Transportation The extraordinary responsibility of the common carrier lasts from the time the goods are Definition unconditionally placed in the possession of, and Contract of Transportation – One whereby a certain received by the carrier for transportation until the person or association of persons obligate themselves same are delivered, actually or constructively, by the to transport carrier to the consignee, or to the person who has a persons, things or news from one place to another for right to receive them, without prejudice to the a fixed price. provisions of article 1738. • Crisostomo v. CA, gr no. 138334 - By • Article 355, COGSA definition, a contract of carriage or transportation is The liability of the carrier shall begin from the one whereby a certain person or association of moment he receives the merchandise, in person or persons obligate themselves to transport persons, through a person entrusted therewith in the place things, or news from one place to another for a fixed indicated for their reception. price. Such person or association of persons are regarded as carriers and are classified as private or As to Passengers special carriers and common or public carriers. It is • Dangwa Transportaion Co., Inc. v. CA, G.R. obvious from the above definition that respondent No. 95582 - by stepping and standing on the platform (travel agency) is not an entity engaged in the of the bus, is already considered a passenger and is business of transporting either passengers or goods entitled all the rights and protection pertaining to and is therefore, neither a private nor a common such a contractual relation. carrier. Respondent did not undertake to transport • Aboitiz Shipping Corporation V. CA, G.R. No. petitioner from one place to another since its 84458 - The duty of the common carrier commence covenant with its customers is simply to make travel from the moment the person who purchases the arrangements in their behalf. Respondent’s services ticket from the carrier presents himself at the proper as a travel agency include procuring tickets and place and in a proper manner to be transported. The facilitating travel permits or visas as well as booking relation of carrier and passenger continues until the customers for tours. passenger has been landed at the port of destination and has left the vessel owner's dock or premises. Parties: Once created, the relationship will not ordinarily 1. carrier or conductor - one who binds himself to terminate until the passenger has, after reaching his transport persons, things, or news as the case may destination, safely alighted from the carrier's be or one employed in or engaged in the business of conveyance or had a reasonable opportunity to leave carrying goods for others for hire the carrier's premises. 2. consignee - is the person to whom the shipment is • China Airlines V. CA, G.R. No. 129988 – When to be delivered to whether by land, sea or air. CAL confirmed the reservations of private 3. shipper - one who gives rise to the contract of respondents, a contract of carriage arose between transportation by agreeing to deliver the things or CAL and private respondents news to be transported, or to present his own person • Alitalia Airways v. CA - when an airline issues or those of other or others in the case of a ticket to a passenger confirmed for a particular transportation of passengers flight on a certain date, a contract of carriage arises. The passenger then has every right to expect that he Persons or corporations who undertake to would fly on that flight and on that date. transport or convey goods, property, or persons from • Japan Airlines v. Simangan, G.R. No. 170141 - one place to another, gratuitously or for hire, and are classified as private or special carriers and common That respondent purchased a round trip plane ticket or public carriers. from JAL and was issued the corresponding boarding pass is uncontroverted. His plane ticket, boarding Common Carrier pass, travel authority and personal articles were Common carriers are persons, corporations, firms or subjected to rigid immigration and security associations engaged in the business of carrying or procedure. After passing through said immigration transporting passengers or goods or both, by land, and security procedure, he was allowed by JAL to water, or air, for compensation, offering their services enter its airplane to fly to Los Angeles, California, to the public. (ARTICLE 1732, NCC) U.S.A. via Narita, Japan. Concisely, there was a contract of carriage between JAL and respondent. • Private Carrier Light Rail Transit Authority v. Navidad, G.R. Those who transport or undertake to transport in a No. 145804 - a contract of carriage was deemed particular instance for hire or reward. created from the moment Navidad paid the fare at the LRT station and entered the premises of the Classification: latter, entitling Navidad to all the rights and 1. As to object: (1) things; (2) persons; (3) news protection under a contractual relation 2. As to place of travel: (1) land; (2) water; (3) air Laws Governing Contract of Transportation When is a contract of carriage perfected? • Coastwise Shipping. 1. New Civil Code – primary law As to Goods 2. Code of Commerce – governs suppletorily in the • Art. 1736 NCC absence of Civil Code provisions • Carriage from Foreign Ports to Philippine (3) He must undertake to carry by the methods by Ports which his business is conducted, and over his 1. New Civil Code – primary law established roads. 2. Code of Commerce – all matters not regulated by (4) The transportation must be for hire. the Civil Code 3. Carriage of Goods by Sea Act – suppletorily to the The true test is whether the given undertaking is a Civil Code part of the business engaged in by the carrier which • Carriage from Philippine Port to Foreign Ports he has held out to the general public as his 1. the laws of the country to which the goods are to occupation rather than the quantity or extent of the be transported business actually transacted, or the no. and character • Overland Transportation of the conveyances used in the employment (the test 1. Civil Code – primary law is therefore the character of the business actually 2. Code of Commerce – suppletorily carried on by the carrier.) • Air Transportation Characteristics of common carriers: 1. Civil Code (1) The common carrier undertakes to carry for all 2. Code of Commerce people indifferently; he holds himself out as ready to 3. For International Carriage – Warsaw Convention engage in the transportation of goods for hire as a public employment and not as a casual occupation, Law on Common Carrier and he undertakes to carry for all persons Articles 1732-1766, Civil Code indifferently, within the limits of his capacity and the Articles 349-379, Code of Commerce sphere of the business required of him, so that he is bound to serve all who apply and is liable for refusal, Civil Code Provisions on Common Carrier without sufficient reason, to do so (2) The common carrier cannot lawfully decline to Definition – Article 1732 accept a particular class of goods for carriage to the Common carriers are persons, corporations, prejudice of the traffic in those goods firms or associations engaged in the business of Exception: for some sufficient reason, where the carrying or transporting passengers or goods or both, discrimination in such goods is reasonable and by land, water, or air, for compensation, offering their necessary (substantial grounds) services to the public. (3) No monopoly is favored - the Commission has the power to say what is a reasonable compensation to Common carriers vs. Private carriers: the utility and to make reasonable rules and • the common carrier holds himself out in regulations for the convenience of the traveling common, that is, to all persons who choose to employ public and to enforce them him, as ready to carry For hire; no one can be a (4) Public convenience - for the best interests of the common carrier unless he has held himself out to the public public as a carrier in such a manner as to render him liable to an action if he should refuse to carry for Diligence required of Common Carriers – Articles anyone who wished to employ him 1733, 1755, 1756 the private carrier agrees in some special case with some private individual to carry for hire Cases on Common Carriers and Extraordinary • a common carrier is bound to carry all who Diligence offer such goods as it is accustomed to carry and • De Guzman v. CA. gr no. 47822 - Under tender reasonable compensation Article 1745 (6), a common carrier is held responsible a private carrier is not bound to carry for any reason, — and will not be allowed to divest or to diminish unless it enter into a special agreement to do so for such responsibility — even for acts of strangers like carrying them thieves or robbers, except where such thieves or • a common carrier is a public service and is robbers in fact acted "with grave or irresistible threat, therefore subject to regulation violence or force." We believe and so hold that the a private carrier does not hold itself out as engaged limits of the duty of extraordinary diligence in the in the business for the public, and is therefore not vigilance over the goods carried are reached where subject to regulation as a common carrier the goods are lost as a result of a robbery which is • the diligence required for a common carrier is attended by "grave or irresistible threat, violence or extraordinary diligence force." the diligence required for a private carrier is ordinary • Calvo v. UCPB General Insurance, gr no. diligence 148496 - The extraordinary diligence in the vigilance over the goods tendered for shipment requires the Test for a common carrier: common carrier to know and to follow the required (1) He must be engaged in the business of carrying precaution for avoiding damage to, or destruction of goods for others as a public employment, and must the goods entrusted to it for sale, carriage and hold himself out as ready to engage in the delivery. It requires common carriers to render transportation of goods for persons generally as a service with the greatest skill and foresight and “to business, and not a casual occupation. use all reasonable means to ascertain the nature and (2) He must undertake to carry goods of the kind to characteristic of goods tendered for shipment, and to which his business is confined. exercise due care in the handling and stowage, including such methods as their nature requires.” The that the loss of the goods was sufficiently established rule is that if the improper packing or, in this case, as having been due to fortuitous event, negating any the defect/s in the container, is/are known to the liability on the part of PKS Shipping to the shipper. carrier or his employees or apparent upon ordinary Article 1733 of the Civil Code requires common observation, but he nevertheless accepts the same carriers to observe extraordinary diligence in the without protest or exception notwithstanding such vigilance over the goods they carry. In case of loss, condition, he is not relieved of liability for damage destruction or deterioration of goods, common resulting therefrom. In this case, petitioner accepted carriers are presumed to have been at fault or to the cargo without exception despite the apparent have acted negligently, and the burden of proving defects in some of the container vans. Hence, for otherwise rests on them. From the testimonies and failure of petitioner to prove that she exercised sworn marine protests of the respective vessel extraordinary diligence in the carriage of goods in masters of Limar I and MT Iron Eagle, that there was this case or that she is exempt from liability, the no way by which the barge’s or the tugboat’s crew presumption of negligence as provided under Art. could have prevented the sinking of Limar I. The 1735 holds. vessel was suddenly tossed by waves of • Asia Lighterage v. CA, gr no. 147246 - extraordinary height of six (6) to eight (8) feet and Common carriers are bound to observe extraordinary buffeted by strong winds of 1.5 knots resulting in the diligence in the vigilance over the goods transported entry of water into the barge’s hatches. by them. They are presumed to have been at fault or • Schmitz Transport And Brokerage v. to have acted negligently if the goods are lost, Transport Venture, gr no. 150255 - As for petitioner, destroyed or deteriorated. To overcome the for it to be relieved of liability, it should, following presumption of negligence in the case of loss, Article 1739 of the Civil Code, prove that it exercised destruction or deterioration of the goods, the due diligence to prevent or minimize the loss, before, common carrier must prove that it exercised during and after the occurrence of the storm in order extraordinary diligence. There are, however, that it may be exempted from liability for the loss of exceptions to this rule. Article 1734 of the Civil Code the goods. enumerates the instances when the presumption of • Loadstar Shipping Co. v. Pioneer Asia negligence does not attach: Insurance, gr no. 157481 - As a common carrier, Art. 1734. Common carriers are responsible for the petitioner is required to observe extraordinary loss, destruction, or deterioration of the goods, unless diligence in the vigilance over the goods it transports. the same is due to any of the following causes only: When the goods placed in its care are lost, petitioner (1) Flood, storm, earthquake, lightning, or other is presumed to have been at fault or to have acted natural disaster or calamity; negligently. Petitioner therefore has the burden of (2) Act of the public enemy in war, whether proving that it observed extraordinary diligence in international or civil; order to avoid responsibility for the lost cargo. (3) Act or omission of the shipper or owner of • Cebu Salvage v. Philippine Home Assurance, the goods; gr no. 15043 - From the nature of their business and (4) The character of the goods or defects in the for reasons of public policy, common carriers are packing or in the containers; bound to observe extraordinary diligence over the (5) Order or act of competent public authority. goods they transport according to the circumstances In the case at bar, the barge completely sank after its of each case. In the event of loss of the goods, towing bits broke, resulting in the total loss of its common carriers are responsible, unless they can cargo but petitioner failed to prove that the typhoon prove that this was brought about by the causes is the proximate and only cause of the loss of the specified in Article 1734 of the Civil Code. In all other goods, and that it has exercised due diligence before, cases, common carriers are presumed to be at fault during and after the occurrence of the typhoon to or to have acted negligently, unless they prove that prevent or minimize the loss. The evidence showed they observed extraordinary diligence. Petitioner was that, even before the towing bits of the barge broke, the one which contracted with MCCII for the transport it had already previously sustained damage when it of the cargo. It had control over what vessel it would hit a sunken object while docked at the Engineering use. All throughout its dealings with MCCII, it Island. It even suffered a hole. Thus, when represented itself as a common carrier. The fact that petitioner persisted to proceed with the voyage, it it did not own the vessel it decided to use to recklessly exposed the cargo to further damage. consummate the contract of carriage did not negate Accordingly, the petitioner cannot invoke the its character and duties as a common carrier. The occurrence of the typhoon as force majeure to MCCII (respondent’s subrogor) could not be escape liability for the loss sustained by the private reasonably expected to inquire about the ownership respondent because the officers/employees of the vessels which petitioner carrier offered to themselves of petitioner admitted that when the utilize. As a practical matter, it is very difficult and towing bits of the vessel broke that caused its sinking often impossible for the general public to enforce its and the total loss of the cargo upon reaching the rights of action under a contract of carriage if it Pasig River, it was no longer affected by the should be required to know who the actual owner of typhoon. The typhoon then is not the proximate the vessel is. In fact, in this case, the voyage charter cause of the loss of the cargo; a human factor, i.e., itself denominated petitioner as the "owner/operator" negligence had intervened. of the vessel. • Philippine American General Insurance • Philippine Charter Insurance v. Unknown Company v. PKS Shipping Co., gr no. 149038 - found Owner of the Vessel M/V “National Honor”, et al, gr no. 161833 – The petitioner failed to adduce any carriage, the parties may freely stipulate their duties evidence to counter that of respondent ICTSI. The and obligations which perforce would be binding on petitioner failed to rebut the testimony of Dauz, that them. Unlike in a contract involving a common the crates were sealed and that the contents thereof carrier, private carriage does not involve the general could not be seen from the outside. While it is true public. Hence, the stringent provisions of the Civil that the crate contained machineries and spare parts, Code on common carriers protecting the general it cannot thereby be concluded that the respondents public cannot justifiably be applied to a ship knew or should have known that the middle wooden transporting commercial goods as a private batten had a hole, or that it was not strong enough to carrier. Consequently, the public policy embodied bear the weight of the shipment. therein is not contravened by stipulations in a charter There is no showing in the Bill of Lading that the party that lessen or remove the protection given by shipment was in good order or condition when the law in contracts involving common carriers. carrier received the cargo, or that the three wooden 3. Lea Mer Industries v. Malayan Insurance, gr no. battens under the flooring of the cargo were not 161745 - Common carriers are persons, corporations, defective or insufficient or inadequate. On the other firms or associations engaged in the business of hand, under Bill of Lading No. NSGPBSML512565 carrying or transporting passengers or goods, or both issued by the respondent NSCP and accepted by the -- by land, water, or air -- when this service is offered petitioner, the latter represented and warranted that to the public for compensation. Petitioner is clearly a the goods were properly packed, and disclosed in common carrier, because it offers to the public its writing the “condition, nature, quality or business of transporting goods through its vessels. characteristic that may cause damage, injury or Thus, the Court corrects the trial court’s finding that detriment to the goods.” Absent any signs on the petitioner became a private carrier when Vulcan shipment requiring the placement of a sling cable in chartered it. Charter parties are classified as the mid-portion of the crate, the respondent ICTSI contracts of demise (or bareboat) and affreightment, was not obliged to do so. which are distinguished as follows: The statement in the Bill of Lading, that the shipment “Under the demise or bareboat charter of the vessel, was in apparent good condition, is sufficient to the charterer will generally be considered as owner sustain a finding of absence of defects in the for the voyage or service stipulated. The charterer merchandise. Case law has it that such statement mans the vessel with his own people and becomes, in will create a prima facie presumption only as to the effect, the owner pro hac vice, subject to liability to external condition and not to that not open to others for damages caused by negligence. To create inspection. a demise, the owner of a vessel must completely and exclusively relinquish possession, command and Relevant Cases on Private Carriers navigation thereof to the charterer; anything short of 1. National Steel Corp. V. CA, gr no. 112287 - Article such a complete transfer is a contract of 1732 of the Civil Code defines a common carrier as affreightment (time or voyage charter party) or not a “persons, corporations, firms or associations engaged charter party at all.” in the business of carrying or transporting passengers The distinction is significant, because a demise or or goods or both, by land, water, or air, for bareboat charter indicates a business undertaking compensation, offering their services to the that is private in character. Consequently, the rights public.” It has been held that the true test of a and obligations of the parties to a contract of private common carrier is the carriage of passengers or carriage are governed principally by their goods, provided it has space, for all who opt to avail stipulations, not by the law on common carriers. themselves of its transportation service for a fee. A The Contract in the present case was one of carrier which does not qualify under the above test is affreightment, as shown by the fact that it was deemed a private carrier. “Generally, private petitioner’s crew that manned the tugboat M/V carriage is undertaken by special agreement and the Ayalit and controlled the barge Judy VII. Necessarily, carrier does not hold himself out to carry goods for petitioner was a common carrier, and the pertinent the general public. The most typical, although not law governs the present factual circumstances. the only form of private carriage, is the charter party, a maritime contract by which the charterer, a party Vigilance over Goods other than the ship owner, obtains the use and Articles 1733-1753, Civil Code service of all or some part of a ship for a period of time or a voyage or voyages.” In the instant case, it Checked in baggages – Art. 1733-1754 is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, ARTICLE 1733. Common carriers, from the nature of it carried passengers or goods only for those it chose their business and for reasons of public policy, are under a “special contract of charter party.” As bound to observe extraordinary diligence in the correctly concluded by the Court of Appeals, the MV vigilance over the goods and for the safety of the Vlasons I “was not a common but a private carrier.” passengers transported by them, according to all the Consequently, the rights and obligations of VSI and circumstances of each case. NSC, including their respective liability for damage to Such extraordinary diligence in the vigilance over the the cargo, are determined primarily by stipulations in goods is further expressed in articles 1734, 1735, and their contract of private carriage or charter party. 1745, Nos. 5, 6, and 7, while the extraordinary 2. Valenzuela Hardwood and Industrial Supply, diligence for the safety of the passengers is further Inc., vs. Court of Appeals and Seven Brothers set forth in articles 1755 and 1756. Shipping Corporation - in a contract of private ARTICLE 1734. Common carriers are responsible for liable in damages, which however, shall be equitably the loss, destruction, or deterioration of the goods, reduced. unless the same is due to any of the following causes only: ARTICLE 1742. Even if the loss, destruction, or (1) Flood, storm, earthquake, lightning, or other deterioration of the goods should be caused by the natural disaster or calamity; character of the goods, or the faulty nature of the (2) Act of the public enemy in war, whether packing or of the containers, the common carrier international or civil; must exercise due diligence to forestall or lessen the (3) Act or omission of the shipper or owner of the loss. goods; (4) The character of the goods or defects in the ARTICLE 1743. If through the order of public authority packing or in the containers; the goods are seized or destroyed, the common (5) Order or act of competent public authority. carrier is not responsible, provided said public authority had power to issue the order. ARTICLE 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding ARTICLE 1744. A stipulation between the common article, if the goods are lost, destroyed or carrier and the shipper or owner limiting the liability deteriorated, common carriers are presumed to have of the former for the loss, destruction, or been at fault or to have acted negligently, unless deterioration of the goods to a degree less than they prove that they observed extraordinary extraordinary diligence shall be valid, provided it be: diligence as required in article 1733. (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than ARTICLE 1736. The extraordinary responsibility of the the service rendered by the common carrier; and common carrier lasts from the time the goods are (3) Reasonable, just and not contrary to public policy. unconditionally placed in the possession of, and received by the carrier for transportation until the ARTICLE 1745. Any of the following or similar same are delivered, actually or constructively, by the stipulations shall be considered unreasonable, unjust carrier to the consignee, or to the person who has a and contrary to public policy: right to receive them, without prejudice to the (1) That the goods are transported at the risk of the provisions of article 1738. owner or shipper; (2) That the common carrier will not be liable for any ARTICLE 1737. The common carrier’s duty to observe loss, destruction, or deterioration of the goods; extraordinary diligence in the vigilance over the (3) That the common carrier need not observe any goods remains in full force and effect even when they diligence in the custody of the goods; are temporarily unloaded or stored in transit, unless (4) That the common carrier shall exercise a degree the shipper or owner has made use of the right of of diligence less than that of a good father of a stoppage in transitu. family, or of a man of ordinary prudence in the vigilance over the movables transported; ARTICLE 1738. The extraordinary liability of the (5) That the common carrier shall not be responsible common carrier continues to be operative even for the acts or omission of his or its employees; during the time the goods are stored in a warehouse (6) That the common carrier’s liability for acts of the carrier at the place of destination, until the committed by thieves, or of robbers who do not act consignee has been advised of the arrival of the with grave or irresistible threat, violence or force, is goods and has had reasonable opportunity thereafter dispensed with or diminished; to remove them or otherwise dispose of them. (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account ARTICLE 1739. In order that the common carrier may of the defective condition of the car, vehicle, ship, be exempted from responsibility, the natural disaster airplane or other equipment used in the contract of must have been the proximate and only cause of the carriage. loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during ARTICLE 1746. An agreement limiting the common and after the occurrence of flood, storm or other carrier’s liability may be annulled by the shipper or natural disaster in order that the common carrier may owner if the common carrier refused to carry the be exempted from liability for the loss, destruction, or goods unless the former agreed to such stipulation. deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act ARTICLE 1747. If the common carrier, without just of the public enemy referred to in article 1734, No. 2. cause, delays the transportation of the goods or changes the stipulated or usual route, the contract ARTICLE 1740. If the common carrier negligently limiting the common carrier’s liability cannot be incurs in delay in transporting the goods, a natural availed of in case of the loss, destruction, or disaster shall not free such carrier from responsibility. deterioration of the goods.

