LEGAL ETHICS REVIEWER

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I. GENERAL PRINCIPLESDefinitionA contract of transportation is one 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.

Classifications1. Common or Private

2. Goods or Passengers

3. For a fee (for hire) or Gratuitous

4. Land, Water/maritime, or Air

5. Domestic/inter-island/coastwise or International/foreign

Governing laws

Land Transportation

1. Common Carriers

a. New Civil Code (NCC) primary

b. Code of Commerce suppletory

2. Private Carriers

a. Object is a merchandise

Code of Commerce primary

NCC suppletory

b. Object is non-commercial

Law on deposit if object is property

Law on contracts if passenger

Transportation by Sea

1. Coastwise

NCC primary

Code of Commerce suppletory

Carriage of Goods by Sea Act (COGSA) does not apply even if the parties expressly provide for it

2. Philippine port to foreign ports law of the country of destination

3. Foreign ports to Philippine ports

a. NCC primary

b. Code of Commerce

c. COGSA

d. Philippine laws still apply even if the collision actually takes place in foreign waters.

Air Transportation

1. Domestic NCC; Code of Commerce

2. International Warsaw Convention

Parties to contract of transportation:

(1) shipper or consignor- one who gives rise to the contract of transportation by agreeing to deliver the things or news to be transported, or to present his own person or those of other or others in the case of transportation of passengers

(2) carrier or conductor- one who binds himself to transport persons, things, or news as the case may be; one employed in or engaged in the business of carrying goods for other for hire

(3) consignee - the party to whom the carrier is to deliver the things being transported; one to whom the carrier may lawfully make delivery in accordance with its contract of carriage (NOTE: the shipper and the consignee may be one person)

Freight defined - The term has been defined as the price or compensation paid for the transportation of goods by a carrier, at sea, from port to port. But the term is also used to denote:

1) the hire paid for the carriage of goods on land from place to place, or on inland streams or lakes.

2) the goods or merchandise transported at sea, on land, or inland streams or lakes.

Thus the term is used in 2 senses: to designate the price for the carriage, also called freightage, or to designate the goods carried.

Meaning of Public use. It is not confined to privileged individuals, but is open to the indefinite public; there must be a right which the law compels the owner to give to the general public. Public use is not synonymous with public interest. The true criterion is whether the public may enjoy it by right or only by permission.

Art. 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (sideline).

It also avoids distinction between offering transportation service on a regular or scheduled basis, and on an occasional, episodic or unscheduled basis.

Neither does it distinguish between a carrier offering its services to the general public (general community or population) and one who offers services only from a narrow segment of the 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) A grantee of pipeline concession under the Petroleum Act is considered a common carrier (First Phil. Industrial vs. CA, supra)A common carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel, provided the charter is limited to the ship only, as in the case of a time or voyage charter.

It is only when the charter includes both the vessel and its crew, as in a bareboat or demise, that a common carrier becomes private (Planters Products vs. CA, 226 SCRA 476)A travel agency is not a common carrier. Its services include procuring tickets and facilitating travel permits or visas as well as booking customers for tours (Crisostomo vs. CA, GR No. 138334, Aug. 25, 2003)I. COMMON CARRIERS

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

Carriers defined. Persons or corporations who undertake to transport or convey goods, property or persons, from one place to another, gratuitously or for hire, and are classified as private or special carriers, and common or public carriers

Private carriers defined. 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)COMMON CARRIERPRIVATE CARRIER

holds himself out in common, that is, to all persons who choose to employ him, as ready to carry for hire

agrees in some special case with some private individual to carry for hire

bound to carry all who offer such goods as it is accustomed to carry and tender reasonable compensation for carrying them

not bound to carry for any reason, unless it enters into a special agreement to do so

subject to State regulationnot subject to regulation as a common carrier

Requires exercise of extraordinary diligenceOnly ordinary diligence is required

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

There is a presumption of fault or negligenceNo presumption of fault or negligence

Governed by the law on common carriersGoverned by the law on obligations and contracts

TOWAGE

A vessel is hired to bring another vessel to another place

ARRASTRE

A contract for unloading of goods from a vessel.

Services are not maritime. They are in fact no different from those of a depositary or warehouseman.

STEVEDORINGLoading and unloading of coastwise vessels calling at the port

Characteristics of common carriers:

1.The common carrier undertakes to carry for all people indifferently; he holds himself out as ready to engage in the transportation of goods for hire as a public employment and not as a casual occupation, and he undertakes to carry for all persons indifferently, within the limits of his capacity and the sphere of the business required of him, so that he is bound to serve all who apply and is liable for refusal, without sufficient reason, to do so (Lastimoso vs. Doliente, October 20, 1961);2.The common carrier cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the traffic in those goods

Exception : for some sufficient reason, where the discrimination in such goods is reasonable and necessary (substantial grounds)

3. No monopoly is favored - the Commission has the power to say what is a reasonable compensation to the utility and to make reasonable rules and regulations for the convenience of the traveling public and to enforce them (Batangas Trans. vs. Orlanes, 52 PHIL 455);4.Public convenience - for the best interests of the public

Test for a common carrier:

1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for persons generally as a business, and not a casual occupation.

2. He must undertake to carry goods of the kind to which his business is confined.

3. He must undertake to carry by the methods by which his business is conducted, and over his established roads.

4. The transportation must be for hire. (First Phil. Industrial vs. CA, 300 SCRA 661)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.

II. DILIGENCE REQUIRED

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

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

COVERAGE

1. Vigilance over goods (Arts. 1734-1754); and

2. Safety of passengers (Arts. 1755-1763).

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)

2. Relationship of trust

3. Business is impressed with a special public duty

4. Possession of the goods

5. Preciousness of human life

A failure on the carrier to use extra-ordinary care in carrying goods or passengers safely is a breach of contract and constitutes culpa contractual not culpa aquiliana. While the liability of a carrier as an insurer is not recognized in this jurisdiction, a carrier is liable for damages suffered by goods carried if such damages arise from its negligence. The carrier is also liable even in those cases where the cause of the loss or damage is unknown.

PRESUMPTION OF NEGLIGENCE1. If the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently (Art. 1735)2. Mere proof of the delivery of goods in good order to a common carrier and their arrival in bad order at their destination makes for a prima facie case against the carrier (Coastwise Lighterage Corp. vs. CA, 245 SCRA 796)3. The court need not make an express finding of fault or negligence, the law imposes liability upon common carriers, as long as it is shown that:

a. There is a contract between the shipper and common carrier

b. Loss or deterioration took place during the existence of contractIII. VIGILANCE OVER GOODSArt. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packaging or in the containers;

(5) Order or act of competent public authority.

