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Transcript of Transpo Reviewer Zarah
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TRANSPORTATION LAW
PRELIMINARY CONSIDERATIONS:
A. Governing Laws1. New Civil Code Primary law
2. Warsaw Convention for international transportation by air
3. Code of Commerce governs suppletorily; it governs
maritime transaction
4. Carriage of Goods by Sea Act for transportation by sea;
governs suppletorily5. Salvage Law
6. Public Service Act
7. Article XII Sec 11 on operation of public convenience of the
1987 Philippine Constitution
B. Concept of Public Utility & public serviceSec. 13 (b) of the Public Service Act provides that: The term
'public service' includes every person that now or hereafter may
own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway,
traction railway, sub-way motor vehicle, either for freight or
passenger, or both with or without fixed route and whatever may
be its classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries, and water
craft, engaged in the transportation of passengers or freight or
both, shipyard, marine railway, marine repair shop, wharf or dock,
ice plant, ice-refrigeration plant, canal, irrigation system, gas
electric light, heat and power, water supply and power,
petroleum, sewerage system, wire or wireless communications
system, wire or wireless broadcasting stations and other similar
public services: Provided, however, That a person engaged in
agriculture, not otherwise a public service, who owns a motor
vehicle and uses it personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or compensation to
a third party or third engaged in agriculture, not itself or
themselves a public service, for operation by the latter for a
limited time and for a specific purpose directly connected with
the cultivation of his or their farm, the transportation, processing,
and marketing of agricultural products of such third party or third
parties shall not be considered as operating a public service for
the purposes of this Act.
Public utilities are privately owned and operated business whose
services are essential to the general public.
Case: National Development Company v CA
C. Constitutional limitations on operation of public utilitiesSec. 11 of Article XII of the 1987 Constitution states that: No
franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens ofthe Philippines or to corporations or associations organized under
the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens; nor shall such franchise,
certificate, or authorization be exclusive in character or for a
longer period than fifty years. Neither shall any such franchise or
right be granted except under the condition that it shall be subject
to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity
participation in public utilities by the general public. The
participation of foreign investors in the governing body of any
public utility enterprise shall be limited to their proportionate
share in its capital, and all the executive and managing officers o
such corporation or association must be citizens of the
Philippines.
*The corporation must be a domestic corporation and that 60% o
the capital must be owned by Filipino citizens.
Sec. 18 of Article XII of the 1987 Constitution provides that: The
State may, in the interest of national welfare or defense, establish
and operate vital industries and, upon payment of jus
compensation, transfer to public ownership utilities and othe
private enterprises to be operated by the Government.Q: What are the bases/reasons for regulation of public utilities?
A:Basis: Police Power
Justification: Common good
D. Regulatory agencies1. Land Transportation Franchising Regulatory Board (LTFRB)
land transportation
2. Land Transportation Office issue license to drivers
3. Maritime Industry Authority (MARINA) wate
transportation
4. National Telecommunications Commission communication
utilities and services, radio communications systems, wire o
wireless telephone and telegraph systems, radio and
television broadcasting systems and other similar public
utilities
5. Energy Regulatory Board electric or power companies
6. National Water Resources Council water resources
7. Civil Aeronautics Board air transportation
Q: What conditions must concur in the grant of certificate of
public convenience and necessity?
A: 1. The grantee must be a citizen of the Philippines or a
corporation or entity 60% of which is owned by such citizens; 2
The grantee must have sufficient financial capability to undertake
the service; and 3. The service will promote public interest and
convenience in a proper and suitable manner.
*In Tatad v Garcia, the SC held that the controlling factor is the
citizenship of the person operating a common carrier.Guiding Principles:
1. Prior or Old Operator Rule the first licensee will be
protected in his investment and will not be subjected to
ruinous competition.
*No certificate of public convenience and necessity will be
issued to other operator as long as the prior operator still in
operation and can satisfy the public and that it still has the
capacity to do so.
2. Protection Investment Rule protects from unfai
competition
3. Prior Applicant Rule protects the first applicant. Principle
all things being equal
*Public interest is the first and paramount consideration.
E. Concept of franchise and certificate of public convenienceFranchise is a grant or privilege from the sovereign power.
Certificate of Public Convenience is a form of regulation through
an administrative agency.
Q: Is a legislative franchise necessary before a public utility can be
allowed to secure a certificate of public convenience?
A:General Rule: NO.
Exception: If a pertinent law requires such legislative franchise.
