A. WHAT IS A 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). - One that holds itself out as ready to engage in the transportation of goods for hire as a public employment and not as a casual occupation. (De Guzman vs. Court of Appeals, No. L-47822, December 22, 1988) B. CHARACTERISTICS OF A COMMON CARRIER Art. 1732 of the Civil Code avoids any distinction between one whose principal business 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. Article 1732 does not 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 The Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or air. The Civil Code does not provide that the transportation should be by motor vehicle. A person or entity may be a common carrier even if he has no fixed publicly known route, maintains no terminals, and issues no tickets. Undertakes to carry for all people indifferently and thus is liable for refusal without sufficient reason (Lastimoso vs. Doliente, 3 SCRA , [1961]); Cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the traffic in these goods; No monopoly is favored (Batangas Trans. vs. Orlanes, 52 Phil. 455); Provides public convenience.

E. DISTINCTIONS BETWEEN COMMON CARRIER AND PRIVATE CARRIER Common Carrier As to passengers Holds himself out for all people indiscriminately. As to required diligence Requires extraordinary diligence. As to state regulation Subject to regulation. As to stipulation on limiting liability Parties may not agree on limiting the carriers liability except when provided by law. Presumption as to fault and negligence Presumption of fault or negligence applies. As to laws applicable on damages Law on common carriers. No fault or negligence is presumed. Law on obligations and contracts. Private Carrier Contracts with particular individuals or groups only. Requires only ordinary diligence. Not subject to regulation. Parties may agree on limiting the carriers liability, provided not contrary to law, morals or good customs.

F. GOVERNING/ APPLICABLE LAW A. Transportation by Sea 1. Coastwise Civil Code (Arts.1732-1766) primary law Code of Commerce suppletory law Note: Carriage of Goods by Sea Act inapplicable even if the parties expressly provide for it.

2.
Code.

C. TESTS WHETHER A PARTY IS A COMMON CARRIER OF GOODS: 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; It must undertake to carry goods of the kind to which its business is confined; It must undertake to carry by the method by which his business is conducted and over its established roads; and The transportation must be for hire. (First Philippine Industrial Corp. v. CA, 300 SCRA 661, [1998)

Carriage from Foreign Ports To Philippine Ports Civil Code primary law Code of Commerce all matters not regulated by the Civil Code. Carriage of Goods by Sea Act (COGSA) suppletory to the Civil

3.
B.

Carriage from Philippine Ports To Foreign Ports- laws of the country to which the goods are to be transported.

Land Transportation a. Common Carriers Civil Code (Arts.1732-1766) primary law Code of Commerce suppletory law b. Private Carriers Object merchandise Code of Commerce primary law Civil Code suppletory law

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C.

Air Transportation

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. Domestic Transportation Persons Not Considered As Passengers 1. One who has not yet boarded any part of a vehicle regardless of whether or not he has purchased a ticket; 2. One who remains on a carrier for an unreasonable length of time after he has been afforded every safe opportunity to alight; 3. One who has boarded by fraud, stealth, or deceit; 4. 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; 5. One who boarded a wrong vehicle, has been properly informed of such fact, and on alighting, is injured by the carrier; or 6. One who rides any part of the vehicle which is unsuitable or dangerous or which he knows is not designed or intended for passengers. RULES ON PRESUMPTION OF NEGLIGENCE: A. In the Carriage of Goods: In case of loss, destruction and deterioration of goods, common carriers are presumed to be at fault or have acted negligently, unless they prove that they exercise extraordinary diligence. In the transport of goods, mere proof of delivery of goods in good order to a carrier 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. B. In the Carriage of Passengers: In case of death or injury to passengers, common carriers are presumed to be at fault or have acted negligently, unless they prove that they exercise extraordinary diligence. .(Art. 1755,NCC) The court need not make an express finding of fault or negligence of common carriers. The law imposes upon common carriers strict liability, as long as it is shown that there exists a relationship between the passenger and the common carrier and that injury or death took place during the existence of the contract. The common carrier is not an absolute insurer against all possible risks of transportation or travel. (Pilapil vs. CA et al, 180 SCRA 546)

1.

Civil Code Code of Commerce

2.

International Transportation Warsaw Convention While the Warsaw Convention has the force of law in the Philippines, it does not have an exclusive enumeration of a carriers liability for contractual breach or absolute limit of liability. It does not preclude the operation of the Civil Code and other laws. The liability of the carrier for the loss, destruction or deterioration of goods transported to the Philippines from a foreign country, is primarily governed by the Civil Code not by the Warsaw Convention which applies only to simple loss of baggage.

There Is International Transportation When: 1. The place of departure and the place of destination are within the territories of two high contracting parties, regardless of whether or not there was a break in the transportation or transshipment. 2. The place of departure and the place of destination are within the territory of a single contracting party if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though the power is not a party to the convention. (Mapa v. CA, 275 SCRA [1997]) High Contracting Parties Signatories to the Warsaw Convention and those which subsequently adhered to it. In National Development Co. vs. CA (164 SCRA 593). The law of the country to which the goods are to be transported governs the liability of the common carrier in case of loss, destruction or deterioration (Art. 1753, NCC) XXX The liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by the said Code, the rights and obligations of common carriers shall be governed by the code of Commence and by special laws (Art. 1766 NCC). Hence, the COGSA /a special law is merely supppletory to the provisions of the Civil Code. The place of destinations whose law shall be deemed to be the governing law in so far as the liability of common carrier is concerned refers to the place of ultimate destination not an agreed stopping place. This is particularly true in so far as the warsaw convention used the term to determine the country where the suit against the international carrier should be filled. (Santos III vs. NorthWest Orient Airlines, 210 SCRA 256 B. EXTRAORDINARY DILIGENCE REQUIREMENT OF EXTRAORDINARY DILIGENCE Common Carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence on the vigilance over goods and for the safety of the passengers transported by them according to all the circumstances of each case. (Art. 1733, Civil Code) Coverage 1. 2. Vigilance over goods (Arts. 1734-1754) Safety of passengers (Arts. 1755-1763)

Doctrine of Proximate Cause is NOT applicable to contract of carriage The injured passenger or owner of goods need not prove causation to establish his case. The presumption arises upon the happening of the accident. (Calalas v. CA, 383 SCRA, [2002]) DEFENSES OF COMMON CARRIERS General Rule: Common carriers are responsible for the loss, destruction or deterioration of the goods. Exceptions: The same is due to any of the following causes only: a. Flood, storm, earthquake, lightning or other natural disaster or calamity; b. Act of public enemy in war, whether international or civil; c. Act or omission of the shipper or the owner of the goods; d. The character of the goods or defects in the packing or in the containers; e. Order or act of competent authority. (Art.1734, Civil Code)

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The above enumeration is exclusive. If not one of those enumerated is present, the carrier is liable. (Belgian Chartering and Shipping, N.V. v. Phil. First Insurance Co.,Inc., 383 SCRA, 2002) The exceptions in Art 1734 must be proven whether the presumption of negligence applies. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instance when the presumption of negligence does not attach. (Delsan v. Trans. American Home Insurance, August 15, 2006)

1. 2.

