transpo reviewer zarah

7/29/2019 Transpo Reviewer Zarah

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TRANSPORTATION LAW

PRELIMINARY CONSIDERATIONS:

A. Governing Laws1. New Civil Code Primary law

2. Warsaw Convention for international transportation by air

3. Code of Commerce governs suppletorily; it governs

maritime transaction

4. Carriage of Goods by Sea Act for transportation by sea;

governs suppletorily5. Salvage Law

6. Public Service Act

7. Article XII Sec 11 on operation of public convenience of the

1987 Philippine Constitution

B. Concept of Public Utility & public serviceSec. 13 (b) of the Public Service Act provides that: The term

'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, railroad, street railway,

traction railway, sub-way motor vehicle, either for freight or

passenger, or both with or without fixed route and whatever may

be its classification, freight or carrier service of any class, express

service, steamboat, or steamship line, pontines, ferries, and water

craft, engaged in the transportation of passengers or freight or

both, shipyard, marine railway, marine repair shop, wharf or dock,

ice plant, ice-refrigeration plant, canal, irrigation system, gas

electric light, heat and power, water supply and power,

petroleum, sewerage system, wire or wireless communications

system, wire or wireless broadcasting stations and other similar

public services: Provided, however, That a person engaged in

agriculture, not otherwise a public service, who owns a motor

vehicle and uses it personally and/or enters into a special contract

whereby said motor vehicle is offered for hire or compensation to

a third party or third engaged in agriculture, not itself or

themselves a public service, for operation by the latter for a

limited time and for a specific purpose directly connected with

the cultivation of his or their farm, the transportation, processing,

and marketing of agricultural products of such third party or third

parties shall not be considered as operating a public service for

the purposes of this Act.

Public utilities are privately owned and operated business whose

services are essential to the general public.

Case: National Development Company v CA

C. Constitutional limitations on operation of public utilitiesSec. 11 of Article XII of the 1987 Constitution states that: No

franchise, certificate, or any other form of authorization for the

operation of a public utility shall be granted except to citizens ofthe 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 o

such corporation or association must be citizens of the

Philippines.

*The corporation must be a domestic corporation and that 60% o

the capital must be owned by Filipino citizens.

Sec. 18 of Article XII of the 1987 Constitution provides that: The

State may, in the interest of national welfare or defense, establish

and operate vital industries and, upon payment of jus

compensation, transfer to public ownership utilities and othe

private enterprises to be operated by the Government.Q: What are the bases/reasons for regulation of public utilities?

A:Basis: Police Power

Justification: Common good

D. Regulatory agencies1. Land Transportation Franchising Regulatory Board (LTFRB)

land transportation

2. Land Transportation Office issue license to drivers

3. Maritime Industry Authority (MARINA) wate

transportation

4. National Telecommunications Commission communication

utilities and services, radio communications systems, wire o

wireless telephone and telegraph systems, radio and

television broadcasting systems and other similar public

utilities

5. Energy Regulatory Board electric or power companies

6. National Water Resources Council water resources

7. Civil Aeronautics Board air transportation

Q: What conditions must concur in the grant of certificate of

public convenience and necessity?

A: 1. The grantee must be a citizen of the Philippines or a

corporation or entity 60% of which is owned by such citizens; 2

The grantee must have sufficient financial capability to undertake

the service; and 3. The service will promote public interest and

convenience in a proper and suitable manner.

*In Tatad v Garcia, the SC held that the controlling factor is the

citizenship of the person operating a common carrier.Guiding Principles:

1. Prior or Old Operator Rule the first licensee will be

protected in his investment and will not be subjected to

ruinous competition.

*No certificate of public convenience and necessity will be

issued to other operator as long as the prior operator still in

operation and can satisfy the public and that it still has the

capacity to do so.

2. Protection Investment Rule protects from unfai

competition

3. Prior Applicant Rule protects the first applicant. Principle

all things being equal

*Public interest is the first and paramount consideration.

E. Concept of franchise and certificate of public convenienceFranchise is a grant or privilege from the sovereign power.

Certificate of Public Convenience is a form of regulation through

an administrative agency.

Q: Is a legislative franchise necessary before a public utility can be

allowed to secure a certificate of public convenience?

A:General Rule: NO.

Exception: If a pertinent law requires such legislative franchise.

Factors:


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1. Public interest

2. Public convenience

3. Public necessity

GENERAL CONCEPTS:

A. Contract of transportation in generalTransportation is a contract whereby a person, natural or

juridical, obligates to transport persons, goods, or both, from one

place to another, by land, air, or water, for a price or commission.

*Importance: For liability purposes

B. PerfectionThere is a perfected contract when there was a meeting of the

minds as to the subject matter and consideration.

C. Common Carrier1. Statutory definition

Article 1732 of the New Civil Codeprovides that: Common

carriers are persons, corporations, firms or associations

engaged in the business of carrying or transporting

passengers or goods or both, by land, water, or air, for

compensation, offering their services to the public.

- one that holds itself out as ready to engage in thetransportation of goods for hire as a public

employment and not as a casual occupation.

Implications being a common carrier:

a. extraordinary diligence must be exercised

b. in case of damage, presumption of negligence on the

part of the common carrier

*It is the activity of the carrier that is controlling.

Cases: A.F. Sanchez Brokerage, Inc v CA; Asia Lighterage v

CA; De Guzman v CA

*The fact that there is no license at the time of the incident

happen is of no moment for liability purposes.

2. Distinguished from private carrierCommon Carrier Private Carrier

As to availability: holds himself outfor all people

indiscriminately

Contracts withparticular

individuals or

groups only

As to required

diligence:

Extraordinary

diligence is

required

Ordinary

diligence is

required

As to regulation: Subject to state

regulation

Not subject to

state regulation

Stipulation

limiting liability:

Parties may not

agree on limiting

the carriers

liability except

when provided by

law

Parties may limit

the carriers

liability,

provided it is not

contrary to law,

morals or good

customs

Exempting

circumstance:

Prove

extraordinary

diligence and

Article 1734 NCC

Caso fortuito,

Article 1174 NCC

Presumption of

Negligence:

There is a

presumption of

fault or negligence

No presumption

of fault or

negligence

Governing law: Law on common

carriers

Law on

obligations and

contracts

3. Distinguished from towage, arrastre and stevedoringDistinctions:

Towage Arrastre Stevedoring

One vessel is

hired to bring

another vessel to

another place;

refers to a service

rendered to a

vessel by towing

for the merepurpose of

expediting her

voyage without

reference to any

circumstances of

danger.

The functions of an

arrastre operator

has nothing to do

with the trade and

business of

navigation, nor to

the use or

operation of

vessels. He is nodifferent from that

of a depositary or

warehouseman.

The function o

stevedores

involves the

loading and

unloading o

coastwise

vessels calling a

the port.

*The SC held that the following services are not considered a common

carrier:

1) purely arrastre services;

*comparable to that as warehouseman and depositor

2) purely stevedoring services; and

3) purely towage services.

*In Crisostomo v CA, the SC held that the respondent being a travel agency is

not a common carrier because the services offered is not one that carriespassenger from one place to another.

4. Tests to determine common carrierTests:

a. He must engaged in the business of carrying goods fo

others as a public employment and must hold himsel

out as ready to engage in the transportation of good

for person generally as a business and not as a casua

occupation;

b. He must undertake to carry goods of the kind to which

his business is confined;

c. He must undertake to carry by the method by which

his business is conducted and over his established

roads;

d. The transportation must be for hireCase: First Philippine Industrial Corporation v CA

*Under Sec. 22 of the Electric Power Distribution Reform

Act, the company like MERALCO distributing electricity is a

common carrier.

5. Parties to the contract of carriagea. Carriage of passengers:

1. Common carrier2. Passengers

b. Carriage of goods:1. Shipper

2. Carrier

D. Registered owner rule and Kabit systemGeneral Rule: Registered owner rule is applicable in thi

jurisdiction.