Factors:
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1. Public interest
2. Public convenience
3. Public necessity
GENERAL CONCEPTS:
A. Contract of transportation in generalTransportation is a contract whereby a person, natural or
juridical, obligates to transport persons, goods, or both, from one
place to another, by land, air, or water, for a price or commission.
*Importance: For liability purposes
B. PerfectionThere is a perfected contract when there was a meeting of the
minds as to the subject matter and consideration.
C. Common Carrier1. Statutory definition
Article 1732 of the New Civil Codeprovides that: Common
carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.
- one that holds itself out as ready to engage in thetransportation of goods for hire as a public
employment and not as a casual occupation.
Implications being a common carrier:
a. extraordinary diligence must be exercised
b. in case of damage, presumption of negligence on the
part of the common carrier
*It is the activity of the carrier that is controlling.
Cases: A.F. Sanchez Brokerage, Inc v CA; Asia Lighterage v
CA; De Guzman v CA
*The fact that there is no license at the time of the incident
happen is of no moment for liability purposes.
2. Distinguished from private carrierCommon Carrier Private Carrier
As to availability: holds himself outfor all people
indiscriminately
Contracts withparticular
individuals or
groups only
As to required
diligence:
Extraordinary
diligence is
required
Ordinary
diligence is
required
As to regulation: Subject to state
regulation
Not subject to
state regulation
Stipulation
limiting liability:
Parties may not
agree on limiting
the carriers
liability except
when provided by
law
Parties may limit
the carriers
liability,
provided it is not
contrary to law,
morals or good
customs
Exempting
circumstance:
Prove
extraordinary
diligence and
Article 1734 NCC
Caso fortuito,
Article 1174 NCC
Presumption of
Negligence:
There is a
presumption of
fault or negligence
No presumption
of fault or
negligence
Governing law: Law on common
carriers
Law on
obligations and
contracts
3. Distinguished from towage, arrastre and stevedoringDistinctions:
Towage Arrastre Stevedoring
One vessel is
hired to bring
another vessel to
another place;
refers to a service
rendered to a
vessel by towing
for the merepurpose of
expediting her
voyage without
reference to any
circumstances of
danger.
The functions of an
arrastre operator
has nothing to do
with the trade and
business of
navigation, nor to
the use or
operation of
vessels. He is nodifferent from that
of a depositary or
warehouseman.
The function o
stevedores
involves the
loading and
unloading o
coastwise
vessels calling a
the port.
*The SC held that the following services are not considered a common
carrier:
1) purely arrastre services;
*comparable to that as warehouseman and depositor
2) purely stevedoring services; and
3) purely towage services.
*In Crisostomo v CA, the SC held that the respondent being a travel agency is
not a common carrier because the services offered is not one that carriespassenger from one place to another.
4. Tests to determine common carrierTests:
a. He must engaged in the business of carrying goods fo
others as a public employment and must hold himsel
out as ready to engage in the transportation of good
for person generally as a business and not as a casua
occupation;
b. He must undertake to carry goods of the kind to which
his business is confined;
c. He must undertake to carry by the method by which
his business is conducted and over his established
roads;
d. The transportation must be for hireCase: First Philippine Industrial Corporation v CA
*Under Sec. 22 of the Electric Power Distribution Reform
Act, the company like MERALCO distributing electricity is a
common carrier.
5. Parties to the contract of carriagea. Carriage of passengers:
1. Common carrier2. Passengers
b. Carriage of goods:1. Shipper
2. Carrier
D. Registered owner rule and Kabit systemGeneral Rule: Registered owner rule is applicable in thi
jurisdiction.
Registered owner rule states that the person who is the
registered owner of a vehicle is liable for any damages caused by
the negligent operation of the vehicle although the same was
already sold or conveyed to another person at the time of the
accident. The registered owner is liable to the injured party
subject to his right of recourse against the transferee or the
buyer.
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Purpose of this rule: easy identification of the owner to be sued
for liability.
Recourse: Registered owner may bring the case to the court to
sue the buyer or operator of the vehicle at fault.
Exception: in case of stolen vehicle registered owner is not liable.
*In the case ofDuavit v CA, the SC held that the registered owner
is not liable if the vehicle was taken from his garage without his
knowledge or consent. To hold the registered owner liable would
be absurd as it would be holding liable the owner of a stolen
vehicle for an accident caused by the person who stole such
vehicle.Kabit System is an arrangement whereby a person who has been
granted a certificate of public convenience allows other persons
who own motor vehicles to operate them under his license,
sometimes for a fee or percentage of the earnings.