ARTICLE 1741. If the shipper or owner merely ARTICLE 1748. An agreement limiting the common contributed to the loss, destruction or deterioration of carrier’s liability for delay on account of strikes or the goods, the proximate cause thereof being the riots is valid. negligence of the common carrier, the latter shall be ARTICLE 1749. A stipulation that the common whereby the responsibility of the former as set forth carrier’s liability is limited to the value of the goods in articles 1998 to 2001 is suppressed or diminished appearing in the bill of lading, unless the shipper or shall be void. owner declares a greater value, is binding. Art. 2004. The hotel-keeper has a right to retain the ARTICLE 1750. A contract fixing the sum that may be things brought into the hotel by the guest, as a recovered by the owner or shipper for the loss, security for credits on account of lodging, and destruction, or deterioration of the goods is valid, if it supplies usually furnished to hotel guests. is reasonable and just under the circumstances, and has been fairly and freely agreed upon. Art. 2005. A judicial deposit or sequestration takes place when an attachment or seizure of property in ARTICLE 1751. The fact that the common carrier has litigation is ordered. no competitor along the line or route, or a part thereof, to which the contract refers shall be taken Art. 2006. Movable as well as immovable property into consideration on the question of whether or not a may be the object of sequestration. stipulation limiting the common carrier’s liability is reasonable, just and in consonance with public policy. Art. 2007. The depositary of property or objects sequestrated cannot be relieved of his responsibility ARTICLE 1752. Even when there is an agreement until the controversy which gave rise thereto has limiting the liability of the common carrier in the come to an end, unless the court so orders. vigilance over the goods, the common carrier is disputably presumed to have been negligent in case Art. 2008. The depositary of property sequestrated is of their loss, destruction or deterioration. bound to comply, with respect to the same, with all the obligations of a good father of a family. ARTICLE 1753. The law of the country to which the goods are to be transported shall govern the liability  Presumption on Negligence – Art. 1734 of the common carrier for their loss, destruction or  When Presumption of negligence does not deterioration. arise – Art 1734; Read with Arts. 1735, 1739, 1741, 1740, 1742, 1743 Hand-carried baggages – Articles 1988, 2000-2008 NCC Stipulations Limiting Carrier’s Liability Art. 1998. The deposit of effects made by the Stipulation printed bill of lading limiting the travelers in hotels or inns shall also be regarded as carrier’s liability for loss or damage or destruction of necessary. The keepers of hotels or inns shall be a cargo to certain sum, unless the shipper or owner responsible for them as depositaries, provided that declares a higher or greater value is sanction by law notice was given to them, or to their employees, of (Art 1749) provided such stipulations are reasonable the effects brought by the guests and that, on the and just under the circumstances, and has been part of the latter, they take the precautions which freely and fairly agreed upon. (Everett Steamship said hotel-keepers or their substitutes advised Corp Vs CA. 297 SCRA 496, ’98) relative to the care and vigilance of their effects. In a contract of private carriage, the parties may validly stipulate that responsibility rests the Art. 2000. The responsibility referred to in the two charterer, exempting the carrier from liability for loss preceding articles shall include the loss of, or injury to or damage of the cargo caused even by the the personal property of the guests caused by the employees negligence. (Valenzuela Hardwood vs CA, servants or employees of the keepers of hotels or 274 SCRA 642, ’97) inns as well as strangers; but not that which may proceed from any force majeure. The fact that Valid Stipulations (Art 1744) travellers are constrained to rely on the vigilance of a. in writing and signed by the shipper the keeper of the hotels or inns shall be considered in b. supported by valuable consideration other determining the degree of care required of him. than the service rendered by the carrier and c. reasonable, just, fair and not contrary to law, Art. 2001. The act of a thief or robber, who has moral and public policy etc entered the hotel is not deemed force majeure, d. delay caused by riots or strikes (Art 1748) unless it is done with the use of arms or through an irresistible force. Void Stipulations (Art 1745) a. goods are transported at the risk of the Art. 2002. The hotel-keeper is not liable for owners compensation if the loss is due to the acts of the b. not liable for any loss, damages or guest, his family, servants or visitors, or if the loss destruction arises from the character of the things brought into c. need not to observe any diligence in the the hotel. custody of the goods d. exercise diligence less than required of a Art. 2003. The hotel-keeper cannot free himself from good father of the family or men of ordinary prudence responsibility by posting notices to the effect that he in the vigilance of the goods is not liable for the articles brought by the guest. Any e. not responsible for acts or omission of its stipulation between the hotel-keeper and the guest employee (except as stipulated in private carrier) f. not responsible for act of robbers or thieves who did not act with grave, irresistible force, threat or 3. Central Shipping Co. v. Insurance Co. of North violence America, gr no. 150751 - Even if the weather g. not responsible for loss, destruction or encountered by the ship is to be deemed a natural deterioration of goods on account of the defective disaster under Article 1739 of the Civil Code, condition of the carrier’s equipments petitioner failed to show that such natural disaster or  Void because they are unjust, unreasonable and calamity was the proximate and only cause of the contrary to law, customs, morale, public policy or loss. Human agency must be entirely excluded from public order. the cause of injury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have been caused, Relevant Cases: Vigilance over Goods contributed to, or worsened by the presence of 1. Delsan Transport Lines v. American Home human participation. The defense of fortuitous event Assurance, gr. No. 149019, August 15, 2006 Delsan’s or natural disaster cannot be successfully made when argument that it should not be held liable for the the injury could have been avoided by human loss of diesel oil due to backflow because the same precaution. Hence, if a common carrier fails to had already been actually and legally delivered to exercise due diligence -- or that ordinary care that Caltex at the time it entered the shore tank holds no the circumstances of the particular case demand -- to water. It had been settled that the subject cargo was prevent or minimize the loss before, during and after still in the custody of Delsan because the discharging the occurrence of the natural disaster, the carrier thereof has not yet been finished when the backflow shall be deemed to have been negligent. The loss or occurred. Since the discharging of the cargo injury is not, in a legal sense, due to a natural into the depot has not yet been completed at the disaster under Article 1734(1). time of the spillage when the backflow occurred, there is no reason to imply that there was actual 4. Regional Container Lines of Singapore v. The delivery of the cargo to the consignee. Delsan is Netherlands Insurance Co., gr no. 168151 - A straining the issue by insisting that when the diesel common carrier is presumed to have been negligent oil entered into the tank of Caltex on shore, there was if it fails to prove that it exercised extraordinary legally, at that moment, a complete delivery thereof vigilance over the goods it transported. When the to Caltex. To be sure, the extraordinary responsibility goods shipped are either lost or arrived in damaged of common carrier lasts from the time the goods are condition, a presumption arises against the carrier of unconditionally placed in the possession of, and its failure to observe that diligence, and there need received by, the carrier for transportation until the not be an express finding of negligence to hold it same are delivered, actually or constructively, by liable. To overcome the presumption of negligence, the carrier to the consignee, or to a the common carrier must establish by adequate proof person who has the right to receive them. The that it exercised extraordinary diligence over the discharging of oil products to Caltex Bulk Depot has goods. It must do more than merely show that some not yet been finished, Delsan still has the duty to other party could be responsible for the damage. guard and to preserve the cargo. The carrier still has In the present case, RCL and EDSA Shipping failed to in it the responsibility to guard and preserve the prove that they did exercise that degree of diligence goods, a duty incident to its having the goods required by law over the goods they transported. transported. There is sufficient evidence showing that the To recapitulate, common carriers, from the fluctuation of the temperature in the refrigerated nature of their business and for reasons of public container van, as recorded in the temperature chart, policy, are bound to observe extraordinary diligence occurred after the cargo had been discharged from in vigilance over the goods and for the safety of the the vessel and was already under the custody of the passengers transported by them, according to all the arrastre operator, ICTSI. This evidence, however, circumstances of each does not disprove that the condenser fan – which case. The mere proof of delivery of goods in good caused the fluctuation of the temperature in the order to the carrier, and their arrival in the place of refrigerated container – was not damaged while the destination in bad order, make out a prima cargo was being unloaded from the ship. It is settled facie case against the carrier, so that if no in maritime law jurisprudence that cargoes while explanation is given as to how the injury occurred, being unloaded generally remain under the custody the carrier must be held responsible. It is incumbent of the carrier; RCL and EDSA Shipping failed to upon the carrier to prove that the loss was due to dispute this. accident or some other circumstances inconsistent with its liability. 5. Philippine American General Insurance Co. v. MCG Marine Services, March 8, 2002 - The findings of the 2. Belgian Overseas Chartering v. Philippine First Board of Marine Inquiry indicate that the attendance Insurance, gr no. 143133 - mere proof of delivery of of strong winds and huge waves while the M/V the goods in good order to a common carrier and of Peatheray Patrick-G was sailing through Cortes, their arrival in bad order at their destination Surigao del Norte on March 3, 1987 was indeed constitutes a prima facie case of fault or negligence fortuitous. A fortuitous event has been defined as one against the carrier. If no adequate explanation is which could not be foreseen, or which though given as to how the deterioration, the loss or the foreseen, is inevitable. An event is considered destruction of the goods happened, the transporter fortuitous if the following elements concur: shall be held responsible. xxx (a) the cause of the unforeseen and unexpected While the loss of the cargoes was admittedly caused occurrence, or the failure of the debtor to comply by the typhoon Sisang, a natural disaster, ANCO with his obligations, must be independent of human could not escape liability to respondent SMC. The will; (b) it must be impossible to foresee the event records clearly show the failure of petitioners’ which constitutes the caso fortuito, or if it can be representatives to exercise the extraordinary degree foreseen, it must be impossible to avoid; (c) the of diligence mandated by law. To be exempted from occurrence must be such as to render it impossible responsibility, the natural disaster should have been for the debtor to fulfill his obligation in a normal the proximate and only cause of the loss. There must manner; and (d) the obligor must be free from any have been no contributory negligence on the part of participation in the aggravation of the injury resulting the common carrier. As held in the case to the creditor. xxx of Limpangco Sons v. Yangco Steamship Co.: In the case at bar, it was adequately shown that . . . To be exempt from liability because of an act of before the M/V Peatheray Patrick-G left the port of God, the tug must be free from any previous Mandaue City, the Captain confirmed with the Coast negligence or misconduct by which that loss or Guard that the weather condition would permit the damage may have been occasioned. For, although safe travel of the vessel to Bislig, Surigao del the immediate or proximate cause of the loss in any Sur. Thus, he could not be expected to have given instance may have been what is termed an act foreseen the unfavorable weather condition that of God, yet, if the tug unnecessarily exposed the two awaited the vessel in Cortes, Surigao del Sur. It was to such accident by any culpable act or omission of the presence of the strong winds and enormous its own, it is not excused. waves which caused the vessel to list, keel over, and Therefore, as correctly pointed out by the appellate consequently lose the cargo contained therein. The court, there was blatant negligence on the part of M/T appellate court likewise found that there was no ANCO’s crewmembers, first in leaving the engine-less negligence on the part of the crew of the M/V barge D/B Lucio at the mercy of the storm without Peatheray Patrick-G, citing the following portion of the assistance of the tugboat, and again in failing to the decision of the Board of Marine Inquiry. Since the heed the request of SMC’s representatives to have presence of strong winds and enormous waves at the barge transferred to a safer place, as was done Cortes, Surigao del Sur on March 3, 1987 was shown by the other vessels in the port; thus, making said to be the proximate and only cause of the sinking of blatant negligence the proximate cause of the loss of the M/V Peatheray Patrick-G and the loss of the cargo the cargoes. belonging to San Miguel Corporation, private respondents cannot be held liable for the said loss. 7. Sulpicio Lines v. First Lepanto Taisho Insurance Corporation, gr no. 140349 - Petitioner-carrier 6. FGU Insurance v. CA, gr no. 137775 - Art. 1739. In contends that its liability, if any, is only to the extent order that the common carrier may be exempted of the cargo damage or loss and should not include from responsibility, the natural disaster must have the lack of fitness of the shipment for transport to been the proximate and only cause of the loss. Singapore due to the damaged packing. This is However, the common carrier must exercise due erroneous. Petitioner-carrier seems to belabor under diligence to prevent or minimize loss before, during the misapprehension that a distinction must be made and after the occurrence of flood, storm, or other between the cargo packaging and the contents of the natural disaster in order that the common carrier may cargo. According to it, damage to the packaging is be exempted from liability for the loss, destruction, not tantamount to damage to the cargo. It must be or deterioration of the goods . . . stressed that in the case at bar, the damage Caso fortuito or force majeure (which in law are sustained by the packaging of the cargo while in identical insofar as they exempt an obligor from petitioner-carrier’s custody resulted in its unfitness to liability) by definition, are extraordinary events not be transported to its consignee in Singapore. Such foreseeable or avoidable, events that could not be failure to ship the cargo to its final destination foreseen, or which though foreseen, were inevitable. because of the ruined packaging, indeed, resulted in It is therefore not enough that the event should not damages on the part of the owner of the goods. have been foreseen or anticipated, as is commonly The falling of the crate during the unloading is believed but it must be one impossible to foresee or evidence of petitioner-carrier’s negligence in handling to avoid. the cargo. As a common carrier, it is expected to In this case, the calamity which caused the loss of the observe extraordinary diligence in the handling of cargoes was not unforeseen nor was it unavoidable. goods placed in its possession for transport. The In fact, the other vessels in the port of San Jose, standard of extraordinary diligence imposed upon Antique, managed to transfer to another place, a common carriers is considerably more demanding circumstance which prompted SMC’s District Sales than the standard of ordinary diligence, i.e., the Supervisor to request that the D/B Lucio be likewise diligence of a good paterfamilias established in transferred, but to no avail. The D/B Lucio had no respect of the ordinary relations between members of engine and could not maneuver by itself. Even if society. A common carrier is bound to transport its ANCO’s representatives wanted to transfer it, they no cargo and its passengers safely "as far as human longer had any means to do so as the tugboat M/T care and foresight can provide, using the utmost ANCO had already departed, leaving the barge to its diligence of a very cautious person, with due regard own devices. The captain of the tugboat should have to all circumstances.” The extraordinary diligence in had the foresight not to leave the barge alone the vigilance over the goods tendered for shipment considering the pending storm. requires the common carrier to know and to follow the required precaution for avoiding the damage to, or destruction of, the goods entrusted to it for safe without notice. However, nothing there permits carriage and delivery. It requires common carriers to shuttling passengers -- without so much as a by your- render service with the greatest skill and foresight leave -- to stopping places that they have not been and “to use all reasonable means to ascertain the previously notified of, much less agreed to or been nature and characteristic of goods tendered for prepared for. Substituting aircrafts or carriers shipment, and to exercise due care in the handling without notice is entirely different from changing and stowage, including such methods as their nature stopping places or connecting cities without notice. requires.” The ambiguities in the contract, being one of Thus, when the shipment suffered damages as it was adhesion, should be construed against the party that being unloaded, petitioner-carrier is presumed to caused its preparation -- in this case, have been negligent in the handling of the damaged respondent. Since the conditions enumerated on the cargo. Under Articles 1735 and 1752 of the Civil ticket do not specifically allow it to change stopping Code, common carriers are presumed to have been places or to fly the passengers to alternate at fault or to have acted negligently in case the goods connecting cities without consulting them, then it transported by them are lost, destroyed or had must be construed to mean that such unilateral deteriorated. To overcome the presumption of change was not permitted. liability for loss, destruction or deterioration of goods Furthermore, the change in petitioners’ flight under Article 1735, the common carrier must prove itinerary does not fall under the situation covered by that they observed extraordinary diligence as the phrase “may alter or omit stopping places shown required in Article 1733 of the Civil Code. on the ticket in case of necessity.” A case of Petitioner-carrier miserably failed to adduce any necessity must first be proven. The burden of shred of evidence of the required extraordinary proving it necessarily fell on respondent. This diligence to overcome the presumption that it was responsibility it failed to discharge. negligent in transporting the cargo. Petitioners do not question the stop in Seattle, so we will not delve into this matter. The airplane engine 8. Savellano v. Northwest Airlines, gr no. 151783, - trouble that developed during the flight bound for Petitioners’ contract of carriage with Northwest was Tokyo from San Francisco definitely merited for the San Francisco-Tokyo(Narita)-Manila flights the “necessity” of landing the plane at some place for scheduled for October 27, 1991. This itinerary was repair -- in this case, Seattle -- but not that of not followed when the aircraft used for the first shuttling petitioners to other connecting points segment of the journey developed engine thereafter without their consent. trouble. Petitioners stress that they are questioning, Northwest failed to show a “case of necessity” for not the cancellation of the original itinerary, but its changing the stopping place from Tokyo to Los substitution, which they allegedly had not contracted Angeles and Seoul. It is a fact that some of the for or agreed to. They insist that, like the other passengers on the distressed flight continued on to passengers of the distressed flight, they had the right the Tokyo (Narita) connecting place. No explanation to be placed on Flight 27, which had a connecting whatsoever was given to petitioners as to why they flight from Japan to Manila. They add that in being were not similarly allowed to do so. It may be that treated differently and shabbily, they were being the Northwest connecting flight from Seattle to Tokyo discriminated against. to Manila could no longer accommodate them. Yet it A contract is the law between the parties. Thus, in may also be that there were other carriers that could determining whether petitioners’ rights were violated, have accommodated them for these sectors of their we must look into its provisions, which are printed on journey, and whose route they might have preferred the airline ticket. Condition 9 in the agreement to the more circuitous one unilaterally chosen for states that a “x x x carrier may without notice them by respondent. substitute alternate carriers or aircraft, and may alter In the absence of evidence as to the actual situation, or omit stopping places shown on the ticket in case of the Court is hard pressed to determine if there was a necessity. x x x.” “case of necessity” sanctioning the alteration of the The basis of the Complaint was the way respondent Tokyo stopping place in the case of petitioners. Thus, allegedly treated petitioners like puppets that could we hold that in the absence of a demonstrated be shuttled to Manila via Los Angeles and Seoul necessity thereof and their rerouting to Los Angeles without their consent. Undeniably, it did not take the and Seoul as stopping places without their consent, time to explain how it would be meeting its respondent committed a breach of the contract of contractual obligation to transport them to their final carriage. destination. Its employees merely hustled the confused petitioners into boarding one plane after Explosion of tire: another without giving the latter a choice from other Yobido v. CA, gr no. 113003 - Under the courses of action that were available. It unilaterally circumstances of this case, the explosion of the new decided on the most expedient way for them to reach tire may not be considered a fortuitous event. There their final destination. are human factors involved in the situation. The fact After an examination of the conditions printed on the that the tire was new did not imply that it was airline ticket, we find nothing there authorizing entirely free from manufacturing defects or that it Northwest to decide unilaterally, after the distressed was properly mounted on the vehicle. Neither may flight landed in Seattle, what other stopping places the fact that the tire bought and used in the vehicle is petitioners should take and when they should of a brand name noted for quality, resulting in the fly. True, Condition 9 on the ticket allowed conclusion that it could not explode within five days’ respondent to substitute alternate carriers or aircraft use. Be that as it may, it is settled that an accident caused either by defects in the automobile or through This liability of the common carriers does not cease the negligence of its driver is not a caso fortuito that upon proof that they exercised all the diligence of a would exempt the carrier from liability for damages. good father of a family in the selection and Moreover, a common carrier may not be absolved supervision of their employees. from liability in case of force majeure or fortuitous Art. 1760. The common carrier's responsibility event alone. The common carrier must still prove prescribed in the preceding article cannot be that it was not negligent in causing the death or eliminated or limited by stipulation, by the posting of injury resulting from an accident. This Court has had notices, by statements on the tickets or otherwise. occasion to state: “While it may be true that the tire that blew-up was Contributory Negligence still good because the grooves of the tire were still Art. 1761. The passenger must observe the diligence visible, this fact alone does not make the explosion of of a good father of a family to avoid injury to himself. the tire a fortuitous event. No evidence was Art. 1762. The contributory negligence of the presented to show that the accident was due to passenger does not bar recovery of damages for his adverse road conditions or that precautions were death or injuries, if the proximate cause thereof is the taken by the jeepney driver to compensate for any negligence of the common carrier, but the amount of conditions liable to cause accidents. The sudden damages shall be equitably reduced. blowing-up, therefore, could have been caused by too much air pressure injected into the tire coupled by Liability for acts of co-passengers and strangers the fact that the jeepney was overloaded and Art. 1763. A common carrier is responsible for injuries speeding at the time of the accident.” suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if  Duration of Common Carrier’s Liability – the common carrier's employees through the Articles 1736-1738 NCC exercise of the diligence of a good father of a family  Stipulations Limiting Common Carrier’s could have prevented or stopped the act or Liability – Articles 1744-1754 NCC omission.