The act of the public enemy must have been the proximate and only cause of the loss; and The common carrier must have exercised 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, Civil Code)

D.

Act or Omission of the Shipper or Owner of Goods 1. The act or omission of the shipper/owner must have been the sole and proximate cause of the loss. This is an absolute defense. 2. Contributory Negligence: partial defense. (Art. 1741, Civil Code ) Doctrine of Contributory Negligence Failure of a person who has been exposed to injury by the fault or negligence of another, to use such degree of care for his safety and protection as ordinarily prudent men would use under the circumstances. (Rakes v. Atlantic, Gulf and Pacific Co., 7 Phil. 359 [1907])

a.

Caso Fortuito / Force Majeure Requisites: a. Must be the proximate and only cause of the loss; b. Event independent of human will; c. Occurrence makes it impossible for debtor to fulfill the obligation in a normal manner; d. Obligor must be free of participation in, or aggravation of, the injury to the debtor; and e. Impossible to foresee or impossible to avoid. o Fire is not considered a natural disaster or calamity as it arises almost invariably from some act of man or by human means unless caused by lightning or by natural disaster or calamity. It may even be caused by the actual fault or privity of the common carrier. (Eastern Shipping Lines Inc. vs. IAC, 150 SCRA 469, [1987]) Mechanical defects are not force majeure if the same was discoverable by regular and adequate inspections. (Aquino T. & Hernando, Notes and Cases on the Law on Transportation and Public Utilities, , R.P. 2004 ed. p.120-122) E.

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

Character of the Goods or Defects in the Packing or in the Container That the loss, destruction or deterioration was caused by the character of the goods or the faulty packing or containers. 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, Civil Code) o The rule is that if the improper packing is known to the carrier or his employee or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for the resulting damage. (A.F. Sanchez Brokerage Inc. vs. C.A., 447 SCRA 427, [2004])

B.

Act of God Requisites: 1. The common carrier must have exercised extraordinary diligence before, during and after the time of the accident; 2. The event must be unforeseen or even if it can be foreseen, it cannot be avoided; 3. There must have been no undue delay on the part of the common carrier; 4. The proximate cause must not be committed by the common carrier.

E.

Order or Act of Public Authority The common carrier is not ipso facto relieved from liability due to the loss, destruction or deterioration of goods caused by public authority. Requisites: The common carrier must prove that the public authority has the power to issue the order for the seizure or destruction of the goods. The common carrier must exercise extraordinary diligence to prevent or minimize the loss, destruction or deterioration of he goods at the time of the accident.

Fortuitous event must be established to be the proximate cause of the loss. (Asia Lighterage and Shipping, Inc. v. CA, et al., 409 SCRA, [2003])

Exemption to Liability From Natural Disasters or Calamities: 1. The natural disaster must have been the proximate cause of the loss. 2. It must have been the cause of the loss. 3. The common carrier must have exercised due diligence to prevent or minimize the damage or loss before, during and after the natural disaster. 4. The common carrier has not negligently incurred delay in transporting the goods.

Said public authority must have the power to issue the order (Article 1743, Civil Code). Consequently, where the officer acts without legal process, the common carrier will be held liable. (Ganzon v. CA 161, SCRA 646 [1988])

C. Acts of Public Enemy In War

D. DURATION OF RESPONSIBILITY OR LIABILITY OF COMMON CARRIERS A. IN CASE OF GOODS

START: From the time that the goods are delivered to the common carrier. ( Article 1736, Civil Code. Cia Maritima vs. Insurance Co. of America) TERMINATION: When the goods are delivered, actively or constructively, by the carrier to the consignee/person who has the right to receive them, or the consignee/person who has the right to receive them has been informed of the arrival of the goods and the consignee had reasonable time to remove such. (Article 1736 and 1738, Civil Code) The liability remains in full force and effect even when they are temporarily unloaded or stored in transit unless the shipper or owner made use of the right of stoppage in transitu . (Article 1737, Civil Code) WHEN RIGHT OF STOPPAGE IN TRANSITU IS EXERCISED: It is the right of the unpaid seller who has parted with his goods to stop its delivery while in transit when the buyer of the goods is or turns insolvent. (Article 1530, Civil Code) The common carrier who holds the goods becomes the warehouseman or ordinary bailee and the contract is terminated when such right is exercised. Requisites: 1. Unpaid seller (Article 1525, Civil Code); 2. Goods must be in transit (Article 1531, Civil Code); 3. The seller must either actually take possession of the goods sold or give notice of his claim to the carrier or other person in possession (Article 1532 [1], Civil Code); 4. The seller must surrender the negotiable document of title, if any, issued by the carrier or bailee (Article 1532[2], Civil Code); 5. The seller must bear the expenses of delivery of the goods after the exercise of the right (Article 1532[2], Civil Code); and 6. The buyer is in a state of insolvency or becomes insolvent. B. IN CASE OF PASSENGERS START: The carrier is bound to exercise utmost diligence with respect to passengers the moment the person who purchases the ticket (or a token) from the carrier presents himself at the proper place and in a proper manner to be transported. Such person must have bona fide intention to use the facilities of the carrier, possess sufficient fare with which to pay for his passage, and present himself to the carrier for the transportation in the manner provided. (Vda. De Nueca v. Manila Railroad Company, CA, G.R. No. 31731, January 30, 1968) It is the duty of carriers of passengers to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances (Dangwa Transportation Co., Inc. vs. CA, 202 SCRA [1991]) TERMINATION: Until the passenger has, after reaching his destination, safely alighted from the carriers conveyance or had a reasonable opportunity to leave the carriers premises. ( La Mallorca v. CA, 17 SCRA 739 [1966]) A person by stepping and standing on the platform of a bus, is already considered a passenger and is entitled to all rights and protection pertaining to such conventional relation (I.d.). E. RULES ON PASSENGERS BAGGAGE 1. Baggage in the custody of the passengers or their employee:

That baggage, while in transit will be considered as necessary deposits. The common carrier shall be responsible for the baggage as depositaries, provided that notice was given to them or its employees and the passengers took the necessary precautions which the carrier has advised them relative to the care and vigilance of their baggage. 2. Baggage not in personal custody, but in that of a Carrier Carrier who has in its custody the baggage of a passenger to be carried like any other goods is required to observe extraordinary diligence. In case of loss or damage, the carrier is presumed negligent. As to the other baggage, the rules in Article 1998 and 2000 to 2003 of the Civil Code concerning the responsibility of hotel-keepers shall be applicable. (Art.1733-1735, Civil Code) III. CODE OF COMMERCE PROVISIONS ON OVERLAND TRANSPORTATION (*Unless otherwise indicated, reference is to Code of Commerce) ARTS. 349 379, CODE OF COMMERCE BILL OF LADING The written acknowledgment of the receipt of goods, and the agreement to transport them to a specific place to a person named or to his order. It is not indispensable for the creation of a contract of carriage. (Compania Maritima v. Insurance Co. of North America 12 SCRA 213 [1964]) Two-fold Character of a Bill of Lading: 1. It is receipt of the goods to be transported; and 2. It constitutes a contract of carriage of the goods. Functions: 1. Best evidence of the existence of the contract of carriage of cargo (Art. 353 Code of Commerce); 2. Commercial document whereby, if negotiable, ownership may be transferred by negotiation; and 3. Receipt of cargo. Limitations as to the Carriers Liability: A stipulation in the Bill of Lading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight is valid. 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.