Registered owner rule states that the person who is the

registered owner of a vehicle is liable for any damages caused by

the negligent operation of the vehicle although the same was

already sold or conveyed to another person at the time of the

accident. The registered owner is liable to the injured party

subject to his right of recourse against the transferee or the

buyer.


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Purpose of this rule: easy identification of the owner to be sued

for liability.

Recourse: Registered owner may bring the case to the court to

sue the buyer or operator of the vehicle at fault.

Exception: in case of stolen vehicle registered owner is not liable.

*In the case ofDuavit v CA, the SC held that the registered owner

is not liable if the vehicle was taken from his garage without his

knowledge or consent. To hold the registered owner liable would

be absurd as it would be holding liable the owner of a stolen

vehicle for an accident caused by the person who stole such

vehicle.Kabit System is an arrangement whereby a person who has been

granted a certificate of public convenience allows other persons

who own motor vehicles to operate them under his license,

sometimes for a fee or percentage of the earnings.

*Kabit system is invariably recognized as being contrary to public

policy and therefore void and inexistent under Article 1409 of the

New Civil Code.

*If the registered owner and the buyer entered into this

transaction they are In pari delicto thus, in case something

happen the court will not aid them. The court will leave them as

they were.

*This arrangement is a circumvention of the requirement for

license.

OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF

GOODS:

A. Vigilance over the goods1. Duty to exercise extraordinary diligence Article 1733 of the

New Civil Code states that: Common carriers, from the

nature of their business and for reasons of public policy, are

bound to observe extraordinary diligence in the vigilance

over the goods and for the safety of the passengers

transported by them, according to all the circumstances of

each case.

Such extraordinary diligence in the vigilance over the goods

is further expressed in Articles 1734, 1735, and 1745, Nos. 5,

6, and 7, while the extraordinary diligence for the safety of

the passengers is further set forth in Articles 1755 and

1756.

Reason: The nature of the business is imbued with public

interest and public policy; because of the exigencies of the

business. The public has no choice but to trust on the skills

of the employees of the common carrier. The goods and the

life of the passenger are placed in the hands of the common

carrier.

Article 363 of the Code of Commerce provides that:

Outside of the cases mentioned in the second paragraph of

Article 361, the carrier shall be obliged to deliver the goods

shipped in the same condition in which, according to the bill

of lading, they were found at the time they were received,without any damage or impairment, and failing to do so, to

pay the value which those not delivered may have at the

point and at the time at which their delivery should have

been made. If those not delivered form part of the goods

transported, the consignee may refuse to receive the latter,

when he proves that he cannot make use of them

independently of the others.

Article 364 of the Code of Commerceprovides that: If the

effect of the damage referred to in Article 361 is merely a

diminution in the value of the gods, the obligation of the

carrier shall be reduced to the payment of the amount

which, in the judgment of experts, constitutes such

difference in value.

Article 365 of the Code of Commerceprovides that: If, in

consequence of the damage, the goods are rendered useless

for sale and consumption for the purposes for which they

are properly destined, the consignee shall not be bound to

receive them, and he may have them in the hands of the

carrier, demanding of the latter their value at the curren

price on that day. If among the damaged goods there should

be some pieces in good condition and without any defectthe foregoing provision shall be applicable with respect to

those damaged and the consignee shall receive those which

are sound, this segregation to be made by distinct and

separate pieces and without dividing a single object, unless

the consignee proves that impossibility of conveniently

making use of them in this form. The same rule shall be

applied to merchandise in bales or packages, separating

those parcels which appear sound.

Presumption of negligence

Article 1735 of the New Civil Code provides that: In a

cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of

the preceding article, if the goods are lost, destroyed o

deteriorated, common carriers are presumed to have been

at fault or to have acted negligently, unless they prove that

they observed extraordinary diligence as required in Article

1733.

2. Duration of liabilityArticle 1736 of the New Civil Code states that: The

extraordinary responsibility of the common carrier last

from the time the goods are unconditionally placed in the

possession of, and received by the carrier for transportation

until the same are delivered, actually or constructively, by

the carrier to the consignee, or to the person who has a

right to receive them, without prejudice to the provisions of

Article 1738.

Article 1737 of the New Civil Code states that: The

common carrier's duty to observe extraordinary diligenceover the goods remains in full force and effect even when

they are temporarily unloaded or stored in transit, unles

the shipper or owner has made use of the right of stoppage

in transitu.

Article 1738 of the New Civil Code provides that: The

extraordinary liability of the common carrier continues to be

operative even during the time the goods are stored in a

warehouse of the carrier at the place of destination, unt

the consignee has been advised of the arrival of the goods

and has had reasonable opportunity thereafter to remove

them or otherwise dispose of them.

3. Defenses of common carriersArticle 1734 of the New Civil Codeprovides that: Common

carriers are responsible for the loss, destruction, o

deterioration of the goods, unless the same is due to any o

the following causes only:

(1) Flood, storm, earthquake, lightning, or other natura

disaster or calamity;

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

civil;

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

(4) The character of the goods or defects in the packing or in

the containers;


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(5) Order or act of competent public authority.

*The enumeration is exclusive or a closed list.

General Rule: Common carriers are responsible for the loss,

destruction or deterioration of the goods.

Exceptions:

1. Flood, storm, earthquake, lightning or other

natural disaster or calamity;

2. Act of the public enemy in war whether

international or civil;

3. Act of omission of the shipper or owner of the

goods;4. The character of the goods or defects in the

packaging or in the containers; and

5. Order or act of the competent public authority

Article 1740 of the New Civil Code states that: If the

common carrier negligently incurs in delay in transporting

the goods, a natural disaster shall not free such carrier from

responsibility.

a. Fortuitous eventArticle 1739 of the New Civil Code provides that: In

order that the common carrier may be exempted from

responsibility, the natural disaster must have been the

proximate and only cause of the loss. However, the

common carrier must exercise due diligence to prevent

or minimize loss before, during and after the

occurrence of flood, storm or other natural disaster in


liability for the loss, destruction, or deterioration of the

goods. The same duty is incumbent upon the common

carrier in case of an act of the public enemy referred to

in Article 1734, No. 2.

*Fire is not within the ambit of natural disaster or

calamity.

*Calamity includes thunderstorm.

*mechanical defect is not within the ambit of the

natural disaster; it is within the control of the common

carrier.

Requisites:1. Proximate cause is the natural calamity

2. Absence of negligence on the part of the

common carrier

3. The common carrier must exercise due diligence

to prevent loss before, during and after the

occurrence of the disaster

4. Free from unreasonable delay by the common

carrier or unreasonable deviation

b. Public enemyArticle 1739 of the New Civil Code states that: In


responsibility, the natural disaster must have been the

proximate and only cause of the loss. However, the

common carrier must exercise due diligence to prevent

or minimize loss before, during and after the

occurrence of flood, storm or other natural disaster in


liability for the loss, destruction, or deterioration of the

goods. The same duty is incumbent upon the common

carrier in case of an act of the public enemy referred to

in Article 1734, No. 2.

*Public enemy includes pirates however it does not

include robbery and thief.

*Pirates are enemies of all civilized nation.

General Rule: rebels and insurreccion is not included.

Exception: If it they are cast of and took allegiance a

hostile manner territory

*Existence of actual war is imperative.

c. Act of omission on the part of the shipper or owner othe goods

*There must be no fault or contributory negligence on

the part of the carrier.

*In Compania Maritima v CA, the SC held that the

common carrier is also at fault; the common carriershould have exercise extraordinary diligence by not

relying solely on the statement of the shipper; it

should have conducted its own weighing. In this case

the common carrier is not totally absolved from it

liability.

d. Improper packingArticle 1742 of the New Civil Codestates that: Even i

the loss, destruction, or deterioration of the good

should be caused by the character of the goods, or the

faulty nature of the packing or of the containers, the

common carrier must exercise due diligence to

forestall or lessen the loss.