Safety of passengers Damages Art. 1764. Damages in cases comprised in this Nature of Obligation of Common Carriers Section shall be awarded in accordance with Title Art. 1755. A common carrier is bound to carry the XVIII of this Book, concerning Damages. Article 2206 passengers safely as far as human care and foresight shall also apply to the death of a passenger caused can provide, using the utmost diligence of very by the breach of contract by a common carrier. cautious persons, with a due regard for all the circumstances. Art. 1764. Damages in cases comprised in this Section shall be awarded with the title XVIII of this Liability of Common Carriers and Presumption of book concerning damages. Negligence Art. 1756. In case of death of or injuries to Article 2206 shall also apply to the death of a passengers, common carriers are presumed to have passenger caused by the breach of contract by a been at fault or to have acted negligently, unless common carrier. they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755. Art. 2197. Damages may be: (1) Actual or compensatory; Stipulations limiting common carrier’s liability (2) Moral; Art. 1757. The responsibility of a common carrier for (3) Nominal; the safety of passengers as required in Articles 1733 (4) Temperate or moderate; and 1755 cannot be dispensed with or lessened by (5) Liquidated; stipulation, by the posting of notices, by statements (6) Exemplary or corrective. on tickets, or otherwise. Articles Related on Actual or compensatory damages Effect of gratuitous carriage Art. 1758. When a passenger is carried gratuitously, a Art. 2199. Except as provided by law or by stipulation limiting the common carrier's liability for stipulation, one is entitled to an adequate negligence is valid, but not for willful acts or gross compensation only for such pecuniary loss negligence. suffered by him as he has duly proved. Such The reduction of fare does not justify any limitation of compensation referred to as actual or compensatory the common carrier's liability. damages.

Liability for acts of carrier’s employees Art. 2201. In contracts and quasi contracts, the Art. 1759. Common carriers are liable for the death of damages for which the obligor who acted in good or injuries to passengers through the negligence or faith is liable shall be those that are natural and willful acts of the former's employees, although such probable consequences of the breach of the employees may have acted beyond the scope of their obligation, and which the parties have foreseen or authority or in violation of the orders of the common could have reasonably foreseen at the time the carriers. obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, temperate or compensatory damages; but it is not the obligor shall be responsible for all damages which necessary that he prove the monetary value thereof. may be reasonably attributed to the non-performance of the obligation. Attorney’s Fees Although attorney’s fees are generally not Art. 2203. The party suffering loss or injury must recoverable, a party can be held liable for such if exercise diligence of a good father of a family to exemplary damages are awarded (Article 2208, New minimize the damages resulting from the act or Civil Code). The award of damages as ‘well as omission in question. attorney’s fees lies upon the discretion of the court in the context of the facts and circumstances of each Indemnity for death case, and this judicial discretion is largely addressed (See Article 2206) The indemnity for death caused by towards tempering any tendency to award excessive a quasi-delict used to be pegged at P3,000, based on damages so much so that it stands vulnerable to and Article 2206 of the Civil Code. However, the amount actually magnetizes, attacks as to its being a result of has been gradually increased through the years passion, prejudice or corruption. because of the declining value of our currency. At The law authorizes recovery of attorney's fees where present, prevailing jurisprudence fixes the amount at the defendant's act or omission has compelled the P50,000. plaintiff to litigate with third person or to incur expenses to protect his interest, or where the court Loss of Earning Capacity deems it just and equitable. Computation of loss of earning capacity is based on life expectancy of deceased, not of heir. Relevant Cases on Safety of Passengers:  The award for loss of earning capacity is based on two factors: (1) the number of years on which the • R. Transport Corporation v. Pante, gr no. computation of damages is based and 162104 - Under the Civil Code, common carriers, like (2) the rate at which the loss sustained by the heirs is petitioner bus company, from the nature of their fixed. The first factor refers to the life expectancy, business and for reasons of public policy, are bound which takes into consideration the nature of the to observe extraordinary diligence for the safety of victim’s work, lifestyle, age and state of health prior the passengers transported by them, according to all to the accident. The second refers to the victim’s the circumstances of each case.28 They are bound to earning capacity minus the necessary living carry the passengers safely as far as human care and expenses. Stated otherwise, the amount recoverable foresight can provide, using the utmost diligence of is that portion of the earnings of the deceased which very cautious persons, with due regard for all the the beneficiary would have received — the net circumstances. earnings of the deceased. Article 1756 of the Civil Code states that "[i]n case of death of or injuries to passengers, common carriers Moral Damages are presumed to have been at fault or to have acted Moral damages include moral suffering, mental negligently, unless they prove that they observed anguish, fright, serious anxiety, besmirched extraordinary diligence as prescribed by Articles 1733 reputation, wounded feelings, moral shock, social and 1755." humiliation, or similar injury. They may be recovered Further, Article 1759 of the Civil Code provides that in the cases enumerated in Article 2219 of the Civil "[c]ommon carriers are liable for the death or injury Code. Anent a breach of a contract of common to passengers through the negligence or willful acts carriage, moral damages may be awarded if the of the former's employees, although such employees common carrier acted fraudulently or in bad faith. may have acted beyond the scope of their authority Moral damages are not recoverable in actions for or in violation of the orders of the common carriers. damages predicated on a breach of the contract of This liability of the common carriers does not cease transportation, as in the instant case, in view of the upon proof that they exercised all the diligence of a provisions of Articles 2219 and 2220 of the New Civil good father of a family in the selection and Code. The exceptions are (1) where the mishap supervision of their employees." results in the death of a passenger, and (2) where it In this case, the testimonial evidence of respondent is proved that the carrier was guilty of fraud or bad showed that petitioner, through its bus driver, failed faith, even if death does not result. to observe extraordinary diligence, and was, therefore, negligent in transporting the passengers of Exemplary Damages the bus safely to Gapan, Nueva Ecija on January 27, Exemplary damages is not a matter of right. It is 1995, since the bus bumped a tree and a house, and imposed by way of example or correction for the caused physical injuries to respondent. Article 1759 public good, in addition to moral, temperate, of the Civil Code explicitly states that the common liquidated or compensatory damages. In contracts carrier is liable for the death or injury to passengers and quasi-contracts, exemplary damages may be through the negligence or willful acts of its awarded if the defendant acted in a wanton employees, and that such liability does not cease fraudulent, reckless, oppressive or malevolent upon proof that the common carrier exercised all the manner. It cannot, however, be considered as a diligence of a good father of a family in the selection matter of right; the court having to decide whether or and supervision of its employees. Hence, even if not they should be adjudicated. Before the court may petitioner was able to prove that it exercised the consider an award for exemplary damages, the diligence of a good father of the family in the plaintiff must first show that he is entitled to moral, selection and supervision of its bus driver, it is still 1755 of the Code. This provision necessarily shifts to liable to respondent for the physical injuries he the common carrier the burden of proof. sustained due to the vehicular accident. The driver of jeepney did not carry “safely as far as human care and foresight could provide, using the • PAL V. CA GR NO. 123238 - Private utmost diligence of very cautious persons, with due respondents and petitioner entered into a contract of regard for all the circumstances" as required by Art. air carriage when the former purchased two plane 1755. First, the jeepney was not properly parked, its tickets from the latter. Under this contract, petitioner rear portion being exposed about two meters from obliged itself (1) to transport Deanna and Nikolai, as the broad shoulders of the highway, and facing the unaccompanied minors, on 2 May 1980 from Manila middle of the highway in a diagonal angle. The to San Francisco through one of its planes, Flight 106; petitioner's driver took in more passengers than the and (2) upon the arrival of Deanna and Nikolai in San allowed seating capacity of the jeepney. These are Francisco Airport on 3 May 1980, to transport them violations of the Land Transportation and Traffic on that same day from San Francisco to Los Code. Therefore, there is no assumption of risk by the Angeles via a connecting flight on United Airways passenger. 996. As it was, petitioner failed to transport Deanna and Nikolai from San Francisco to Los Angeles on the • Victory Liner, Inc. v. CA, GR no. 159636 - day of their arrival at San Francisco. The staff of Anent the second issue, petitioner was correctly United Airways 996 refused to take aboard Deanna found liable for breach of contract of carriage. A and Nikolai for their connecting flight to Los Angeles common carrier is bound to carry its passengers because petitioner's personnel in San Francisco could safely as far as human care and foresight can not produce the indemnity bond accomplished and provide, using the utmost diligence of very cautious submitted by private respondents. Thus, Deanna and persons, with due regard to all the circumstances. In Nikolai were stranded in San Francisco and were a contract of carriage, it is presumed that the forced to stay there overnight. It was only on the common carrier was at fault or was negligent when a following day that Deanna and Nikolai were able to passenger dies or is injured. Unless the presumption leave San Francisco and arrive at Los is rebutted, the court need not even make an express Angeles via another airline, Western Airlines. Clearly finding of fault or negligence on the part of the then, petitioner breached its contract of carriage with common carrier. This statutory presumption may only private respondents. be overcome by evidence that the carrier exercised When an airline issues a ticket to a passenger, extraordinary diligence. confirmed for a particular flight on a certain date, a In the instant case, there is no evidence to rebut the contract of carriage arises. The passenger has every statutory presumption that the proximate cause of right to expect that he be transported on that flight Marie Grace’s death was the negligence of and on that date, and it becomes the airline's petitioner. Hence, the courts below correctly ruled obligation to carry him and his luggage safely to the that petitioner was guilty of breach of contract of agreed destination without delay. If the passenger is carriage. not so transported or if in the process of transporting, he dies or is injured, the carrier may be held liable for • Bachelor Express, Inc. v. CA, gr no. 159636 - a breach of contract of carriage. The running amuck of the passenger was the proximate cause of the incident as it triggered off a • Calalas v. CA, gr no. 122039 - It is immaterial commotion and panic among the passengers such that the proximate cause of the collision between the that the passengers started running to the sole exit jeepney and the truck was the negligence of the truck shoving each other resulting in the falling off the bus driver. The doctrine of proximate cause is applicable by passengers Beter and Rautraut causing them fatal only in actions for quasi-delict, not in actions injuries. The sudden act of the passenger who involving breach of contract. The doctrine is a device stabbed another passenger in the bus is within the for imputing liability to a person where there is no context of force majeure. relation between him and another party. In such a However, in order that a common carrier may be case, the obligation is created by law itself. But, absolved from liability in case of force majeure, it is where there is a pre-existing contractual relation not enough that the accident was caused by force between the parties, it is the parties themselves who majeure. The common carrier must still prove that it create the obligation, and the function of the law is was not negligent in causing the injuries resulting merely to regulate the relation thus created. Insofar from such accident. as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the • Light Rail Transit Authority v. Navidad, gr no. diligence required of common carriers with regard to 145804 A security guard assaulted Navidad, which the safety of passengers as well as the presumption caused the latter to fall on the tracks. LRTA of negligence in cases of death or injury to contended that it was an act of a stranger that could passengers. not have been foreseen or prevented. The LRTA In case of death or injuries to passengers, Art. 1756 added that the appellate court’s conclusion on the of the Civil Code provides that common carriers are existence of an employer-employee relationship presumed to have been at fault or to have acted between Roman and LRTA lacked basis because negligently unless they prove that they observed Roman himself had testified being an employee of extraordinary diligence as defined in Arts. 1733 and Metro Transit and not of the LRTA. The law requires common carriers to carry passengers safely using the utmost diligence of very cautious persons with due The acts of Maranaos could not be considered as caso regard for all circumstances. Such duty of a common fortuito because there was already a warning by the carrier to provide safety to its passengers so PC. obligates it not only during the course of the trip but No contributory negligence could be attributed to the for so long as the passengers are within its premises deceased. The assailant's motive was to retaliate for and where they ought to be in pursuance to the the loss of life of two Maranaos as a result of the contract of carriage. The statutory provisions render collision between petitioner's bus and the jeepney in a common carrier liable for death of or injury to which the two Maranaos were riding. The armed men passengers (a) through the negligence or wilful acts actually allowed deceased to retrieve something from of its employees or b) on account of wilful acts or the bus. What apparently angered them was his negligence of other passengers or of strangers if the attempt to help the driver of the bus by pleading for common carrier’s employees through the exercise of his life. due diligence could have prevented or stopped the act or omission. In case of such death or injury, a • Zulueta v. Pan American World Airways, gr carrier is presumed to have been at fault or been no. 28589 - Filipino passenger who went to relieve negligent, and by simple proof of injury, the himself was berated by the captain for coming back passenger is relieved of the duty to still establish the late to the plane and was called a monkey. Held: A fault or negligence of the carrier or of its employees passenger is entitled to courteous treatment from the and the burden shifts upon the carrier to prove that carrier and its EEs and failure of the common carrier the injury is due to an unforeseen event or to force to comply with this obligation will entitle the majeure. In the absence of satisfactory explanation passenger to damages. The relation between by the carrier on how the accident occurred, which common carrier and passenger involves special and petitioners, according to the appellate court, have peculiar obligations and duties, differing in kind and failed to show, the presumption would be that it has degree, from those of almost every legal or been at fault, an exception from the general rule that contractual relation. On account of the peculiar negligence must be proved. situation of the parties, the law implies a promise and The foundation of LRTA’s liability is the contract of imposes upon the CC the corresponding duty of carriage and its obligation to indemnify the victim protection and courteous treatment. Therefore, the arises from the breach of that contract by reason of CC is under the absolute duty of protecting his its failure to exercise the high diligence required of passengers from assault or insult by himself or his the common carrier. In the discharge of its servants. A contract to transport passengers is quite commitment to ensure the safety of passengers, a different in kind and degree from any other carrier may choose to hire its own employees or avail contractual relation. And this, because of the relation itself of the services of an outsider or an independent which an air carrier sustains with the public. Its firm to undertake the task. In either case, the business is mainly with the traveling public. It invites common carrier is not relieved of its responsibilities people to avail of the comforts and advantages it under the contract of carriage. offers. The contract of air carriage, therefore, generates a relation attended with a public duty. • Fortune Express v. CA, gr no. 119756 - Art. Neglect or malfeasance of the CC's employees 1763 of the Civil Code provides that a common naturally could give ground for an action for carrier is responsible for injuries suffered by a damages. Passengers do not contract merely for passenger on account of wilfull acts of other transportation. They have a right to be treated by the passengers, if the employees of the common carrier CC's employees with kindness, respect, courtesy and could have prevented the act through the exercise of due consideration. They are entitled to be protected the diligence of a good father of a family. In the against personal misconduct, injurious language, present case, it is clear that because of the indignities and abuses from such employees. So it is, negligence of petitioner's employees, the seizure of that any rude or discourteous conduct on the part of the bus by Mananggolo and his men was made its employees towards a passenger gives the latter possible. an action for damages against the CC. Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to • Mindanao Terminal and Brokerage Service, take revenge on the petitioner by burning some of its Inc. v. Phoenix Assurance, gr no. 162467 - There is a buses and the assurance of petitioner's operation distinction between an arrastre and a manager, Diosdado Bravo, that the necessary stevedore. Arrastre, a Spanish word which refers to precautions would be taken, petitioner did nothing to hauling of cargo, comprehends the handling of cargo protect the safety of its passengers. Had petitioner on the wharf or between the establishment of the and its employees been vigilant they would not have consignee or shipper and the ship's tackle. The failed to see that the malefactors had a large responsibility of the arrastre operator lasts until the quantity of gasoline with them. Under the delivery of the cargo to the consignee. The service is circumstances, simple precautionary measures to usually performed by longshoremen. On the other protect the safety of passengers, such as frisking hand, stevedoring refers to the handling of the cargo passengers and inspecting their baggages, preferably in the holds of the vessel or between the ship's tackle with non-intrusive gadgets such as metal detectors, and the holds of the vessel. The responsibility of the before allowing them on board could have been stevedore ends upon the loading and stowing of the employed without violating the passenger's cargo in the vessel. constitutional rights. It is not disputed that Mindanao Terminal was petitioner thereby assumed the obligation to take the performing purely stevedoring function while the place of the carrier originally designated in the private respondent in the Summa case was original conjunction ticket. The petitioner's argument performing arrastre function. In the present case, that it is not a designated carrier in the original Mindanao Terminal, as a stevedore, was only charged conjunction tickets and that it issued its own ticket is with the loading and stowing of the cargoes from the not decisive of its liability. The new ticket was simply pier to the ship’s cargo hold; it was never the a replacement for the unused portion of the custodian of the shipment of Del Monte Produce. A conjunction ticket, both tickets being for the same stevedore is not a common carrier for it does not amount of US$2,760 and having the same points of transport goods or passengers; it is not akin to a departure and destination. By constituting itself as an warehouseman for it does not store goods for profit. agent of the principal carrier the petitioner's The loading and stowing of cargoes would not have a undertaking should be taken as part of a single far reaching public ramification as that of a common operation under the contract of carriage executed by carrier and a warehouseman; the public is adequately the private respondent and Singapore Airlines in protected by our laws on contract and on quasi-delict. Manila. The public policy considerations in legally imposing 3. China Airlines v. Chiok, gr no. 152122 - A common upon a common carrier or a warehouseman a higher carrier has a peculiar relationship with and an degree of diligence is not present in a stevedoring exacting responsibility to its passengers. For reasons outfit which mainly provides labor in loading and of public interest and policy, the ticket-issuing airline stowing of cargoes for its clients. acts as principal in a contract of carriage and is thus