The surrender of the original bill of lading is not a condition precedent for a common carrier to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible, acknowledgment of the delivery by signing the delivery receipt suffices. (RP v. Lorenzo Shipping, February 7, 2005)

Kinds of Bill of Lading: 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. 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

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to a specified person. Clean One which does not indicate any defect in the goods. 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. 5. 6. On-Board Bill of Lading v. Received for Shipment Bill of Lading: An On Board Bill of Lading is one in which it is stated that the goods have been received on board the vessel which is to carry the goods. An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation that the shipment is as good as on its way. It is, therefore, understandable that a party to a maritime contract would require an on board bill of lading because of its apparent certainty of shipping as well as the seaworthiness of the vessel which is to carry the goods. (Magellan Mfg.,etc. v. Court of Appeals, 201 SCRA 116117[1991]) A Received for Shipment Bill of Lading is one which it is stated that the goods have been received for shipment without specifying the vessel by which the goods are to be shipped. Received for shipment bills of lading are issued wherever conditions are not normal and there is insufficiency of shipping space. (Magellan Mfg., etc. v. Court of Appeals,201 SCRA 116) OBLIGATIONS OF THE CARRIER A. Duty to Accept the Goods 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 [1915]). 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.

B.

it takes the risk of delivering it in good condition as when it was loaded. (PAL vs. CA, 226 SCRA 423 ) Duty to deliver the goods Not only to transport the goods safely but to deliver the same 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 DELIVERY Stipulated in Contract/Bill of Lading Carrier is bound to fulfill the contract and is liable for any delay; no matter from what cause it may have arisen.

No stipulation

1. 2.

Within a reasonable time. 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: 1. Merely suspends and generally does not terminate the contract of carriage. 2. Carrier remains duty bound to exercise extraordinary diligence. SECTION 3(6) (COGSA) Applicability 1. Domestic/inter-island/coastwise 1. International/overseas/foreig transportation. n (from foreign country to Philippines). 2. Land, water, air transportation. subject to the rule on Paramount 3. Carriage of goods. Clause 4. Maritime transportation. 2. Water/maritime transportation 3. Carriage of goods Notice of damage 1. Filing of notice of claim for the 1. Filing of a notice of claim for the damages is damages is a condition precedent not a condition precedent 2. 24-hour period for claiming latent 2. 3-day period for claiming latent damage. 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). 3. Natural disaster shall not free the carrier from responsibility (Art.1740, Civil Code) 4. 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, Civil Code) C. Duty to exercise extraordinary diligence o Inquiry may be made as to the nature of passengers baggage, but beyond this constitutional boundaries are already in danger of being transgressed . (Nocum vs. Laguna Tayabas Bus Co., 30 SCRA 68)[this doctrine is not applicable to aircrafts because of Section 8 of Anti-Hijacking Law (RA 6235)] ARTICLE 366 (COC)

o o

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,

RIGHT OF CONSIGNEE TO ABANDON GOODS Instances:

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1. 2. 3.

Partial non-delivery, where the goods are useless without the others (Art. 363, Code of Commerce); Goods are rendered useless for sale or consumption for the purposes for which they are properly destined (Art. 365, Code of Commerce); and In case of delay through the fault of the carrier (Art. 371, Code of Commerce).

OG 307)

Payment of the transportation charge precludes the presentation of any claim against the carrier.

NOTICE OF DAMAGE Requisites for Applicability: 1. Domestic/inter-island/coastwise transportation 2. Land/water/air transportation 3. Carriage of goods 4. Goods shipped are damaged (Art. 366, Code of Commerce) 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. o These rules do not apply to misdelivery of goods. (Roldan vs. Lim Ponzo) o The filing of notice of claim is a condition precedent for recovery. 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. 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. If no bill of lading was issued: within 6 years 2. If bill of lading was issued: within 10 years. COMBINED CARRIER AGREEMENT General Rule: In case of a contract of transportation of several legs, each carrier is responsible for its particular leg in the contract. (Art. 373, Code of Commerce) 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. MANNER OF RECOVERY FROM DAMAGES OF GOODS Inter-Island if goods arrived in damaged condition: 1. If damage is apparent, the shipper must file a claim immediately; or 2. If damages are not apparent, he should file a claim within twenty-four hours from delivery. The filing of claim under either (a) or (b) is a condition precedent for recovery. If the claim is filed, but the carrier refuses to pay, enforce carriers liability in court by filing a case: 1. Within six (6) years, if no bill of lading has been issued; or 2. Within ten (1) years, if a bill of lading has been issued.

Overseas where goods arrived in a damaged condition from a foreign port to a Philippine port of entry: a. Upon discharge of goods, if the damage is apparent, claim should be filed immediately; or b. If the damage is not apparent, claim should be filed within three days from delivery.

The filing of notice of claim is not a condition precedent for recovery. However, an action must be filed within one year from discharge. If there is no delivery action should be filed from the day of the goods supposed delivery. Where there was delivery to the wrong person, the prescriptive period is ten years because there is a violation of contract, and the Carriage of Goods by Sea Act (COGSA) does not apply to cases of misdelivery.

Doctrine of Connecting Carriers The original carrier that entered into the contract of carriage shall be liable for damages caused by its connection carrier. (Art. 373 Code of Commerce) IV. ADMIRALTY AND MARITIME COMMERCE ARTS. 573 - 869, CODE OF COMMERCE Characteristics of Maritime Transaction: 1. REAL - similar to transactions over real property with respect to effectively against third persons which is done through registration as shown by the limitation of the liability of the agents to the actual value of the vessel and the freight money; and the right to retain the cargo and embargo and detention of the vessel; and 2. HYPOTHECARY - the liability of the owner is limited to the value of the vessel itself (Doctrine of Limited Liability). o 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)

Written demand within twenty-four (24) hours is necessary only when the package does not show exterior signs of damage but when there are exterior signs of damage, a verbal claim made immediately is sufficient compliance with law. (Mapaso Goldfields v. Compania Maritima [CA], 2

PREFERENCE OF CREDITS Mortgage of a vessel properly registered becomes preferred mortgage lien which shall have priority over all claims against the vessel in an extrajudicial foreclosure for: 1. Credit in favor of the public treasury; 2. Judicial costs of the proceedings; 3. Pilotage and tonnage charges and other sea and port charges; 4. Salaries of depositaries keepers of the vessel; 5. Captain and crews wages; 6. General average; 7. Salvage, including contract salvage; 8. Maritime liens arising prior in time to the recording of the preferred mortgage; 9. Damages arising out of tort; and 10. Preferred mortgage registered prior in time.