*If the defect is apparent, the carrier may refuse to

accept the goods for carriage; if the shipper insists, the

remedy is to make a protestation; make a foul bill o

lading.

*In Iron Bulk v CA (Dec. 8, 2003), carrier issued pro

forma bill of lading stated where in that it accepted

goods in good condition. The goods arrived defective

The SC held that the carrier is not exempt from liability

because it accepted the goods without protestation.

*Foul Bill of Lading preserves the right of the carrier to

use the excuse provided in 1734.

e. Order of public authorityArticle 1743 of the New Civil Code states that: I

through the order of public authority the goods are

seized or destroyed, the common carrier is notresponsible, provided said public authority had powe

to issue the order.

*The important requisite is that the public authority

has the power to issue an order.

Case: Ganzon v CA

4. Contributory negligence of the shipperArticle 1741 of the New Civil Code states that: 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 shal

be liable in damages, which however, shall be equitably

reduced.

5. Stipulation limiting liability of carrierArticle 1744 of the New Civil Codestates that: A stipulation

between the common carrier and the shipper or owne

limiting the liability of the former for the loss, destruction, o

deterioration of the goods to a degree less than

extraordinary diligence shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the

service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

*This is for the benefit of the carrier.


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Consideration: Reduction of fare

*The stipulation must be in writing for the purpose of

preventing abuse from the carrier.

Article 1748 of the New Civil Code provides that: An

agreement limiting the common carrier's liability for delay

on account of strikes or riots is valid.

Article 1749 of the New Civil Codestates that: A stipulation

that the common carrier's liability is limited to the value of

the goods appearing in the bill of lading, unless the shipper

or owner declares a greater value, is binding.

Article 1750 of the New Civil Code provides that: Acontract fixing the sum that may be recovered by the owner

or shipper for the loss, destruction, or deterioration of the

goods is valid, if it is reasonable and just under the

circumstances, and has been fairly and freely agreed upon.

a. RequisitesArticle 1744 of the New Civil Code states that: A

stipulation between the common carrier and the

shipper or owner limiting the liability of the former for

the loss, destruction, or deterioration of the goods to a

degree less than extraordinary diligence shall be valid,

provided it be:


(2) Supported by a valuable consideration other than

the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

Article 1751 of the New Civil Codeprovides that: The

fact that the common carrier has no competitor along

the line or route, or a part thereof, to which the

contract refers shall be taken into consideration on the

question of whether or not a stipulation limiting the

common carrier's liability is reasonable, just and in

consonance with public policy.

*Liability can be limited but cannot be totally

exempted.

*Stipulations reducing diligence or limiting liability

must be in writing to be enforceable.

b. Invalid stipulationsArticle 1745 of the New Civil Codestates that: Any of

the following or similar stipulations shall be considered

unreasonable, unjust and contrary to public policy:

(1) That the goods are transported at the risk of the

owner or shipper;

(2) That the common carrier will not be liable for any

loss, destruction, or deterioration of the goods;

(3) That the common carrier need not observe any

diligence in the custody of the goods;

(4) That the common carrier shall exercise a degree of

diligence less than that of a good father of a family, or

of a man of ordinary prudence in the vigilance over the

movables transported; (5) That the common carrier

shall not be responsible for the acts or omission of his

or its employees;

(6) That the common carrier's liability for acts

committed by thieves, or of robbers who do not act

with grave or irresistible threat, violence or force, is

dispensed with or diminished;

(7) That the common carrier is not responsible for the

loss, destruction, or deterioration of goods on account

of the defective condition of the car, vehicle, ship,

airplane or other equipment used in the contract o

carriage.

*Even if they agreed with regard to numbers 1,2 and 3

the stipulation is void because it is contrary to public

policy because all these stipulations exempt the carrie

from liability.

General Rule: The degree of diligence may be lowered

Exception: Not lower than that of a good father of a

family.

General Rule: stipulations exempting from liability act

committed by robbers and thieves who do not act withgrave threat or irresistible threats are not valid.

Exception: In case the robbers or thieves used grave

threat or irresistible threats.

*In this case, the presumption of negligence is stil

applicable, the stipulation only affects the outcome o

the case.

c. Effect of delayArticle 1747 of the New Civil Codestates that: If the

common carrier, without just cause, delays the

transportation of the goods or changes the stipulated

or usual route, the contract limiting the common

carrier's liability cannot be availed of in case of the

loss, destruction, or deterioration of the goods.

*Delay will prevent the carrier from raising natura

disaster as a defense and that the agreement limiting

its liability cannot be raised as a defense.

d. Rule on presumption of negligence despite stipulationArticle 1752 of the New Civil Codestates that: Even

when there is an agreement limiting the liability of the

common carrier in the vigilance over the goods, the

common carrier is disputably presumed to have been

negligent in case of their loss, destruction o

deterioration.

B. Other obligations1. Duty to accept goods

a. Grounds for valid refusal to accept goodsi. General Rule: Goods sought to be transported

are dangerous objects or substances including

dynamite and other explosives;

Exception: Carriers that are permitted or allowed

to transport dangerous objects or substances fo

the reason that it is their function to do so or it i

their operation.

ii. Goods are unfit for transportation;

*This can be found under Article 356 of the Code

of Commerce

iii. Acceptance would result in overloading;

iv. Contrabands or illegal goods;

v. Goods are injurious to health;

vi. Goods will be exposed to untoward danger like

flood, capture by enemies and the like;

vii. Goods like livestock will be exposed to disease;

viii. Strike; and

ix. Failure to tender goods on time

2. Duty to deliver goodsa. Time of delivery

General Rule: It is by stipulation

Exception: In the absence of stipulation Code o

Commerce governs.


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Article 358 of the Code of Commerceprovides that: If

there is no period fixed for the delivery of the goods

the carrier shall be bound to forward them in the first

shipment of the same or similar goods which he may

make to the point where he must deliver them; and

should he not do so, the damages caused by the delay

should be for his account.

*When a common carrier undertakes to convey goods,

the law implies a contract that they shall be delivered

at destination within a reasonable time, in the absence

of any agreement as to the time of delivery.*Mercantile usage or practice

With stipulation Without stipulation

Carrier is bound to

fulfil the contract and

is liable for any delay;

no matter from what

cause it may have

arisen

1. Within a

reasonable time.

2. Carrier is bound

to forward them

in the first

shipment of the

same or similar

goods which he

may make to the

point of delivery

b. Consequences of delayArticle 1740 of the New Civil Code provides that: If

the common carrier negligently incurs in delay in

transporting the goods, a natural disaster shall not free

such carrier from responsibility.

Article 1747 of the New Civil Code provides that: If

the common carrier, without just cause, delays the

transportation of the goods or changes the stipulated

or usual route, the contract limiting the common

carrier's liability cannot be availed of in case of the

loss, destruction, or deterioration of the goods.


a period has been fixed for the delivery of the goods, it

must be made within such time, and, for failure to do

so, the carrier shall pay the indemnity stipulated in the

bill of lading, neither the shipper nor the consignee

being entitled to anything else. If no indemnity has

been stipulated and the delay exceeds the time fixed in

the bill of lading, the carrier shall be liable for the

damages which the delay may have caused.


In case of delay through the fault of the carrier,

referred to in the preceding articles, the consignee

may leave the goods transported in the hands of the

former, advising him thereof in writing before their

arrival at the point of destination. When this

abandonment takes place, the carrier shall pay the full

value of the goods as if they had been lost or mislaid. If

the abandonment is not made, the indemnification forlosses and damages by reason of the delay cannot

exceed the current price which the goods transported

would have had on the day and at the place in which

they should have been delivered; this same rule is to

be observed in all other cases in which this indemnity

may be due.