Carrier has duty to keep and care for goods carried It is the duty of the common carrier to properly and carefully handle, carry, keep and care for the goods carried and to exercise due care to ascertain and consider the nature of the goods offered for shipment and to use such methods for their care during the voyage as their nature requires. The carrier is liable for injury to, or loss of, cargo resulting from the failure to properly care for and handle the cargo en route; and it is required to provide adequate ventilation for the safe carriage of the cargo, and provide reasonable and ordinary inspection and care in and about the transportation of cargo.

A vessel should not accept cargo unless it can be given the type of storage that its character requires, for placing of conditions in a bill of lading does not relieve the vessels of obligation to take appropriate care of the cargo.

Duty of carrier to deliver cargo in good condition as when loaded There is no absolute obligation for a common carrier to accept cargo. It should not be accepted unless it can be given the type of storage that its character requires.

Where a vessel accepts a cargo for shipment for valuable consideration, it takes the risk of delivering it in good condition as when it was loaded. And if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom.

In the exercise of extra-ordinary diligence required by law, the common carrier must give due regard to all circumstances and take all steps necessary to insure the safety of the passengers and the goods given the circumstances.

A. DEFENSES OF A COMMON CARRIER IN THE CARRIAGE OF GOODS/EXEMPTING CAUSES1. Caso fortuito/force majeure

Requisites:a. Must be the proximate and only cause of the loss

b. Exercise of due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster (Art. 1739)

c. Carrier has not negligently incurred in delay in transporting the goods (Art. 1740)

Fire is not considered a natural disaster 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:a. Must be the proximate and only cause of the loss

b. 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 owner

a. Sole and proximate cause: absolute defense

b. 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)

Duty to Deliver GoodsOft-Repeated Rule: In the absence of a special contract, a carrier is not an insurer against delay in transportation of goods

Consequences of Delay:

a. A natural disaster shall not free carrier from responsibility (Art. 1740)

b. Contract limiting carrier's liability cannot be availed of in case of loss of goods (Art. 1747)

c. Excusable delays in carriage suspend, but do not generally terminate, the contract of carriage, and when the cause is removed, the master must proceed with the voyage and make delivery

d. During delay the vessel continues to be liable as a common carrier, not as a warehouseman, and remains duty bound to exercise extraordinary diligence

e. Payment of indemnity:

i. Stipulated in bill of lading

ii. If no indemnity stipulated, then carrier shall be liable for damages incurred due to delay

f. Consignee may:

i. Leave goods transported in the hands of carrier (Abandonment) advising him thereof in writing before their arrival at the point of destination. The carrier shall pay the full value of goods as if they had been lost or mislaid.

ii. If no abandonment was made indemnification shall not exceed the current price of goods at the time it should have been delivered

Grounds for valid refusal to accept goods: (DUO-CIEDSF)1. Dangerous objects or substances including dynamites and other explosives

2. Unfit for transportation

3. Acceptance would result in overloading

4. Contrabands or illegal goods

5. Injurious to health

6. Goods will be exposed to untoward danger like flood, capture by enemies and the like

7. Goods like livestock will be exposed to diseases

8. Strike9. Failure to tender goods in timeDue Diligence to lessen the loss

B.CONTRIBUTORY NEGLIGENCE

C.DURATION OF LIABILITY

Commencement: from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation

Termination: actual or constructive delivery by the carrier to the consignee or to the person who has the right to receive them (Art. 1736)

Liability remains:

a. Even when goods are temporarily unloaded or stored in transit unless the shipper or owner has made use of the right of stoppage in transitu (Art. 1737)

b. And when goods are stored in the carriers warehouse at the place of destination until the consignee has been advised of the arrival thereof and had reasonable opportunity thereafter to remove or dispose them (Art. 1738)

c. Delivery to the customs authorities is not delivery to the consignee. However, the parties may agree to limit the liability of carrier (Lu Do vs. Binamira, 101 Phil. 120)Constructive deliveryNotice by the common carrier that the cargo had already arrived, placing them at the disposal of the shipper or consignee releases the common carrier from extra-ordinary responsibility. From such moment the consignee or shipper should exercise over the cargo the ordinary control pertinent to ownership (should unload cargo from the common carrier).

D.STIPULATIONS FOR LIMITATION OF LIABILITY

1.As to degree of diligence

Common carrier and shipper may agree on carriers observance of diligence to a degree less than extraordinary, provided it be:

1. In writing, signed by shipper or owner;

2. Supported by a valuable consideration other than the service rendered by carriers; and

3. Reasonable, just and not contrary to public policy. (Art. 1744)2. As to amount of liability

Valid Stipulations:

a. Carrier's liability limited to the value of goods appearing in the bill of lading, unless the shipper or owner declares a greater value. (Art. 1749)

b. Fixing the sum to be recovered by the owner or shipper, if it is reasonable and just under the circumstances and has been fairly and freely agreed upon. (Art. 1750)

c. Limiting carriers liability for delay on account of strikes or riots. (Art. 1748)

Invalid Stipulations: (RLNTD)a. Goods are transported at the risk of the owner or shipper;

b. Carrier will not be liable for any loss of goods;

c. Carrier need not observe any diligence in the custody of goods;

d. Carrier shall exercise a degree of diligence less than that of a good father of a family;

e. Carrier shall not be responsible for the acts or omissions of his or its employees;

f. 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;

g. Carrier not responsible for the loss of goods on account of defective condition of car, vehicle, ship or other equipment used in the contract of carriage. (Art. 1745)

Presumption despite stipulation

Even when there is an agreement limiting the liability, the common carrier is disputably presumed to have been negligent in case of their loss. (Art. 1752)

The validity of stipulations limiting the carrier's liability is to be determined by their reasonableness and their conformity to the sound public policy. It cannot lawfully stipulate for exemption from liability unless such exemption is just and reasonable and unless the contract is freely and fairly made. No contractual limitation is reasonable which is subversive of public policy. Ysmael vs Barreto, 51 Phil 90E.LIABILITY FOR BAGGAGE OF PASSENGERSRules on Passenger Baggage

Common carriers are bound to observe extraordinary diligence in the vigilance over the goods of the passengers transported by them.