liable for the acts and the omissions of any errant Liability of Successive Air Carriers carrier to which it may have endorsed any sector of 1. British Airways v. CA, gr no. 121824 - The contract the entire, continuous trip. of transportation was exclusively between the passenger and common carrier BA. The latter merely Involuntary upgrading of seats to first class endorsing the Manila to Hong Kong log of the Cathay Pacific v. Vasquez, GR 150843 - they had former’s journey to PAL, as its subcontractor or priority for upgrading of their seat accommodation at agent. Conditions of contracts were one of no extra cost when an opportunity arises. But, just continuous air transportation. Well-settled rule that like other privileges, such priority could be an agent is also responsible for any negligence in the waived. The Vazquezes should have been consulted performance of its function and is liable for damages first whether they wanted to avail themselves of the which the principal may suffer by reason of its privilege or would consent to a change of seat negligent act. When an action is based on breach of accommodation before their seat assignments were contract of carriage, the passenger can only sue BA given to other passengers. Normally, one would and not PAL, since the latter was not a party in the appreciate and accept an upgrading, for it would contract. mean a better accommodation. But, whatever their 2. American Airlines v. CA, gr no. 116044-45 - The reason was and however odd it might be, the contract of carriage between the private respondent Vazquezes had every right to decline the upgrade and Singapore Airlines although performed by and insist on the Business Class accommodation they different carriers under a series of airline tickets, had booked for and which was designated in their including that issued by the petitioner, constitutes a boarding passes. They clearly waived their priority single operation. Members of the IATA are under a or preference when they asked that other passengers general pool partnership agreement wherein they act be given the upgrade. It should not have been as agent of each other in the issuance of tickets to imposed on them over their vehement objection. By contracted passengers to boost ticket sales insisting on the upgrade, Cathay breached its worldwide and at the same time provide passengers contract of carriage with the Vazquezes. easy access to airlines which are otherwise inaccessible in some parts of the world. Booking and Failure to accommodate at first class seats reservation among airline members are allowed even Lopez v. Pan American World Airways, gr no. 22415 - by telephone and it has become an accepted practice From the evidence of defendant it is in effect among them. A member airline which enters into a admitted that defendant - through its agents - first contract of carriage consisting of a series of trips to cancelled plaintiffs, reservations by mistake and be performed by different carriers is authorized to thereafter deliberately and intentionally withheld receive the fare for the whole trip and through the from plaintiffs or their travel agent the fact of said required process of interline settlement of accounts cancellation, letting them go on believing that their by way of the IATA clearing house an airline is duly first class reservations stood valid and confirmed. In compensated for the segment of the trip serviced. so misleading plaintiffs into purchasing first class Thus, when the petitioner accepted the unused tickets in the conviction that they had confirmed portion of the conjunction tickets, entered it in the reservations for the same, when in fact they had IATA clearing house and undertook to transport the none, defendant wilfully and knowingly placed itself private respondent over the route covered by the into the position of having to breach its aforesaid unused portion of the conjunction tickets, i e ., contracts with plaintiffs should there be no last- Geneva to New York, the petitioner tacitly recognized minute cancellation by other passengers before flight its commitment under the IATA pool arrangement to time, as it turned out in this case. Such actuation of act as agent of the principal contracting airline, defendant may indeed have been prompted by Singapore Airlines, as to the segment of the trip the nothing more than the promotion of its self-interest in petitioner agreed to undertake. As such, the holding on to Senator Lopez and party as passengers in its flight and foreclosing on their chances to seek spouse was caused by the reckless negligence of the the services of other airlines that may have been able driver of the Isuzu trailer truck which lost its brakes to afford them first class accommodations. All the and bumped the Celyrosa Express bus, owned and time, in legal contemplation such conduct already operated by respondents. amounts to action in bad faith. For bad faith means a breach of a known duty through some motive Doctrine of Last Clear Chance of interest or ill-will. Engada v. CA, gr no. 140698 - In the present case, At the time plaintiffs bought their tickets, defendant, there was only a distance of 30 meters from the therefore, in breach of its known duty, made plaintiffs Tamaraw jeepney when the Isuzu pick-up abandoned believe that their reservation had not been cancelled. its lane and swerved to the left of the center line. In Such willful-non-disclosure of the cancellation or addition, petitioner was running at a fast clip while pretense that the reservations for plaintiffs stood - traversing this lane. This was testified to by Seyan and not simply the erroneous cancellation itself - is and Iran, unrebutted by petitioner. The resulting the factor to which is attributable the breach of the damage to the Tamaraw jeepney, at the point where resulting contracts. And, as above-stated, in this the head and chassis were separated from the body, respect defendant clearly acted in bad faith. bolsters this conclusion that petitioner was speeding. Petitioner was negligent in several ways, and his Unconfirmed tickets negligence was the proximate cause of the Spouses Yu Eng Cho v. Pan American World Airways, collision. In abandoning his lane, he did not see to it gr no. 123560 – In the case at bar, petitioners’ ticket first that the opposite lane was free of oncoming were on "RQ" status. They were not confirmed traffic and was available for a safe passage. For passengers and their names were not listed in the failing to observe the duty of diligence and care passenger manifest. In other words, this is not a case imposed on drivers of vehicles abandoning their lane, where Pan Am bound itself to transport petitioners petitioner must be held liable. and thereafter reneged on its obligation. Hence, Iran could not be faulted when in his attempt to avoid respondent airline cannot be held liable for damages. the pick-up, he swerved to his left. Petitioner’s acts had put Iran in an emergency situation which forced Common Carrier not an insurer of passenger’s safety; him to act quickly. An individual who suddenly finds not liable for death of passenger himself in a situation of danger and is required to act Mariano, Jr. v. Callejas, gr no. 166640 - While the law without much time to consider the best means that requires the highest degree of diligence from may be adopted to avoid the impending danger, is common carriers in the safe transport of their not guilty of negligence if he fails to undertake what passengers and creates a presumption of negligence subsequently and upon reflection may appear to be a against them, it does not, however, make the carrier better solution, unless the emergency was brought by an insurer of the absolute safety of its passengers. his own negligence. (Emergency Rule) Article 1755 of the Civil Code qualifies the duty of The doctrine of last clear chance states that a person extraordinary care, vigilance and precaution in the who has the last clear chance or opportunity of carriage of passengers by common carriers to only avoiding an accident, notwithstanding the negligent such as human care and foresight can provide. What acts of his opponent, is considered in law solely constitutes compliance with said duty is adjudged responsible for the consequences of the accident. But with due regard to all the circumstances. as already stated on this point, no convincing Article 1756 of the Civil Code, in creating a evidence was adduced by petitioner to support his presumption of fault or negligence on the part of the invocation of the above cited doctrine. Instead, what common carrier when its passenger is injured, merely has been shown is the presence of an emergency and relieves the latter, for the time being, from the proper application of the emergency introducing evidence to fasten the negligence on the rule. Petitioner’s act of swerving to the Tamaraw’s former, because the presumption stands in the place lane at a distance of 30 meters from it and driving of evidence. Being a mere presumption, however, the the Isuzu pick-up at a fast speed as it approached the same is rebuttable by proof that the common carrier Tamaraw, denied Iran time and opportunity to ponder had exercised extraordinary diligence as required by the situation at all. There was no clear chance to law in the performance of its contractual obligation, speak of. or that the injury suffered by the passenger was Lapanday v. Angala, gr no. 153076 - Since both solely due to a fortuitous event. parties are at fault in this case, the doctrine of last In fine, we can only infer from the law the intention of clear chance applies. the Code Commission and Congress to curb the The doctrine of last clear chance states that where recklessness of drivers and operators of common both parties are negligent but the negligent act of carriers in the conduct of their business. one is appreciably later than that of the other, or Thus, it is clear that neither the law nor the nature of where it is impossible to determine whose fault or the business of a transportation company makes it an negligence caused the loss, the one who had the last insurer of the passenger's safety, but that its liability clear opportunity to avoid the loss but failed to do so for personal injuries sustained by its passenger rests is chargeable with the loss. In this case, Deocampo upon its negligence, its failure to exercise the degree had the last clear chance to avoid the collision. Since of diligence that the law requires. Deocampo was driving the rear vehicle, he had full In the case at bar, petitioner cannot succeed in his control of the situation since he was in a position to contention that respondents failed to overcome the observe the vehicle in front of him. Deocampo had presumption of negligence against them. The totality the responsibility of avoiding bumping the vehicle in of evidence shows that the death of petitioner’s front of him. A U-turn is done at a much slower speed to avoid skidding and overturning, compared to 1. When it has for its object merchandise or any running straight ahead. Deocampo could have article of commerce. avoided the vehicle if he was not driving very fast 2. When, whatever its object may be, the carrier is while following the pick-up. Deocampo was not only a merchant or is habitually engaged in transportation driving fast, he also admitted that he did not step on for the public. the brakes even upon seeing the pick-up. He only stepped on the brakes after the collision. ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually demand that a Contributory Negligence bill of lading be made, stating: 1. The name, surname and residence of the 1. Estacion v. Bernardo, gr no. 144723 – respondent shipper. Noe’s act of standing on the rear carrier of the Fiera 2. The name, surname and residence of the carrier. exposing himself to bodily injury is in itself 3. The name, surname and residence of the person negligence on his part. Noe was guilty of contributory to whom or to whose order the goods are to be sent negligence. Contributory negligence is conduct on the or whether they are to be delivered to the bearer of part of the injured party, contributing as a legal cause said bill. to the harm he has suffered, which falls below the 4. The description of the goods, with a statement of standard to which he is required to conform for his their kind, of their weight, and of the external marks own protection. Respondent Noe’s act of standing on or signs of the packages in which they are contained. the left rear carrier portion of the Fiera showed his 5. The cost of transportation. lack of ordinary care and foresight that such act could 6. The date on which shipment is made. cause him harm or put his life in danger. It has been 7. The place of delivery to the carrier. held that "to hold a person as having contributed to 8. The place and the time at which delivery to the his injuries, it must be shown that he performed an consignee shall be made. act that brought about his injuries in disregard of 9. The indemnity to be paid by the carrier in case of warning or signs of an impending danger to health delay, if there should be any agreement on this and body. Respondent Noe’s act of hanging on the matter. Fiera is definitely dangerous to his life and limb. ARTICLE 351. In transportation made by railroads or 2. Fortune Express, Inc. v. CA, gr no. 119756 - The other enterprises subject to regulation rate and time petitioner contends that Atty. Caorong was guilty of schedules, it shall be sufficient for the bills of lading contributory negligence in returning to the bus to or the declaration of shipment furnished by the retrieve something. But Atty. Caorong did not act shipper to refer, with respect to the cost, time and recklessly. It should be pointed out that the intended special conditions of the carriage, to the schedules targets of the violence were petitioner and its and regulations the application of which he requests; employees, not its passengers. The assailant’s and if the shipper does not determine the schedule, motive was to retaliate for the loss of life of two the carrier must apply the rate of those which appear Maranaos as a result of the collision between to be the lowest, with the conditions inherent thereto, petitioner’s bus and the jeepney in which the two always including a statement or reference to in the Maranaos were riding. Mananggolo, the leader of the bill of lading which he delivers to the shipper. group which had hijacked the bus, ordered the passengers to get off the bus as they intended to ARTICLE 352. The bills of lading, or tickets in cases burn it and its driver. The armed men actually of transportation of passengers, may be diverse, allowed Atty. Caorong to retrieve something from the some for persons and others for baggage; but all of bus. What apparently angered them was his attempt them shall bear the name of the carrier, the date of to help the driver of the bus by pleading for his shipment, the points of departure and arrival, the life. He was playing the role of the good cost, and, with respect to the baggage, the number Samaritan. Certainly, this act cannot be considered and weight of the packages, with such other an act of negligence, let alone recklessness. manifestations which may be considered necessary for their easy identification. Not Passengers: 1. One who has boarded by fraud, stealth or deceit ARTICLE 353. The legal evidence of the contract 2. Rides any part of the vehicle unsuitable or between the shipper and the carrier shall be the bills dangerous or which he knows is not designated or of lading, by the contents of which the disputes which intended for passengers may arise regarding their execution and performance 3. Remains on a carrier for an unreasonable length shall be decided, no exceptions being admissible of time after he has been afforded every safe other than those of falsity and material error in the opportunity to alight drafting. After the contract has been complied with, the bill of Provisions of the CODE OF COMMERCE ON CARRIERS lading which the carrier has issued shall be returned ARTICLES 349-379, CODE OF COMMERCE to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and Commercial Contracts for Transportation Overland actions shall be considered cancelled, unless in the ARTICLE 349. A contract of transportation by land same act the claim which the parties may wish to or water ways of any kind shall be considered reserve be reduced to writing, with the exception of commercial: that provided for in Article 366. In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of the consignment of the goods which he delivered to its loss or of any other cause, he must give the latter the carrier, provided that at the time of ordering the a receipt for the goods delivered, this receipt change of consignee the bill of lading signed by the producing the same effects as the return of the bill of carrier, if one has been issued, be returned to him, in lading. exchange for another wherein the novation of the contract appears. ARTICLE 354. In the absence of a bill of lading, The expenses which this change of consignment disputes shall be determined by the legal proofs occasions shall be for the account of the shipper. which the parties may present in support of their respective claims, according to the general provisions ARTICLE 361. The merchandise shall be transported established in this Code for commercial contracts. at the risk and venture of the shipper, if the contrary has not been expressly stipulated. ARTICLE 355. The responsibility of the carrier shall As a consequence, all the losses and deteriorations commence from the moment he receives the which the goods may suffer during the transportation merchandise, personally or through a person charged by reason of fortuitous event, force majeure, or the for the purpose, at the place indicated for receiving inherent nature and defect of the goods, shall be for them. the account and risk of the shipper. Proof of these accidents is incumbent upon the ARTICLE 356. Carriers may refuse packages which carrier. appear unfit for transportation; and if the carriage is to be made by railway, and the shipment is insisted ARTICLE 362. Nevertheless, the carrier shall be upon, the company shall transport them, being liable for the losses and damages resulting from the exempt from all responsibility if its objections, is causes mentioned in the preceding article if it is made to appear in the bill of lading. proved, as against him, that they arose through his negligence or by reason of his having failed to take ARTICLE 357. If by reason of well-founded suspicion the precautions which usage has established among of falsity in the declaration as to the contents of a careful persons, unless the shipper has committed package the carrier should decide to examine it, he fraud in the bill of lading, representing the goods to shall proceed with his investigation in the presence of be of a kind or quality different from what they really witnesses, with the shipper or consignee in were. attendance. If, notwithstanding the precautions referred to in this If the shipper or consignee who has to be cited does article, the goods transported run the risk of being not attend, the examination shall be made before a lost, on account of their nature or by reason of notary, who shall prepare a memorandum of the unavoidable accident, there being no time for their result of the investigation, for such purposes as may owners to dispose of them, the carrier may proceed be proper. to sell them, placing them for this purpose at the If the declaration of the shipper should be true, the disposal of the judicial authority or of the officials expense occasioned by the examination and that of designated by special provisions. carefully repacking the packages shall be for the account of the carrier and in a contrary case for the ARTICLE 363. Outside of the cases mentioned in the account of the shipper. second paragraph of Article 361, the carrier shall be obliged to deliver the goods shipped in the same ARTICLE 358. If there is no period fixed for the condition in which, according to the bill of lading, delivery of the goods the carrier shall be bound to they were found at the time they were received, forward them in the first shipment of the same or without any damage or impairment, and failing to do similar goods which he may make point where he so, to pay the value which those not delivered may must deliver them; and should he not do so, the have at the point and at the time at which their damages caused by the delay should be for his delivery should have been made. account. If those not delivered form part of the goods transported, the consignee may refuse to receive the ARTICLE 359. If there is an agreement between the latter, when he proves that he cannot make use of shipper and the carrier as to the road over which the them independently of the others. conveyance is to be made, the carrier may not change the route, unless it be by reason of force ARTICLE 364. If the effect of the damage referred to majeure; and should he do so without this cause, he in Article 361 is merely a diminution in the value of shall be liable for all the losses which the goods he the goods, the obligation of the carrier shall be transports may suffer from any other cause, beside reduced to the payment of the amount which, in the paying the sum which may have been stipulated for judgment of experts, constitutes such difference in such case. value. When on account of said cause of force majeure, the carrier had to take another route which produced an ARTICLE 365. If, in consequence of the damage, the increase in transportation charges, he shall be goods are rendered useless for sale and consumption reimbursed for such increase upon formal proof for the purposes for which they are properly destined, thereof. the consignee shall not be bound to receive them, and he may have them in the hands of the carrier, ARTICLE 360. The shipper, without changing the demanding of the latter their value at the current place where the delivery is to be made, may change price on that day. If among the damaged goods there should be some shall be liable for the damages which the delay may pieces in good condition and without any defect, the have caused. foregoing provision shall be applicable with respect to those damaged and the consignee shall receive those ARTICLE 371. In case of delay through the fault of which are sound, this segregation to be made by the carrier, referred to in the preceding articles, the distinct and separate pieces and without dividing a consignee may leave the goods transported in the single object, unless the consignee proves the hands of the former, advising him thereof in writing impossibility