ARRIVALS UNDER STRESS (Article 819-825)

Article 819. If during the voyage the captain shuold believe that the vessel cannot continue the trip to the port of destination on account of lack of provisions, well-founded fear of seizure, privateers or pirates, or by reason of any accident of the sea disabling it to navigate , he shall assemble the officers anf shall summon the persons interested in the cargo who may be present, and who may attend the meeting without the right to vote; and if, after examining the circumstance of the case, the reason should be considered well-founded, the arrival at the nearest and most convenient port shall be agreed upon, drafting and entering the proper minutes, which shall be signed by all, in the log book.

The captain shall have the deciding vote, and the persons interested in the cargo, may make objections and protests they may deem proper, which shall be entered in the minutes in order thatt hey may make use thereof in the manner they may consider advisable.

When is an arrival considered unlawful?Article 820. An arrival shall not be considered lawful in the following cases:

1. if the lack of provisions should arise from the failure to take the necessary provisions for the voyage according to usage amd customs, or if they should have been rendered useless or lost through bad stowage or negligence in their care.

2. If the risk of enemies, privateers, or pirates should not have been known, manifest and based on positive and probable facts.

3. If the defect of the vessel should have arisen from the fact that it was not repaired, rigged, equipped and perpared in a manner suitable for voyage or some erroneous order of the captain.

4. When malice, negligence, want of foresight or lack of skill on the part of the captain exists in the act causing the damage,

Article 821: Expenses for arrivals under stress. It shall be borne jointly by the shipowner or agent where the arrival is not lawful. If the arrival is legitimate, the shipowner or agent shall not be held liable for the damages which may be

caused the shipper

Maam: just go over this class

SHIPWRECKS (Articles 840-845)

Definition: a shipwreck is when a ship recvs injuries rendering her incapable of navigation. It is also defined as a loss of the vessel at sea, either by being swallowed up by the waves, or by running against another vessel or boats.

Maam: So we have already discussed averages, just go over that and the important provisions such as in Liquidation of Gross Averages (Articles 851-868).

Article 855. The merchandise loaded on the upper deck os the vessel shall contribute to the gross average should they be saved, but there shall be no right to indemnity if they should be lost by reason of having been jettisoned for common safety, except when marine ordinances allow their shipment in this manner in coastwise navigation.

The same shall take place with that which is on board and is not included in the bills of lading or inventories, according to the cases.

In any case, the shipowner and the captain shall be liable to the shippers for the damages from the jettison, if the storage on the upper deck was made without the consent of the latter.

SALVAGE LAW (ACT 2616)

What do we understand by salvage? Salvage law here provides for a compulsory reward (?) for the who brave the perils of the sea to save cargo or

vessels in order to encourage such services whether the owner of the property saved likes it or not, he must give a reward, the maximum amount of which is 50% of the value of the property saved.

Act 2616 is almost a century old law, enacted Feb 4 1916,

4 Requisites for salvage reward:1. There must be a valid object of salvage. It could either be a vessel, cargo,or wreck of a vessel or cargo. 2. Such object must have been exposed to marine peril. 3. Salvage service must be voluntary, not arising from a pre-existing duty. Salvors have no connection with

the owner, no engagement or duty on the part of the salvor. The salvor is independent.4. Salvage effort must be successful.

Relevant terms in salvage law:Derelict – a vessel or cargo that is badly damaged and abandoned by the crew to the mercy of the sea. Mere abandonment of such vessel or cargo does not make it res nullus (belonging to no one) so that anybody can claim it. The proepr procedure must be followed:

1. If the vessel is abandoned, the salvor must stoke it to the nearest port where it will be delivered to the nearest municipal treasurer or collector of customs who will advertise the fact of salvage

2. If the oner of the salvaged vessel appears, he may take possession of the vessel and must pay a reward not exceeding 50% of the value of the vessel.

Desertion – act by which a seaman deserts or abandons a ship in which he has engaged to perform a voyage before the expiration of his time and without leave. So desertion refers to unauthorized… from the ship without intention to return to her service. It is essential for desertion to exist that there must be animo revertendi in order for the seaman to be considered to have deserted the vessel. There must be no intention to return. (Singa Ship Management v NLRC)

How to determine/basis of salvage reward:1. Value of the property saved2. Zeal employed by those who made the salvage3. Danger to the lives of those who participated in the salvage. It would depend on the circumstances, kung

gaano kalalim, etc 4. Number of persons who took part, the services renedered and the expenses incurred

What if there is no claim? What if it was stoked to the nearest port and it was published by the mun. treasurer for purposes of salvage, and if no claim for the vessel is made within 3mts after the publication of the advertisement?