The rules concerning the responsibility of hotelkeepers shall be applicable to common carriers.

The deposit of effects made by passengers in common carriers shall be regarded as necessary. The common carrier shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the passengers and that, on the part of the latter, they take the precautions which said common carriers or their employees advised relative to the care and vigilance of their effects.

The act of a thief or robber, who has entered the common carrier is not deemed force majeure, unless it is done with the use of arms or through irresistible force.

The common carrier is not liable for compensation if the loss is due to the acts of the passenger, or if the loss arises from the character of the things brought into the common carrier

The common carrier cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the passenger. Any stipulation between the common carrier and the passenger where the responsibility of the former is suppressed or diminished shall be void.

Classes of baggage of passengers

The law makes a distinction between

(1) baggage in the custody of the passengers or their employees (hand-carried baggage); and

(2) baggage not in such custody but in that of the common carrier (checked-in baggage)

Liability for baggage in custody of passenger

The baggage of passengers in their personal custody or in that of their EEs while being transported shall be regarded as necessary deposits. The common carrier shall be responsible for such baggage as depositaries, provided that

(1) notice was given to them or to their EEs, of the baggage brought by their passengers, and that

(2) the passengers take the precautions which said CCs advised relative to the care and vigilance of their baggage.

Responsibility for acts of employees, thieves

A common carrier is responsible as a depositary for the loss of or injury to the baggage in the personal custody of passengers, caused by the common carrier's servants or employees but not those caused by force majeure.

The act of a thief or robber, who has entered the common carrier's vehicle is not deemed force majeure, unless it is done with the use of arms or through irresistible force.

The common carrier is not liable if the loss of the baggage in the personal custody of the passenger is due to the acts of the passengers, his family, servants or visitors, OR if the loss arises from the character of the baggage.

Stipulations limiting liability

A common carrier cannot free himself from responsibility by posting notices to the effect that he is not liable for the baggage brought by the passengers. Any stipulation diminishing the responsibility required under 1998 to 2001 shall be void.

Liability for baggage not in custody of passenger the provisions on carriage of goods shall apply (extraordinary diligence in the vigilance over the goods).

the law immediately imposes on the common carrier extraordinary responsibility for the loss thereof which lasts until the actual or constructive delivery of the effects to the passenger as the person who has the right to receive them (presumption of negligence exists but may be rebutted by proof of exercise of extraordinary diligence or causes under 1734).

A common carrier is liable for the loss of baggage although not declared and the charges not paid, if it accepted them for transportation

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)

HAND-CARRIED BAGGAGE CHECKED-IN BAGGAGE

Necessary depositConsidered as goods

Common carrier exercises diligence of a depositary (ordinary diligence)Requires extraordinary diligence

Governed by Arts. 1998 and 2000-2003Governed by Arts. 1733-1753

V. SAFETY OF PASSENGERS

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all circumstances.

A. PASSENGERA passenger is a person who has entered into a contract of carriage, express or implied, with the carrier. He is entitled to extraordinary diligence from the common carrier.

The following are not considered passengers, and are entitled to ordinary diligence only:

a. One who has not yet boarded any part of a vehicle regardless of whether or not he has purchased a ticket;

b. One who remains on a carrier for an unreasonable length of time after he has been afforded every safe opportunity to alight;

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

d. One who attempts to board a moving vehicle, although he has a ticket, unless the attempt be with the knowledge and consent of the carrier;

e. One who has boarded a wrong vehicle, has been properly informed of such fact, and on alighting, is injured by the carrier;

f. Invited guests and accommodation passengers. (Lara vs. Valencia)g. One who rides any part of the vehicle which is unsuitable or dangerous or which he knows is not designed or intended for passengers.

Ticket given to a passenger is a written contract

Ticket given to passenger is a written contract with the ff. elements: (1) the consent of the contracting parties manifested by the fact that the passenger boards the ship and the shipper consents or accepts him in the ship for transportation; (2) cause or consideration which is the fare paid by the passenger as stated in the ticket; (3) object, which is the transportation of the passenger from the place of departure to the place of destination which are stated in the ticket.

B.DILIGENCE REQUIRED

Extraordinary diligence in carrying passengers

Art. 1755 shows clearly the high degree of care and extraordinary diligence required of a common carrier with respect to its passengers.

Duty of extraordinary diligence extends also to crew members

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

How presumption of negligence is overcome

To overcome such presumption, it must be shown that the common carrier had observed the required extraordinary diligence or that the accident was caused by fortuituos event. In order to constitute caso fortuito that would exempt a person from responsibility, it is necessary that :

1. The event must be independent of human will;

2. The occurrence must render it impossible for the obligor to fulfill his obligation in a normal manner;

3. The obligor must be free of a concurrent or contributory fault or negligence. [Estrada vs Consolacion, 71 SCRA 523]

"Last clear chance" rule NOT applicable to contracts of carriage

The principle of last clear chance applies only in a suit between the owners and drivers of two colliding vehicles; it does not apply where a passenger demands responsibility from the common carrier to enforce its contractual obligation; it would be iniquitous to exempt the driver and his employer on the ground that the other driver was also negligent.C.DURATION OF LIABILITY

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).D.LIABILITY FOR ACTS OF OTHERS

Acts of other passengers

The common carrier is not ordinarily liable for injuries to passengers due to fires or explosions caused by articles brought into conveyance by other passengers. For the carrier to be liable, he must be aware, through its employees, of the nature of the article or must have had some reason to anticipate danger therefrom (circumstances must show that there are causes for apprehension that the passenger's baggage is dangerous and that the common carrier fails to act in the fact of such evidence) [Nocum vs Laguna Bus Co., 1969]Acts of employees

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

The liability of the common carrier does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

The 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)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)

Acts of Manufacturer defective equipment

A passenger is entitled to recover damages from a common carrier for an injury resulting from a defect in an appliance purchased from a manufacturer, whenever it appears that the defect would have been discovered by the common carrier if it had exercised the degree of care which under the circumstances was incumbent upon it, with regard to inspection and application of the necessary tests; for the purposes of this doctrine, the manufacturer is considered as being in law the agent or servant of the common carrier, as far as regards the work of constructing the appliance.

Liability of a common carrier for death or injuries to passengers 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

E.STIPULATIONS LIMITING LIABILITY

Valid stipulation

Stipulation limiting liability when a passenger is carried gratuitously, but not for willful acts or gross negligence.The reduction of fare does not justify any limitation of the common carrier's liability. (Art. 1758)

Under 1758 (2), the reduction of fare does not justify any limitation of the CC's liability -- the law requires gratuitous passage.