Article 372 of the Code of Commercestates that: The

value of the goods which the carrier must pay in cases

of loss or misplacement shall be determined in

accordance with that declared in the bill of lading, the

shipper not being allowed to present proof that among

the goods declared therein there were articles o

greater value and money. Horses, vehicles, vessels

equipment and all other principal and accessory means

of transportation shall be especially bound in favour of

the shipper, although with respect to railroads said

liability shall be subordinated to the provisions of the

laws of concession with respect to the property, and to

what this Code established as to the manner and form

of effecting seizures and attachments against said

companies.Article 373 of the Code of Commerce states that: The

carrier who makes the delivery of the merchandise to

the consignee by virtue of combined agreements o

services with other carriers shall assume the

obligations of those who preceded him in the

conveyance, reserving his right to proceed against the

latter if he was not the party directly responsible fo

the fault which gave rise to the claim of the shipper o

consignee. The carrier who makes the delivery shal

likewise acquire all the actins and rights of those who

preceded him in the conveyance. The shipper and the

consignee shall have an immediate right of action

against the carrier who executed the transportation

contract, or against the other carriers who may have

received the goods transported without reservation

However, the reservation made by the latter shall no

relieve them from the responsibilities which they may

have incurred by their own acts.


consignees to whom the shipment was made may no

defer the payment of the expenses and transportation

charges of the goods they receive after the lapse of 24

hours following their delivery; and in case of delay in

this payment, the carrier may demand the judicial sale

of the goods transported in an amount necessary to

cover the cost of transportation and the expense

incurred.Effects of delay:

1. Excusable delay in carriage merely suspends and

generally does not terminate the contract o

carriage. When the cause is removed, the maste

must proceed with the voyage and make

delivery;

2. Carrier remains duty bound to exercise

extraordinary diligence;

3. Natural disaster shall not free the carrier from

responsibility;

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.

c. Place of DeliveryArticle 360 of the Code of Commerce provides that

The shipper, without changing the place where the

delivery is to be made, may change the consignment o

the goods which he delivered to the carrier, provided

that at the time of ordering the change of consignee

the bill of lading signed by the carrier, if one has been

issued, be returned to him, in exchange for anothe

wherein the novation of the contract appears. The


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expenses which this change of consignment occasions

shall be for the account of the shipper.

d. To whom delivery shall be madeArticle 368 of the Code of Commerce provides that:

The carrier must deliver to the consignee, without any

delay or obstruction, the goods which he may have

received, by the mere fact of being named in the bill of

lading to receive them; and if he does not do so, he

shall be liable for the damages which may be caused

thereby.

Article 369 of the Code of Commerceprovides that: Ifthe consignee cannot be found at the residence

indicated in the bill of lading, or if he refuses to pay the

transportation charges and expenses, or if he refuses

to receive the goods, the municipal judge, where there

is none of the first instance, shall provides for their

deposit at the disposal of the shipper, this deposit

producing all the effects of delivery without prejudice

to third parties with a better right.

OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF

PASSENGERS:

A. Safety of Passengers1. Duty to observe utmost diligence

Article 1755 of the New Civil Code provides that: A

common carrier is bound to carry the passengers safely as

far as human care and foresight can provide, using the

utmost diligence of very cautious persons, with a due regard

for all the circumstances.

*There are claims not really focused on death, injuries, loss

or damage of goods but concentrates on moral damages;

and the SC said that these claims can still prosper in because

there is still a breach of contract of carriage.

*Behavior of the employees towards to passengers is also a

factor considered by the court to rule against a common

carrier.

*In CAL v PAL, the SC held that hijacking of the airplane is

considered to be a force majeure thus cannot held the

carrier liable.

Case: Singapore Airline v Andion Fernandez

*In Japan Airlines v Asuncion (January 28, 2005), the SC

held that the things invoked by the respondent do not fall

within the ambit of extraordinary diligence. Though it is the

duty of the carrier to check that travel documents are with

the passengers but it is not under the obligation of the

carrier to check the veracity of the information in the travel

document; it also held that the obligation of the carrier is

limited to endorsing and not to influence. The issue of

whether or not an alien be admitted entrance to a country is

a sovereign act and such cannot be interfered by the

petitioner.2. Duration of liability

*The carrier is bound to exercise utmost diligence with

respect to passengers the moment the person who

purchases the ticket or token from the carrier presents

himself at the proper place and in a proper manner to be

transported. Such person must have a 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 transportation in the place and manner provided.

*In LRTA v Navidad, the SC held the petitioner carrier liable

for breach of contract. The SC held that Nicanor Navidad

was a passenger when he died after he fell on the LRT tracks

and was struck by a moving train. He was considered a

passenger because he entered the LRT station after having

purchased a token and he fell while he was on the platform

waiting for a train. Thus, he was where he was supposed to

be with the intention of boarding a train.

*Once created, the relationship will not ordinarily terminate

until the passenger has, after reaching his destination, safely

alighted from the carriers conveyance or has had areasonable opportunity to leave the carriers premises. A

persons who remain on the premises within a reasonable

time after leaving the conveyance are to be deemed

passengers, and what is a reasonable time or a reasonable

delay within this rule is to be determined from all the

circumstances, and includes reasonable time to look afte

his baggage and prepare for his departure.

*In La Mallorca v CA, the SC held that there was a breach of

duty to exercise extraordinary diligence with respect to the

4 year old child and the carrier is liable as a consequence

The presence of passengers near the bus was no

unreasonable and they were, therefore, to be considered

still as passengers of the carrier, entitled to the protection

under their contract.

*In Aboitiz Shipping Corporation v CA, the SC held tha

extraordinary diligence was still owed to AV at the time o

the accident. It was ruled that AVs presence in the premise

was not without cause. The victim had to claim his baggage

which was possible only one hour after the vessel arrived

since it was the standard procedure in the case o

petitioners vessels that the unloading operation shall star

only after that time.

*The differences between the La Mallorca case and Aboitiz

Shipping Corporation are: 1. The business is different from

that of La Mallorca case; and 2. The capacity of passengers

and baggages are different

3. Presumption of negligenceArticle 1756 of the New Civil Code states that: In case o

death of or injuries to passengers, common carriers are

presumed to have been at fault or to have acted negligently

unless they prove that they observed extraordinary diligence

as prescribed in Articles 1733 and 1755.

4. Liability for acts of employees

Article 1759 of the New Civil Codeprovides that: Common

carriers are liable for the death of or injuries to passengers

through the negligence or wilful acts of the former's

employees, although such employees may have acted

beyond the scope of their authority or in violation of the

orders of the common carriers.

This liability of the common carriers does not cease upon

proof that they exercised all the diligence of a good father o

a family in the selection and supervision of thei

employees.

Case: Maranan v Perez

5. Liability for acts of strangersArticle 1763 of the New Civil Code provides that: A

common carrier is responsible for injuries suffered by a

passenger on account of the wilful acts or negligence o

other passengers or of strangers, if the common carrier's

employees through the exercise of the diligence of a good


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father of a family could have prevented or stopped the act

or omission.

Case: Bachelor Express v CA

6. Effect of stipulation on liabilityArticle 1757 of the New Civil Code provides that: The

responsibility of a common carrier for the safety of

passengers as required in Articles 1733 and 1755 cannot be

dispensed with or lessened by stipulation, by the posting of

notices, by statements on tickets, or otherwise.

Article 1758 of the New Civil Codeprovides that: When a

passenger is carried gratuitously, a stipulation limiting thecommon carrier's liability for negligence is valid, but not for

wilful acts or gross negligence.

The reduction of fare does not justify any limitation of the

common carrier's liability.


common carrier's responsibility prescribed in the preceding

article cannot be eliminated or limited by stipulation, by the

posting of notices, by statements on the tickets or

otherwise.