*Kabit system is invariably recognized as being contrary to public
policy and therefore void and inexistent under Article 1409 of the
New Civil Code.
*If the registered owner and the buyer entered into this
transaction they are In pari delicto thus, in case something
happen the court will not aid them. The court will leave them as
they were.
*This arrangement is a circumvention of the requirement for
license.
OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF
GOODS:
A. Vigilance over the goods1. Duty to exercise extraordinary diligence Article 1733 of the
New Civil Code states that: Common carriers, from the
nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers
transported by them, according to all the circumstances of
each case.
Such extraordinary diligence in the vigilance over the goods
is further expressed in Articles 1734, 1735, and 1745, Nos. 5,
6, and 7, while the extraordinary diligence for the safety of
the passengers is further set forth in Articles 1755 and
1756.
Reason: The nature of the business is imbued with public
interest and public policy; because of the exigencies of the
business. The public has no choice but to trust on the skills
of the employees of the common carrier. The goods and the
life of the passenger are placed in the hands of the common
carrier.
Article 363 of the Code of Commerce provides that:
Outside of the cases mentioned in the second paragraph of
Article 361, the carrier shall be obliged to deliver the goods
shipped in the same condition in which, according to the bill
of lading, they were found at the time they were received,without any damage or impairment, and failing to do so, to
pay the value which those not delivered may have at the
point and at the time at which their delivery should have
been made. If those not delivered form part of the goods
transported, the consignee may refuse to receive the latter,
when he proves that he cannot make use of them
independently of the others.
Article 364 of the Code of Commerceprovides that: If the
effect of the damage referred to in Article 361 is merely a
diminution in the value of the gods, the obligation of the
carrier shall be reduced to the payment of the amount
which, in the judgment of experts, constitutes such
difference in value.
Article 365 of the Code of Commerceprovides that: If, in
consequence of the damage, the goods are rendered useless
for sale and consumption for the purposes for which they
are properly destined, the consignee shall not be bound to
receive them, and he may have them in the hands of the
carrier, demanding of the latter their value at the curren
price on that day. If among the damaged goods there should
be some pieces in good condition and without any defectthe foregoing provision shall be applicable with respect to
those damaged and the consignee shall receive those which
are sound, this segregation to be made by distinct and
separate pieces and without dividing a single object, unless
the consignee proves that impossibility of conveniently
making use of them in this form. The same rule shall be
applied to merchandise in bales or packages, separating
those parcels which appear sound.
Presumption of negligence
Article 1735 of the New Civil Code provides that: In a
cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of
the preceding article, if the goods are lost, destroyed o
deteriorated, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as required in Article
1733.
2. Duration of liabilityArticle 1736 of the New Civil Code states that: The
extraordinary responsibility of the common carrier last
from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation
until the same are delivered, actually or constructively, by
the carrier to the consignee, or to the person who has a
right to receive them, without prejudice to the provisions of
Article 1738.
Article 1737 of the New Civil Code states that: The
common carrier's duty to observe extraordinary diligenceover the goods remains in full force and effect even when
they are temporarily unloaded or stored in transit, unles
the shipper or owner has made use of the right of stoppage
in transitu.
Article 1738 of the New Civil Code provides that: The
extraordinary liability of the common carrier continues to be
operative even during the time the goods are stored in a
warehouse of the carrier at the place of destination, unt
the consignee has been advised of the arrival of the goods
and has had reasonable opportunity thereafter to remove
them or otherwise dispose of them.
3. Defenses of common carriersArticle 1734 of the New Civil Codeprovides that: Common
carriers are responsible for the loss, destruction, o
deterioration of the goods, unless the same is due to any o
the following causes only:
(1) Flood, storm, earthquake, lightning, or other natura
disaster or calamity;
(2) Act of the public enemy in war, whether international or
civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in
the containers;
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(5) Order or act of competent public authority.
*The enumeration is exclusive or a closed list.
General Rule: Common carriers are responsible for the loss,
destruction or deterioration of the goods.