Void stipulations

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)

F.CONCURRING CAUSES OF ACTION ARISING FROM THE NEGLIGENT ACT OF THE COMMON CARRIER

1. 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 (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 (Art. 2180, NCC) Defense of due diligence in the selection and supervision of employees is available. Exception: maritime tort resulting in 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 (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)G.Contributory negligence of passengers

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

Diligence required of passenger

Diligence of a good father of a family to avoid injury to himself.

Effect of contributory negligence of passenger

If THE proximate cause of death or injury

the common carrier is exempted from liability

If NOT the proximate cause of death or injury he or his heirs are not barred from recovery of damages, provided that the common carrier is the proximate cause of his death or injury

The conduct of plaintiff in undertaking to alight while the train was yet slightly underway was not characterized by imprudence and that he was not guilty of contributory negligence. The circumstances show that it was no means so risky for him to get off while the train was yet moving. It is not negligence per se for a traveler to alight from a slowly moving train. (Cangco vs MRR 38 Phil 768)

By placing his left arm on the window, the passenger is guilty of contributory negligence, and although contributory negligence cannot relieve the carrier but can only reduce his liability (Art. 1762), this is a circumstance which militates against plaintiff's position. It is negligence per se for passengers to protrude any part of his body and that no recovery can be had for an injury.

In this case, the bus driver had done what a prudent man could have done to avoid the collision. The injury was due to passenger's fault. (Isaac vs A. L. Ammen)VI. BILL OF LADING

A bill of lading may defined as a written acknowledgment of the receipt of goods and an agreement to transport and to deliver them at a specified place to a person named or on his order. It comprehends all methods of transportation.A. KINDS1. On board - issued when the goods have been actually placed aboard the ship with very reasonable expectation that the shipment is as good as on its way.

2. Received - one in which it is stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped.

3. Negotiable - one in which it is stated that the goods referred to therein will be delivered to the bearer or to the order of any person named therein. 4. Non-negotiable - One in which it is stated that the goods referred to therein will be delivered to a specified person.

5. Clean One which does not indicate any defect in the goods.

6. Foul One which contains a notation thereon indicating that the goods covered by it are in bad condition. 7. Spent One which covers goods that already have been delivered by the carrier without a surrender of a signed copy of the bill.8. Through One issued by the carrier who is obliged to use the facilities of other carriers as well as his own facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which bill of lading is honored by the second and other interested carriers who do not issue their own bills.9. Custody One wherein the goods are already received by the carrier but the vessel indicated therein has not yet arrived in the port.

10. Port One which is issued by the carrier to whom the goods have been delivered, and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment. B. THREE-FOLD CHARACTER

1.A receipt for the goods shipped.

2. A contract which the three parties (shipper, carrier, consignees) undertake specific responsibilities and assume stipulated obligations.

3. A legal evidence of the contract between the shipper and the carrier. Its contents shall decide all disputes which may arise with regard to their execution and fulfillment. (Magellan Manufacturing v. CA, 201 SCRA 2021)

In the absence of a bill of lading, their respective claims may be determined by legal proofs which each of the contracting parties may present in conformity with law.

C.OBLIGATIONS OF THE CARRIERa) Duty to Accept Goods

b) Duty to Deliver Goods to (i) person indicated in bill of lading; or (ii) any person to whom bill of lading was validly transferred or negotiated

c) Duty to exercise extraordinary diligence

D.DELIVERY OF GOODS

Duty to deliver General Rule: A common carrier cannot ordinarily refuse to carry a particular class of goods.

Exception: For some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. (Fisher vs. Yangco Steamship Co. 31 Phil 1).

The common carrier has the duty to deliver the goods in the same condition in which according to the bill of lading they were found at the time they were received, without damage or impairment; otherwise, the common carrier is liable for damages (Art. 363)Instances when the carrier may validly refuse to accept the goods

1.Goods sought to be transported are dangerous objects, or substances including dynamite and other explosives

2.Goods are unfit for transportation

3.Acceptance would result in overloading

4.Contrabands or illegal goods

5.Goods are injurious to health

6.Goods will be exposed to untoward danger like flood, capture by enemies and the like

7.Goods like livestock will be exposed to disease

8.Strike

9.Failure to tender goods on time. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p.68)

In case of carriage by railway, the carrier is exempted from liability if carriage is insisted upon by the shipper, provided its objections are stated in the bill of lading.

However, when a common carrier accepts cargo for shipment for valuable consideration, it takes the risk of delivering it in good condition as when it was loaded. (PAL vs. CA)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.

E.PERIOD FOR DELIVERY

Stipulated 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 delay

a. Merely suspends and generally does not terminate the contract of carriage

b. Carrier remains duty bound to exercise extraordinary diligence

c. Natural disaster shall not free the carrier from responsibility (Art.1740)

d. If delay is without just cause, the contract limiting the common carriers liability cannot be availed of in case of loss or deterioration of the goods (Art.1747)

F.RIGHT OF CONSIGNEE TO ABANDON THE GOODS

1. Partial non-delivery, where goods are useless with others (Art. 363 Code of Commerce)

2. Goods rendered useless for sale or consumption for purposes for which they are properly destined (Art. 365)

3. In case of delay through the fault of carrier (Art. 371)

G.PRESCRIPTIVE PERIOD

Not provided by Article 366. Thus, in such absence, Civil Code rules on prescription apply.

If despite the notice of claim, the carrier refuses to pay, action must be filed in court.

1. No bill of lading was issued: within 6 years

2. Bill of lading was issued: within 10 years.ARTICLE 366COGSA Sec.3 (6)

Applicability

1. Domestic/inter-island/coastwise transportation

2. Land, water, air transportation

3. Carriage of goods1. International/overseas/ foreign (from foreign country to Phils.)

Note: subject to the rule on Paramount Clause

2. Water/maritime transportation

3. Carriage of goods

Notice of damage

1. Condition precedent

2. 24-hour period for claiming latent damage1. Not a condition precedent

2. 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).