B. Passengers BaggagesArticle 1754 of the New Civil Codeprovides that: The provisions

of Articles 1733 to 1753 shall apply to the passenger's baggage

which is not in his personal custody or in that of his employee. As

to other baggage, the rules in Articles 1998 and 2000 to 2003

concerning the responsibility of hotel-keepers shall be

applicable.

Article 1998 of the New Civil Code states that: The deposit of

effects made by the travellers in hotels or inns shall also be

regarded as necessary. The keepers of hotels or inns shall be

responsible for them as depositaries, provided that notice was

given to them, or to their employees, of the effects brought by

the guests and that, on the part of the latter, they take the

precautions which said hotel-keepers or their substitutes advised

relative to the care and vigilance of their effects.

Article 2000 of the New Civil Code states that: The responsibility

referred to in the two preceding articles shall include the loss of,or injury to the personal property of the guests caused by the

servants or employees of the keepers of hotels or inns as well as

strangers; but not that which may proceed from any force

majeure. The fact that travellers are constrained to rely on the

vigilance of the keeper of the hotels or inns shall be considered in

determining the degree of care required of him.

Article 2001 of the New Civil Code provides that: The act of a

thief or robber, who has entered the hotel is not deemed force

majeure, unless it is done with the use of arms or through an

irresistible force.

Article 2002 of the New Civil Code provides that: The hotel-

keeper is not liable for compensation if the loss is due to the acts

of the guest, his family, servants or visitors, or if the loss arises

from the character of the things brought into the hotel.

Article 2003 of the New Civil Code provides that: The hotel-

keeper cannot free himself from responsibility by posting notices

to the effect that he is not liable for the articles brought by the

guest. Any stipulation between the hotel-keeper and the guest

whereby the responsibility of the former as set forth in articles

1998 to 2001 is suppressed or diminished shall be void.

*The baggage in the personal custody of the passenger or his

employee in that the baggage 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 passenger took the necessary

precaution, which the carrier has advised them relative to the

care and vigilance of their baggage. In case of loss due to the faul

of the passenger the carrier will not be liable.

*They are not absolutely responsible as depository because the

law requires notice.

*It is also required to declare the value of the baggage.

*The carrier who has in his custody the baggage of the passenge

to be carried like any other goods is required to observe

extraordinary diligence. In case of loss or damage the carrier ispresumed negligent.

OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER:

A. Effect of negligence of shipper or passenger Article 1741 of theNew Civil Code states that: 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, shal

be equitably reduced.

Article 1761 of the New Civil Codeprovides that: The passenge

must observe the diligence of a good father of a family to avoid

injury to himself.

Article 1762 of the New Civil Codestates that: The contributory

negligence of the passenger does not bar recovery of damages fo

his death or injuries, if the proximate cause thereof is the

negligence of the common carrier, but the amount of damages

shall be equitably reduced.

*The shipper is also obliged to exercise due diligence in avoiding

damage or injury.

*With respect to carriage of passengers, the said passengers are

likewise bound to observe due diligence to avoid injury.

*The contributory negligence on the part of the passenger is not a

defense that will excuse the carrier from liability. It will only

mitigate such liability.

*The carrier may be able to prove that the only cause of the loss

of the goods is any of the following acts of the shipper:

1. failure of the shipper to disclose the nature of the goods;

2. improper marking or direction as to destination; and

3. improper loading when he assumed such responsibility.

*The shipper must likewise see to it that the goods are properly

packed; otherwise, liability of the carrier may be mitigated o

barred depending on the circumstances.

B. Payment of freightWho will pay:

Shipper - before or at the time he delivers the goods to the carrie

for shipment.

Consignee - if agreed upon by the parties at the point o

destination is bound by such stipulation the moment he accepts

the goods.Passengers - they are contractually bound to pay the fare within

such time as prescribed by regulations or by the carrier.

Time to pay:

Tickets are purchased in advance from ticket outlets.

Consignees to whom the shipment was made may not defer the

payment of the expenses and transportation charges of the goods

they receive after the lapse of 24 hours following their delivery.

*In case of delay in payment, the carrier may demand the judicia

sale of the goods transported in an amount necessary to cover the

cost of transportation and the expenses incurred.


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Article 374 of the Code of Commerceprovides that: The carrier

who makes the delivery of the merchandise to the consignee by

virtue of combined agreements or services with other carriers

shall assume the obligations of those who preceded him in the

conveyance, reserving his right to proceed against the latter if he

was not the party directly responsible for the fault which gave rise

to the claim of the shipper or consignee. The carrier who makes

the delivery shall likewise acquire all the actions and rights of

those who preceded him in the conveyance. The shipper and the

consignee shall have an immediate right of action against the

carrier who executed the transportation contract, or against theother carriers who may have received the goods transported

without reservation. However, the reservation made by the latter

shall not relieve them from the responsibilities which they may

have incurred by their own acts.

Article 375 of the Code of Commerceprovides that: The goods

transported shall be especially bound to answer for the cost of

transportation and for the expenses and fees incurred for them

during their conveyance and until the moment of their delivery.

This special right shall prescribe 8 days after the delivery has been

made, and once prescribed, the carrier shall have no other action

than that corresponding to him as an ordinary creditor.

C. Liability for demurrageDemurrage is the compensation provided for in the contract of

affreightment for the detention of the vessel beyond the time

agreed on for loading and unloading. It is a claim for damages for

failure to accept delivery.

*Liability for demurrage exists only when expressly stipulated in

the contract.

EXTRAORDINARY DILIGENCE:

A. Underlying reasonReasons:

1. From the nature of the business and for reasons of

public policy;

2. Relationship of trust;

3. Business is impressed with a special public duty;

4. Possession of the goods;

5. Preciousness of human life

B. Effect of StipulationArticle 1744 of the New Civil Codestates that: A stipulation

between the common carrier and the shipper or owner

limiting the liability of the former for the loss, destruction, or

deterioration of the goods to a degree less than

extraordinary diligence shall be valid, provided it be:


(2) Supported by a valuable consideration other than the

service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.Article 1757 of the New Civil Code states that: The

responsibility of a common carrier for the safety of

passengers as required in Articles 1733 and 1755 cannot be

dispensed with or lessened by stipulation, by the posting of

notices, by statements on tickets, or otherwise.

Article 1758 of the New Civil Code states that: When a

passenger is carried gratuitously, a stipulation limiting the

common carrier's liability for negligence is valid, but not for

wilful acts or gross negligence.

The reduction of fare does not justify any limitation of the

common carrier's liability.


common carrier's responsibility prescribed in the preceding

article cannot be eliminated or limited by stipulation, by the

posting of notices, by statements on the tickets o

otherwise.

C. Extraordinary diligence in carriage by sea1. Seaworthiness of the vessel

Sec. 3 [1] of the COGSA provides that: The carrieshall be bound before and at the beginning of the

voyage to exercise due diligence to

(a) Make the ship seaworthy;

(b) Properly man,equip, and supply the ship;

(c) Make the holds, refrigerating and cooling

chambers, and all other parts of the ship in which

goods are carried, fit and safe for their reception

carriage, and preservation.

Sec. 3 [2] of the COGSA provides that: The carrie

shall properly and carefully load, handle, stow, carry

keep, care for, and discharge the goods carried.

Sec. 116 of the IC

Sec. 119 of the IC

Article 609 of the Code of Commerce states that

Captains, masters or patrons of vessels must be

Filipinos, have legal capacity to contract in accordance

with this code, and prove the skill, capacity, and

qualifications necessary to command and direct the

vessel, as established by marine or navigation laws

ordinances, or regulations, and must not be

disqualified according to the same for the discharge o

the duties of the position. If the owner of a vesse

desires to be the captain thereof, without having the

legal qualifications therefor, he shall limit himself to

the financial administration of the vessel, and shal

intrust the navigation to a person possessing the

qualifications required by said ordinances andregulations.

*Extraordinary diligence requires that the ship which

will transport the passengers and goods is seaworthy.