The mun. treasurer shall sell the property saved at public auction and the expenses shall be deducted from the proceeds, and the balance is deposited with the treasury.

Case: Varios v Carlos Bottom 7 SCRA 535Facts: The vessel MV Alfredo suffered engine failure and drifted towards open sea. While there ws no danger

of sinking as the weather was fair, and the sea was smooth, the vessel could not move on its own power. Another vessel, the MV Henry, responded through an SOS distress signal from MV Alfredo and towed the vessel. The sister vessel of MV Alfredo arrived and took over the towing service. The owner of MV Henry later made a salvage claim from the owner of Alfredo.

Issue: 1, whether MV Alredo was valid salvage claim, and 2, was the captain of MV Henry entitled to salvage compenstation?

Held: 1. No. There was no salvage as there was no maritime peril. Vessel was just drifting in open sea, weather was

fair and the sea smooth. Thus, the vessel was not in derelict as to warrant a salvage claim for the towing of the vessel. Di siya derelict kasi di sya iniwan, in fact it was the captain who called the SOS signal. MV Henry’s service can be

considered as a quasi-contract of towage, because in consenting with MV Henry’s offer to tow the vessel, MV Alfredo thereby entered into a juridical relation of towage with the owner of the towing vessel.

2. The captain of MV Henry is not entitled since the contract was one of towage. Only the owner of the towing vessel is entitled to remuneration, but has already waived its claim for compensation for the service done. So in this case, it was the captain of the MV Henry who wanted to be compensated, but the SC said that when MV Alfredo agreed to MV Henry, there was an implied contract of towage. Who gets to be paid? The ship owner of MV Henry, not the captain. But the ship owner of MV Henry has already waived compensation for the service, thus, the captain has no basis to seek compensation, because this is not a salvage. MV Alfredo was not a valid

Case: Valles v Pijete, 34 PhilFacts: The spooner (a small seafaring vessel) Kojak was lost off the coast of Mindoro and was abandoned by

the captain and crew. A report of her loss was received by the Collector of Customs who immediately issued a circular to all masters of steamers and vessel plying Philippine waters declaring Kojak as a derelict and danger to navigation. Pijete and co chartered the Coast Guard ‘Cutter Mindoro’ Cutter is a boat belonging to a ship fitted for rowing and sailing. They searched and found Kojak floating and abandoned and underwater. Despite strong winds, Pijete and co succeeded in towing her to the port of Mindoro. Being safe at port, Pijete chartered Lakandula, with lighters and salvage equipment for the use on Kojak. Pending salvage operations, plaintiff Valles wrote Pijete offering to pay for their services and demanding the delivery of Kojak and in the demand letter, provided 10 days within which to reply otherwise, they will not answer for any expenses after that. The salvage operations continued well beyond the 10 day period. Valles thereafter instituted an action to recover possession of Kojak.

Issue/s: WON Pijete was entitled to the possession of the vessel, was owner Valles liable to compensate Pijete notwithstanding the demand letter?

Held: YES. The salvors have the right to retain possession of the vessel until the owner pays the reasonable expenses. The demand made upon them had no legal effect.

PUBLIC SERVICE LAW

Maam: There is no more Public Service Commission because it has already been supplanted by several agencies like LFTRB, LTO, MARINA, Coast Guard, POEA, etc. However, in American jurisdiction, we already discussed the nature of public utilities during our discussion of common carriers. If you will take into consideration the nature of public utilities as defined under the PS Act, similar din sya, because the basis of public utility under the Public Service Act appears to be a person (natural or juridical, under Art. 1752) who operate or provide services to the public for hire or compensation, either in a general or limited capacity…and for general business purpose.

Said definition implies that the operator of public utility should be the owner of the equipment or facilities being used in the operation of the same. But as in vessels where there exists ‘charter parties’ where in the vessel is leased, it makes no mention in the requirements that the vessel should be owned by the person or juridical entity. However it can be assumed that a basic requirement that the equipment which is to be used in the operation must be owned by the franchisee, because the logical explanation is that the operator must be able to show proof of its financial capability to operate the said utility. Ownership of the equipment is persuasive proof upon the applicant applying for a Certificate of Public Convenience to operate a particular route/vessel/etc. Especially in land transportation, the units or vehicles under the franchise shall be registered in the latter’s name. How could this be done if the franchise-grantee is not the owner thereof?