VIII. MARITIME COMMERCEA. GENERAL CONCEPT

Maritime laws 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)B. CHARTER PARTIES

Contract by which an entire ship, or some principal part thereof is let by the owner to another person for a specified time or use for the conveyance of goods, in consideration of the payment of freight (Caltex Phils. vs. Sulpicio Lines, 315 SCRA 709)LEASECHARTER PARTY

If for a definite period, lessee cannot give up lease by paying a portion of the amount agreed uponCharterer may rescind charter party by paying half of 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 leaseThe new owner is not compelled to respect the charter party so long as he can load the vessel with his own cargo

If the leased property is sold to one who knows of the existence of the lease, the new owner must respect the leaseThe new owner is not compelled to respect the charter party so long as he can load the vessel with his own cargo

Classes of Charter Parties

1. Bareboat or Demise Charter

Charterer provides crew, food and fuel. The charterer is liable as if he were the owner, except when such arises from the unworthiness of the vessel

Owner pro hac vice a demise charterer, in spite of the fact that somebody else is the owner of the vessel, is treated as the owner of the chartered vessel, just for that one particular purpose only.

Effect: charterer assumes customary rights and liabilities of the ship-owner to third persons and is held liable for the expense of the voyage and the wages of the seamen

2. Contract of Affreightment

Owner leases the boat or part of it for the carriage of goods

1. Time charter vessel is chartered for a period of time or duration of voyage

2. Voyage or trip charter contract for hire of vessel for one or series of voyages

BAREBOAT OR DEMISE CHARTERCONTRACT OF AFFREIGHTMENT

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 chartererOwner retains possession, command and navigation of the ship

Common carrier becomes privateCommon carrier remains as such

Freight Parties may fix the manner or form in which the charter price shall be satisfied

Lay days period when vessel will be delayed in the port for loading and unloading

Primage bonus to be paid to the captain after the successful voyage

Deadfreight where the charterer failed to occupy the leased portion of the vessel, he may thereby be made liable by the ship-owner

Demurrage sum due, by express contract, for the detention of the vessel, in loading and unloading, beyond the time allowed in the contract of affreightment, and to any other improper detention or delay beyond the time set for loading

Persons who may make a charter

1. Owner or owners of the vessel, either in whole or in majority part, who have legal control and possession of the vessel

2. Charterer may subcharter entire vessel to 3rd person only if not prohibited in original charter. (Art.679)

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

4. Captain in the absence of the ship agent or consignee and only if he acts in accordance with the instructions of the agent or owner and protects the latters interests. (Art.609)

Requisites of a valid charter party

1. Consent of the contracting parties

2. Existing vessel which should be placed at the disposition of the shipper

3. Freight

4. Compliance with Art. 652 of the Code of Commerce

Rights and Obligations of Parties

SHIPOWNER OR SHIP AGENTCHARTERER

1. If the vessel is chartered wholly, not to accept cargo from others;

2. To observe represented capacity;

3. To unload cargo clandestinely placed

4. To substitute another vessel if load is less than 3/5 of capacity;

5. To leave the port if the charterer does not bring the cargo within the lay days and extra lay days allowed;

6. To place in a vessel in a condition to navigate;

7. to bring cargo to nearest neutral port in case of war or blockade. (Arts. 669-678)

1. To pay the agreed charter price;

2. To pay freightage on unboarded cargo;

3. To pay losses to others for loading uncontracted cargo and illicit cargo;

4. To wait if the vessel needs repair;

5. To pay expenses for deviation. (Arts. 679-687)

Rescission of a Charter Party

At charterers request

(Art 688)

At shipowners request

(Art. 689)Fortuitous causes

(Art. 690)

1.By aban-doning 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; and

5. Inability of the vessel to navigate.

C. LIABILITY OF SHIPOWNER/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;

2. Discharge duties of the captain, subject to Art.609;

3. Contract in the name of the owners with respect to repairs, details of equipment, armament, provisions of food and fuel, and freight of the vessel, and all that relate to the requirements of navigation;

4. Order a new voyage, make a new charter or insure the vessel after obtaining authorization from the shipowner or if granted in certificate of appointment.

Civil Liabilities of the Shipowner And Ship Agent

1. Acts of the captain (Art. 618)2. All contracts of the captain, whether authorized or not, to repair, equip and provision the vessel provided that the amount claimed was invested for the benefit of the vessel (Art. 586);

3. 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)

Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the Captain towards Passengers and Cargoes

1. Damages to vessel and to cargo due to lack of skill and negligence;

2. Thefts and robberies of the crew;

3. Losses and fines for violation of laws;

4. Damages due to mutinies;

5. Damages due to misuse of power;

6. For deviations;

7. For arrivals under stress;

8. Damages due to non-observance of marine regulations. (Art. 618)

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:

a. Insubordination in serious matters;

b. Robbery;

c. Theft;

d. Habitual drunkenness;

e. Damage caused to the vessel or to its cargo through malice or manifest or proven negligence. (Art. 605)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).

D. DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE)General rule

The liability of ship owners 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) No vessel, no liability

Interest extends to:

a. Vessel itself

b. Equipments

c. Freightage

d. Insurance proceeds (Chua v. IAC, 166 SCRA 183)Cases where applicable

1. Art. 587 civil liability for indemnities to third persons

2. Art. 590 indemnities from negligent acts of the captain (not the shipowner or ship agent)

3. Art. 837 collision

4. Art. 643 liability for wages of the captain and the crew and for advances made by the ship agent if the vessel is lost by shipwreck or capture

Exceptions to limited liability1. Where injury or damage is due to ship owners fault

2. Vessel is insured

3. Claims under Workmens Compensation

4. Expenses for repair on vessel before loss

5. In case there is no total loss and the vessel is not abandoned;

6. Vessel is not abandoned

7. 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

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

2. In case of leakage of at least of the contents of a cargo containing liquids (Art. 687); and

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

E. ACCIDENTS AND DAMAGES IN MARITIME COMMERCE

1.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 of Average

Particular or Simple Average damage or expenses caused to the vessel or cargo that did not inure to common benefit, and (ii) borne by respective owners (Art. 809)

only the vessel or only the cargo is saved Gross or General Average

a. Damage or expenses deliberately caused in order to save the vessel, its cargo or both from real and known risk (Art. 811)

b. 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)

c. Requisites:

1. Common danger present

2. Arising from accidents of sea, disposition of authority

3. Peril imminent and ascertained

4. Part of vessel or cargo deliberately sacrificed

5. Intended to save vessel or cargo or both

6. Successful saving of vessel or cargo

7. Proper legal steps and authority taken

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;

2. deliberate sacrifice;

3. success;

4. 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 deliberation

2. Resolution of the captain

3. Entry of the resolution in the logbook

4. Detailed minutes

5. Delivery of the minutes to the maritime judicial authority of the first port, within 24 hours from arrival,

6. Ratification by captain under oath. (Arts. 813-814)

Expenses incurred to refloat a vessel, which accidentally ran aground, in order to continue its voyage, do not constitute general average. Not only is there absence of a marine peril, common safety factor, and deliberateness. It is the safety of the property, and not the voyage, which constitutes the true foundation of general average. (A. Magsaysay, Inc. vs. Agan, G.R.No. L-6393, Jan. 31, 1955)

Goods not covered by general average even if sacrificed

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

2. Goods not recorded in the books or records of the vessel. (ART.855 (2))

3. Fuel for the vessel if there is more than sufficient fuel for the voyage. (Rule IX, York-Antwerp Rule)

Jettison

Act of throwing cargo overboard in order to lighten the vessel.