*The carriers are deemed to warrant impliedly the

seaworthiness of the ship. The failure of a common

carrier to maintain in seaworthy condition the vesse

involved in its contract of carriage is a clear breach o

its duty prescribed in Article 1755 of the NCC.

*Shippers of goods are not expected to inquire into the

vessels seaworthiness and compliance with al

maritime laws.

*The unseaworthiness can be established by the fact

that it did not withstand the natural and inevitable

action of the sea.

2. Overloading*Duty to exercise due diligence includes the duty to

take passengers or cargoes that are within the carrying

capacity of the vessel.

3. Proper storage*The ship must not be only seaworthy but it must also

be cargoworthy. The ship must be an efficien

storehouse for her cargo.


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*The vessel must be adequately equipped and

properly manned.

4. Obligation of captain and crew*If the negligence of the captain and crew can be

traced to the fact that they are really incompetent, the

Limited Liability Rule cannot be invoked because the

ship owner may be deemed negligent.

5. Rule on deviation and transhipment Deviation*If route is stipulated upon by the shipper and carrier,

carrier cant change unless due toforce majeure.

*Carrier shall be liable for all losses suffered from anyother cause, beside the sum stipulated for such case.

*If due to said force majeure he took another route

and incurred expenses by reason thereof, he shall be

reimbursed for such increase upon formal proof

thereof (Art. 359, Code of Commerce).

Transshipment is the act of taking cargo out of one

ship and loading it in another.

*When done without legal excuse, however

competent and safe the vessel into which the transfer

is made, is a violation of the contract and an

infringement of the right of the shipper and subjects

the carrier to liability if the freight is lost even by a

cause otherwise excepted (Magellan Manufacturing

Corp. v. CA).


there is an agreement between the shipper and the

carrier as to the road over which the conveyance is to

be made, the carrier may not change the route, unless

it be by reason of force majeure; and should he do so

without this cause, he shall be liable for all the losses

which the goods he transports may suffer from any

other cause, beside paying the sum which may have

been stipulated for such case. When on account of said

cause of force majeure, the carrier had to take another

route which produced an increase in transportation

charges, he shall be reimbursed for such increase upon

formal proof thereof.

D. Extraordinary diligence in carriage by land1. Vehicles condition

*Owners are required to make sure that the vehicles

they are using are in good order and condition.

2. Traffic rules (RA 4136)*In cases involving breach of contract of carriage,

proof of violation of traffic rules confirms that the

carrier failed to exercise extraordinary diligence.

3. Obligation to Inspect*in overland transportation, common carrier is not

bound nor empowered to make an examination of the

contents of packages or bags particularly those hand

carried. Airline companies are required to inspect each

and every cargo brought into the aircraft (RA 6235).

E. Extraordinary diligence in carriage by air1. Airworthiness - an aircraft, its engines, propellers and

other components and accessories are of proper design and

construction, and are safe for air navigation purposes, such

design and construction being consistent with accepted

engineering practice and in accordance with aerodynamic

laws and aircraft science (RA 779).

2. Competent and well trained crew

3. To take the required and prescribed route

4. Adverse weather conditions or extreme climatic

changes are some of the perils involved in air trave

consequence of which the passenger must assume o

expect.

5. RA 6235 (An Act Prohibiting Certain Acts Inimical to

Civil Aviation and for Other Purposes) - acts punishable:

a. to compel a change in the course or destination of an

aircraft of Philippine registry; or

b. to seize or usurp control of the aircraft while in flight.

ACTIONS IN CASE OF BREACH OF CONTRACT OF CARRIAGE:

A. Causes of action and nature/extent of liability (culpacontractual, culpa aquiliana and culpa delictual)

Culpa contractual only the carrier is primarily liable and no

the driver.

Reason: There is no privity between the driver and the

passenger.

*The party to be impleaded is the carrier itself.

Basis: Article 1759 of the New Civil Code

Culpa delictual/criminal the driver is primarily liable. The

carrier is subsidiarily liable only if the driver is convicted and

declared insolvent.

Basis: Article 100 of the Revised Penal Code

Culpa aquiliana the carrier and the driver are solidarily liable

as joint tortfeasor.

Basis: Article 2180 of the New Civil Code

B. Prescriptive period and conditions precedent1. Overland transportation of goods and coastwise

shipping (Domestic)

Article 366 of the Code of Commerce provides that

Within the 24 hours following the receipt of the

merchandise, the claim against the carrier for damage

or average which may be found therein upon opening

the packages, may be made, provided that the

indications of the damage or average which gives rise

to the claim cannot be ascertained from the outside

part of such packages, in which case the claim shall be

admitted only at the time of receipt. After the periods

mentioned have elapsed, or the transportation charge

have been paid, no claim shall be admitted against the

carrier with regard to the condition in which the goods

transported were delivered.

*Prior notice of claim does not apply to misdelivery of

goods.

Purpose of notice: To inform the carrier that the

shipment has been damaged and that it is charged

with liability therefor, and to give it an opportunity to

make an investigation and fix responsibility while the

matter is fresh.*The filing of notice of claim is a condition precedent

for recovery in case of damage condition of the goods.

*Not provided by Article 366 of the Code of

Commerce. Thus, in such absence, the New Civil Code

rules on prescription apply.

Prescriptive period:

General Rule: If written, 10 years, if not written, 6

years

Exceptions:

1. COGSA 1 year


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2. Warsaw Convention 2 years

Example: Q: In case of pending extrajudicial claim,

does it suspend the one year period?

A: NO

*One year period applies to shipper, assignee, insurer,

subrogees, and successor in interest.

*One year period does not apply in cases of delay or

misdelivery.

International Carriage of Goods by Sea Sec. 3 [6] ofthe COGSA substantially provides that in case of

patent damage, the shipper should file a claim with the

carrier immediately upon delivery. In case of latent

damage, the shipper should file a claim with the carrier

within 3 days from delivery. Action for loss or damage

to the cargo should be brought within one year after:

delivery of the goods (delivered but damaged goods);

or the date when the goods should have been

delivered (loss).

*The filing of a notice of claim is not a condition

precedent.

Recoverable Damages

The court may award the following damages:

1. Actual/Compensatory Damages

2. Temperate Damages

3. Liquidated Damages

4. Exemplary Damages

5. Moral Damages

6. Nominal Damages

Actual/Compensatory damages are those awarded to the

aggrieved party as adequate compensation only for such

pecuniary loss suffered by him as he has alleged and duly proved.

Article 2199 of the Civil Codestates that: Except as provided by

law or by stipulation, one is entitled to an adequate compensation

only for such pecuniary loss suffered by him as he has duly

proved. Such compensation is referred to as actual or

compensatory damages.

*To claim this award, proving the amount is necessary.

*Procedures or plastic surgeries performed to restore the part of

the body injured are included as a component of actual damages.

Temperate damages or moderate damages these are damages

the amount of which is left to the sound discretion of the court,

but it is necessary that there be some injury or pecuniary loss

established, the exact amount of which, could not be determined

by the plaintiff by reason of the nature of the case.

Article 2224 of the New Civil Codeprovides that: Temperate or

moderate damages, which are more than nominal but less than

compensatory damages, may be recovered when the court finds

that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty.

*The court is convinced that there is pecuniary loss.

*There is no actual certainty of the actual amount loss. The court

is allowed to calculate the amount.

*This is in the form of actual damages

Liquidated damages are fixed damages previously agreed by the

parties to the contract and payable to the innocent party in case

of breach by the other.

Article 2226 of the New Civil Code provides that: Liquidated

damages are those agreed upon by the parties to a contract, to be

paid in case of breach thereof.

*This is in the form of actual damages but a stipulated one.

*Proving the amount is not necessary.

*In this kind of damages, estoppel applies.

General Rule: The court cannot change the amount.