Exceptions:
1. Flood, storm, earthquake, lightning or other
natural disaster or calamity;
2. Act of the public enemy in war whether
international or civil;
3. Act of omission of the shipper or owner of the
goods;4. The character of the goods or defects in the
packaging or in the containers; and
5. Order or act of the competent public authority
Article 1740 of the New Civil Code states that: If the
common carrier negligently incurs in delay in transporting
the goods, a natural disaster shall not free such carrier from
responsibility.
a. Fortuitous eventArticle 1739 of the New Civil Code provides that: In
order that the common carrier may be exempted from
responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the
common carrier must exercise due diligence to prevent
or minimize loss before, during and after the
occurrence of flood, storm or other natural disaster in
order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the
goods. The same duty is incumbent upon the common
carrier in case of an act of the public enemy referred to
in Article 1734, No. 2.
*Fire is not within the ambit of natural disaster or
calamity.
*Calamity includes thunderstorm.
*mechanical defect is not within the ambit of the
natural disaster; it is within the control of the common
carrier.
Requisites:1. Proximate cause is the natural calamity
2. Absence of negligence on the part of the
common carrier
3. The common carrier must exercise due diligence
to prevent loss before, during and after the
occurrence of the disaster
4. Free from unreasonable delay by the common
carrier or unreasonable deviation
b. Public enemyArticle 1739 of the New Civil Code states that: In
order that the common carrier may be exempted from
responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the
common carrier must exercise due diligence to prevent
or minimize loss before, during and after the
occurrence of flood, storm or other natural disaster in
order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the
goods. The same duty is incumbent upon the common
carrier in case of an act of the public enemy referred to
in Article 1734, No. 2.
*Public enemy includes pirates however it does not
include robbery and thief.
*Pirates are enemies of all civilized nation.
General Rule: rebels and insurreccion is not included.
Exception: If it they are cast of and took allegiance a
hostile manner territory
*Existence of actual war is imperative.
c. Act of omission on the part of the shipper or owner othe goods
*There must be no fault or contributory negligence on
the part of the carrier.
*In Compania Maritima v CA, the SC held that the
common carrier is also at fault; the common carriershould have exercise extraordinary diligence by not
relying solely on the statement of the shipper; it
should have conducted its own weighing. In this case
the common carrier is not totally absolved from it
liability.
d. Improper packingArticle 1742 of the New Civil Codestates that: Even i
the loss, destruction, or deterioration of the good
should be caused by the character of the goods, or the
faulty nature of the packing or of the containers, the
common carrier must exercise due diligence to
forestall or lessen the loss.
*If the defect is apparent, the carrier may refuse to
accept the goods for carriage; if the shipper insists, the
remedy is to make a protestation; make a foul bill o
lading.
*In Iron Bulk v CA (Dec. 8, 2003), carrier issued pro
forma bill of lading stated where in that it accepted
goods in good condition. The goods arrived defective
The SC held that the carrier is not exempt from liability
because it accepted the goods without protestation.
*Foul Bill of Lading preserves the right of the carrier to
use the excuse provided in 1734.
e. Order of public authorityArticle 1743 of the New Civil Code states that: I
through the order of public authority the goods are
seized or destroyed, the common carrier is notresponsible, provided said public authority had powe
to issue the order.
*The important requisite is that the public authority
has the power to issue an order.
Case: Ganzon v CA
4. Contributory negligence of the shipperArticle 1741 of the New Civil Code states that: If the
shipper or owner merely contributed to the loss, destruction
or deterioration of the goods, the proximate cause thereof
being the negligence of the common carrier, the latter shal
be liable in damages, which however, shall be equitably
reduced.
5. Stipulation limiting liability of carrierArticle 1744 of the New Civil Codestates that: A stipulation
between the common carrier and the shipper or owne
limiting the liability of the former for the loss, destruction, o
deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
*This is for the benefit of the carrier.
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Consideration: Reduction of fare
*The stipulation must be in writing for the purpose of
preventing abuse from the carrier.
Article 1748 of the New Civil Code provides that: An
agreement limiting the common carrier's liability for delay
on account of strikes or riots is valid.
Article 1749 of the New Civil Codestates that: A stipulation
that the common carrier's liability is limited to the value of
the goods appearing in the bill of lading, unless the shipper
or owner declares a greater value, is binding.
Article 1750 of the New Civil Code provides that: Acontract fixing the sum that may be recovered by the owner
or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
a. RequisitesArticle 1744 of the New Civil Code states that: A
stipulation between the common carrier and the
shipper or owner limiting the liability of the former for
the loss, destruction, or deterioration of the goods to a
degree less than extraordinary diligence shall be valid,
provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than
the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Article 1751 of the New Civil Codeprovides that: The
fact that the common carrier has no competitor along
the line or route, or a part thereof, to which the
contract refers shall be taken into consideration on the
question of whether or not a stipulation limiting the
common carrier's liability is reasonable, just and in
consonance with public policy.