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MERCHANT VESSEL Vessel engaged in maritime commerce, whether foreign or otherwise. 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 Code of Commerce) o 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)

Where the shipowner or ship agent validly exercised his right of abandonment of the vessel with all her equipment and the freightage earned during the voyage, the abandonment amounts to an offer to the injured party of the value of the vessel, of her equipment, and the freight money earned during the voyage. (Phil. Shipping Co. v. Garcia-Vergara 96 Phil 201) In consequence of the limited liability rule, the shipowners property, other than his vessel and freightage earned during the voyage, cannot be made to answer for his liability arising from the collision with other vessels. (Phil. Shipping Co. v. Garcia-Vergara, G.R. No. L1600, June 1, 1906) This is not to say, however, that the limited liability rule is without exceptions, namely: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain. (Phil. Am. Gen. Insurance Co., Inc. v. CA, 273 SCRA 649,271 [1997]) ; (2) where the vessel is insured; and (3) in workmens compensation claims. (Monarch Insurance Co., Inc. v. CA, 333 SCRA 71 [2000])

DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE) 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[1987]). The interest extends to: 1. The vessel itself; 2. Equipments; 3. Freightage; and 4. Insurance proceeds. (Chua v. IAC, 166 SCRA 183[1988]) Exceptions: When not applicable; 1. The voyage is not maritime, but only in river, bay or gulf. 2. In case of expense for equipping, repairing or provisioning of the vessel. 3. In case the vessel is not common but a special carrier. 4. In case the vessel would totally sink or get lost by reason of the ship owner or ship agents fault. 5. When the injury to or death of a passenger is due either to the fault of the ship owner and the captain. 6. When the vessel is insured (to the extent of the insurance proceeds); or 7. In workmens compensation claims. (Yangco v. Laserna 73 Phil. 330) o When shipowner was equally negligent, it cannot escape liability by virtue of the limited liability rule (Central Shipping Co. vs. Insurance Co. of N. America, G.R. No. 150751. September 20, 2004) The limited liability doctrine applies not only to the goods but also in all cases like death or injury to passengers. (Heirs of Amparo Delos Santos vs. CA, 186 SCRA 649)

Contrary to the theory that the limited liability rule has been rendered obsolete by the advances in modern technology, which considerably lessen the risks involved in maritime trade, this Court continues to apply the said rule in appropriate cases. (Monarch Insurance Co., Inc. v. CA, 333 SCRA 71 [2000]) ABANDONMENT 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[1987]). o Satisfaction of Claims Under the Limited Liability 1. All claims should be collated before they can be satisfied from what remains of the insurance proceeds and freightage at the time of the loss; 2. No claimant should be given preference over the others. Execution of judgment in earlier completed cases, even those already final and executory, must be stayed pending completion of all cases caused by the subject sinking. (Aboitiz Shipping v. Gen. Accident Fire and Life Insurance, 217 SCRA 359 [1993]) Abandonment; Who May Exercise 1. Shipowner 2. Ship agent

If the vessel is not entirely lost, the hypothecary nature will not apply, unless the shipowner or the ship agent abandons the vessel.

When Applicable: 1. Civil liability for indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried. (Art. 587, Code of Commerce) 2. Civil liability arising from collisions. (Art. 837, Code of Commerce) 3. Unpaid wages of the captain and the crew if the vessel and its cargo are totally lost by reason of capture or shipwreck. (Art. 643, Code of Commerce) Rules on Principle of Limited Liability of the Shipowner and Ship Agent

However, in cases of co-ownership of a vessel, its part owner may exempt himself from liability by the abandonment. (Art. 590, Code of Commerce) A charterer cannot make an abandonment as the charterer cannot be regarded as being in the place of the owner or agents in matters relating to the responsibility pertaining to ownership and possession of the vessel. (Yueng Sheng Exchange v. Urrutia, 12 Phil. 747[1909])

Instances when the Shipowner or Agent May Exercise the Right to Abandon Vessel: 1. For civil liability to 3rd persons arising from the conduct of the captain in the vigilance over the goods which the vessel carried. 2. For the proportionate contribution of co-owners of the vessel to a common fund for the acts of the captain. 3. For civil liability incurred by the shipowner in case of collision.

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

4. In case of leakage of at least of the contents of a cargo containing liquids; and 5. In case of constructive loss of the vessel.
Requisites for Abandonment in Maritime Commerce 1. Actual relinquishment of claim of ownership; 2. Constructive total loss (loss, injury or expenses suffered should be more then of the value of the thing abandoned); 3. Abandonment must be neither partial nor conditional; 4. Abandonment done within reasonable time after receipt of reliable information of constructive total loss; 5. Explicit notice to the insurer, whether orally or in writing, specifying the cause of abandonment; 6. If notice done orally, a written notice must be given within 7 days from such oral notice. Persons Participating In Maritime Commerce 1. Shipowners and ship agents 2. Captains and masters of the vessel 3. Officers and crew of the vessel 4. Supercargoes 5. Engineer 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. (Chua Hek Yong vs. IAC, 166 SCRA 183)

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, Code of Commerce) If for a definite period, he may not discharge them until after the fulfillment of their contracts, except on the following grounds: - Insubordination in serious matters; - Robbery; - Theft; - Habitual drunkenness; - Damage caused to the vessel or to its cargo through malice or manifest or proven negligence. (Art. 605, Code of Commerce) 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 of Captains and Masters (3-Fold character): 1. General agent of the shipowner; 2. Technical director of the vessel; 3. Representative of the government of the country under whose flag he navigates. Qualifications of Captain and Masters: 1. Filipino citizen; 2. Legal capacity to contract; 3. Must have passed the required physical and mental examinations required for licensing him as such. (Art. 609, Code of Commerce) Inherent powers of Captains: 1. Appoint crew in the absence of ship agent; 2. Command the crew and direct the vessel to its port of destination; 3. Impose correctional punishment on those who, while on board vessel, fail to comply with his orders or are wanting in discipline; 4. Make contracts for the charter of vessel in the absence of ship agent. 5. Supply, equip, and provision the vessel; and 6. Order repair of vessel to enable it to continue its voyage. (Art. 610, Code of Commerce) Duties of Captains: 1. Bring on board the proper certificate and documents and a copy of the Code of Commerce; 2. Keep a Log Book, Accounting Book and Freight Book; 3. Examine the ship before the voyage; 4. Stay on board during the loading and unloading of the cargo; 5. Be on deck while leaving or entering the port; 6. Protest arrivals under stress and in case of shipwreck; 7. Follow instructions of and render an accounting to the ship agent; 8. Leave the vessel last in case of wreck; 9. Hold in custody properties left by deceased passengers and crew members; 10. Comply with the requirements of customs, health, etc. at the port of arrival; 11. Observe rules to avoid collision; 12. Demand a pilot while entering or leaving a port. (Art. 612, Code of Commerce)

Not a mere agent under civil law; he is solidarily liable with the ship owner.

Powers and functions of a Ship Agent: 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. All contracts of the captain, whether authorized or not, to repair, equip and provision the vessel; (Art. 586, Code of Commerce) 2. 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, Code of Commerce) 3. Indemnities in favor of third persons arising from the conduct of the captain in the care of the goods loaded in the vessel; 4. Damages suffered by a third person for tort committed by the captain; and 5. Damages in case of collision due to fault or negligence or want of skill of the captain.