Exception: If the amount stipulated is excessive the court may

disregard said amount and may compute the actual damages.

*The only thing to be proved is the fact of loss.

Exemplary damages are mere accessories to other forms odamages except nominal damages. They are mere additions to

actual, moral, temperate and liquidated damages which may o

may not be granted at all depending upon the necessity of setting

an example for the public good as a form of deterrent to the

repetition of the same act by any one.

Article 2229 of the New Civil Code provides that: Exemplary o

corrective damages are imposed, by way of example or correction

for the public good, in addition to the moral, temperate

liquidated or compensatory damages.

*Awarded because of the wanton, fraudulent, malevolent

oppressive acts of the carrier.

*This is awarded to prevent other carrier to commit oppressive

acts.

*This cannot be awarded unless the plaintiff is entitled to moral a

the same time actual or temperate damages.

Article 2231 of the New Civil Codestates that: In quasi-delicts

exemplary damages may be granted if the defendant acted with

gross negligence.

Article 2232 of the New Civil Codestates that: In contracts and

quasi-contracts, the court may award exemplary damages if the

defendant acted in a wanton, fraudulent, reckless, oppressive, or

malevolent manner.

Article 2233 of the New Civil Code states that: Exemplary

damages cannot be recovered as a matter of right; the court wil

decide whether or not they should be adjudicated.

Article 2234 of the New Civil Codestates that: While the amoun

of the exemplary damages need not be proved, the plaintiff mustshow that he is entitled to moral, temperate or compensatory

damages before the court may consider the question of whethe

or not exemplary damages should be awarded In case liquidated

damages have been agreed upon, although no proof of loss is

necessary in order that such liquidated damages may be

recovered, nevertheless, before the court may consider the

question of granting exemplary in addition to the liquidated

damages, the plaintiff must show that he would be entitled to

moral, temperate or compensatory damages were it not for the

stipulation for liquidated damages.

Article 2235 of the New Civil Code states that: A stipulation

whereby exemplary damages are renounced in advance shall be

null and void.

Nominal damages are not for indemnification of loss but fo

vindication of a right violated.

Article 2221 of the New Civil Code provides that: Nomina

damages are adjudicated in order that a right of the plaintiff

which has been violated or invaded by the defendant, may be

vindicated or recognized, and not for the purpose of indemnifying

the plaintiff for any loss suffered by him.

Article 2222 of the New Civil Code states that: The court may

award nominal damages in every obligation arising from any


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source enumerated in Article 1157, or in every case where any

property right has been invaded.

Article 2223 of the New Civil Codestates that: The adjudication

of nominal damages shall preclude further contest upon the right

involved and all accessory questions, as between the parties to

the suit, or their respective heirs and assigns.

*In Japan Airlines v CA, JAL failed to give the plaintiff the priority

for the first available flight. The SC awarded nominal damages.

Moral damages are in the category of an award designed to

compensate the claimant for actual injury suffered and not to

impose a penalty on the wrongdoer.Article 2217 of the New Civil Codeprovides that: Moral damages

include physical suffering, mental anguish, fright, serious anxiety,

besmirched reputation, wounded feelings, moral shock, social

humiliation, and similar injury. Though incapable of pecuniary

computation, moral damages may be recovered if they are the

proximate result of the defendant's wrongful act for omission.

Q: When moral damages may be awarded?

A: 1. Death of a passenger; 2. Carrier is guilty of fraud, malice, bad

faith even if there is no death of a passenger (Case: Lopez v Pan-

American); 3. In Air France case

MARITIME LAW:

Source: Code of Commerce

A. Concept of Maritime LawMaritime Law is the system of laws which particularly relates to

the affairs and business of the sea, to ships, their crews and

navigation, and to maritime conveyance of persons and property.

*Apply only to maritime trade and sea voyages.

B. Limited Liability Rule1. Concept

The exclusively real and hypothecary nature of maritime law

operates to limit the liability of the shipowner to the value

of the vessel, earned freightage and proceeds of the

insurance, if any. NO VESSEL NO LIABILITY expresses in a

nutshell the limited liability rule. The total destruction of the

vessel extinguishes maritime lien as there is no longer any

res to which it can attach.

Q: Is this rule applies in the handling of the passengers?

A:YES

Q: Whose liability is this?

A: Shipowner or Agents.

Article 586 2nd

paragraph states that: By ship agent is

understood the person entrusted with provisioning or

representing the vessel in the port in which it may be

found.

*Ship agent is the only person that can be sued directly.

Reason: Article 618 of the Code of Commerce provides so.

Article 618 1st

paragraphstates that: The ship captain shallbe civilly liable to the ship agent, and the latter to the third

persons who may have made contracts with the former; x x

x.

Q: What kind?

A: Maritime in nature; marine transactions connected with

maritime law; maritime trade and commerce

Purpose: To encourage shipbuilding and maritime

transactions

Article 587 of the Code of Commerce provides that: The

ship agent shall also be civilly liable for the indemnities in

favor of third persons which may arise from the conduct of

the captain in the care of the goods which he loaded on the

vessel; but he may exempt himself therefrom by abandoning

the vessel with all her equipments and the freight it may

have earned during the voyage.


co-owners of a vessel shall be civilly liable in the proportion

of their interests in the common fund, for the results of the

acts of the captain, referred to in Article 587. Each co-owner

may exempt himself from this liability by the abandonment

before a notary, of the part of the vessel belonging to him. Article 837 of the Code of Commerce provides that: The

civil liability incurred by the shipowners in the case

prescribed in this section, shall be understood as limited to

the value of the vessel with all its appurtenances and

freightage earned during the voyage.

When applicable:

The Code of Commerce sanctions the application of the

doctrine in the following cases: 1. Civil liability for

indemnities in favor of third persons which arise from the

conduct of the captain in the case of the goods which the

vessel carried; 2. Civil liability arising from collisions; 3

Unpaid wages of the captain and the crew if the vessel and

its cargo are totally lost by reason of capture of shipwreck.

2. Exceptions to the ruleExceptions:

1. When the injury to or death of a passenger is due

either to the fault of the shipowner, or to the

concurring negligence of the shipowner and the

captain;

2. When the vessel is insured to the extent of the

insurance proceeds; and

*Freightage collectible

Q: How come insurance is an exception?

A: Because there is no loss. The loss was compensated

by the insurance company

3. In Workmens Compensation claims

Q: Why is an exception?A: Because not maritime in nature

*In Yangco v Laserna case, the SC held that it covers

anything that is connected with maritime transactions

3. AbandonmentQ: If theres partial loss can the shipowner/agent be

exempted from liability?

A:YES. If there is abandonment.

Q: If there is total loss, is it necessary to abandon?

A:NO. There is nothing to abandon.

Case: Luzon Stevedoring

Article 587 of the Code of Commerce states that: The ship

agent shall also be civilly liable for the indemnities in favo

of third persons which may arise from the conduct of the

captain in the care of the goods which he loaded on the

vessel; but he may exempt himself therefrom by abandoning



Q: How claims are satisfied under the Limited Liability Rule?

A: 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. No claimant should be given

preference over the others by the simple expedience o

having filed or completed its action earlier than the rest


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Thus, the execution of judgment in earlier completed cases,

even those already final and executory, must be stayed

pending completion of all cases occasioned by the subject

sinking. Then and only then can all such claims be

simultaneously settled, either completely or pro-rata should

the insurance proceeds and freightage be not enough to

satisfy the claim.

Case: Aboitiz Shipping Co. v General Accident Fire and Life

Insurance Corporation

C. Vessels- Those engaged in navigation, whether coastwise or on

the high seas, including floating docks, pontoons,

dredges, scows and any other floating apparatus

destined for the services of the industry or maritime

commerce. Excluded are local and foreign military

vessels, bancas and other watercrafts of less than 3

tons gross capacity and small watercrafts engaged in

river and bay traffic.