*Liability can be limited but cannot be totally
exempted.
*Stipulations reducing diligence or limiting liability
must be in writing to be enforceable.
b. Invalid stipulationsArticle 1745 of the New Civil Codestates that: Any of
the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the
owner or shipper;
(2) That the common carrier will not be liable for any
loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any
diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family, or
of a man of ordinary prudence in the vigilance over the
movables transported; (5) That the common carrier
shall not be responsible for the acts or omission of his
or its employees;
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished;
(7) That the common carrier is not responsible for the
loss, destruction, or deterioration of goods on account
of the defective condition of the car, vehicle, ship,
airplane or other equipment used in the contract o
carriage.
*Even if they agreed with regard to numbers 1,2 and 3
the stipulation is void because it is contrary to public
policy because all these stipulations exempt the carrie
from liability.
General Rule: The degree of diligence may be lowered
Exception: Not lower than that of a good father of a
family.
General Rule: stipulations exempting from liability act
committed by robbers and thieves who do not act withgrave threat or irresistible threats are not valid.
Exception: In case the robbers or thieves used grave
threat or irresistible threats.
*In this case, the presumption of negligence is stil
applicable, the stipulation only affects the outcome o
the case.
c. Effect of delayArticle 1747 of the New Civil Codestates that: If the
common carrier, without just cause, delays the
transportation of the goods or changes the stipulated
or usual route, the contract limiting the common
carrier's liability cannot be availed of in case of the
loss, destruction, or deterioration of the goods.
*Delay will prevent the carrier from raising natura
disaster as a defense and that the agreement limiting
its liability cannot be raised as a defense.
d. Rule on presumption of negligence despite stipulationArticle 1752 of the New Civil Codestates that: Even
when there is an agreement limiting the liability of the
common carrier in the vigilance over the goods, the
common carrier is disputably presumed to have been
negligent in case of their loss, destruction o
deterioration.
B. Other obligations1. Duty to accept goods
a. Grounds for valid refusal to accept goodsi. General Rule: Goods sought to be transported
are dangerous objects or substances including
dynamite and other explosives;
Exception: Carriers that are permitted or allowed
to transport dangerous objects or substances fo
the reason that it is their function to do so or it i
their operation.
ii. Goods are unfit for transportation;
*This can be found under Article 356 of the Code
of Commerce
iii. Acceptance would result in overloading;
iv. Contrabands or illegal goods;
v. Goods are injurious to health;
vi. Goods will be exposed to untoward danger like
flood, capture by enemies and the like;
vii. Goods like livestock will be exposed to disease;
viii. Strike; and
ix. Failure to tender goods on time
2. Duty to deliver goodsa. Time of delivery
General Rule: It is by stipulation
Exception: In the absence of stipulation Code o
Commerce governs.
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Article 358 of the Code of Commerceprovides that: If
there is no period fixed for the delivery of the goods
the carrier shall be bound to forward them in the first
shipment of the same or similar goods which he may
make to the point where he must deliver them; and
should he not do so, the damages caused by the delay
should be for his account.
*When a common carrier undertakes to convey goods,
the law implies a contract that they shall be delivered
at destination within a reasonable time, in the absence
of any agreement as to the time of delivery.*Mercantile usage or practice
With stipulation Without stipulation
Carrier is bound to
fulfil the contract and
is liable for any delay;
no matter from what
cause it may have
arisen
1. Within a
reasonable time.
2. Carrier is bound
to forward them
in the first
shipment of the
same or similar
goods which he
may make to the
point of delivery
b. Consequences of delayArticle 1740 of the New Civil Code provides that: If
the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free
such carrier from responsibility.
Article 1747 of the New Civil Code provides that: If
the common carrier, without just cause, delays the
transportation of the goods or changes the stipulated
or usual route, the contract limiting the common
carrier's liability cannot be availed of in case of the
loss, destruction, or deterioration of the goods.
Article 370 of the Code of Commerceprovides that: If
a period has been fixed for the delivery of the goods, it
must be made within such time, and, for failure to do
so, the carrier shall pay the indemnity stipulated in the
bill of lading, neither the shipper nor the consignee
being entitled to anything else. If no indemnity has
been stipulated and the delay exceeds the time fixed in
the bill of lading, the carrier shall be liable for the
damages which the delay may have caused.