of conveniently making use of them in before their arrival at the point of destination. this form. When this abandonment takes place, the carrier shall The same rule shall be applied to merchandise in pay the full value of the goods as if they had been bales or packages, separating those parcels which lost or mislaid. appear sound. If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot ARTICLE 366. Within the twenty-four hours exceed the current price which the goods transported following the receipt of the merchandise, the claim would have had on the day and at the place in which against the carrier for damage or average be found they should have been delivered; this same rule is to therein upon opening the packages, may be made, be observed in all other cases in which this indemnity provided that the indications of the damage or may be due. average which gives rise to the claim cannot be ascertained from the outside part of such packages, ARTICLE 372. The value of the goods which the in which case the claim shall be admitted only at the carrier must pay in cases if loss or misplacement time of receipt. shall be determined in accordance with that declared After the periods mentioned have elapsed, or the in the bill of lading, the shipper not being allowed to transportation charges have been paid, no claim shall present proof that among the goods declared therein be admitted against the carrier with regard to the there were articles of greater value and money. condition in which the goods transported were Horses, vehicles, vessels, equipment and all other delivered. principal and accessory means of transportation shall be especially bound in favor of the shipper, although ARTICLE 367. If doubts and disputes should arise with respect to railroads said liability shall be between the consignee and the carrier with respect subordinated to the provisions of the laws of to the condition of the goods transported at the time concession with respect to the property, and to what their delivery to the former is made, the goods shall this Code established as to the manner and form of be examined by experts appointed by the parties, effecting seizures and attachments against said and, in case of disagreement, by a third one companies. appointed by the judicial authority, the results to be reduced to writing; and if the interested parties ARTICLE 373. The carrier who makes the delivery of should not agree with the expert opinion and they do the merchandise to the consignee by virtue of not settle their differences, the merchandise shall be combined agreements or services with other carriers deposited in a safe warehouse by order of the judicial shall assume the obligations of those who preceded authority, and they shall exercise their rights in the him in the conveyance, reserving his right to proceed manner that may be proper. against the latter if he was not the party directly responsible for the fault which gave rise to the claim ARTICLE 368. The carrier must deliver to the of the shipper or consignee. consignee, without any delay or obstruction, the The carrier who makes the delivery shall likewise goods which he may have received, by the mere fact acquire all the actions and rights of those who of being named in the bill of lading to receive them; preceded him in the conveyance. and if he does not do so, he shall be liable for the The shipper and the consignee shall have an damages which may be caused thereby. immediate right of action against the carrier who executed the transportation contract, or against the ARTICLE 369. If the consignee cannot be found at other carriers who may have received the goods the residence indicated in the bill of lading, or if he transported without reservation. refuses to pay the transportation charges and However, the reservation made by the latter shall not expenses, or if he refuses to receive the goods, the relieve them from the responsibilities which they may municipal judge, where there is none of the first have incurred by their own acts. instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the ARTICLE 374. The consignees to whom the effects of delivery without prejudice to third parties shipment was made may not defer the payment of with a better right. the expenses and transportation charges of the goods they receive after the lapse of twenty-four ARTICLE 370. If a period has been fixed for the hours following their delivery; and in case of delay in delivery of the goods, it must be made within such this payment, the carrier may demand the judicial time, and, for failure to do so, the carrier shall pay sale of the goods transported in an amount necessary the indemnity stipulated in the bill of lading, neither to cover the cost of transportation and the expenses the shipper nor the consignee being entitled to incurred. anything else. If no indemnity has been stipulated and the delay ARTICLE 375. The goods transported shall be exceeds the time fixed in the bill of lading, the carrier especially bound to answer for the cost of transportation and for the expenses and fees incurred either by indorsement or by delivery, goods for them during their conveyance and until the represented by such document. moment of their delivery. This special right shall prescribe eight days after the Rights and obligations of common carrier, shipper delivery has been made, and once prescribed, the and consignee under a bill of lading carrier shall have no other action than that 1) Art. 351 – Shipper schedules and special corresponding to him as an ordinary creditor. conditions of the carriage; if not by the shipper, the carrier must select the lowest rate. ARTICLE 376. The preference of the carrier to the 2) Art. 353 – Shipper must return the bill of payment of what is owed him for the transportation lading issued to him to the carrier. In the case of a and expenses of the goods delivered to the consignee with the loss of the bill of lading, he shall consignee shall not be cut off by the bankruptcy of be issued a receipt for the goods delivered. the latter, provided it is claimed within the eight days 3) Art. 355 – The responsibility of the carrier – mentioned in the preceding article. begins: the moment he receives the merchandise, personally or thru an authorized person, place ARTICLE 377. The carrier shall be liable for all the indicated for receiving them. consequences which may arise from his failure to 4) Art. 356 – Carrier may refuse – unfit for comply with the formalities prescribed by the laws transportation; if to be made by rail, the company and regulations of the public administration, during shall transport them. the whole course of the trip and upon arrival at the 5) Art. 357 – If under suspicion of falsity, the point of destination, except when his failure arises carrier can examine it in the presence of witnesses from having been led into error by falsehood on the with the shipper or consignee in attendance. If part of the shipper in the declaration of the without, with notary. If the suspicion is false, the merchandise. If the carrier has acted by virtue of a carrier is liable for the repacking. If true, the shipper. formal order of the shipper or consignee of the 6) Art. 358 – If there are no period fixed for merchandise, both shall become responsible. delivery – the carrier should forward them on the first shipment of the same of similar goods which he may ARTICLE 378. Agents for transportation shall be make to a point where he must deliver them. obliged to keep a special registry, with the formalities 7) Art. 359 – If there is an agreement, the route required by Article 36, in which all the goods the cannot be changed except force majeure. If he does transportation of which is undertaken shall be without this reason, he shall be liable for losses entered in consecutive order of number and dates, incurred and amount stipulated if stated. with a statement of the circumstances required in 8) Art. 360 – A shipper who after delivering the Article 350 and others following for the respective goods to the carrier and having been issued a bill of bills of lading. lading designating a consignee and a place of consignment, wants to change the consignee of the ARTICLE 379. The provisions contained in Articles good, can be required by the carrier to surrender all 349 and following shall be understood as equally copies of the bill of lading in order that a new one applicable to those who, although they do not may be issued now bearing the name of the new personally effect the transportation of the consignee. Expenses incurred in the process will have merchandise, contract to do so through others, either to be borne by the shipper. This can only be done if as contractors for a particular and definite operation, shipment has not be made yet! or as agents for transportations and conveyances. 9) Art. 361 – The merchandise shall be In either case they shall be subrogated in the place of transported at the risk and venture of the shipper, the carriers themselves, with respect to the unless contrary is expressly stipulated or by force obligations and responsibility of the latter, as well as majeure or thru the negligence of the carrier (Art. with regard to their rights. 362). A proof of these is incumbent upon the carrier. 10) Art. 362 – Liability because of negligence is Bill of Lading: negated if shipper committed fraud in the bill of A bill of lading is an instrument issued by a captain to lading, representing the goods to be different; a shipper which is stated the fact of the receipt of the Carrier may sell them or place them under disposal of goods and stating the terms and conditions of the a judicial authority or official designated by special carriage. provisions IF: a. goods run the risk of being lost AND; The three fold character off a bill of lading are: b. no time for owners to dispose of them. First, it is a receipt for the goods shipped. 11) Art. 363: Second, it is a contract by which three parties, a. Outside the cases mentioned in Art 362, 2nd namely, the shipper, the carrier and the consignee, par, the carrier is obliged to deliver the goods undertake specific responsibilities and assume shipped: stipulated obligations. 1.In the same condition in which according to Third, a bill of lading is also a document of title. A the bill of lading they were found at the time document of title is any document used in the they were received ordinary course of business in the sale or transfer of 2.Without damage or impairment; goods, as proof of the possession or control of goods, b. Failing to do so, to pay the value which those or authorizing or purporting to authorize the not delivered may have at the point and at the time possessor of the document to transfer or receive, at which their delivery should have been made c. If those not delivered form part of the whole Merchant Vessel - Vessel engaged in maritime goods and that the consignee PROVES he cannot commerce, whether foreign or otherwise. make use of them independently from the others, he Constitutes property which may be acquired and may refuse to receive them. transferred by any of the means recognized by law. 12) Art. 364 – If in case of force majeure there is They shall continue to be considered as personal or are damage/s and there is a diminution in the property. (Arts. 573, 585) value of the goods, the obligation of the carrier – They are susceptible to maritime liens such as for the reduced to the payment of the amount, which in the repair, equipping and provisioning of the vessel in the judgment of experts constitutes difference in value. preparation of a voyage, as well as mortgage 13) Art. 365 – If it is rendered useless in case of liabilities, in satisfaction of which a vessel may be damage/s, the consignee may demand the value at validly arrested and sold. the current price. If there are parts which are ok, the consignee shall receive those. MARITIME/ADMIRALTY LAW 14) Art. 368 –The carrier must deliver to the It is the system of laws which particularly relates to consignee, without any delay or obstruction, the the affairs and business of the sea, to ships, their goods which he may have received by the mere fact crews and navigation, and to maritime conveyance of of being names in the bill of lading to receive them; if persons and property. he does not do so, he shall be liable for the damages Maritime laws apply only to maritime trade and sea which may be caused thereby. voyages. 15) Art. 369 – If the consignee cannot be found at Arrastre service is not maritime in character. It refers the residence indicated therein or if he refuses to pay to a contract for the unloading of goods from a transpo charges and expenses, or refuses to receive vessel. the goods: The municipal judge shall provide for their deposit at Necessity of Registration the disposal of the shipper, this deposit producing the Under Section 803 of PD 34, a vessel of more effect of delivery. than 3 tons owned by Filipino citizens or corporations 16) Art. 372 – The value of the goods lost or and associations at least 60% of the capital of which misplaced is determined by that declared in the bill of belongs to said citizens shall be registered with the lading; Philippine Coast Guard under PD 1064. The 17) Art. 373 – If there is a delivery by combined registration of those 3 tons or less is optional. agreements or services, violations can be preceded Thereafter, if the vessel is more than 15 tons gross, it against the carrier. shall be issued a certificate of Philippine registry. The taking of a certificate of Philippine registry on vessels Time for making claims 15 tons or less is optional. However, if a domestic A claim for lost goods against a merchant vessel vessel not less than 5 tons does not take a certificate must be made within 30 days from receipt of the last of Philippine registry, it shall be issued a certificate of package of the goods. Failure of the shipper to do so ownership. Under EO 125 and 125-A, registration of is fatal as it is a condition precedent to the accrual of vessels is now with the Maritime Industry Authority the cause of action against the carrier. (MARINA). An action for misdelivery of cargo under the Civil Code and not under the Carriage3 of Goods by Sea SHIPOWNERS AND SHIP AGENTS Act, prescribes in 10 years. The one year prescriptive period under the latter law is applicable to loss or Shipowner damage of cargo but not to its misdelivery. Person who has possession, control and management Against the arrastre operator, the suit should be of the vessel and the consequent right to direct her preceded by a claim filed within 15 days from the navigation and receive freight earned and paid, while discharge of the last cargo, and the suit itself should his possession continues. be filed within two years from said discharge. Carrier’s responsibility starts from the moment he Ship agent receives unconditionally the merchandise personally Person entrusted with provisioning and representing or through an authorized agent, and lasts until he the vessel in the port in which it may be found; also delivers them actually ot constructively to the includes the shipowner. consignee or to his agent; lasts until actual or Not a mere agent under civil law; he is solidarily constructive delivery to consignee or authorized liable with the ship owner. representative. 24 hour prescription of Art. 366 occurs only if there is Powers and functions: delivery by the carrier to the consignee at the place 1. Capacity to trade; of destination. If the consignee has not received 2. Discharge duties of the captain, subject to possession of the cargo and has not physically Art.609; inspected the same at the time of the shipment was 3. Contract in the name of the owners with respect discharged from the ship, there is no delivery. to repairs, details of equipment, armament, provisions of food and fuel, and freight of the vessel, MARITIME COMMERCE and all that relate to the requirements of navigation; ARTICLES 573-736, 806-845 CODE OF COMMERCE 4. Order a new voyage, make a new charter or insure the vessel after obtaining authorization from Rules on Vessels the shipowner or if granted in certificate of appointment. Civil Liabilities of the Shipowner And Ship Agent Duties: 1. All contracts of the captain, whether authorized 1. Bring on board the proper certificate and or not, to repair, equip and provision the vessel; (Art. documents and a copy of the Code of Commerce; 586) 2. Keep a Log Book, Accounting Book and Freight 2. Loss and damage to the goods loaded on the Book; vessel without prejudice to their right to free 3. Examine the ship before the voyage; themselves from liability by abandoning the vessel to 4. Stay on board during the loading and unloading the creditors. (Art. 587) of the cargo; 5. Be on deck while leaving or entering the port; Duty of Ship Agent to Discharge the Captain and 6. Protest arrivals under stress and in case of Members of the Crew shipwreck; If the seamen contract is not for a definite period or 7. Follow instructions of and render an accounting voyage, he may discharge them at his discretion. to the ship agent; (Art. 603) 8. Leave the vessel last in case of wreck; If for a definite period, he may not discharge them 9. Hold in custody properties left by deceased until after the fulfillment of their contracts, except on passengers and crew members; the following grounds: 10. Comply with the requirements of customs, health, a. Insubordination in serious matters; etc. at the port of arrival; b. Robbery; 11. Observe rules to avoid collision; c. Theft; 12. Demand a pilot while entering or leaving a port. d. Habitual drunkenness; (Art. 612) e. Damage caused to the vessel or to its cargo through malice or manifest or proven negligence. A ship’s captain must be accorded a reasonable (Art. 605) measure of discretionary authority to decide what the safety of the ship and of its crew and cargo CAPTAINS AND MASTERS specifically requires on a stipulated ocean voyage They are the chiefs or commanders of ships. (Inter-Orient Maritime Enterprises Inc. vs. CA). The terms have the same meaning, but are particularly used in accordance with the size of the No liability for the following: vessel governed and the scope of transportation, i.e., 1. Damages caused to the vessel or to the cargo by large and overseas, and small and coastwise, force majeure; respectively. 2. Obligations contracted for the repair, equipment, and provisioning of the vessel unless he has Nature of position (3-fold character): expressly bound himself personally or has signed a 1. General agent of the shipowner; bill of exchange or promissory note in his name. (Art. 2. Technical director of the vessel; 620) 3. Representative of the government of the country under whose flag he navigates. Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the Captain towards Passengers and Qualifications: Cargoes 1. Filipino citizen; 1. Damages to vessel and to cargo due to lack of 2. Legal capacity to contract; skill and negligence; 3. Must have passed the required physical and 2. Thefts and robberies of the crew; mental examinations required for licensing him as 3. Losses and fines for violation of laws; such. (Art. 609) 4. Damages due to mutinies; 5. Damages due to misuse of power; Inherent powers: 6. For deviations; 1. Appoint crew in the absence of ship agent; 7. For arrivals under stress; 2. Command the crew and direct the vessel to its 8. Damages due to non-observance of marine port of destination; regulations. (Art. 618) 3. Impose correctional punishment on those who, while on board vessel, fail to comply with his orders Sailing Mate/First Mate or are wanting in discipline; Second chief of the vessel who takes the place of the 4. Make contracts for the charter of vessel in the captain in case of absence, sickness, or death and absence of ship agent. shall assume all of his duties, powers and 5. Supply, equip, and provision the vessel; and responsibilities. (Art. 627) 6. Order repair of vessel to enable it to continue its voyage. (Art. 610) Duties: 1. Provide himself with maps and charts with Sources of funds to comply with the inherent powers astronomical tables necessary for the discharge of his of the captain (in successive order): duties; 1. From the consignee of the vessel; 2. Keep the Binnacle Book; 2. From the consignee of the cargo; 3. Change the course of the voyage on consultation 3. By drawing on the ship agent; with the captain and the officers of the boat, 4. By a loan on bottomry; following the decision of the captain in case of 5. By sale of part of the cargo. (Art. 611) disagreement; 4. Responsible for all the damages caused to the 5. Physical incapacity; vessel and the cargo by reason of his negligence. 6. Desertion. (Art. 637) (Arts. 628 - 631) Rules in case of Death of a Seaman Second Mate The seaman’s heirs are entitled to payment as Takes command of the vessel in case of the inability follows: or disqualification of the captain and the sailing mate, 1. If death is natural: assuming in such case their powers and a. compensation up to time of death if engaged on responsibilities. wage Third in command b. if by voyage - half of amount if death occurs on voyage out; and full, if on voyage in Duties: c. if by shares - none, if before departure; full, if 1. Preserve the hull and rigging of the vessel; after departure 2. Arrange well the cargo; 2. if death is due to defense of vessel - full payment; 3. Discipline the crew; 3. if captured in defense of vessel - full payment; 4. Assign work to crew members; 4. if captured due to carelessness - wages up to the 5. Inventory the rigging and equipment of the date of the capture. (Art. 645) vessel, if laid up. (Art. 632) Complement of the Vessel Engineers All persons on board, from the captain to the cabin Officers of the vessel but have no authority except in boy, necessary for the management, maneuvers, and matters referring to the motor apparatus. When two service, thus including the crew, the sailing mates, or more are hired, one of them shall be the chief engineers, stokers and other employees on board not engineer. having specific designations. Does not include the passengers or the persons Duties: whom the vessel is transporting. 