1. Acquisitiona. By prescription

Article 573 of the Code of Commerce states that:

Merchant vessels constitute property which may be

acquired and transferred by any of the means

recognized by law. The acquisition of a vessel must

appear in a written instrument, which shall not

produce any effect with respect to third persons if not

inscribed in the registry of vessels. The ownership of a

vessel shall likewise be acquired by possession in good

faith, continued for three years, with a just title duly

recorded. In the absence of any of these requisites,

continuous possession for ten years shall be necessary

in order to acquire ownership. A captain may not

acquire by prescription the vessel of which he is in

command.

Requisites:

1. Acquisition must appear in a written instrument

2. Such shall not produce any effect to third personsif not inscribed in the registry of vessels

3. Shall be acquired by possession in good faith,

continued for 3 years

4. With a just title duly recorded

5. In the absence of any of there, continuous

possession for 10 years shall be necessary to

acquire ownership

Q: Can the ship captain acquire vessel by prescription?

A:NO. The character of possession he has is not those

for acquisitive possession. The requisite for acquisitive

possession is that possession as an owner.

Article 575 of the Code of Commerce states that: Co-

owners of vessels shall have the right of repurchase

and redemption in sales made to strangers, but they

may exercise the same only within the 9 days following

the inscription of the sale in the registry, and by

depositing the price at the same time.

b. By saleArticle 576 of the Code of Commerce states that: In

the sale of a vessel it shall always be understood as

included the rigging, masts, stores and engine of a

steamer appurtenant thereto, which at the time

belongs to the vendor. The arms, munitions of war,

provisions and fuel shall not be considered as included

in the sale. The vendor shall be under the obligation to

deliver to the purchaser a certified copy of the record

sheet of the vessel in the registry up to the date o

sale.

Article 577 of the Code of Commerce states that: I

the alienation of the vessel should be made while it is

on voyage, the freightage which it earns from the time

it receives its last cargo shall pertain entirely to the

purchaser, and the payment of the crew and othe

persons who make up its complement for the samevoyage shall be for his account. If the sale is made afte

the vessel has arrived at the port of its destination, the

freightage shall pertain to the vendor, and the

payment of the crew and other individuals who make

up its complement shall be for his account, unless the

contrary is stipulated in either case.

*If made while it is on voyage, the freightage which it

earns from the time it receives its last cargo shal

pertain entirely to the purchaser, and the payment o

the crew and other persons who make up its

complement shall be for his account.

*If made after vessel arrived at port of its destination

freightage shall pertain to the vendor, and the

payment of the crew and other individuals who make

up its complement shall be for his account, unless the

contrary is stipulated in either case.

Article 578 of the Code of Commerce states that: I

the vessel being on a voyage or in a foreign port, it

owner or owners should voluntarily alienate it, eithe

to Filipinos or to foreigners domiciled in the capital o

in a port of another country, the bill of sale shall be

executed before the consul of the Republic of the

Philippines at the port where it terminates its voyage

and said instrument shall produce no effect with

respect to third persons if it is not inscribed in the

registry of the consulate. The consul shall immediately

forward a true copy of the instrument of purchase andsale of the vessel to the registry of vessels of the port

where said vessel is inscribed and registered. In every

case the alienation of the vessel must be made to

appear with a statement of whether the vendo

receives its price in whole or in part, or whether he

preserves in whole or in part any claim on said vessel

In case the sale is made to a Filipino, this fact shall be

stated in the certificate of navigation. When a vessel

being in a voyage, shall be rendered useless fo

navigation, the captain shall apply to the competen

judge or court of the port of arrival, should it be in the

Philippines; and should it be in a foreign country, to

the consul of the Republic of the Philippines, should

there be one, or, where there is none, to the judge or

court or to the local authority; and the consul, or the

judge or court, shall order an examination of the vesse

to be made. If the consignee or the insurer should

reside at said port, or should have representatives

there, they must be cited in order that they may take

part in the proceedings on behalf of whoever may be

concerned.

c. Registration


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Section 810 of the Tariff and Customs Code provides

that: The Bureau of Customs is vested with exclusive

authority over the registration and documentation of

Philippine vessels. By it shall be kept and preserved the

records of registration and of transfers and

encumbrances of vessels; and by it shall be issued all

certificates, licenses or other documents incident to

registration and documentation, or otherwise requisite

for Philippine vessels.

*Through the MARINA

d. Ships manifestSec. 906 of the Tariff and Customs Code provides that:

Manifests shall be required for cargo and passengers

transported from one place or port in the Philippines

to another only when one or both of such places is a

port of entry.*Declaration of the entire cargo. The object is to

furnish customs officers with a list to check against, to

inform the revenue officers what goods are brought

into a port of the country on a vessel. Hence, the

requirement that a vessel must carry a manifest is not

complied with even if a bill of lading can be presented.

*A bill of lading is just a declaration of a specific cargo

rather than the entire cargo. It is issued as a matter of

convenience by virtue of a contract.

D. Persons who take part in Maritime Commerce1. Shipowners and shipagents


shipowner and the ship agent shall be civilly liable for the

acts of the captain and for the obligations contracted by the

latter to repair, equip, and provision the vessel, provided the

creditor proves that the amount claimed was invested for

the benefit of the same. By ship agent is understood the

person entrusted with provisioning or representing the

vessel in the port in which it may be found.


ship agent shall also be civilly liable for the indemnities infavor of third persons which may arise from the conduct of

the captain in the care of the goods which he loaded on the

vessel; but he may exempt himself thereform by abandoning




Neither the shipowner nor the ship agent shall be liable for

the obligations contracted by the captain, if the latter

exceeds the powers and privileges pertaining to him by

reason of his position or conferred upon him by the former.

Nevertheless, if the amounts claimed were invested for the

benefit of the vessel, the responsibility therefor shall

devolve upon its owner or agent.

a. Rules in case of part-ownersArticle 589 of the Code of Commerceprovides that: If

two or more persons should be part owners of a

merchant vessel, a partnership shall be presumes as

estrablished by the co-owners. This partnership shall

be governed by the resolution of the majority of the

members. If the part-owners should not be more than

two, the disagreement of views, if any, shall be

decided by the vote of the member having the largest

interest. If the interests are equal, it should be decided

by lot. The person having the smallest share in the

ownership shall have one vote; and proportionately

the other part owners as many votes as they have

parts equal to the smallest one. A vessel may not be

detained, attached or levied upon in execution in it

entirety, for the private debts of a part owner, but the

proceedings shall be limited to the interest which the

debtor may have in the vessel, without interfering with

the navigation.


The co-owners of a vessel shall be civilly liable in theproportion of their interests in the common fund, fo

the results of the acts of the captain, referred to in

Article 587.


All the part owners shall be liable, in proportion to

their respective ownership, for the expenses fo

repairing the vessel, and for other expenses which are

incurred by virtue of a resolution of the majority. They

shall likewise be liable in the same proportion for the

expenses for the maintenance, equipment, and

provisioning of the vessel, necessary for navigation.


The resolution of the majority with regard to the

repair, equipment, and provisioning of the vessel in the

port of departure shall bind the minority, unless the

minority members renounce their interests, which

must be acquired by the other co-owners, after a

judicial appraisement of the value of the portion o

portions assigned. The resolutions of the majority

relating to the dissolution of the partnership and sale

of the vessel shall also be binding on the minority. The

sale of the vessel must be made at public auction

subject to the provisions of the law of civil procedure

unless the co-owners unanimously agree otherwise

saving always the right of repurchase and redemption

provided for in Article 575.

Article 593 of the Code of Commerce provides thatThe owners of a vessel shall have preference in he

charter over other persons, under the same conditions

and price. If two or more of them should claim this

right, the one having the greater interest shall be

preferred; and should they have equal interests, the

matter shall be decided by lot.


co-owners shall elect the manager who is to represen

them in the capaci

transpo reviewer zarah

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