Article 371 of the Code of Commerce provides that:
In case of delay through the fault of the carrier,
referred to in the preceding articles, the consignee
may leave the goods transported in the hands of the
former, advising him thereof in writing before their
arrival at the point of destination. When this
abandonment takes place, the carrier shall pay the full
value of the goods as if they had been lost or mislaid. If
the abandonment is not made, the indemnification forlosses and damages by reason of the delay cannot
exceed the current price which the goods transported
would have had on the day and at the place in which
they should have been delivered; this same rule is to
be observed in all other cases in which this indemnity
may be due.
Article 372 of the Code of Commercestates that: The
value of the goods which the carrier must pay in cases
of loss or misplacement shall be determined in
accordance with that declared in the bill of lading, the
shipper not being allowed to present proof that among
the goods declared therein there were articles o
greater value and money. Horses, vehicles, vessels
equipment and all other principal and accessory means
of transportation shall be especially bound in favour of
the shipper, although with respect to railroads said
liability shall be subordinated to the provisions of the
laws of concession with respect to the property, and to
what this Code established as to the manner and form
of effecting seizures and attachments against said
companies.Article 373 of the Code of Commerce states that: The
carrier who makes the delivery of the merchandise to
the consignee by virtue of combined agreements o
services with other carriers shall assume the
obligations of those who preceded him in the
conveyance, reserving his right to proceed against the
latter if he was not the party directly responsible fo
the fault which gave rise to the claim of the shipper o
consignee. The carrier who makes the delivery shal
likewise acquire all the actins and rights of those who
preceded him in the conveyance. The shipper and the
consignee shall have an immediate right of action
against the carrier who executed the transportation
contract, or against the other carriers who may have
received the goods transported without reservation
However, the reservation made by the latter shall no
relieve them from the responsibilities which they may
have incurred by their own acts.
Article 374 of the Code of Commercestates that: The
consignees to whom the shipment was made may no
defer the payment of the expenses and transportation
charges of the goods they receive after the lapse of 24
hours following their delivery; and in case of delay in
this payment, the carrier may demand the judicial sale
of the goods transported in an amount necessary to
cover the cost of transportation and the expense
incurred.Effects of delay:
1. Excusable delay in carriage merely suspends and
generally does not terminate the contract o
carriage. When the cause is removed, the maste
must proceed with the voyage and make
delivery;
2. Carrier remains duty bound to exercise
extraordinary diligence;
3. Natural disaster shall not free the carrier from
responsibility;
4. If delay is without just cause, the contract limiting
the common carriers liability cannot be availed
of in case of loss or deterioration of the goods.
c. Place of DeliveryArticle 360 of the Code of Commerce provides that
The shipper, without changing the place where the
delivery is to be made, may change the consignment o
the goods which he delivered to the carrier, provided
that at the time of ordering the change of consignee
the bill of lading signed by the carrier, if one has been
issued, be returned to him, in exchange for anothe
wherein the novation of the contract appears. The
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expenses which this change of consignment occasions
shall be for the account of the shipper.
d. To whom delivery shall be madeArticle 368 of the Code of Commerce provides that:
The carrier must deliver to the consignee, without any
delay or obstruction, the goods which he may have
received, by the mere fact of being named in the bill of
lading to receive them; and if he does not do so, he
shall be liable for the damages which may be caused
thereby.
Article 369 of the Code of Commerceprovides that: Ifthe consignee cannot be found at the residence
indicated in the bill of lading, or if he refuses to pay the
transportation charges and expenses, or if he refuses
to receive the goods, the municipal judge, where there
is none of the first instance, shall provides for their
deposit at the disposal of the shipper, this deposit
producing all the effects of delivery without prejudice
to third parties with a better right.
OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF CARRIAGE OF
PASSENGERS:
A. Safety of Passengers1. Duty to observe utmost diligence
Article 1755 of the New Civil Code provides that: A
common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard
for all the circumstances.
*There are claims not really focused on death, injuries, loss
or damage of goods but concentrates on moral damages;
and the SC said that these claims can still prosper in because
there is still a breach of contract of carriage.
*Behavior of the employees towards to passengers is also a
factor considered by the court to rule against a common
carrier.
*In CAL v PAL, the SC held that hijacking of the airplane is
considered to be a force majeure thus cannot held the
carrier liable.
