABLE1. When public policy is contradicted;1. If the
requirements under the Convention are not complied with.
IMPORTANT CONCEPTS:1. Transportation documents1. Passenger
ticket1. Baggage check1. Air way bill2. Liability of the carrier
for damages1. Death or injury to passengers1. Loss or damage to
baggage or goods1. Delay3. Successive carrier agreement4.
Jurisdiction5. Combined transportation agreement
PASSENGER TICKETBAGGAGE CHECKAIR WAYBILL
PassengerChecked-in baggageGoods to be shipped
LIABILITY OF CARRIER FOR DAMAGES1. Death or injury of a
passenger if the accident causing it took place on board the
aircraft or in the course of its operations of embarking or
disembarking; (Art. 17)2. Destruction, loss or damage to any
baggage or goods, if it took place during the transportation by
air; (Art. 18) and Transportation by air The period during which
the baggage or goods are in the charge of the carrier, whether in
an airport or on board an aircraft, or, in case of a landing
outside an airport, in any place whatsoever.It includes any
transportation by land or water outside an airport if such takes
place in the performance of a contract for transportation by air,
for the purpose of loading, delivery, or transshipment.3. Delay in
the transportation of passengers, baggage or goods. (Art. 19)
Note: The Hague Protocol amended the WC by removing the
provision that if the airline took all necessary steps to avoid the
damage, it could exculpate itself completely (Art. 20(1)).
(Alitalia vs. IAC, 192 SCRA 9)
LIMIT OF LIABILITY (Art. 22, as amended by Guatemala Protocol,
1971; Alitalia vs. IAC)1. Passengers GENERAL RULE: $100,000 per
passengerEXCEPTION: Agreement to a higher limit
2. Checked-in baggageGENERAL RULE: $20 per kilogramEXCEPTION: In
case of special declaration of value and payment of a supplementary
sum by consignor, carrier is liable to not more than the declared
sum unless it proves the sum is greater than actual value.3.
Hand-carried baggage $1000/passenger4. Goods to be shippedGENERAL
RULE: $20 per kilogramEXCEPTION: In case of special declaration of
value and payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves the sum
is greater than actual value.
An agreement relieving the carrier from liability or fixing a
lower limit is null and void. (Art. 23) Carrier is not entitled to
the foregoing limit if the damage is caused by willful misconduct
or default on its part. (Art. 25)
Thus, the WC does not operate as an exclusive enumeration of the
instances of an absolute limit of the extent of liability. It does
not preclude the application of the Civil Code and other pertinent
local laws. It does not regulate or exclude liability for other
breaches of contract by the carrier, or misconduct of its
employees, or for some particular or exceptional type of damage.
(Alitalia vs. CA)
In PanAm v. IAC, the WC was applied as regards the limitation on
the carriers liability, there being a simple loss of baggage
without any improper conduct on the part of the officials or
employees of the airline or other special injury sustained by the
passenger.
In KLM Royal v. Tuller, the WC has invariably been held
inapplicable, or as not restrictive of the carriers liability,
where there was satisfactory evidence of malice or bad faith
attributable to its officers and employees. (Alitalia vs. IAC)
ACTION FOR DAMAGES1. Notice of claim A written complaint must me
made within:1. 3 days from receipt of baggage1. 7 days from receipt
of goods1. In case of delay, 14 days from receipt of baggage/goods
The complaint is a condition precedent. Without the complaint, the
action is barred except in case of fraud on the part of the
carrier. (Art. 26)
2. Prescriptive period Action must be filed within 2 years from:
1. date of arrival at the destination1. date of expected arrival1.
date on which the transportation stopped. (Art. 29)
In United Airlines vs. Uy the two-year prescriptive period was
not applied where the airline employed delaying tactics.
RULE IN CASE OF VARIOUS SUCCESSIVE CARRIERS1. Carriage of
passengers GENERAL RULE: Action is filed only against the carrier
in which the accident or delay occurred. EXCEPTION: Agreement or
contract whereby the first carrier assumed liability for the whole
journey. 1. Carriage of baggage or goods 1. Passenger or consignor
can file an action against the first carrier and the carrier in
which the damage occurred1. Passenger or consignee can file an
action against the last carrier and the carrier in which the damage
occurred. These carriers are jointly and severally liable. (Art.
30)
A contract of international carriage by air, although performed
by different carriers under a series of airline tickets constitutes
a single operation. Members of the International Air Transportation
Association (IATA) are under a general pool partnership agreement
wherein they act as agent of each other in the issuance of tickets
to contracted passengers to boost ticket sales worldwide and at the
same time provide passengers easy access to airlines which are
otherwise inaccessible in some parts of the world. (American
Airlines vs. CA)
Under a general pool partnership agreement, the ticket-issuing
airline is the principal in a contract of carriage while the
endorsee-airline is the agent. The obligation of the former
remained and did not cease even when the breach occurred not on its
own flight but on that of another airline which had undertaken to
carry the passengers to one of their destinations. (China Airlines
vs. Chiok)
JURISDICTION At the option of the plaintiff, the action for
damages may be filed in the:1. Court of domicile of the carrier;1.
Court of its principal place of business;1. Court where it has a
place of business through which the contract has been made; or1.