1. In charge of the motor apparatus, spare parts, and other instruments pertaining to the engines; SUPERCARGOES 2. Keep the engines and boilers in good condition; Persons who discharges administrative duties 3. Not to change or repair the engine without assigned to him by ship agent or shippers, keeping authority of the captain; an account and record of transaction as required in 4. Inform the captain of any damage to the motor the accounting book of the captain. (Art. 649) apparatus; 5. Keep an Engine Book; PILOT 6. Supervise all personnel maintaining the engine. A person duly qualified, and licensed, to conduct a (Art. 632) vessel into or out of ports, or in certain waters. The term generally connotes a person taken on board Crew at a particular place for the purpose of conducting a The aggregate of seamen who man a ship, or the ship through a river, road or channel, or from a port. ship’s company. Master pro hac vice for the time being in the Hired by the ship agent, where he is present and in command and navigation of the ship. his absence, the captain hires them, preferring While in exercising his functions a pilot is in sole Filipinos, and in their absence, he may take in command of the ship and supersedes the master for foreigners, but not exceeding 1/5 of the crew. (Art. the time being in the command and navigation of the 634) ship, the master does not surrender his vessel to the pilot and the pilot is not the master. There are OFFICERS AND CREW occasions when the master may and should interfere 1. Sailing Mate/First Mate and even displace the pilot, as when the pilot is 2. Second Mate obviously incompetent or intoxicated (Far Eastern 3. Engineers Shipping Company vs. CA). 4. Crew Compulsory Pilotage – States possessing harbors No liability under the following circumstances: have enacted laws or promulgated rules requiring 1. If, before beginning voyage, captain attempts to vessels approaching their ports to take on board change it, or a naval war with the power to which the pilots licensed under the local laws. (Notes and Cases vessel was destined occurs; on the Law on Transportation and Public Utilities, 2. If a disease breaks out and be officially declared Aquino, T. & Hernando, R.P. 2004 ed. p. 518) an epidemic in the port of destination; 3. If the vessel should change owner or captain. Liablity of Pilot (Art. 647) GENERAL RULE: On compulsory pilotage grounds, the Harbor Pilot is responsible for damage to a vessel or Just Causes for the Discharge of Seaman While to life or property due to his negligence. Contract Subsists EXCEPT: 1. Perpetration of a crime; 1. Accident caused by force majeure or natural 2. Repeated insubordination, want of discipline; calamity provided the pilot exercised prudence and 3. Repeated incapacity and negligence; extra diligence to prevent or minimize damages. 4. Habitual drunkenness; 2. Countermand or overrule by the master of the vessel in which case the registered owner of the pilotage is compulsory. It is quite common for states vessel is liable. (Sec.11, Art.III PPA Admin Order 03- and localities to provide for compulsory pilotage, and 85) safety laws have been enacted requiring vessels approaching their ports, with certain exceptions, to Case on Captain take on board pilots duly licensed under local law. Inter-Orient Maritime Enterprises v. NLRC , gr no. The purpose of these laws is to create a body of 115286 - The captain of a vessel is a confidential and seamen thoroughly acquainted with the harbor, to managerial employee within the meaning of the pilot vessels seeking to enter or depart, and thus above doctrine. A master or captain, for purposes of protect life and property from the dangers of navigation. maritime commerce, is one who has command of a While it is indubitable that in exercising his functions vessel. A captain commonly performs three (3) a pilot is in sole command of the ship and supersedes distinct roles: (1) he is a general agent of the the master for the time being in the command and shipowner; (2) he is also commander and technical navigation of a ship and that he becomes master pro director of the vessel; and (3) he is a representative hac vice of a vessel piloted by him, there is of the country under whose flag he navigates. Of overwhelming authority to the effect that the master these roles, by far the most important is the role does not surrender his vessel to the pilot and the performed by the captain as commander of the pilot is not the master. The master is still in command vessel, for such role (which to our mind, is analogous of the vessel notwithstanding the presence of a pilot. to that of "Chief Executive Officer" [CEO] of a There are occasions when the master may and present-day corporate enterprise) has to do with the should interfere and even displace the pilot, as when operation and protection of the vessel during its the pilot is obviously incompetent or intoxicated and voyage and the protection of the passengers (if any) the circumstances may require the master to displace and crew and cargo. In his role as general agent of a compulsory pilot because of incompetency or the shipowner, the captain has authority to sign bills physical incapacity. If, however, the master does not of lading, carry goods aboard and deal with the observe that a compulsory pilot is incompetent or freight earned, agree upon rates and decide whether physically incapacitated, the master is justified in to take cargo. The ship captain, as agent of the relying on the pilot, but not blindly. shipowner, has legal authority to enter into contracts The master is not wholly absolved from his duties with respect to the vessel and the trading of the while a pilot is on board his vessel, and may advise vessel, subject to applicable limitations established with or offer suggestions to him. He is still in by statute, contract or instructions and regulations of command of the vessel, except so far as her the shipowner. To the captain is committed the navigation is concerned, and must cause the ordinary governance, care and management of the vessel. work of the vessel to be properly carried on and the Clearly, the captain is vested with both management usual precaution taken. Thus, in particular, he is and fiduciary functions. More importantly, a ship's bound to see that there is sufficient watch on deck, captain must be accorded a reasonable measure of and that the men are attentive to their duties, also discretionary authority to decide what the safety of that engines are stopped, towlines cast off, and the the ship and its crew and cargo specifically requires anchors clear and ready to go at the pilot's order. on a stipulated ocean voyage. Doctrine of Limited Liability or the Real and On Harbor Pilot Hypothecary Nature of maritime Law Far Eastern Shipping v. CA, gr no. 130068 - A pilot, in 1. Real - similar to transactions over real maritime law, is a person duly qualified, and licensed, property with respect to effectively against third to conduct a vessel into or out of ports, or in certain persons which is done through registration. waters. In a broad sense, the term "pilot" includes The evidence of real nature is shown by: both (1) those whose duty it is to guide vessels into 1) The limitation of the liability of the agents to the or out of ports, or in particular waters and (2) those actual value of the vessel and the freight money; and entrusted with the navigation of vessels on the high 2) The right to retain the cargo and embargo and seas. However, the term "pilot" is more generally detention of the vessel (Luzon Stevedoring Corp v. understood as a person taken on board at a particular CA, 156 SCRA 169); place for the purpose of conducting a ship through a river, road or channel, or from a port. 2. Hypothecary - the liability of the owner of the Under English and American authorities, generally value of the vessel is limited to the vessel itself speaking, the pilot supersedes the master for the (Doctrine of Limited Liability). time being in the command and navigation of the ship, and his orders must be obeyed in all matters  The real and hypothecary nature of maritime connected with her navigation. He becomes the law simply means that the liability of the carrier in master pro hac vice and should give all directions as connection with losses related to maritime contracts to speed, course, stopping and reversing anchoring, is confined to the vessel, which stands as the towing and the like. And when a licensed pilot is guaranty for their settlement. (Aboitiz Shipping Corp. employed in a place where pilotage is compulsory, it vs. General Accident Fire and Life Assurance Corp. is his duty to insist on having effective control of the 217 SCRA 359). vessel, or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take entire charge of the vessel, but is deemed merely the DOCTRINE OF LIMITED LIABILITY adviser of the master, who retains command and (HYPOTHECARY RULE) control of the navigation even in localities where Cases where applicable: 1. Art. 587 – civil liability for indemnities to third her equipments and the freightage he may have persons earned during the voyage. 2. Art. 590 – indemnities from negligent acts of the captain (not the shipowner or ship agent) Art. 590. The co-owners of a vessel shall be civilly 3. Art. 837 – collision liable, in the proportion of their contribution to the 4. Art. 643 – liability for wages of the captain common fund, for the results of the acts of the and the crew and for advances made by the ship captain, referred to in Article 587. agent if the vessel is lost by shipwreck or capture Each part owner may exempt himself from this liability by the abandonment before a notary of the GENERAL RULE: The liability of shipowner and ship part of the vessel belonging to him. agent is limited to the amount of interest in said vessel such that where vessel is entirely lost, the ARTICLE 837. The civil liability contracted by the obligation is extinguished. (Luzon Stevedoring v. shipowners in the cases prescribed in this section, Escano, 156 SCRA 169) shall be understood as limited to the value of the vessel with all her appurtenances and all the freight The interest extends to: earned during the voyage. 1) the vessel itself; 2) equipments; Relevant Cases on Limited Liability Rule 3) freightage; and 4) insurance proceeds. (Chua v. IAC, 166 SCRA 183) 1. Aboitiz Shipping v. New India Assurance, gr no. 156978 - In the present case, petitioner has the EXCEPTIONS: burden of showing that it exercised extraordinary 1. Claims under Workmen’s Compensation (Abueg diligence in the transport of the goods it had on board vs. San Diego 77 Phil 730); in order to invoke the limited liability doctrine. 2. Injury or damage due to shipowner or to the Differently put, to limit its liability to the amount of concurring negligence of the shipowner and the the insurance proceeds, petitioner has the burden of captain; proving that the unseaworthiness of its vessel was 3. The vessel is insured (Vasquez vs. CA 138 SCRA not due to its fault or negligence. Considering the 553). evidence presented and the circumstances obtaining 4. Expenses for repair on vessel completed before in this case, we find that petitioner failed to discharge loss; this burden. It initially attributed the sinking to the 5. In case there is no total loss and the vessel is not typhoon and relied on the BMI findings that it was not abandoned; at fault. However, both the trial and the appellate 6. Collision between two negligent vessels; courts, in this case, found that the sinking was not due to the typhoon but to its unseaworthiness. An Abandonment of the vessel is necessary to limit the exception to the limited liability doctrine is when the liability of the shipowner. The only instance were damage is due to the fault of the shipowner or to the abandonment is dispensed with is when the vessel is concurrent negligence of the shipowner and the entirely lost (Luzon Stevedoring vs. CA 156 SCRA captain. In which case, the shipowner shall be liable 169). to the full-extent of the damage. Where the shipowner fails to overcome the presumption of RIGHT OF SHIPOWNER OR SHIP AGENT TO ABANDON negligence, the doctrine of limited liability cannot be VESSEL applied. Instances: 1. In case of civil liability from indemnities to 2. Monarch Insurance v. CA, gr no. 92735 - The third persons (Art. 587); petitioners assert in common that the vessel M/V P. 2. In case of leakage of at least ¾ of the contents Aboitiz did not sink by reason of force majeure but of a cargo containing liquids (Art. 687); and because of its unseaworthiness and the concurrent 3. In case of constructive loss of the vessel (Sec. fault and/or negligence of Aboitiz, the captain and its 138, Insurance Code). crew, thereby barring Aboitiz from availing of the benefit of the CAUSES OF REVOCATION OF VOYAGE "No vessel, no liability," expresses in a nutshell the 1. War or interdiction of commerce; limited liability rule. The shipowner’s or agent’s 2. Blockade; liability is merely co-extensive with his interest in the 3. Prohibition to receive cargo at destination; vessel such that a total loss thereof results in its 4. Embargo; extinction. The total destruction of the vessel 5. Inability of the vessel to navigate. (Art. 640) extinguishes maritime liens because there is no longer any res to which it can attach. This doctrine is Exceptions to the limited liability Doctrine – Articles. based on the real and hypothecary nature of 587, 590 and 837 maritime law which has its origin in the prevailing conditions of the maritime trade and sea voyages Art. 587. The ship agent shall also be civilly liable for during the medieval ages, attended by innumerable the indemnities in favor of third persons which arise hazards and perils. To offset against these adverse from the conduct of the captain in the care of the conditions and to encourage shipbuilding and goods which the vessel carried; but he may exempt maritime commerce it was deemed necessary to himself therefrom by abandoning the vessel with all confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment, and injury was wholly lost by reason of the accident. Such freight, or insurance, if any. holding cannot be applied herein for the reason that Contrary to the petitioners’ theory that the limited the vessel lost was insured and that defendant liability rule has been rendered obsolete by the collected the insurance. That being the case, the advances in modern technology which considerably insurance money substitutes the vessel and must be lessen the risks involved in maritime trade, this Court used, so far as necessary, to pay the judgment continues to apply the said rule in appropriate cases. rendered in the present case. This is not to say, however, that the limited liability rule is without exceptions, namely: (1) where the Risks, Damages and Accidents of Maritime Commerce injury or death to a passenger is due either to the (Articles 806-809) - Averages; as to nature as to fault of the shipowner, or to the concurring classes negligence of the shipowner and the captain; (2) where the vessel is insured; and (3) in workmen’s Art. 806. For the purposes of this Code the following compensation claims. shall be considered averages: Article 587 speaks only of situations where the fault 1. All extraordinary or accidental expenses which or negligence is committed solely by the captain. In may be incurred during the voyage for the cases where the ship owner is likewise to be blamed, preservation of the vessel or cargo, or both. Article 587 does not apply. Such a situation will be 2. All damages or deterioration which the vessel may covered by the provisions of the Civil Code on suffer from the time it puts to sea at the port of common carriers. departure until it casts anchor at the port of destination, and those suffered by the merchandise 3. Yangco v. Laserna, gr no. 131621 - Art. 587 from the time they are loaded in the port of shipment accords a shipowner or agent the right of until they are unloaded in the port of their abandonment; and by necessary implication, his consignment. liability is confined to that which he is entitled as of right to abandon -- the vessel with all her equipments Art. 807. The petty and ordinary expenses incident to and the freight it may have earned during the navigation, such as those of pilotage of coasts and voyage. In other words, such liability is limited to the ports, lighterage and towage, anchorage, inspection, value of the vessel and other things appertaining health, quarantine lazaretto, and other so-called port thereto such that a total loss thereof results in its expenses, costs of barges, and unloading, until extinction. Although the article appears to deal only the merchandise is placed on the wharf, and other with the limited liability of shipowners or agents for usual expenses of navigation shall be considered damages arising from the misconduct of the captain ordinary expenses to be defrayed by the shipowner, in the care of the goods which the vessel carries, this unless there is an express agreement to the contrary. is a mere deficiency of language and in no way indicates the true extent of such liability, to wit, the Art. 808. Averages shall be: benefit of limited liability applies in all cases (as 1. Simple or particular. regards both goods and passengers of the vessel) 2. General or gross. wherein the shipowner or agent may properly be held for the negligent or illicit acts of the captain. Averages consist of 2 items : The reason for the limited liability is the real and 1. Expenses : to constitute an average, an expense hypothecary nature of maritime law as distinguished must be: from civil law and mercantile law in general. As a. extraordinary or accidental evidence of this real nature, we have (1) the b. incurred during the voyage limitation of the liability of the agents to the actual c. incurred in order to preserve the vessel, cargo or value of the vessel and the freight money and (2) the both right of the maritime creditor to retain the cargo, and 2. Damages or deterioration : to constitute an the embargo and detention of the vessel in cases average, it must be: where the ordinary civil law would not allow more a. have been suffered from the time the vessel puts than a personal action against the debtor or person to sea from the port of departure until it casts anchor liable. Thus, even assuming that Yangco is liable for in the port of destination breach of contract because his relationship to the b. have been suffered by the merchandise from the passengers rests on a contract of carriage, the time they are exclusively real and hypothecary nature of maritime loaded in the port of shipment until they are law still operates to limit his liability to the value of unloaded in the port the vessel or to the insurance thereon, if any. In this of consignment case, the vessel was not insured. Whether the abandonment of the vessel sought by the petitioner Simple or Particular in instant case was in accordance with law or not, is Defined immaterial. The vessel having totally perished, any Art. 809. As a general rule, simple or particular act of abandonment would be an idle ceremony. averages include all the expenses and damages Petitioner is absolved from all complaints. caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the 4. Philippine Shipping Co. V. Vergara gr no. 1600 - in persons interested in the vessel and her cargo, accordance with articles 837 and 826 of the Code of especially the following: Commerce, the defendant in an action cannot be held 1. The losses suffered by the cargo from the time of responsible in damages when the ship causing the its embarkation until it is unloaded, either on account of the inherent defect of the goods or by reason of a in condition to enter a port or roadstead, and the marine accident or force majeure, and the expenses damage resulting therefrom to the goods removed or incurred to avoid and repair the same. transferred. 2. The losses and expenses suffered by the vessel in 5. The damage suffered by the goods of the cargo by its hull, rigging, arms, and equipments, for the same the opening made in the vessel in order to drain it causes and reasons, from the time it puts to sea from and prevent its sinking. the port of departure until it anchors in the port of 6. The expenses caused in order to float a vessel destination. intentionally stranded for the purpose of saving it. 3. The losses suffered by the merchandise loaded on 7. The damage caused to the vessel which had to be deck, except in coastwise navigation, if the marine opened, scuttled or broken in order to save the cargo. ordinances allow it. 8. The expenses for the treatment and subsistence of 4. The wages and victuals of the crew when the the members of the crew who may have been vessel is detained or embargoed by a legitimate wounded or crippled in defending or saving the order or force majeure, if the charter has been vessel. contracted for a fixed sum for the voyage. 9. The wages of any member of the crew held as 5. The necessary expenses on arrival at port, in order hostage by enemies, privateers, or pirates, and the to make repairs or secure provisions. necessary expenses which he may incur in his 6. The lowest value of the goods sold by the captain imprisonment, until he is returned to the vessel or to in arrivals under stress for the payment of provisions his domicile, should he prefer it. and to save the crew, to meet any other need of the 10. The wages and victuals of the crew of a vessel vessel against which the proper amount shall be chartered by the month, during the time that it is charged. embargoed or detained by force majeure or by order 7. The victuals and wages of the crew while the of the Government, or in order to repair the damage vessel is in quarantine. caused for the common benefit. 8. The loss inflicted upon the vessel or cargo by 11. The depreciation resulting in the value of the reason of an impact or collision with another, if it is goods sold at arrivals under stress in order to repair accidental and unavoidable. If the accident should the vessel by reason of gross average. occur through the fault or negligence of the captain, 12. The expenses of the liquidation of the average. the latter shall be liable for all the damage caused. 