Case: Singapore Airline v Andion Fernandez
*In Japan Airlines v Asuncion (January 28, 2005), the SC
held that the things invoked by the respondent do not fall
within the ambit of extraordinary diligence. Though it is the
duty of the carrier to check that travel documents are with
the passengers but it is not under the obligation of the
carrier to check the veracity of the information in the travel
document; it also held that the obligation of the carrier is
limited to endorsing and not to influence. The issue of
whether or not an alien be admitted entrance to a country is
a sovereign act and such cannot be interfered by the
petitioner.2. Duration of liability
*The carrier is bound to exercise utmost diligence with
respect to passengers the moment the person who
purchases the ticket or token from the carrier presents
himself at the proper place and in a proper manner to be
transported. Such person must have a bona fide intention to
use the facilities of the carrier, possess sufficient fare with
which to pay for his passage, and present himself to the
carrier for transportation in the place and manner provided.
*In LRTA v Navidad, the SC held the petitioner carrier liable
for breach of contract. The SC held that Nicanor Navidad
was a passenger when he died after he fell on the LRT tracks
and was struck by a moving train. He was considered a
passenger because he entered the LRT station after having
purchased a token and he fell while he was on the platform
waiting for a train. Thus, he was where he was supposed to
be with the intention of boarding a train.
*Once created, the relationship will not ordinarily terminate
until the passenger has, after reaching his destination, safely
alighted from the carriers conveyance or has had areasonable opportunity to leave the carriers premises. A
persons who remain on the premises within a reasonable
time after leaving the conveyance are to be deemed
passengers, and what is a reasonable time or a reasonable
delay within this rule is to be determined from all the
circumstances, and includes reasonable time to look afte
his baggage and prepare for his departure.
*In La Mallorca v CA, the SC held that there was a breach of
duty to exercise extraordinary diligence with respect to the
4 year old child and the carrier is liable as a consequence
The presence of passengers near the bus was no
unreasonable and they were, therefore, to be considered
still as passengers of the carrier, entitled to the protection
under their contract.
*In Aboitiz Shipping Corporation v CA, the SC held tha
extraordinary diligence was still owed to AV at the time o
the accident. It was ruled that AVs presence in the premise
was not without cause. The victim had to claim his baggage
which was possible only one hour after the vessel arrived
since it was the standard procedure in the case o
petitioners vessels that the unloading operation shall star
only after that time.
*The differences between the La Mallorca case and Aboitiz
Shipping Corporation are: 1. The business is different from
that of La Mallorca case; and 2. The capacity of passengers
and baggages are different
3. Presumption of negligenceArticle 1756 of the New Civil Code states that: In case o
death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence
as prescribed in Articles 1733 and 1755.
4. Liability for acts of employees
Article 1759 of the New Civil Codeprovides that: Common
carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former's
employees, although such employees may have acted
beyond the scope of their authority or in violation of the
orders of the common carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father o
a family in the selection and supervision of thei
employees.
Case: Maranan v Perez
5. Liability for acts of strangersArticle 1763 of the New Civil Code provides that: A
common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence o
other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good
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father of a family could have prevented or stopped the act
or omission.
Case: Bachelor Express v CA
6. Effect of stipulation on liabilityArticle 1757 of the New Civil Code provides that: The
responsibility of a common carrier for the safety of
passengers as required in Articles 1733 and 1755 cannot be
dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.
Article 1758 of the New Civil Codeprovides that: When a
passenger is carried gratuitously, a stipulation limiting thecommon carrier's liability for negligence is valid, but not for
wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the
common carrier's liability.
Article 1760 of the New Civil Code states that: The
common carrier's responsibility prescribed in the preceding
article cannot be eliminated or limited by stipulation, by the
posting of notices, by statements on the tickets or
otherwise.
B. Passengers BaggagesArticle 1754 of the New Civil Codeprovides that: The provisions
of Articles 1733 to 1753 shall apply to the passenger's baggage
which is not in his personal custody or in that of his employee. As
to other baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
applicable.
Article 1998 of the New Civil Code states that: The deposit of
effects made by the travellers in hotels or inns shall also be
regarded as necessary. The keepers of hotels or inns shall be
responsible for them as depositaries, provided that notice was
given to them, or to their employees, of the effects brought by
the guests and that, on the part of the latter, they take the
precautions which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects.
Article 2000 of the New Civil Code states that: The responsibility
referred to in the two preceding articles shall include the loss of,or injury to the personal property of the guests caused by the
servants or employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force
majeure. The fact that travellers are constrained to rely on the
vigilance of the keeper of the hotels or inns shall be considered in
determining the degree of care required of him.