Order of goods to be cast overboard:

1. Those which are on the deck, preferring the heaviest one with the least utility and value;

2. Those which are below the upper deck, beginning with the one with greatest weight and smallest value. (Art. 815)

Jettisoned goods are not res nullius nor deemed abandoned within the meaning of civil law so as to be the object of occupation by salvage. (Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.) In order that the jettisoned goods may be included in the gross or general average, the existence of the cargo on board should be proven by means of the bill of lading. (Art. 816)

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;

2. Risk of enemy not well known or manifest

3. Defect of vessel due to improper repair; and

4. 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)

2.CollisionsCollision: impact of two vessels both of which are moving

Allision: striking of a moving vessel against one that is stationary

Nautical Rules to Determine Negligence

1. When two vessels are about to enter a port, the farther one must allow the nearer to enter first; if they collide, the fault is presumed to be imputable to the one who arrived later, unless it can be proved that there was no fault on its part.

2. When two vessels meet, the smaller should give the right of way to the larger one.

3. A vessel leaving port should leave the way clear for another which may be entering the same port.

4. The vessel which leaves later is presumed to have collided against one which has left earlier.

5. There is a presumption against the vessel which sets sail in the night.

6. There is a presumption against the vessel with spread sails which collides with another which is at anchor and cannot move, even when the crew of the latter has received word to lift anchor, when there was not sufficient time to do so or there was fear of a greater damage or other legitimate reason.

7. There is a presumption against an improperly moored vessel.

8. There is a presumption against a vessel which has no buoys to indicate the location of its anchors to prevent damage to vessels which may approach it.

9. Vessels must have proper look-outs or persons trained as such and who have no other duty aside therefrom. (Smith Bell v. CA)

Nautical Rules as to Sailing Vessel and Steamship

1.Where a steamship and a sailing vessel are approaching each other from opposite directions, or on intersecting lines, the steamship from the moment the sailing vessel is seen, shall watch with the highest diligence her course and movements so as to be able to adopt such timely means of precaution as will necessarily prevent the two boats from coming in contact.

2.The sailing vessel is required to keep her course unless the circumstances require otherwise.

Zones of Time in the Collision of Vessels

First zone all time up to the moment when risk of collision begins.

rule is as yet applicable for none is necessary.

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.

Third zone time when collision is certain and time of impact.

An error in this zone would no longer be legally consequential.

Error in Extremis - sudden movement made by a faultless vessel during the third zone of collision with another vessel which is at fault during the 2nd zone. Even if such sudden movement is wrong, no responsibility will fall on said faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632)Cases Covered By Collision and Allision

1. One vessel at fault Vessel at fault is liable for damage caused to innocent vessel as well as damages suffered by the owners of cargo of both vessels. (Art. 826)

2. Both vessels at fault

Each vessel must bear its own loss, but the shippers of both vessels may go against the shipowners who will be solidarily liable. (Art. 827)

3. Vessel at fault not known

Each vessel must bear its own loss, but the shippers of both vessels may go against the shipowners who will be solidarily liable. (Art. 828)

Doctrine of Inscrutable Fault In case of collision where it cannot be determined which between the two vessels was at fault, both vessels bear their respective damage, but both should be solidarily liable for damage to the cargo of both vessels.

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

5. Fortuitous event/force majeure No liability. Each bears its own loss. (Art. 830)

The doctrine of res ipsa loquitur applies in case a moving vessel strikes a stationary object, such as a bridge post, dock, or navigational aid. (Far Eastern Shipping v. CA, Luzon Stevedoring vs. CA)Even if the cause of action against the common carrier is based on quasi-delict, the defense of due diligence in the selection and supervision of employees is unavailing in case of a maritime tort resulting in collision. It is not a civil tort governed by the Civil Code but a maritime one governed by Arts. 826-839 of the Code of Commerce. (Manila Steamship vs. Insa Abdulhaman)

Doctrine of Last Clear Chance and Rule on Contributory Negligence cannot be applied in collision cases because of Art.827 of the Code of Commerce. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed.)

Maritime protest

Condition precedent or prerequisite to recovery of damages arising from collisions and other maritime accidents.

It is a written statement made under oath by the captain of a vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or damaged, with respect to the circumstances attending such occurrence, for the purpose of recovering losses and damages.

Excuses for not filing protest: 1) where the interested person is not on board the vessel; and 2) on collision time, need not be protested. (Art. 836)

Cases applicable: 1. Collision (Art. 835);

2. Arrival under stress (Art. 612(8));

3. Shipwrecks (Arts. 612(15), 843);

4. Where the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages (Art. 624).

Who makes: Captain When made: within 24 hours from the time the collision took place.

Before whom made: competent authority at the point of collision or at the first port of arrival, if in the Philippines and to the Philippine consul, if the collision took place abroad. (Art. 835)

Shipwreck

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.

IX. CARRIAGE OF GOODS BY SEA ACT (COGSA)I. APPLICATION

The transportation must be:

1. Water/maritime transportation (by sea);

2. for the carriage of goods;

3. to and from Philippine ports

4. in foreign trade

Application of COGSA in in domestic shipping

General Rule Not applicable

Exception- when parties agree to make it apply (clause paramount)Application of COGSA in carriage of passengers

NOT applicable

II.NOTICE OF DAMAGE (SEC. 3(6))

To recover loss or damage to cargo, notice and general nature thereof in writing must be given by the shipper or consignee to the carrier or his agent at the port of discharge or at the time of removal of the goods

Rules:a. Patent damage: shipper should file a claim with the carrier immediately upon delivery

b. Latent damage: shipper should file a claim with the carrier within three days from delivery. Note: The filing of a notice of claim is not a condition precedent.