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

6. No liability for the following: 1. Damages caused to the vessel or to the cargo by force majeure; 2. 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, Code of Commerce) 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, CoC) OFFICERS AND CREW 1. Sailing Mate/First Mate 2. Second Mate 3. Engineers 4. 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; 2. If a disease breaks out and be officially declared an epidemic in the port of destination; 3. If the vessel should change owner or captain. (Art. 647, Code of Commerce) 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, Code of Commerce) 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) 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. 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, Code of Commerce) Just Causes for the Discharge of Seaman While Contract Subsists 1. Perpetration of a crime; 2. Repeated insubordination, want of discipline; 3. Repeated incapacity and negligence; 4. Habitual drunkenness; 5. Physical incapacity;

Desertion. (Art. 637, Code of Commerce)

Rules in Case of Death of a Seaman The seamans heirs are entitled to payment as follows: 1. If Death Is Natural: a. compensation up to time of death if engaged on wage; b. if by voyage - half of amount if death occurs on voyage out; and full, if on voyage in; c. if by shares - none, if before departure; full, if after departure; 2. If Death is Due to Defense of Vessel - full payment; 3. If Captured in Defense of Vessel - full payment; 4. If Captured Due to Carelessness - wages up to the date of the capture. (Art. 645, Code of Commerce) 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. SUPERCARGOES Persons who discharge administrative duties assigned to them by ship agent or shippers, keeping an account and record of transaction as required in the accounting book of the captain. (Art. 649, Code of Commerce) 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.

Liability of Pilot General Rule: On compulsory pilotage grounds, the Harbor Pilot is responsible for damage to a vessel or to life or property due to his negligence. Exceptions: 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 Philippine Ports Authority Administrative Order 03-85) DESERTION An act by which a seaman deserts and abandons a ship or vessel before the expiration of his term of duty without leave and without intention to return. (Singa Ship Management Phils. v. NLRC 276 SCRA 201[1997]) CAUSES OF REVOCATION OF VOYAGE 1. War or interdiction of commerce; 2. Blockade; 3. Prohibition to receive cargo at destination; 4. Embargo; 5. Inability of the vessel to navigate. (Art. 640, Code of Commerce)

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

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. 2. 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. 3. 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. SALVAGE LAW (ACT NO. 2616) Provides a compulsory reward to those who save cargo by requiring the owner of the property to give a reward equivalent to the maximum of 50% of the value of the property saved. SALVAGE (Two Concepts) 1. Service 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; valid object of salvage; that the vessel is shipwrecked beyond the control of the crew or shall have been abandoned; 2. Object must have been exposed to marine peril (not perils of the ship); 3. Services rendered voluntarily (neither an existing duty nor out of a pre-existing contract); 4. Services are successful, total or partial. Subjects of Salvage: 1. Ship itself; 2. Jetsam goods which are cast into the sea, and there sink and remain under water; 3. Floatsam or Flotsam goods which 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 (Diaz, Notes on Transportation Law, p.173). 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. Rules on Salvage Reward 1. The reward is fixed by the RTC judge in the absence of agreement or where the latter is excessive. (Sec. 9, Act No. 2616) 2. 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. 3. 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, Act. No 2616) 4. If a vessel is the salvor, the reward shall be distributed as follows: a. 50% to the shipowner; b. 25% to the captain; and c. 25% to the officers and crew in proportion to their salaries. (Sec. 13, Act No. 2616) 5. Expenses incurred in the salvage must be shown to be necessary and reasonable in amount before they will be allowed to the salvors. 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. SPECIAL CONTRACTS OF MARITIME COMMERCE 1. Charter party 2. Bill of lading 3. Contract of transportation of passengers on sea voyages 4. Loan on bottomry 5. Loan on respondentia 6. Marine insurance A. 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 to a charter party: 1. Ship owner or ship agent; and 2. Charterer Form of Charter Party 1. Must be in duplicate 2. Signed by the contracting parties, and when either does not know how or is unable to do so, by two witnesses at his request. (Art. 652, Code of Commerce) Contents of Charter Party Agreement Besides the condition freely stipulated, it shall include the following: 1. Kind, name and tonnage of the vessel; 2. Her flag and port of registry; 3. Name, surname and domicile of the captain; 4. Name, surname and domicile of the ship agent, and if the latter should make the carter party; 5. Name, surname and domicile of the charterer, and if he states that he is acting by commission, that of the person for whose account he makes the contract;

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

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6. 7.

Port of loading and unloading; Capacity, the number or tons or weight, or measure which they respectively bind themselves to load and transport, or whether it is the total cargo; 8. Freightage to be paid; 9. Amount of primage to be paid by the captain; 10. Days agreed upon for loading and unloading; 11. Lay Days and extra lay days to be allowed and the rate of demurrage. Classes of Charter Party:

6. 7.
B.

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. Contract of Affreightment A contract whereby the owner of the vessel leases part or all of its space to haul goods for others. Kinds of Contract of Affreightment: a. Time Charter vessel is chartered for a fixed period of time or duration of voyage. b. Voyage or trip charter the vessel is leased for one or series of voyages usually for purposes of transporting goods for charterer.

1. 2. 3. 4. 5. A.
1. 2. 3. 4. 5. B. 1. 2. C. 1. 2. 3. 4. 5.

and extra lay days allowed; To place in a vessel in a condition navigate; and To bring cargo to nearest neutral port in case of war or blockade. ( Art.669-678, Code of Commerce) Of the Charterer: To pay the agreed charter price; To pay freightage on unboarded cargo; To pay losses to others for loading uncontracted cargo or illicit cargo; To wait if the vessel needs repair; To pay expenses for deviation. (Art. 679-687, Code of Commerce) Rescission of a Charter Party At Charterers Request: By abandoning the charter and paying half of the freightage; Error in tonnage or flag; Failure to place the vessel at the charterers disposal; Return of the vessel due to pirates, enemies or bad weather; Arrival at a port for repairs. At Shipowners Request: If the extra lay days terminate without the cargo being placed alongside the vessel; Sale by the owner of the vessel before loading the charterer. Fortuitous causes: War; Blockade; Prohibition to receive cargo; Embargo; and Inability of the vessel to navigate.

2.

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 Clauses Which May Be Included In a Charter Party 1. Jason 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. 2. Clause Paramount or Paramount Clause 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. Rights and Obligations in a Charter Party A.

PRIMAGE: Bonus to be paid to the captain after the successful voyage. 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. 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. LAY DAYS: Days allowed to charter parties for loading and unloading the cargo. EXTRA LAY DAYS: Days which follow after the lay days have elapsed. BILL OF LADING Written acknowledgment of receipt of goods and agreement to transport them to a specific place to a person named or to his order. (Compania Maritima v. Insurance Comp. of North America, 12 SCRA 213) The consignee and the shipper who accepts a bill of lading even without signing are bound by the terms and conditions thereof. (Keng Hua Paper Products v. CA 286 SCRA 257[1998])

1. 2. 3. 4. 5.