9. Any loss suffered by the cargo through the faults, Art. 817. If in the lightening a vessel on account of a negligence, or barratry of the captain or of the crew, storm, in order to facilitate its entry into a port or without prejudice to the right of the owner to recover roadstead, part of her cargo should be transferred to the corresponding indemnity from the captain, the lighters or barges and be lost, the owner of said part vessel, and the freight. shall be entitled to indemnity, as if the loss had originated from a gross average, the amount thereof Distinguishing feature: an expense incurred or being distributed between the vessel and cargo from damage suffered which has not inured to the which it came. common benefit and profit of all persons interested in If, on the contrary, the merchandise transferred the vessel and its cargo should be saved and the vessel should be lost, no liability may be demanded of the salvage. Effects Art. 810. The owner of the goods which gave rise to Art. 818. If, as a necessary measure to extinguish a the expense or suffered the damage shall bear the fire in port, roadstead, creek, or bay, it should be simple or particular averages. decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved Gross or General shall contribute. Defined Art. 811. As a general rule, general or gross averages Requisites for general average: shall include all the damages and expenses which are 1. there must be a common danger --> the ship and deliberately caused in order to save the vessel, its cargo are subject to the same danger and that the cargo, or both at the same time, from a real and danger arises from accidents of the sea, dispositions known risk, and particularly the following: of the authorities or faults of men, provided that the 1. The goods or cash invested in the redemption of circumstances producing the peril should be the vessel or of the cargo captured by enemies, ascertained and imminent privateers, or pirates, and the provisions, wages, and 2. for the common safety, part of the vessel or the expenses of the vessel detained during the time the cargo or both is sacrificed deliberately settlement or redemption is being made. 3. from the expenses or damages caused follows the 2. The goods jettisoned to lighten the vessel, whether successful saving of the vessel and cargo they belong to the cargo, to the vessel, or to the 4. the expenses or damages should have been crew, and the damage suffered through said act by incurred or inflicted after taking legal steps and the goods which are kept on board. authority 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are Requisites abandoned, in order to save the cargo, the vessel, or Art. 813. In order to incur the expenses and cause the both. damages corresponding to gross average, there must 4. The expenses of removing or transferring a portion be a resolution of the of the cargo in order to lighten the vessel and place it captain, adopted after deliberation with the sailing Classes: mate and other officers of the vessel, and after 1. Particular or Simple Average hearing the persons interested in the cargo who may 2. Gross or General Average be present. If the latter should object, and the captain and • Where both vessel and cargo are saved, it is officers or a majority of them, or the captain, if general average; where only the vessel or only the opposed to the majority, should consider certain cargo is saved, it is particular average. measures necessary, they may be executed under his responsibility, without prejudice to the right of the • Expenses incurred to refloat a vessel, which shippers to proceed against the captain before the accidentally ran aground, in order to continue its competent judge or court, if they can prove that he voyage, do not constitute general average. Not only acted with malice, lack of skill, or negligence. is there absence of a marine peril, common safety If the persons interested in the cargo, being on board factor, and deliberateness. It is the safety of the the vessel, have not been heard, they shall not property, and not the voyage, which constitutes the contribute to the gross average, their share being true foundation of general average. (A. Magsaysay, chargeable against the captain, unless the urgency of Inc. vs. Agan, G.R.No. L-6393, Jan. 31, 1955) the case should be such that the time necessary for previous deliberation was wanting. PARTICULAR OR SIMPLE GROSS OR GENERAL Definition Art. 814. The resolution adopted to cause the Damages or expenses Damages or expenses damages which constitute general average must caused to the vessel or deliberately caused in necessarily be entered in the log book, stating the cargo that did not inure order to save the vessel, motives and reasons on which it is based, the votes to the common benefit, its cargo or both from real against it and the reason for the dissent, should there and borne by respective and known risk. (Art. be any, and the irresistible and urgent causes which owners. (Art. 809) 811) impelled the captain if he acted of his own accord. Liability In the first case the minutes shall be signed by all the The owner of the goods All the persons having an persons present who could do so before taking which gave rise to the interest in the vessel and action, if possible; and if not, at the first opportunity. expense or suffered the the cargo therein at the In the second case, it shall be signed by the captain damage shall bear this time of the occurrence of and by the officers of the vessel. average. (Art. 810) the average shall In the minutes, and after the resolution, shall be contribute to satisfy this stated in detail all the goods jettisoned, and mention average. (Art. 812) shall be made of the injuries caused to those kept on The insurers (Art.859) and board. The captain shall be obliged to deliver one lenders on bottomry and copy of these minutes to the maritime judicial respondentia shall authority of the first port he may make, within likewise contribute. twenty- four hours after his arrival, and to ratify it (Art.732). immediately under oath. Number of interests involved Only one interest Several interests involved Formalities for incurring gross average : involved 1. there must be an assembly of the sailing mate and Share in the damage or expense other officers with the captain including those with 100% share In proportion to the value interests in the cargo of the owner’s property 2. there must be a resolution of the captain saved 3. the resolution shall be entered in the log book, Right to recover with the reasons and motives and the votes for and No reimbursement There may be against the resolution reimbursement 4. the minutes shall be signed by the parties Kinds (not exclusive) 5. within 24 hours upon arrival at the first port the captain makes, he shall deliver one copy of these Art. 809 Art. 811 minutes to the maritime judicial authority thereat Procedure for recovery 1. Assembly and Art. 860. If, notwithstanding the jettison of the deliberation merchandise, breakage of masts, ropes, and 2. Resolution of the equipment, the vessel should be lost running same captain risk, no contribution whatsoever by reason of gross 3. Entry of the resolution average shall be proper. in the logbook The owners of the goods saved shall not be liable for 4. Detailed minutes the indemnification of those jettisoned, lost or 5. Delivery of the minutes damaged. to the maritime judicial authority of the first port, within 24 hours from • The person whose property has been saved arrival, must contribute to reimburse the damage caused or 6. Ratification by captain expense incurred if the situation constitutes general under oath. (Arts. 813- average. 814) for the damage which may be caused the shippers by GOODS NOT COVERED BY GENERAL AVERAGE EVEN reason of the arrival under stress, provided the latter IF SACRIFICED is legitimate. Otherwise, the shipowner or agent and 1. Goods carried on deck. (ART.855) the captain shall be jointly liable. 2. Goods not recorded in the books or records of the vessel. (ART.855 (2)) Duty of the Captain on Arrival Under Stress Fuel for the vessel if there is more than sufficient fuel ARTICLE 825. The captain shall answer for the for the voyage. damages caused by his delay, if the reason for the arrival under stress having ceased, he should not Concept or Rules on: continue the voyage. Arrivals under Stress – Articles 819-822, 825 If the reason for said arrival should have been the Collisions – Articles 826-833 fear of enemies, privateers, or pirates, before sailing, Doctrine of Error in Extremis a discussion and resolution of a meeting of the Protest – Articles 835, 836 officers of the vessel and persons interested in the cargo who may be present shall take place, in Arrival Under Stress accordance with the provisions contained in Article The arrival of a vessel at the nearest and most 819. convenient port instead of the port of destination, if during the voyage the vessel cannot continue the trip Collisions/Allision – Articles 826-833 to the port of destination. Doctrine of Error in Extremis Protest – Articles 835, 836 Arrival under Stress When Lawful ARTICLE 819. If the captain during the navigation ARTICLE 826. If a vessel should collide with another should believe that the vessel can not continue the through the fault, negligence, or lack of skill of the voyage to the port of destination on account of the captain, sailing mate, or any other member of the lack of provisions, well founded fear of seizure, complement, the owner of the vessel at fault shall privateers or pirates, or by reason of any accident of indemnify the losses and damages suffered, after an the sea disabling her to navigate, he shall assemble expert appraisal. the officers and shall call the persons interested in the cargo who may be present, and who may attend ARTICLE 827. If both vessels may be blamed for the the meeting without the right to vote; and if, after collision, each one shall be liable for his own examining the circumstances of the case, the reasons damages, and both shall be jointly responsible for the should be considered well founded, it shall be losses and damages suffered by their cargoes. decided to make the nearest and most convenient port drafting and entering in the log book the proper ARTICLE 828. The provisions of the foregoing article minutes, which shall be signed by all. are applicable to the case in which it can not be The captain shall have the deciding vote and the decided which of the two vessels was the cause of persons interested in the cargo may make the the collision. objections and protests they may deem proper, which shall be entered in the minutes in order that they ARTICLE 829. In the cases above mentioned the civil may make use thereof in the manner they may action of the owner against the person liable for the consider advisable. damage is reserved, as well as the criminal liabilities which may be proper. Arrival Under Stress When Unlawful ARTICLE 820. The arrival under stress shall not be ARTICLE 830. If a vessel should collide with another considered legal in the following cases: by reason of an accident or through force majeure, 1. If the lack of provisions should arise from the each vessel and her cargo shall be liable for their own failure to take the necessary provisions for the damage. voyage, according to usage and custom, or if they should have been rendered useless or lost through ARTICLE 831. If a vessel should be forced to collide bad stowage or negligence in their care. with another one by a third vessel, the owner of the 2. If the risk of enemies, privateers, or pirates should third vessel shall indemnify for the losses and not have been well known, manifest, and based on damages caused, the captain thereof being civilly positive and justifiable facts. liable to said owner. 3. If the injury to the vessel should have been caused by reason of her not being repaired, rigged, ARTICLE 832. If, by reason of a storm or other cause equipped, and arranged in a convenient manner for of force majeure, a vessel which is properly anchored the voyage, or by reason of some erroneous order of and moored should collide with those in her the captain. immediate vicinity, causing them damage, the injury 4. Whenever malice, negligence, want of foresight, or occasioned shall be looked upon as particular lack of skill on the part of the captain is the reason average to the vessel run into. for the act causing the damage. Collision: impact of two vessels both of which are Who bears the Cost on Arrival Under Stress moving ARTICLE 821. The expenses caused by the arrival Allision: striking of a moving vessel against one that under stress shall always be for the account of the is stationary shipowner or agent, but the latter shall not be liable Cases of collision : as it deems best with reference to the movements of 1. due to the fault, negligence or lack of skill of the the other vessel. captain, sailing mate or the complement of the vessel 2. the time between the moment when the risk of  under 826, the shipowner shall be liable for the collision begins and the moment when it has become losses and damages a practical necessity. 2. due to the fault of both vessels  In the second the burden is on the vessel required under 827, each vessel shall suffer its own losses, to keep away and avoid the danger. but as regards the owners of the cargoes, both 3. the time between the moment when collision has vessels shall be jointly and severally liable become a practical certainty and the moment of 3. where it cannot be determined which of the 2 actual contact vessels is at fault  under 828, each vessel shall  The third zone covers the period in which errors in suffer its own losses, and both shall also be solidarily extremis occur; and the rule is that the vessel which responsible for the losses and damages caused to has forced the privileged vessel into danger is their cargoes responsible even if the privileged vessel has 4. collision due to fortuitous event or force majeure committed an error within that zone.  under 830, each vessel shall bear its own damages 5. where two vessels collide with each other without Effect of fault of privileged vessel during third zone : their fault but by reason of the fault of a third vessel If a vessel having a right of way suddenly changes its  under 831, the owner of the third vessel causing course during the third zone, in an effort to avoid an the collision shall be liable for the losses and imminent collision due to the fault of another vessel, damages such act may be said to be done in extremis, and 6. a vessel which is properly anchored and moored even if wrong, cannot create responsibility on the may collide with those nearby by reason of a storm or part of said vessel with the right of way. Thus, it has other cause of force majeure been held that fault on the part of the sailing vessel under 832, the vessel run into shall suffer its own at the moment preceding a collision, that is, during damages and expenses the third division of time, does not absolve the steamship which has suffered herself and a sailing Nautical Rules to determine negligence : vessel to get into such dangerous proximity as to 1. When 2 vessels are about to enter a port, the cause inevitable harm and confusion, and a collision farther one must allow the nearer to enter first; if results as a consequence. The steamer having a far they collide, the fault is presumed to be imputable to greater fault in allowing such proximity to be brought the one who arrived later, unless it can be proved about is chargeable with all the damages resulting that there was no fault on its part. from the collision; and the act of the sailing vessel 2. When 2 vessels meet, the smaller should give the having been done in extremis and even wrong, is not right of way to the larger one. responsible for the result. 3. A vessel leaving port should leave the way clear for another which may be entering the same port. Error in Extremis 4. The vessel which leaves later is presumed to have The sudden movement made by a faultless vessel collided against one who has left earlier. during the third zone of collision with another vessel 5. There is also a presumption against the vessel which is at fault under the second zone. Even if which sets sail at night. sudden movement is wrong, no responsibility will fall 6. The presumption also works against the vessel on the faultless vessel. with spread sails which collides with another which is at anchor, and cannot move, even when the crew of Doctrine of Inscrutable Fault the latter has received word to lift anchor, when there Where fault is established but it cannot be was not sufficient time to do so or there was fear of a determined which of the two vessels were at fault, greater damage or other legitimate reason. both shall be deemed to have been at fault. 7. The vessel which is not properly moored or does  Under Arts. 827 and 828, in case of collision not observe the proper distances, has the between two vessels at sea, both are solidarily liable presumption against itself. for the loss of cargo carried by either to the full 8. The vessel which is moored at a place not used for extent of the value thereof, not only in the case the purpose, or which is improperly moored or does where both vessels may be shown to be actually not have sufficient cables, or which has been left blameworthy but also in the case where it is shown without watch, has also against itself the that only one was at fault but the proof does not presumption. show it 9. The same rule applies to those vessels which do  makes no difference that the negligence not have buoys to indicate the location of its anchors imputable to the two to prevent damage to these vessels which may vessels may have differed somewhat in character and approach it. degree and that the negligence of the sunken ship was somewhat more marked than that of the other. Zones in time of collisions (3 time zones):  The doctrine of last clear chance cannot be raised 1. all the time up to the moment when the risk of (Williams v. Yangco, 27 Phil 68) collision may have said to have begun  under the express provisions of Art. 827, under within this zone, no rule is applicable because none which the evidence disclosing that both vessels are is necessary. Each vessel is free to direct its course blameworthy, the owners of neither can successfully maintain an action against the other for the loss or ARTICLE 842. The goods saved from the wreck shall injury to his vessel be specially liable for the payment of the expenses of the respective salvage, and the amount thereof must Relevant Articles on Maritime Protest be paid by the owners of the former before they are delivered to them, and with preference to any other Art. 835. The action for the recovery of losses and obligation, if the merchandise should be sold. damages arising from collisions cannot be admitted if a protest or declaration is not presented within Jettison twenty-four hours before the competent authority of Act of throwing cargo overboard in order to lighten the point where the collision took place, or that of the the vessel. first port of arrival of the vessel, if in Philippine Order of goods to be cast overboard: territory and to the consul of the Philippines, if it 1. Those which are on the deck, preferring the occurred in a foreign country. heaviest one with the least utility and value; 2. Those which are below the upper deck, beginning ARTICLE 836. In so far as the damages caused to with the one with greatest weight and smallest value. persons or to the cargo are concerned, the absence (Art. 815) of a protest can not prejudice the persons interested who were not on board or were not in a condition to Jettisoned goods are not res nullius nor deemed make known their wishes. “abandoned” within the meaning of civil law so as to be the object of occupation by salvage. (Pandect of MARITIME PROTEST Commercial Law and Jurisprudence, Justice Jose  Condition precedent or prerequisite to recovery of Vitug, 1997 ed.) damages arising from collisions and other maritime accidents. In order that the jettisoned goods may be included in It is a written statement made under oath by the the gross or general average, the existence of the captain of a vessel after the occurrence of an cargo on board should be proven by means of the bill accident or disaster in which the vessel or cargo is of lading. (Art. 816) lost or damaged, with respect to the circumstances attending such occurrence, for the purpose of Shipwreck recovering losses and damages. Loss of a vessel at sea, either by being swallowed up by the waves, by running against another vessel Excuses for not filing protest: or thing at sea, or on coast 1) where the interested person is not on board the renders the ship incapable of navigation vessel; 2) on collision time, need not be protested. (Art. 836) Under 841, in case the wreck or stranding is due to the (1) malice, negligence, or lack of skill of the Cases applicable: captain, or (2) because the vessel put to sea was 1. Collision insufficiently repaired and equipped, the captain shall 2. Arrival under stress be liable 3. Shipwrecks 4. Where the vessel has gone Art. 842. The goods saved from the wreck shall be through a hurricane or when the captain believes that specially bound for the payment of the expenses of the cargo has suffered damages or averages the respective salvage, and the amount thereof must be paid by the owners of the former before they are It is made by the Captain within 24 hours from the delivered to them, and with preference over any time the collision took place before a competent other obligation if the merchandise should be sold. authority at the point of collision or at the first port of arrival, if in the Philippines and to the Philippine  Where a ship and its cargo are saved together, the consul, if the collision took place abroad. (Art. 835) salvage allowance should be charged against the ship and cargo in proportion of their respective values, the Shipwrecks same as in general averages and neither is liable for the salvage due from the other Art. 840. The losses and deteriorations suffered by a Where a personal action is brought by the salvor vessel and her cargo by reason of shipwreck or against the owner of the ship, the liability of the latter stranding shall be individually for the account of the is limited to such part of the salvage compensation owners, the part which may be saved belonging to due for the entire service as is proportionate to the them in the same proportion. value of the ship