III.PRESCRIPTIVE PERIOD

1. To give notice if loss or damage is apparent notice in writing must be given to carrier or agent at time of removal of goods by persons entitled to delivery.

2. To give notice if not apparent within 3 days from delivery.3. To bring suits 1 year after delivery or when goods should have been delivered a suit must be filed (whether notice of loss/damage is given), otherwise prescribed.

a. Stipulation reducing the 1 year period is null and void, but a written agreement to suspend it is valid (Maritime Company of the Philippines vs. CA, 164 SCRA 593)b. An extra-judicial demand does not suspend the period

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)c. An insurer who is exercising its right of subrogation is also bound by the 1-year period (Fil. Merchants vs. Alejandro 145 SCRA 42). It does not apply to a claim against the insurer for the insurance proceeds. The claim against the insurer is based on contract that expires in 10 years (Mayer Steel Pipe Corp. vs. CA 274 SCRA 432)d. If there is no delivery in case of undelivered or lost cargo, the one-year period starts to run from the day the vessel left port.

e. 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

f. Delivery to the wrong person prescriptive period is (i) 10 years because there is a breach of contract, or (ii) 4 years for quasi-delict (Ang v. American SS Agencies (19 SCRA 631)

Delay or late delivery are not the damage or loss contemplated under the COGSA. The goods are not actually lost or damaged. The applicable period is 10 years (Mitsui vs. CA 287 SCRA 366)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.

Suspension of the one-year period

The one-year prescriptive period is suspended by:

1. The express agreement of the parties (Universal Shipping Lines, Inc. vs. IAC, 188 SCRA 170)2. The filing of an action in court until it is dismissed. (Stevens & Co. vs. Nordeutscher Lloyd, 6 SCRA 180)IV. 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) Nature and value of goods may be declared by shipper and inserted in bill of lading; declaration is prima facie evidence and not conclusive on carrier Shipper and carrier may agree on another maximum amount, but not more than the amount of damage actually sustainedNo Liability under COGSA:

1. Nature or value of goods knowingly and fraudulently misstated by shipper

2. Damage resulted from dangerous nature of shipment loaded without consent of carrier

3. Unseaworthiness not due to negligence of carrier

4. Deviation was to save life or property at sea

X. WARSAW CONVENTION OF 1979A. APPLICABILITY

The transportation must be:

1. International transportation;

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

Note: Warsaw Convention prevails over the Civil Code, Rules of Court and all laws in the Philippines since an international law prevails over general law.

International Transportation by Air 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

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)

Note: Absence of agreement concerning stopping place transportation not deemed international for purposes of the WC

When Not Applicable:

If there is willful misconduct on the part of the carriers employees (PAL v. CA, 257 SCRA 33) When it contradicts public policy

If requirements under WC are not complied with

B. LIABILITY OF CARRIERS

1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations (Art. 17)

2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage (Art. 18)

3. Delay in the transportation of passengers, luggage or goods (Art. 19)

Note: The Hague Protocol amended the Warsaw Convention 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 v. IAC, 192 SCRA 9)

C.LIMIT OF LIABILITY (Art. 22, as amended by Guatemala Protocol, 1971; Alitalia vs. IAC)1. Passengers

GENERAL RULE: $100,000 per passenger

EXCEPTION: Agreement to a higher limit

2. Checked-in baggage

GENERAL RULE: $20 per kilogram

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

3. Hand-carried baggage

$1000/passenger

4. Goods to be shipped

GENERAL RULE: $20 per kilogram

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

An agreement relieving the carrier from liability or fixing a lower limit is null and void. (Art. 23)

Carrier is not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part. (Art. 25)

Thus, the WC does not operate as an exclusive enumeration of the instances of an absolute limit of the extent of liability. It does not preclude the application of the Civil Code and other pertinent local laws. It does not regulate or exclude liability for other breaches of contract by the carrier, or misconduct of its employees, or for some particular or exceptional type of damage. (Alitalia vs. CA) In PanAm v. IAC, the WC was applied as regards the limitation on the 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)D.SPECIAL RULES ON LiabilitES of AirLINE CARRIERs

1. 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)X. PUBLIC SERVICE ACTA.PUBLIC UTILITY DEFINEDA public utility is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. Apart from statutes which define the public utilities that are within the purview of such statutes, it would be difficult to construct a definition of a public utility which would fit every conceivable case. As its name indicates, however, the term public utility implies a public use and service to the public. (Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)

Public Service - Includes any person who may own, operate, manage, or control 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, railroad, street railway, traction railway, subway motor vehicle, steamboat, or steamship line, ferries, and water craft, shipyard, ice-plant, electric light, heat and power or any public utility (Sec. 13(b) Commercial Act 146)A casual or incidental service devoid of public character and interest is not brought within the category. (Luzon Stevedoring vs. PSC, 156 SCRA 169)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; CAB; and MIA.

B.CERTIFICATE OF PUBLIC CONVENIENCE

No public service shall operate without having been issued a certificate of public convenience (no franchise is required by law, e.g. common carriers) or a certificate of public convenience and necessity (a prior franchise is required by law, e.g. telephone and other services) (Sec. 15 Comm. Act 146)

CERTIFICATE OF PUBLIC CONVENIENCE (CPC)

CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY (CPCN)

An authorization issued by the appropriate government agency for the operation of public services for which no franchise, either municipal or legislative, is required by law, e.g., common carriers. An authorization issued by the appropriate government agency for the operation of public service for which a prior franchise is required by law; e.g. telephone and other services.

A CPC or a CPCN constitutes neither a franchise nor a contract, confers no property right, and is a mere license or a privilege. The holder of said certificate does not acquire a property right in the route covered thereby. Nor does it confer upon the holder any proprietary right or interest or franchise in the public highways. Revocation of this certificate deprives him of no vested right. New and additional burdens, alteration of the certificate, or even revocation or annulment thereof is reserved to the State. (Luque vs. Villegas, 30 SCRA 408)Requirements for granting certificate:

1. Citizen of the Philippines, or a corporation, etc. constituted and organized under the laws of the Philippines at least 60% of its stock or paid-up capital must belong entirely to citizens of the Philippines

2. Financially capable of undertaking the proposed service

3. Proof of public necessity, interest and convenience (KMU vs. Garcia, Jr., 239 SCRA 386)

C.PRIOR OPERATOR/OLD OPERATOR RULE

The rule allowing an existing franchised operator to invoke a preferential right within the authorized territory as long as he renders satisfactory and economical service.