Court of the place of destination. (Art. 28(1)) NOTE: It is the
passengers ultimate destination not an agreed stopping place that
determines the country where suit is to be filed. The forum of
action provided in Art. 28(1) is a matter of jurisdiction rather
than of venue. (Santos III vs. Northwest; 2A C.J.S.)
V. SALVAGE LAW (Act No. 2616)
Salvage Two concepts:1.Services one person renders to the owner
of a ship or goods, by his own labor, preserving the goods or the
ship which the owner or those entrusted with the care of them have
either abandoned in distress at sea, or are unable to protect or
secure.2.Compensation allowed to persons by whose voluntary
assistance a ship at sea or her cargo or both have been saved in
whole or in part from impending sea peril, or such property
recovered from actual peril or loss, as in cases of shipwreck,
derelict or recapture. Requisites: 1. Valid object of salvage;1.
Object must have been exposed to marine peril (not perils of the
ship);1. Services rendered voluntarily (neither an existing duty
nor out of a pre-existing contract);1. Services are successful,
total or partial. Subjects of Salvage:1. Ship itself;2. Jetsam
goods which are cast into the sea, and there sink and remain under
water;3. Floatsam or Flotsam goods which float upon the sea when
cast overboard;4. Ligan or Lagan goods cast into the sea tied to a
buoy, so that they may be found again by the owners (p.173, Judge
Diaz). Persons who have no right to a reward for salvage:1. Crew of
the vessel saved;2. Person who commenced Salvage in spite of
opposition of the Captain or his representative; 3. In accordance
with Sec. 3 of the Salvage Law, a person who fails to deliver a
salvaged vessel or cargo to the Collector of Customs.
Derelict a ship or her cargo which is abandoned and deserted at
sea by those who are in charge of it, without any hope of
recovering it, or without any intention of returning to it.
The intention of those in charge must be ascertained. If those
in charge left with the intention of returning, or of procuring
assistance, the property is not derelict, but if they quitted the
property with the intention of finally leaving it, it is derelict
and a change of their intention and an attempt to return will not
change its nature (Erlanger & Galinger vs. Swedish East Asiatic
Co. Ltd.).
If it is clear that the intention to return is slight, the
salvage which was done thereafter is considered valid. (Notes and
Cases on the Law on Transportation and Public Utilities, Aquino, T.
& Hernando, R.P. 2004 ed. p. 616)
Contract of Towage A contract whereby one vessel, usually
motorized, pulls another, whether loaded or not with merchandise,
from one place to another, for a compensation. It is a contract for
services rather than a contract of carriage.
SALVAGETOWAGE
Governed by special law (Act No. 2616)Governed by Civil Code on
contract of lease
Requires success, otherwise no paymentSuccess is not
required
Must be done with the consent of the captain/crewmenOnly the
consent of the tugboat owner is needed
Vessel must be involved in an accidentVessel need not be
involved in an accident
Fees distributed among crewmenFees belong to the tugboat
owner
RULES ON SALVAGE REWARD0. The reward is fixed by the RTC judge
in the absence of agreement or where the latter is excessive. (Sec.
9)0. The reward should constitute a sufficient compensation for the
outlay and effort of the salvors and should be liberal enough to
offer an inducement to others to render services in similar
emergencies in the future.0. If sold (no claim being made within 3
months from publication), the proceeds, after deducting expenses
and the salvage claim, shall go to the owner; if the latter does
not claim it within 3 years, 50% of the said proceeds shall go to
the salvors, who shall divide it equitably, and the other half to
the government. (Secs. 11-12)0. If a vessel is the salvor, the
reward shall be distributed as follows:3. 50% to the shipowner;3.
25% to the captain; and
3. 25% to the officers and crew in proportion to their salaries.
(Sec. 13)
Taking passengers from a sinking ship, without rendering any
service in rescuing the vessel, is not a salvage service, being a
duty of humanity and not for reward.
VI. PUBLIC SERVICE ACT(C.A. No. 146)
PURPOSES:1. To secure adequate, sustained service for the public
at the least possible cost;1. To protect the public against
unreasonable charges and poor, inefficient service;1. To protect
and secure investments in public services;1. To prevent ruinous
competition.
AUTHORITY TO OPERATE PUBLIC SERVICESGENERAL RULE: No public
service shall operate without having been issued a certificate of
public convenience or a certificate of public convenience and
necessity.EXCEPTIONS:1. Warehouses;1. Animal drawn vehicles and
bancas moved by oar or sail;1. Airships, except for the fixing of
maximum rates for fare and freight;1. Radio companies, except for
rates fixing;1. Public services owned or operated by the
government, except as to rates fixing;1. Ice plants; and1. Public
markets. PUBLIC SERVICE A person who owns, operates, manages or
controls in the Philippines for hire or compensation, with general
or limited clientele, whether permanent, occasional or accidental,
and done for general business purposes, any common carrier or
public utility, ice plants, power and water supplies, communication
and similar public services. (Sec. 13b, CA 146) A casual or
incidental service devoid of public character and interest is not
brought within the category. The question depends on such factors
as the extent of services, whether such person or company has held
himself or itself out as ready to serve the public or a portion of
the public generally. (Luzon Stevedoring vs. PSC)
NOTE: The Public Service Commission created under the Public
Service Law has already been abolished under P.D. No. 1 and other
issuances. It has been replaced by the following government
agencies: LTO; LTFRB; ATO; BOE; NTC; NEA; ERB; NWRC;