Art. 841. If the wreck or standing should be caused by Barratry the malice, negligence, or lack of skill of the captain, Willful and intentional act on the part of the master or or because the vessel put to sea insufficiently crew, in pursuance of some unlawful or fraudulent repaired and equipped, the ship agent or the shippers purpose, without the consent of the owner, and to the may demand indemnity of the captain for the prejudice of his interest; Neither honest error or damages caused to the vessel or to the cargo by the judgment nor mere negligence. accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621. Primage It was formerly a small allowance or compensation vessel under the charterer’s direction, such that the payable to the master and marines of a ship, to the master and crew provided by the shipowner become former for the use of his cables and ropes to the agents and servants or employees of the discharge the goods of the merchant; to the latter for charterer, and the charterer (and not the owner) the lading and unlading in any port of haven. Today, through the agency of the master, has possession it is no longer a gratuity but is included in the freight and control of the vessel during the charter period. rate. Time charter Demurrage A time charter, like a demise charter, is a contract for It is the sum fixed by the contract of carriage, or the use of a vessel for a specified period of time or which is allowed, as remuneration to the owner of a for the duration of one or more specified voyages. In ship for the detention of his vessel beyond the this case, however, the owner of a time- chartered number of days allowed by the charter party for vessel (unlike the owner of a vessel under a demise loading and unloading of for sailing. It is an extended or bare- boat charter), retains possession and control freight or reward to the vessel in compensation for through the master and crew who remain his the earnings she is improperly caused to lose. employees. What the time charterer acquires is the right to utilize the carrying capacity and facilities of Lay days the vessel and to designate her destinations during Lay days are days allowed to charter parties for the term of the charter. loading and unloading the cargo. Voyage or trip charter Derelict A voyage charter, or trip charter, is simply a contract A ship or her cargo which is abandoned and deserted of affreightment, that is, a contract for the carriage of at sea by those who are in charge of it, without any goods, from one or more ports of loading to one or hope of recovering it, or without any intention of more ports of unloading, on one or on a series of returning it voyages. In a voyage charter, master and crew  if those in charge of the property left it with the remain in the employ of the owner of the vessel. intention of finally leaving it, it is a derelict and the change of their intention and an attempt to return to Charterer the pro hac vice owner of the vessel in it will not change its nature bareboat charter Pro hac vice means “for this occasion.” It means that Rights of finder of derelict during the duration of the bareboat charter, he will The finder who takes possession with the intention of assume the rights and liabilities of the shipowner. In a saving the ship, gains a right of possession which he bare boat charter the vessel ceases to be a common can maintain against the true owners. The owner carrier, it becomes a private carrier. It is the charterer does not renounce his right of property. This is not who will be liable to the holders of the goods if the presumed to be intentional, nor does the finder goods get lost. And since it is a private carrier, if the acquire any such right. But the owner thus abandons charterer does not pay the shipowner the stipulated temporarily, his right of possession, which is fees, the shipowner cannot ask that the cargoes be transferred to the finder who becomes bound to sold to satisfy his claims because he has no lien on preserve the property with good faith and bring it to a the goods. Because the one who is liable and who is place of safety for the owner's use; in return, he dealing with the owners of the goods is the charterer. acquires a right to be paid for his service a There is no privity of contract between the shipowner reasonable and proper compensation out of the and the owners of the goods so he cannot ask that property itself. He is not bound to part with the the goods be sold to satisfy his claim for his fees. possession until he is paid or the property is taken It is well settled that in a demise or bare boat charter, into the possession of the law preparatory to the the charterer is treated as owner pro hac vice of the amount of salvage being legally asserted vessel, the charterer assuming in large measure the Special Contracts of Maritime Commerce customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or Charter Parties with the vessel. In such case, the Master of the vessel 1. Bareboat or Demise is the agent of the charterer and not of the 2. Contract of Affreightment shipowner. The charterer or owner pro hac vice, and 3. Time Charter not the general owner of the vessel, is held liable for the expenses of the voyage including the wages of Bareboat or demise charter the seamen. A bareboat or demise charter is a demise of a vessel, much as a lease of an unfurnished house is a demise Loan on Bottomry and Respondentia of real property. The shipowner turns over possession of his vessel to the charterer, who then undertakes to Art. 719. A loan in which, under any condition provide a crew and victuals and supplies and fuel for whatever, the repayment of the sum loaned and of her during the term of the charter. The shipowner is the premium stipulated depends upon the safe arrival not normally required by the terms of a demise in port of the goods on which it is made, or of the charter to provide a crew, and so the charterer gets price they may receive in case of accident, shall be the “bare boat”, i.e., without a crew. Sometimes, of considered a loan on bottomry or respondentia. course, the demise charter might provide that the shipowner is to furnish a master and crew to man the Art. 721. In a contract on bottomry or respondentia Contents: the following must be stated: 1. Kind, name and registry of the vessel; 1. The kind, name, and registry of the vessel. 2. Name, surname and domicile of the captain; 2. The name, surname, and domicile of the captain. 3. Names, surnames and domiciles of the 3. The names, surnames, and domiciles of the person borrower and the lender; giving and the person receiving the loan. 4. Amount of the loan and the premium 4. The amount of the loan and the premium stipulated; stipulated. 5. Time for repayment; 5. The time for repayment. 6. Goods pledged to secure repayment; 6. The goods pledged to secure repayment. 7. Voyage during which the risk is run (Art.721) 7. The voyage during which the risk is run. BOTTOMRY/ ORDINARY LOAN ARTICLE 725. No loans can be made on the salaries of RESPONDENTIA (MUTUUM) the crew, nor on the profits which it is expected to Not subject to Usury Subject to Usury Law earn. Law Liability of the borrower Not subject to any ARTICLE 730 Loans made during the voyage shall is contingent on the contingency (absolute have preference over those made before the clearing safe arrival of the liability) of the vessel, and they shall be graduated by the vessel or cargo at inverse order to that of their dates. The loans for the destination last voyage shall have preference over prior ones. The last lender is a The first lender is a Should several loans have been made at a port made preferred creditor preferred creditor under stress and for the same purpose, all of them shall be paid pro rata. WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED AS SIMPLE LOAN LOAN ON BOTTOMRY AND RESPONDENTIA 1. Lender loaned an amount larger than the  A real, unilateral, aleatory contract, by virtue of value of the object due to fraudulent means which one person lends to another a certain amount employed by the borrower. (ART.726) of money or goods on things exposed to maritime 2. Full amount of the loan is not used for the risks, which amount, with its earnings, is to be cargo or given on the goods if all of them could not returned if the things are safely transported, and have been loaded, the balance will be considered a which is lost if the latter are lost. simple loan. (ART.727) 3. If the effects on which the money is taken is not subjected to any risk. (ART.729) LOAN ON BOTTOMRY LOAN ON RESPONDENTIA Note: Under existing laws, the parties to a loan, Definition whether ordinary or maritime, may agree on any rate Loan made by Loan taken on security of interest. (CB Circular 905) shipowner or ship agent of the cargo laden on a guaranteed by vessel vessel, and repayable MARINE INSURANCE LOAN ON BOTTOMRY OR itself and repayable upon safe arrival of RESPONDENTIA upon arrival of vessel at cargo at destination. Indemnity is paid Indemnity is paid in destination. (Art. 719) (Art. 719) after the loss has advance by way of a loan occurred Who may contract In case of loss of the In case of loss of the vessel Shipowner or ship Only the owner of the vessel due to a risk due to a marine peril, the agent. Outside of the cargo. insured against, the obligation of the borrower residence of the owners obligation of the to pay is extinguished - the captain. insurer becomes Common elements: absolute 1. Exposure of security to marine peril; Consensual contract Real contract 2. Obligation of the debtor conditioned only upon safe arrival of the security at the point of Hypothecary Nature of Bottomry/ Respondentia destination. Forms: GENERAL RULE: The obligation of the borrower to pay 1. Public instrument the loan is extinguished if the goods given as security 2. Policy signed by the contracting parties and are absolutely lost by reason of an accident of the the broker taking part therein sea, during the voyage designated, and if it is proven 3. Private instrument (Art. 720) that the goods were on board.

EXCEPTIONS: 1. Loss due to inherent defect; 2. Loss due to the barratry on the part of the captain; 3. Loss due to the fault or malice of the borrower; 4. The vessel was engaged in contraband; and 5. The cargo loaded on the vessel be different in For suits predicated not upon loss or damage from that agreed upon. but on alleged misdelivery or conversion of imported goods, the applicable rule on Concurrence of Marine Insurance and Loan on prescription is that found in the New Civil Bottomry/Respondentia Code, either 10 years for breach of written contracts or 4 years for quasi-delict. (Ang vs. 1. The insurable interest of the owner of a ship American Steamship Agencies, Inc. Jan. hypothecated by bottomry is only the excess of the 27,1967; 2010 bar question) value over the amount secured by bottomry. (Sec. 101, Insurance Code) A stipulation shortening the 1 year 2. The value of what may be saved in case of prescriptive period within which to file an shipwreck shall be divided between the lender and action for loss or damages shall de NULL and the insurer in proportion to the interest of each one. VOID. (Elser vs. Harvester, 50OG5805) (Art. 735) • RIGHTS AND IMMUNITIES Note: If a vessel is hypothecated by bottomry only Sec.4 the excess is insurable, since a loan on bottomry partakes of the nature likewise of an insurance (1) Neither the carrier nor the ship shall be liable for coverage to the extent of the loan accommodation. loss or damage arising or resulting from The same rule would apply to the hypothecation of unseaworthiness unless caused by want of due the cargo by respondentia. (Pandect of Commercial diligence on the part of the carrier to make the ship Law and Jurisprudence, Justice Jose Vitug, 1997 ed.) seaworthy and to secure that the ship is properly manned, equipped, and supplied, and to make the When loss does not extinguish loan: (Art. 731) holds, refrigerating and cooling chambers, and all 1. where the loss is caused by inherent defect of the other parts of the ship in which goods are carried fit thing and safe for their reception, carriage, and 2. where the loss is caused by fault or malice of preservation, in accordance with the provisions of borrower paragraph (1) of Section (3). Whenever loss or 3. where loss is caused by barratry on the part of the damage has resulted from unseaworthiness, the captain burden of proving the exercise of due diligence shall 4. where loss is caused by damage to the vessel as a be on the carrier or other person claiming exemption consequence of its engaging in contraband under this section. 5. where loss arose from having loaded the merchandise on a vessel different from that (2) Neither the carrier nor the ship shall be designated in the contract, except if change is due to responsible for loss or damage arising or resulting force majeure from — (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation CARRIAGE OF GOODS BY SEA ACT or in the management of the ship;

• COGSA contains advanced legislation, which (b) Fire, unless caused by the actual fault or privity of is in consonance with the modern maritime the carrier; rules and the practices of great shipping (c) Perils, dangers, and accidents of the sea or other countries of the world. (Commonwealth Act navigable water; No.65) (d) Act of God; New Civil Code (Art.1753) - Primary law on goods (e) Act of war; that are being transported from a foreign port to the Philippines. (f) Act of public enemies; COGSA- Suppletory law for such type of (g) Arrest or restraint of princes, rulers, or people, or transportation. seizure under legal process; • NOTICE OF LOSS OR DAMAGE (h) Quarantine restrictions; Apparent loss or damage- notice must be given (i) Act or omission of the shipper or owner of the immediately upon delivery. goods, his agent or representative; Not Apparent loss or damage- notice must be given within 3 days from the date of delivery. (j) Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether partial or • PERIOD TO FILE ACTION: (1 YEAR general: Provided, that nothing herein contained shall PRESCRIPTIVE PERIOD) be construed to relieve a carrier from responsibility An action for loss or damage of cargo should for the carrier's own acts; be filed within 1 year after: (k) Riots and civil commotions; -the delivery of the goods; or -the date when the goods should have been (l) Saving or attempting to save life or property at delivered sea; (m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice goods shipped with such knowledge and consent of the goods; shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed (n) Insufficiency or packing; or rendered innocuous by the carrier without liability (o) Insufficiency or inadequacy of marks; on the part of the carrier except to general average if any. (p) Latent defects not discoverable by due diligence; and PUBLIC SERVICE ACT (q) Any other cause arising without the actual fault • and privity of the carrier and without the fault or Public Utility is a business or service engaged neglect of the agents or servants of the carrier, but in regularly supplying the public with some the burden of proof shall be on the person claiming commodity or service of public consequence the benefit of this exception to show that neither the such as electricity, gas water, transportation, actual fault or privity of the carrier nor the fault or telephone or telegraph service. (Albano vs. neglect of the agents or servants of the carrier Reyes, GR No. 83551) contributed to the loss or damage. Public utilities are privately owned and operated (3) The shipper shall not be responsible for loss or businesses whose services are essential to the damage sustained by the carrier or the ship arising or general public. They are enterprises which resulting from any cause without the act, or neglect specially cater to the needs of the public and of the shipper, his agents, or his servants. conduce to their comfort and convenience. As (4) Any deviation in saving or attempting to save life such, public utility services are impressed with or property at sea, or any reasonable deviation shall public interest and concern. (Kilusang Mayo Uno not be deemed to be an infringement or breach or Labor Center vs. Garcia, GR No. 115381) this Act or of the contract of carriage, and carrier shall not be liable for any loss or damage resulting CERTIFICATE OF CERTIFICATE OF PUBLIC therefrom: Provided, however, that if the deviation is PUBLIC CONVENIENCE AND for the purpose of loading or unloading cargo or CONVENIENCE NECESSITY passengers it shall, prima facie, be regarded as It is an authorization It is an authorization unreasonable. issued by the Board issued by the Board for for the operation of the operation of public (5) Neither the carrier nor the ship shall in any event public services for services for which a be or become liable for any loss or damage to or in which no franchise, prior franchise is connection with the transportation of goods in an either municipal or required by law such as amount exceeding $500 per package of lawful money legislative, is electric, telephone, and of the United States, or in case of goods not shipped required by law, such other services. in packages, per customary freight unit, or the as common carrier. equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the REQUIREMENTS FOR THE ISSUANCE OF bill of lading. This declaration, if embodied in the bill CERTIFICATE OF PUBLIC CONVENIENCE of lading, shall be prima facie evidence, but shall not (1) The applicant must be a citizen of the be conclusive on the carrier. Philippines, or a corporation or a co- By agreement between the carrier, master or agent partnership, association or joint stock of the carrier, and the shipper another maximum company constituted and organized under amount than that mentioned in this paragraph may the laws of the Philippines, at least 60 per be fixed: Provided, that such maximum shall not be centum of the stock or paid-up capital of less than the figure above named. In no event shall which entirely belong to citizens of the the carrier be liable for more than the amount of Philippines; damage actually sustained. (2) The applicant must be financially capable of Neither the carrier nor the ship shall be responsible in undertaking the proposed service and any event for loss damage to or in connection with meeting the responsibilities incident to its the transportation of the goods if the nature or value operations; and thereof has been knowingly and fraudulently (3) The applicant must prove that the operation misstated by the shipper in the bill of lading. of the public service proposed and the authorization to do business will promote the (6) Goods of an inflammable, explosive, or public interest in a proper and suitable dangerous nature to the shipment whereof, the manner. (Angeles Vda. De Lat vs. PSC, GR No. carrier, master or agent of the carrier, has not L-34978) consented with knowledge of their nature and character, may at any time before discharge be PRIOR OPERATOR RULE- Under this policy, the PSC landed at any place or destroyed or rendered will not issue a certificate of public convenience to a innocuous by the carrier without compensation, and second operator if there is a first operator who is the shipper of such goods shall be liable for all rendering sufficient, adequate and satisfactory damages and expenses directly or indirectly arising service, and who in all things and respects is out of or resulting from such shipment. If any such complying with the rules and regulations of the Commission. (Aquino and Hernando, Notes and Cases contrary to public policy and therefore void on the Law on Transportation and Public Utilities) and inexistent. (Teja vs. IAC, 148 SCRA 347) (B) BOUNDARY SYSTEM- The driver does not PRIOR APPLICANT RULE- Where there are various receive a fixed wage but gets only the excess applicants for a public utility over the same territory, of fares collected by him over the amount he all conditions being equal, priority in the filing of pays to the jeep owner. application for a certificate of public convenience becomes an important factor in granting or refusal of THE WARSAW CONVENTION a certificate. (Batangas transportation Co. vs. -The Warsaw Convention is an agreement among Orlanes) nations which provides for the rights and obligations The rule provides for the priority in the filing of of the air carrier and the passengers in international application for CPC. flights. -Objective: “To regulate in a uniform manner the PRIOR INVESTMENT RULE- The goal of the law is not conditions of international transportation by air.” only to protect the public but the operators as well. It (Amarican vs. CA, 327 SCRA 482) is therefore the duty of the gov’t. To protect the operators from unfair, unjustified and ruinous -It applies to all international transportation of competition. persons, baggage or goods performed by an aircraft gratuitously or for hire. POWER TO FIX RATES The power to fix the rates of public utilities is JURISDICTION delegated to the regulatory administrative and such -Suits by a passenger of an international airline must cannot be further delegated by the said be prosecuted, under Warsaw Convention, in any of administrative agencies. the following places, at the option of the plaintiff- passenger: STANDARD IN FIXING RATES 1. Court of domicile of carrier; -Rate must be reasonable and just. 2. Court of principal business of the carrier; -The requirement of reasonableness comprehends 3. Court where the carrier has a place of business such rates which must not be so low as to be through which the contract was made; and confiscatory, or too high as to be oppressive. In 4. Court of the place of destination determining whether the rate is confiscatory, it is essential also to consider the given situation, LIABILITY requirements and opportunities of the utility. -Liability limit: (Republic of the Phil. vs. Manila Electric Co.) (1.) Baggage lost- 250 francs per kilogram (2.) Death of Passenger- 250,000 francs per -With respect to carriers that are being regulate by passenger the LTFRB, in determining rates, several factors are to be considered like price of gasoline, spare parts, -The carrier cannot avail of this limitation if the boundary and other operating expenses. The rate in breach is attended by willful misconduct, bad faith, order to be fair and just must strike a balance recklessness or improper behavior on the part of any between the affordability of the riding public and the official or employee for which the carrier is viability of the operator without detriment to public responsible. If there is satisfactory evidence of malice safety. The Board, therefore, adopted two methods in or bad faith by the airline’s officers and employees, rate determination namely the straight method and an air carrier may be sentenced to pay not only the add-on method. compensatory but also moral and exemplary damages, and attorney’s fees. (China vs. Chiok, 407 PROVISIONAL INCREASE SCRA 432) -An administrative agency may be empowered by law to approve provisionally, when demanded by urgent public need, rates of public utilities without a hearing. Source: Miravite, Commercial Law Review; Sunjiang, The reason is discerned from the fact that provisional Pointers in Commercial Law; Quimbo, Transportation rates are by their nature temporary and subject to and Maritime Law. Beda notes from the net. adjustment in conformity with the definitive rates approved after final hearing. (Padua et al. vs. Ranada, GR No. 141949)

UNLAWFUL ARRANGEMENTS (A) KABIT SYSTEM- It is an arrangement between parties whereby a person who has been granted a certificate of public convenience allows the other person who own motor vehicles to operate under such license, for a fee or percentage of such earnings. -The parties to a “kabit” agreement cannot seek remedies in court, both parties being”in pari delicto” to an agreement which is