Case: Kilusang Mayo Uno Labor Center v Garcia 239 s 386 The Certificate of Public Convenience is an authorization granted by the LTFRB for the operation of land

transportation as required by law. There are 3 requisites for the issuance of CPC for a franchise:1. Philippine citizenship. If applicant is a corporation, it has to comply with the 60-40 capitalisation,

wherein at least 60% must be owned by Pinoys. 2. Financial capacity3. Public need for the proposed service

So this will be subject to publication, whether the route being applied for can still be awarded. The current franchise holder of this route is not sufficiently or ably provide for the necessary transportation for that particular route in which case it shall be opened to another franchise.

If applicant does not own the equipment, it would be a reflection on the former’s financial capacity. It is basic that the franchise applicant are supposed to be financially capable to operate the service applied for so they can financially sustain their operations and pay damages that may arise from suit or claims.

Maam: I remember one of the requirements for land transportation license was that you have to have a garage. You have to show as one of your requirements, you have a suitable garage where you can park the vehicle. So if you’re applying for a franchise for 5 taxis, dapat may area ka where you can park your 5 units, otherwise, doubts can be cast upon your capability to safeguard your vehicles. Some operators who do not own all the vehicles sought to be authorized under the franchise applied for (recall kabit system).

FRANCHISE LEASES UNDER COMMONWEALTH ACT 146 However there is this situation now which allows a nonowner of a equipment for public utility or public service to

operate it. This is through lease of franchise and the equipment authorized therein under CA 146 as amended by the Public Service Act. This can be done in applications for shipping, certificates for public convenience or franchise through the concept of charter.

There is also this novel device by the Metro Manila Commission wherein it was able to dispose of its buses to private operators through the concept of ‘lease purchase.’ So, ipa-lease nila. For example, Holiday. Ipa-lease nila yung taxi, so rent-to-own. Here the private operator buys the buses or the vehicle in installments from the MMC and then applies for a franchise using the said buses, indicating in the application as well as the registration papers of the units, their arrangement.

So lessor-seller, lessee-purchaser. So if the lessee-purchaser operator religiously pays for the entire installment, the unit is eventually transferred to him. If not the unit is repossessed and the payments in installments shall be treated as lease rental payments for the use of the units. So kung di sya makabayad, the monthly payments will be considered rentals.

Case: Tatad et al v Secretary Garcia et al. The SC here had the opportunity to rule upon the consitutionality of an agreement which allowed the lease

purchase of infrastructure facilities and equipment for the operation of a public utility owned by a foreign company under the build-lease-transfer (BLT) scheme. this case arose from the seemingly insoluble traffic problems in MNL, which compelled the government to cause the construction of the Light Rail Transit (LRT) system in the middle of EDSA, so the local foreign companies were invited to bid for the project which action finds support under RA 6957, which is the Build-Operate-Transfer Law (BOT Law) which provided for two schemes:

1. Build-operate-transfer: in this arrangement, the builder builds; the builder operates, and after a certain amount of time transfers it to the government. Similar din to sa mga arrangement where the lessee builds upon the land, after 30yrs it will also belong to the owner of the land.

2. Build-transfer: one builds, the other transfers. So after the preliminary stages (bidding, etc), it was awarded to EDSA Corporation Ltd, a consortium of 10

foreign and domestic corporations. Senators Tatad Osmena and Biazon petitioned the SC under Rule 65 of the RRC seeking in effect to nullify and enjoin the enforcement of a contract that would pave the way to start the construction of EDSA MRT; and they raised several grounds.

Issue: WON the agreement granting to a foreign corporation the ownership of EDSA MRT-3 which is a public utility, was constitutional; and WON the build-lease-transfer scheme is legal since BLT is not one of the 2 schemes in RA 6957. So Tatad et al was saying that since the agreement in this case involved BLT, and BLT is not named in the BOT law, then it was illegal.

There is also the issue of the minimum requirement od the 60% capital ownership by Filipino citizens and 40% by foreigners. Dito they questioned that because there was a consortium even though there were domestic counterparts. Tatad’s position was that since EDSA MRT was a public utility, it cannot be owned by a foreign corporation, so they argued that the ownership and operation thereof is limited by the Constitution to Filipino citizens and domestic corporations. They made reference to Sec. XI, Article XII of the Constitution :

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

Held:1. The SC declared in effect that EDSA LRT3 per se even if it’s owned by repsondent EDSA Corp Ltd, a foreign

corporation, is not a public utility because what it owns are the rail tracks, rolling stocks, coaches, rail stations, terminals and power plant. These are not public utilities. While a franchise is needed to operate these facilities to serve the public, they do not themselves constitute a public utility. So what does a public utitlity constitute? SC said, what constitutes a public utility is not their ownership but their use to serve the public. So it further explained that while EDSA Ltd is the owner of the facilities necessary to operate the EDSA LRT3, it admits that it is not enfranchised to operate the public utility. So its operation would be the government through the Dept of Transportation and Communication (DOTC). Therefore the constitutional prohibition is not violated. The SC significantly declared that the right to operate a public utility exists independently and separately from the owners of the facilities thereof. One can own said facilities without operating them as a public utility or conversely, one may operate a public utility without owning the facilities used so that devotion of property to serve the people may be done by the owner or by the person in control thereof.