Of the Owner or Ship Agent: If the vessel is chartered wholly, not to accept cargo from others; To observe represented capacity; To unload cargo clandestinely placed; To substitute another vessel if load is less than 3/5 of capacity; To leave the port if the charterer does not bring the cargo within the lay days

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

11

Acceptance of the consignee is implied if he claims reimbursement for missing goods and files a case based on the bill of lading. (Belgian Overseas Chartering v. Phil. First Insurance, 383 SCRA 23 [2002])

Who may Contract 1. Bottomry: the owner; if owner is absent captain. 2. Respondentia: only the owner of he cargo Bottomry or Respondentia 1. Not subject to Usury Law. 2. Liability of the borrower is contingent on the safe arrival of the vessel or cargo at destination. 3. The last lender is a preferred creditor. Ordinary Loan (Mutuum) 1. Subject to Usury Law 2. Not subject to any contingency (absolute liability). 3. The first lender is a preferred creditor.

USUAL FORMS OF CONSUMMATING CONTRACTS 1. C.O.D collect on delivery If the goods are marked C.O.D., the carrier acts for the seller in collecting the purchase price. The buyer must pay for the goods before he can obtain possession. C.O.D. terms do not prevent title from passing to the buyer on delivery to the carrier where they are solely intended as security for the purchase price. 2. C.I.F. cost, insurance and freight They signify that the price fixed covers not only the cost of the goods, but the expense of the freight and insurance to be paid by the seller up to the point of destination. Title passes to the buyer at the moment of delivery to the point especially named. 3. F.O.B. - free on board At the place of destination Seller must pay the freight since the contract states free on board till destination. 4. F.A.S. - free alongside ship The property passes as soon as the goods are delivered aboard the carrier or alongside the vessel, and that the buyer as the owner of the goods is to bear all expenses after they are so delivered. (De Leon, Comments and Cases on Sales, 2002 Edition, page 234) 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. LOAN ON BOTTOMRY Loan made by shipowner or ship agent guaranteed by the vessel itself and repayable upon arrival of vessel at destination. LOAN ON RESPONDENTIA Loan taken on security of cargo laden on a vessel and repayable upon safe arrival of cargo at destination. Common Elements of Loans on Bottomry and Respondentia: 1. The captain may not borrow on bottomry or respondentia except on his own interest or portion thereof, otherwise, the contract is void; 2. These contracts must at least be in writing, otherwise, they cannot be the basis of judicial action. In order to affect third persons and entitle it to preferential credit treatment, the contract should be inscribed in the certificate of registry and seconded in the registry of vessels; 3. Should the goods upon which the money is taken not be the risk, the contract shall be considered a simple loan; 4. More recent loans are preferred than prior loans; 5. The usury laws are inapplicable to these contracts; 6. Exposure of security to marine peril; 7. Obligation of the debtor conditioned only upon safe arrival of the security at the point of destination.

When Loan On Bottomry Or Respondentia Regarded As Simple Loan 1. Lender loaned an amount larger than the value of the object due to fraudulent means employed by the borrower. (Art. 726, Code of Commerce) 2. 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, Code of Commerce) 3. If the effects on which the money is taken is not subjected to any risk. (Art.729, Code of Commerce)

The parties to a loan, whether ordinary or maritime, may agree on any rate of interest (CB Circular 905); provided the same is not contrary to law, morals, good customs, public order or public policy (Art. 1306, Civil Code)

Obligation on Bottomry Loan is Extinguished when: 1. The loss of the vessel is based on the risk agreed upon; and 2. Risk occurred during the voyage. HYPOTHECARY NATURE OF BOTTOMRY AND RESPONDENTIA General 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; 2. Loss due to the barratry on the part of the captain; 3. Loss due to the fault or malice of the borrower; 4. The vessel was engaged in contraband; 5. The cargo loaded on the vessel be different in from that agreed upon. RISKS, DAMAGES AND ACCIDENTS IN MARITIME COMMERCE 1. Averages 2. Arrival Under Stress 3. Collision 4. Shipwreck A. 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, Code of Commerce)

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

12

CLASSES OF AVERAGES: 1. Gross or General Average 2. Particular or Simple Average

Damages and expenses that do not inure to the common benefit or are not the result of a deliberate sacrifice. These expenses and damages are borne by those who suffer them. (See Art. 806, 807-810 Code of Commerce) The owner of the goods who gave rise to the expense or suffered the damage shall bear this average. Goods Not Covered By General Average Even If Sacrificed 1. Goods carried on deck. (Art. 855, Code of Commerce) 2. Goods not recorded in the books or records of the vessel. (Art. 855[2], Code of Commerce) 3. Fuel for the vessel if there is more than sufficient fuel for the voyage. Jettison - the 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, Code of Commerce)

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. o 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, 967 Phil 504 [1955]) Domestic Deck cargo is allowed With shippers consent General average Without shippers consent Captain is liable Captain is liable Particular average International Deck cargo is not allowed

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. 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, Code of Commerce) Under the York-Antwerp Rules, deck cargo is permitted in Coastwise Shipping but prohibited in Overseas Shipping. 1. If deck cargo is located 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 a violation of the York-Antwerp Rules. 2. If the deck cargo is located with the consent of the shipper on coastwise shipping, it must always contribute to general average and if jettisoned would be entitled to reimbursement.

B. Gross or General Average Includes all damages and expenses, which are deliberately caused in order to save the vessel and/or its cargo from real and known risk resulting in a common benefit. These expenses and damages shall be borne ratably among all those having interest in the vessel and cargo at the time of the occurrence of the average. (Art. 806, 808, 811 Code of Commerce) Requisites of Gross or General Average: 1. Common danger; 2. Deliberate sacrifice; 3. Success; and 4. Proper formalities and legal steps. Particular or Simple Average

ARRIVAL UNDER STRESS 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, due to: 1. Lack of provisioning; 2. Well-founded fear of seizure, of privateers or pirates; or 3. An accident of the sea disabling the vessel to navigate. (Art. 819, Code of Commerce) In such arrival the captain must file a protest which is merely a disclaimer.

When NOT Lawful 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.

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Who Bears Expenses General Rule: The shipowner bears all the expenses for arrival under stress. Exception: When arrival under stress is unlawful, the ship owner also answers for damages to the owners of the cargo and the passengers. 1. 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. 2. The captain shall be liable for damages caused by his delay if after the cause of the arrival under stress has ceased he should not continue the voyage. 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, Code of Commerce) C. COLLISION The impact of two moving vessels. Zones of Time in the Collision of Vessels: a. 1st zone all time up to the moment when risk of collision begins; b. 2nd zone time between moment when risk of collision begins and the moment it becomes a practical certainty; and c. 3rd zone time when collision has become a practicable certainty to the point of actual impact. Allision - Impact between a moving vessel and a stationary one. Rules on Collision of Vessels 1. The collision may be due to the fault, negligence or lack of skill of the captain, sailing mate, or any other member of the complement of the vessel. The owner of the vessel at fault may be liable for losses or damages. (Art. 826, Code of Commerce) 2. The collision may be due to the fault of both vessels. Each vessel shall suffer its own losses, but as regards the owner of cargoes both vessels shall be jointly and severally liable. (Art.827, Code of Commerce) 3. If it cannot be determined which vessel is at fault, each vessel shall also suffer its own losses and both shall be solidarily liable for losses or damages on the cargoes. (Art. 828, Code of Commerce) 4. The vessels may collide with each other through fortuitous event or force majeure. In this case, each shall bear its own damage. 5. Two vessels may collide with each other without their fault by reason of a third vessel. The third vessel will be liable for losses and damages. (Art. 831, Code of Commerce) 6. A vessel which is properly anchored and moored may collide with those nearby, by reason of storm or other cause of force majeure. The vessel run into shall suffer its own damage and expense. (Art. 832, Code of Commerce) 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

5. 6.