The policy is not to issue a certificate to a second operator to cover the same field and in competition with a first operator who is rendering sufficient, adequate and satisfactory service. The prior operator must first be given an opportunity to improve its service, if inadequate or deficient.

Purpose: To prevent ruinous and wasteful competition in order that the interests of the public would be conserved and preserved.

Ruinous competition means that because of the competition, the prior operators income will be so reduced that it will not give him an adequate return on his investment It subordinates the prior applicant rule which gives the first applicant priority only if things and circumstances are equal.

So long as the first operator keeps and performs his terms and conditions of its license and complies with the reasonable demands of the public, it has more or less of a vested and preferential right over another who seeks to acquire a later license to operate over the same route. To carry out the purpose and intent for which the PSC was created, the law contemplates that the first license will be protected in his investment and will not be subjected to ruinous competition. (Batangas Transportation Co. vs Orlanes 52 Phil 455)Exceptions to Prior Operator Rule

Where the operator either fails or neglects to make the improvement or Failure to effect the increase in services, especially when given the opportunitynew operators should be given the chance to give the services needed by the public.If operator abandons his service.Prior applicant rule

Presupposes a situation when two interested persons apply for a certificate to operate a public utility in the same community over which no person has as yet granted any certificate. If it turns out, after the hearing, that the circumstances between the two applicants are more or less equal, then the applicant who applied ahead of the other, will be granted the certificate.

Registered Owner Rule

A registered owner of a vehicle (even if not used for public service) is the lawful operator insofar as the public and third persons are concerned; consequently, it is directly and primarily responsible for the consequences of its operation.

In contemplation of the law, the owner/operator of record is the employer of the driver, the actual operator and employer being considered as merely its agent (Equitable Leasing Corp. vs. Suyom, GR No. 143360. Sept. 5, 2002) The registered owner cannot escape responsibility by proving that a third person is the actual and real owner. He is liable to the injured party subject to his right of recourse against the transferee or buyer.

The registered owner is liable even if the vehicle was leased to another (BA Finance Corp. vs. CA, 215 SCRA 715) It would be absurd to hold liable the owner of a stolen vehicle for an accident caused by the person who stole the vehicle (Duavit vs. CA, 173 SCRA 490)D.FIXING OF RATE

The rate to be fixed must be just, founded upon conditions which are fair and reasonable to both the owner and the public.

A rate is just and reasonable if it conforms to the following requirements:

1. One which yields to the carrier a fair return upon the value of the property employed in performing the service; and

2. One which is fair to the public for the service rendered.

Power to fix rate for public utility vehicles is lodged with the LTFRB.

E.UNLAWFUL ARRANGEMENTS

1.Kabit System A system whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate under such license, for a fee or a percentage of such earnings. It is void under Art. 1409 NCC.

Effects: The thrust of the law in enjoining the kabit system is to identify the person upon whom responsibility may be fixed with the end in view of protecting the riding public The registered owner is primarily liable for all the consequences of the operations of the carrier. The registered owner cannot recover from the actual owner and the latter cannot obtain transfer of the vehicle to himself, both being in pari delicto (Teja Marketing vs. IAC, 148 SCRA 347) Both the registered owner and the actual owner are solidarily liable with the driver (Zamboanga Tranportation Co. vs. CA, 30 SCRA 717) The transfer, sale, lease or assignment of the privilege granted is valid between the contracting parties but not upon the public or third persons (Gelisan vs. Alday, 152 SCRA 388)Exceptions to kabit system:

When neither of the parties to the kabit system is being held liable for damages.

When the case arose from the negligence of another vehicle in using the public road to whom no representation or misrepresntation as regards the ownership and operation of passenger jeepney was made.

When the riding public was not bothered or inconvenienced at the very least by the illegal arrangement. (Lim vs. CA, 373 SCRA 394)

2.Boundary System

The driver pays for the gasoline consumed and does not receive a fixed wage but gets only the excess of the receipt of the fares collected by him over the amount he has agreed to pay to the owner of the vehicle

The owner cannot escape liability: The owner is subsidiarily liable as employer in accordance with Art. 103 RPC From the viewpoint of labor laws, he is an employee, being entitled to all privileges going along with the employer-employee relationship From the viewpoint of the NCC, the driver is a lessee because he pays a fixed amount of rental for his use of the vehicle From the viewpoint of the law on common carriers, he is an employee of the operator for purpose of the latters liability to passengersF.APPROVAL OF SALE, ENCUMBRANCE OR LEASE OF PROPERTY

It is a property and has a considerable value and can be the subject of sale or attachment. (Cogeo-Cubao Operators and Drivers Assn. vs. CA, 207 SCRA 343, Raymundo vs. Luneta Motor Co.)CPCs have considerable material value. They are valuable assets. They are subject to being sold for consideration as much as any other property. They are even more valuable than ordinary properties, taking into consideration that they are not granted to every one who applies for them but only to those who undertake to furnish satisfactory and convenient service to the public. Though intangible, they are of value and are considered properties which can be seized through legal process. (Raymundo vs Luneta Motor 58 Phil 889)This being the case, even if a sale has been executed before a tortious incident, the sale, if unregistered, has no effect as to the right of the public and third persons to recover from the registered owner (Equitable Leasing Corp. v. Suyom).The public has the right to conclusively presume that the registered owner is the real owner, and may sue accordingly (First Malayan Leasing and Finance Corp. v. Court of Appeals), as cited in PCI Leasing And Finance, Inc., vs. UCPB General Insurance Co., Inc G.R. No. 162267, July 04, 2008]Encumbrances of motor vehicles. - Mortgages, attachments, and other encumbrances of motor vehicles,in order to be valid against third partiesmust be recorded in the Bureau (now the Land Transportation Office). Voluntary transactions or voluntary encumbrances shall likewise be properly recorded on the face of all outstanding copies of the certificates of registration of the vehicle concerned.

Cancellation or foreclosure of such mortgages, attachments, and other encumbrances shall likewise be recorded, and in the absence of such cancellation, no certificate of registration shall be issued without the corresponding notation of mortgage, attachment and/or other encumbrances. (Section 5 (e), RA 4136)

PAGE 30REVIEWER FOR TRANSPORTATION LAWBAR 2011