2. The SC further stated the situation in the Transpo industry, where enfranchised airlines and shipping companies may lease their aircraft or vessel instead of owning them or operating them themselves.

Issue #2: the BOT is not circumscribed in the schemes provided in RA 6957

1. The court explained the nature of BOT/BT. The BOT simply means that the contractor finances and constructs an infrastructure facility and then operates it until it has recovered its investments and earned reasonable profits therefrom. Thereafter the contractor transfers ownership and operation of the project to the govt. Under the BT scheme, the ownership is immediately transferred to the govt after the infrastructure project is finished upon payment of the cost. The court argued that there is no mention in the BOT Law that the BOT and BT schemes bar any arrangement for the payment by the government of the project cost. The law must be read in such a way as to rule out or restrict any variation within the context of the two schemes. And even if there was no specific ‘BLT’ scheme in the BOT Law, it was concluded that the BLT scheme in the challenged case does not violate the BT scheme under the law; and held that the BLT was a legal arrangement.

What are the particular provisions in the Constitution that are in reference to the PS Law/public utilities?- we have Article 12, Sections 17, 18, 19

Case: Albano v Reyes 175 s 264Facts: This is a case seeking to restrain respondent Philippine Ports Authority and the Secretary of DOTC

from awarding to the International Container Terminal Services Inc (ICTS) a contract for the development, management and operation of the Manila Intl Container Terminal. The petitioner claims since that MICT is a public utility, it needs a legisltaive franchise before it can operate as a public utility pursuant to Art XII, Sec XI of the Constitution.

Held: The Court said that the power of the Phil. Ports Authority is in the exercise of the option granted to it by Pres. Dec. 857 – to choose to contract out the operation and management of the MICT to a private corporation. The Court further said that legislative franchise granted by Congress is not necessary for the operation of the MICT as a

private entity. The contract entered into by the PPA and such entity constitutes as a substantial compliance wit hthe law as the Manila International Container port is a wharf, a dock as contemplated by the PS Act, and therefore its operation does not necessarily call for a franchise from Congress.

CERTIFICATE OF PUBLIC CONVENIENCE

What is a CPC? It is an authorization issued by the Commission or the public service regulatory body for the operation of

public services for which no franchise, either municipal nor legislative, is required. So for example, di kelangan dumaan pa sa legislative to be able to run that franchise. So a CPC is authority for a franchise to engage in land transportation, example if you want to ply the Agdao – Matina route, so that is it. Transportation services, jeepneys, howler trucks (?)…

It is distinguished from a Certificate of Public Convenience AND Necessity, which requires the public utility to first secure a municipal or legislative franchise for the operation of the public service. Example, electric companies, telephone companies, cable, etc – these have to go through a legislative frnachise. If you want to put up a telephone station in your province, you go through the local municipal legislative body or to Congress before you can apply with the NTC (National Telecommunications Commission) .

Summary: CPCN = requires legislative franchise, CPC = leg. franchise not required

What is the nature of a legislative franchise?

Case: Republic of the Philippines v Rteleco (255 SCRA) The Court declared that a telephone company having a legislative franchise were nothing is stated in the

franchise cannot presume that it has an eclusive right as prior operator over the area, so it is not provided that it is exclusive. Judicial notice is taken of the fact that all legislative franchsies for the operation of telephone systems contain the provisions that ‘in the event that the Phil. Govt should desire to maintain and operate for itself the system or enterprise authorized, the grantee shall surrender said franchise and turn over to the govt said system and all serviceable equipment less reasonable costs.

Here a CPC we have a rule on notice and hearing. These powers are granted to the various agencies concerned. So an application for CPC will require a filing of the application, publication of the application, notice of hearing. This is because the other franchise holders have the right to be heard also, WON they can aptly service the route being applied for – because we have the prior operator rule which gives the prior operator the opportunity to service the area (as they were given the first franchise over that). So if the prior operator fails to aptly service the route, then another person or entity may be given a franchise to operate that route in addition to the existing franchise.