7. 8. 9.

earlier. There is a presumption against the vessel which sets sail in the night. 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 no sufficient time to do so or there was fear of a greater damage or other legitimate reason. There is a presumption against an improperly moored vessel. 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. Vessels must have proper look-outs or persons trained as such and who have no other duty aside therefrom. (Smith Bell v. CA 197 SCRA 201)

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. 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) Rules on Liability in Collision and Allision Consequential Damages Covered: 1. Damages caused to vessel 2. Damages caused to the passenger 3. Damages caused to the cargo Rule: 1. One vessel at fault Vessel at fault is liable for damage caused to the vessel, passenger, and cargoes of both vessels. (Art. 826, CoC) 2. Both Vessels At Fault Each vessel must bear its own loss, but as to the other damages, the passenger and cargoes, they shall be both solidarily liable . (Art. 827, CoC) 3. Vessel at fault not known Each vessel must bear its own loss, but both shall be solidarily liable for losses and damages on the cargoes. (Art. 828, CoC) 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. Third vessel at fault The third vessel will be liable for all the losses and damages. (Art. 831, Code of Commerce)

4.

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5.

Fortuitous event/force majeure No liability. Each party shall bear its own loss. However, due diligence must be exercised by the carrier to lessen the damages before, during, and after the impact (Art. 830, Code of Commerce). 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, 297 SCRA 301; Luzon Stevedoring vs. CA, 156 SCRA 169)

Carriage of Goods by Sea Act (Commonwealth Act. No. 65; Public Act No. 521, 74 th US Congress) Domestic Trade: Civil Code and Code of Commerce applies. Foreign Trade: COGSA applies.

The Civil Code and the Code of Commerce is suppletory to COGSA in the carriage of goods from foreign ports to the Philippines. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for loss, destruction or deterioration of the goods. ( Art 1753, NCC) The Civil Code is the primary law on goods that are being shipped from a foreign port to the Philippines. However, COGSA remains to be a suppletory law for international shipping.

Doctrine of Last Clear Chance and Rule on Contributory Negligence cannot be applied in collision cases where both vessels are at fault because under Art. 827 of the Code of Commerce, both vessels shall suffer its own loss, and at the same time shall be solidarily liable for the damages to the passenger and cargoes of both vessels.

In case of collision, there must be a maritime protest to recover collision damage; in such a case, the marine protest is a condition sine qua non and not merely a disclaimer unlike in the arrival under stress or shipwreck.

MARITIME PROTEST 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.

For COGSA TO BE APPLICABLE, the transportation must be: 1. Water/maritime transportation; 2. for the carriage of goods; and 3. overseas/international/foreign (from foreign port to Philippine port).

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, Code of Commerce)

It can be applied in domestic sea transportation if agreed upon by the parties. (Clause Paramount or Paramount Clause)

Maritime Protest is applicable in the following cases: 1. Collision (Art. 835, Code of Commerce); 2. Arrival under stress (Art. 612(8), Code of Commerce); 3. Shipwrecks (Arts. 612(15), 843, Code of Commerce); 4. Where the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages (Art. 624, Code of Commerce). Pre-Requisites for Recovery: 1. Maritime protest should be made within 24 hours before the 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 Code of Commerce) 2. The lack of protest does not prejudice such action to recover in respect to damages caused to persons or cargo whose owners were not on board the vessel or who were not in a condition to make their wishes known. (Art. 836 CoC) D. 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, or because the vessel put to sea was insufficiently repaired and equipped; the owner of the vessel may demand indemnity from said captain. (Art. 841, Code of Commerce)

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: Art.1749 of the Civil Code applies to Inter-Island Trade. Notice of Damage 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. The filing of a notice of claim is not a condition precedent. PRESCRIPTIVE PERIOD

1.

Coastwise or within the Philippines When to file a claim with carrier condition precedent if goods arrived in damaged condition, claim must be filed by the shipper within the following period otherwise recovery is barred: a. Immediately if damage is apparent; or b. Within 24 hours from delivery if damage is not apparent. When to file a case in court prescriptive period: a. Within 6 years, if no bill of lading has been issued; or b. Within 10 years, if bill of lading has been issued.

2.

International carriage from foreign port to the Philippines

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(Carriage of Goods by Sea Act) When to file a claim with carrier not condition precedent. a. Upon discharge of goods, if the damage is apparent, claim should be filed immediately; or b. If damage is not apparent, claim should be filed within 3 days from delivery. When To File A Case In Court Within a period of 1 year from discharge.

when the goods should have been delivered. In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. (Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co., Inc. 383 SCRA 23 [2002]) As stated in the same provision, a failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within one year. (Vitug, Pandect of Commercial Law and Jurisprudence, 3rd ed., 1997, p. 333) This one year prescriptive period also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading. (Filipino Merchants Insurance Co., Inc. v. Alejandro, 145 SCRA 42) In Loadstar Shipping Co., Inc. v. CA (315 SCRA 339), the SC ruled that a claim is not barred by prescription as long as the one year period has not lapsed. (Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co., Inc. 383 SCRA 23 [2002]) TACKLE TO TACKLE RULE The shipper shall be responsible for the goods the moment it passes through one side of the ship for the purpose of loading until it passes through the other side for discharging. There are two tackles involved in the operation; one for loading, the other for unloading. V. PUBLIC SERVICE ACT (COMMONWEALTH ACT NO. 146) PUBLIC SERVICE - Includes every person that now or hereafter 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 or public utility, ice plants, power and water supplies, communication and similar public services. (Sec. 13b, CA 146) 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 Marina. Three-Fold Purpose: 1. To protect the public against unreasonable charges and poor, inefficient service; 2. To protect and secure investments in public services; 3. To prevent ruinous competition. AUTHORITY TO OPERATE PUBLIC SERVICES General 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; 2. Animal drawn vehicles and bancas moved by oar or sail; 3. Airships, except for the fixing of maximum rates for fare and freight; 4. Radio companies, except for rates fixing; 5. Public services owned or operated by the government, except as to rates fixing;

Under the COGSA, suits for loss or damage to the cargo should be brought within one year after: 1. Delivery of the goods; or 2. The date when goods should have been delivered. The one-year prescriptive period is suspended by: 1. The express agreement of the parties; 2. The filing of an action in court until it is dismissed. The one-year period shall run from delivery of the last package and is not suspended by extrajudicial demand. Reasons: 1. Matters affecting transportation of goods by sea should be decided at the shortest time possible. 2. The Civil Code does not apply to a special law like COGSA. 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 because the claim against the insurer is based on contract, it expires in 10 years. The period does not apply to conversions or misdeliveries. It contemplates a situation where no delivery at all was made because the goods had perished, gave out of commerce, or disappeared in such a way that their existence is unknown or cannot be recovered. It starts from delivery to the arrastre operator, not consignee. A stipulation reducing the one year period is null and void but a written agreement to suspend it is valid.

The rule applies in cases of collision, but it starts not from the date of collision, but when the goods should have been delivered had the cargoes been saved.

Section 3(6) of the COGSA provides: Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier of his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of delivery. Said notice of loss or damage may be endorsed on the receipt of the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt, been the subject of joint survey or inspection. The carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or that date

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6. Ice plants; and 7. Public markets. PUBLIC UTILITIES - Privately owned and operated business whose services are essential to the general public. A foreigner can own a public utility. The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own facilities without operating them as utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. The Constitution requires a franchise for the operation of public utility but it does not require a franchise before one can own the facilities needed to operate a public utility. (Tatad vs. Garcia, 243 SCRA 436)

Conditions that Must Concur in the Grant of Certificate of Public Convenience and Certificate of Public Convenience and Necessity: Applicant must be a citizen of the Philippines or a corporation or entity 60% of the stock or paid-up capital of which is owned by such citizens; Applicant must prove public necessity; Applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest on a proper and suitable manner; Applicant must have sufficient financial capability to undertake the proposed services and meeting the responsibilities incident to its operation. Primordial considerations are public interest, necessity and convenience.

FRANCHISE AND CERTIFICATE OF PUBLIC CONVENIENCE The trend is not to require a legislative franchise. However, even if there was already a delegation of authority to a specific administrative agency to issue certificates of public convenience, it does not follow that a legislative franchise is no longer necessary. It would still depend on the enabling law creating or authorizing the administrative body, which may still require a legislative franchise. A certificate of public convenience is not necessary for the issuance of a legislative franchise. Certificate of Public Convenience: 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. Certificate of Public Convenience And Necessity: 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 Certificate of Public Convenience or a Certificate of Public Convenience and Necessity 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). FRANCHISE Is a special privilege and its terms and conditions are specifically prescribed by Congress. Thus, the manner of granting the franchise, to whom it may be granted, the mode of conducting the business, the character and quality of the service to be rendered and the duty of the grantee to the public in exercising the franchise are defined in clear and unequivocal language by the legislature. These conditionalities are made more stringent when the franchise involves the operation of a game played for bets, such as jai-alai, which is conceded as a menace to morality. Franchises are granted in accord with this universal principle. (Del Mar v. PAGCOR 358 SCRA 775) An authority or permit is a license or provisional authority granted to a public utility to operate as an implementation of a legislative enactment. In fine, an authority or permit is a detailed implementation of a legislative franchise. (U.S. v. Almond 6 Phil. 309)

Grounds for Revocation/Cancellation of the Certificate of Public Convenience: Where the holder is a mere dummy; Where the operator ceased operation and placed his buses on storage; Where the operator abandons totally the service. clear Under section 16 (n) of Public Service Act, the power of the Commission to suspend or revoke any certificate may only be exercised whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order, rule or regulation of the Commission or any provision of the Act. General Rule: Prior notice and hearing. Exception: When it is necessary to avoid serious and irreparable damage or inconvenience to the public or private interest, in which case, a suspension not more than 30 days may be ordered, prior to the hearing. Powers Requiring Notice and Hearing Issuance of Certificate of Public Convenience or Certificate of Public Convenience and Necessity; Fixing of rates, tolls, and charges; Setting up of standards and classifications; Establishment of rules to secure accuracy of all meters and all measuring appliances; Issuance of orders requiring establishment or maintenance of extension of facilities; Revocation, or modification of Certificate of Public Convenience or Certificate of Public Convenience and Necessity; Suspension of Certificate of Public Convenience or Certificate of Public Convenience and Necessity, except when it is necessary to avoid serious and irreparable damage or inconvenience to the public or private interest, in which case, a suspension not more than 30 days may be ordered, prior to the hearing. Powers Exercisable Without Prior Notice and Hearing Investigation of any matter concerning public service;

Requiring operators to furnish safe, adequate, and proper service; Requiring public services to pay expenses of investigation; Valuation of properties of public utilities; Examination and test of measuring appliances;

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Grant of special permits to make extra or special trips in territories specified in the certificate; Uniform accounting system and furnishing of annual reports; Compelling compliance with the laws and regulations.

damages suffered by third persons caused by the operation of said vehicle, even though the same had been transferred to a third person. The registered owner is not allowed to escape responsibility by proving that a third person is the actual and real owner Reason: It would be easy for him, by collusion with others or otherwise, to transfer the responsibility to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. (Erezo, et al. vs. Jepte 102 Phil 103] A registered owner 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 law, the owner/operator of record is the employer of the driver, the actual operator and employer being considered as merely its agent. The same principle applies even if the registered owner of any vehicle does not use it for public service, (Equitable Leasing Corp vs. Suyom, 388 SCRA 445 [2002]], or otherwise stated, to privately-owned vehicles. RATE-FIXING POWER 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: One which yields to the carrier a fair return upon the value of the property employed in performing the service; and One which is fair to the public for the service rendered.

ACTS REQUIRING PRIOR APPROVAL Establish and maintain individual or joint rates; Establish and operate new units; Issue free tickets; Issue any stock or stock certificates representing an increase of capital; Capitalize any franchise in excess of the amount actually paid to the Government; Sell, alienate, mortgage or lease property, certificates or franchise UNLAWFUL ACTS OF PUBLIC UTILITY COMPANIES Engagement in public service business without first securing the proper certificate; Providing or maintaining unsafe, improper or inadequate service as determined by the proper authority; Committing any act of unreasonable and unjust preferential treatment to any particular person, corporation or entity as determined by the proper authority; Refusing or neglecting to carry public mail upon request. PRIOR OPERATOR RULE - The rule allowing an existing franchised operator to invoke a preferential right as against a second operator within the authorized territory as long as he renders adequate and economical service. Purpose: To prevent ruinous and wasteful competition in order that the interests of the public would be conserved and preserved. 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. The granting of preference to an old operator applies only when said operator has made as offer to meet the increase in traffic or demand for service and not when another operator, even a new one, has made the offer to serve the new line or increase the service on said line. The rule of preference protects only those who are vigilant, in meeting the needs of the traveling public. PROTECTION OF INVESTMENT RULE The Law aims to protect not only the public, but the operations as well. It is the governments duty to protect the investment of the operators of public utilities from unfair, unjustified and ruinous competition. 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 The registered owner of a certificate of public convenience is liable to the public for the injuries or

Exceptions to Kabit system: When neither of the parties to the pernicious 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 misrepresentation 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) The policy, which prohibits the Kabit System, may also be applied to vessels and aircrafts that are covered by certificates of public convenience and necessity. Persons who do not have such certificates cannot circumvent the law by using the certificate of another. ( Sec. 23, Public Service Act) BOUNDARY SYSTEM Features: The driver does not receive a fixed wage but gets only the excess of the receipt of the fares collected by him over the amount he pays to the jeep owner. The gasoline consumed by the jeep is for the account of the driver. These two features are not sufficient to withdraw the relationship between the owner and the driver from that of employer and employee. The jeepney owner is subsidiarily liable as employer in accordance with Art.103 of RPC (Magboo vs. Bernardo, 7 SCRA 952)

TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

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