Case: San Pablo v Pantranco 153 S 499 The doctrine here is WON the sea is an extension of the highway. NO The facts shows that PANTRANCO is engaged in the land transportation business. They have a CPC to operate

buses from Metro Manila to Bicol region and East Samar. Pantranco wrote MARINA requesting authority to lease-purchase a vessel to be used in its project to operate a ferry boat service for its exclusive use in the ferrying of its passenger buses and cargo trucks from Matnog, Sorsogon and Pale, Samar, that will provide service for their company buses and frieght trucks that have to cross the San Bernardino strait. Pantranco contended that this service was private and not as a common carrier. San Pablo and Cardinal Shipping Corp are the existing franchise-holders in this area and they opposed the application.

Issue: won the sea can be considered as an extension of the highway? Can a land transportation company be authorized to operate a ferry-service or coastwise or inter-island shipping service along its authorized route as an incident to its franchise, without the need for filing a separate application for the same? Note, PANTRANCO only applied at MARINA to purchase the vessel on the ground that it will be used for their planned venture. PANTRANCO was not applying for a CPC.

Held:1. SC took judicial notice of the fact that examination of the Phil. Map (kasi sabi ng PANTRANCO the strait was

just a small body of water so they didn’t have to apply for a certificate of public convenience to operate in

those waters) that Matnog on the southern tip of Luzon, is traversed by the strait which leans toward the Pacific Ocean. Thus it cannot be considered a small body of water. Taking into consideration the environmental circumstances of the case, the conveyance of passengers, trucks and cargo to Matnog is certainly not a ferryboat service but a coastwise or inter-island shipping service.

2. Under no circumstances can the sea between Matnog be considered a continuation of the highway. So PAN was required to secure first a separate CPC for the operation of the inter-island shipping service in accordance with law. The CPC for a bus transportation cannot be merely amended to include this water service under the guise that it is a mere private ferry service.

CABLE TV NETWORKSCable TV networks are covered by Executive Order 436, Sept 1997. This is under the national telecommuncations commission. The operation of cable television systems as a subscriber service undertaking, with a unqiqe technology shall be maintained separate and distinct from telecommunications or broadcast television which should be supervised by the NTC.

Who are the persons qualified? Only those persons, associations, partnerships or cooperatives granted a provisional authority or Certificate

of Authority from the NTC may install, operate and maintain a cable TV … within the service area.

Cable TV and advertisements So of course, cable TV service providers may carry advertisements and other similar paid segments for which the operator may charge and collect reasonable fees provided that no cable TV operator shall infringe on broadcast television markets by inserting ads in the programme it carries or transmits without the consent of the program concerned.

DISTINCTIONS BETWEEN CIVIL CODE, COGSA, CODE OF COMMERCE

CIVIL CODE COGSA CODE OF COMMERCE1. Diligence Requirement Extraordinary diligence Due diligence (Sec 3, par 1) to

make the ship seaworthy, properly manned, equipped… etc

Ordinary diligence but modified by Civil Code. So, extraordinary diligence.

2. Exculpatory causes or immunities of the carrier

1734 – for common carriers Sec 4, par 2. 17 Carrier immunities!

Applicable only to private carriers; Article 361 but modified by the Civil Code to apply to common carriers.

Maam: Applicable only to private carriers yung immunities, but it is still governed by 1734 because the Code of Commerce is merely suppletory. Since there is a provision on the exempting circumstances in the Civil Code, then that will prevail.

3. Burden of Proof 1735 – presumption on part of carrier to prove that it exercised EXD

To establish a prima facie against the carrier, the shipper has the burden of proof proving that the cargo was received by the carrier in good condition and that the cargo was damaged upon delivery upon carrier at its destination.

Same as Civil Code

4. Duration of liability 1736, 1737, 1738 – lasts from the time the goods are placed… etc

Term covers the period from the time when the goods are loaded to the time when they are discharged from the ship or from the point of loading to the point of discharge.

Maam: Note medyo limited yung duration of liability sa COGSA.

Same as Civil Code

5. Stipulations limiting liability

1744, 1746, 1751, 1752

Section 4, par. 5 aka the per-package limitation, maximum of 500USD unless there is a higher declared amount

Same as Civil Code

6. Prescription of actions Statute of Limitations 3 days, not a condition precedent but you have to file an action within 1 year.

Otherwise, the claim is barred forever.

Art. 366Enforced by the

Statue of Limitations in CC