Article 2001 of the New Civil Code provides that: The act of a
thief or robber, who has entered the hotel is not deemed force
majeure, unless it is done with the use of arms or through an
irresistible force.
Article 2002 of the New Civil Code provides that: The hotel-
keeper is not liable for compensation if the loss is due to the acts
of the guest, his family, servants or visitors, or if the loss arises
from the character of the things brought into the hotel.
Article 2003 of the New Civil Code provides that: The hotel-
keeper cannot free himself from responsibility by posting notices
to the effect that he is not liable for the articles brought by the
guest. Any stipulation between the hotel-keeper and the guest
whereby the responsibility of the former as set forth in articles
1998 to 2001 is suppressed or diminished shall be void.
*The baggage in the personal custody of the passenger or his
employee in that the baggage in transit will be considered as
necessary deposits. The common carrier shall be responsible for
the baggage as depositaries, provided that notice was given to
them or its employees, and the passenger took the necessary
precaution, which the carrier has advised them relative to the
care and vigilance of their baggage. In case of loss due to the faul
of the passenger the carrier will not be liable.
*They are not absolutely responsible as depository because the
law requires notice.
*It is also required to declare the value of the baggage.
*The carrier who has in his custody the baggage of the passenge
to be carried like any other goods is required to observe
extraordinary diligence. In case of loss or damage the carrier ispresumed negligent.
OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER:
A. Effect of negligence of shipper or passenger Article 1741 of theNew Civil Code states that: If the shipper or owner merely
contributed to the loss, destruction or deterioration of the goods
the proximate cause thereof being the negligence of the common
carrier, the latter shall be liable in damages, which however, shal
be equitably reduced.
Article 1761 of the New Civil Codeprovides that: The passenge
must observe the diligence of a good father of a family to avoid
injury to himself.
Article 1762 of the New Civil Codestates that: The contributory
negligence of the passenger does not bar recovery of damages fo
his death or injuries, if the proximate cause thereof is the
negligence of the common carrier, but the amount of damages
shall be equitably reduced.
*The shipper is also obliged to exercise due diligence in avoiding
damage or injury.
*With respect to carriage of passengers, the said passengers are
likewise bound to observe due diligence to avoid injury.
*The contributory negligence on the part of the passenger is not a
defense that will excuse the carrier from liability. It will only
mitigate such liability.
*The carrier may be able to prove that the only cause of the loss
of the goods is any of the following acts of the shipper:
1. failure of the shipper to disclose the nature of the goods;
2. improper marking or direction as to destination; and
3. improper loading when he assumed such responsibility.
*The shipper must likewise see to it that the goods are properly
packed; otherwise, liability of the carrier may be mitigated o
barred depending on the circumstances.
B. Payment of freightWho will pay:
Shipper - before or at the time he delivers the goods to the carrie
for shipment.
Consignee - if agreed upon by the parties at the point o
destination is bound by such stipulation the moment he accepts
the goods.Passengers - they are contractually bound to pay the fare within
such time as prescribed by regulations or by the carrier.
Time to pay:
Tickets are purchased in advance from ticket outlets.
Consignees to whom the shipment was made may not defer the
payment of the expenses and transportation charges of the goods
they receive after the lapse of 24 hours following their delivery.
*In case of delay in payment, the carrier may demand the judicia
sale of the goods transported in an amount necessary to cover the
cost of transportation and the expenses incurred.
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Article 374 of the Code of Commerceprovides that: The carrier
who makes the delivery of the merchandise to the consignee by
virtue of combined agreements or services with other carriers
shall assume the obligations of those who preceded him in the
conveyance, reserving his right to proceed against the latter if he
was not the party directly responsible for the fault which gave rise
to the claim of the shipper or consignee. The carrier who makes
the delivery shall likewise acquire all the actions and rights of
those who preceded him in the conveyance. The shipper and the
consignee shall have an immediate right of action against the
carrier who executed the transportation contract, or against theother carriers who may have received the goods transported
without reservation. However, the reservation made by the latter
shall not relieve them from the responsibilities which they may
have incurred by their own acts.
Article 375 of the Code of Commerceprovides that: The goods
transported shall be especially bound to answer for the cost of
transportation and for the expenses and fees incurred for them
during their conveyance and until the moment of their delivery.
This special right shall prescribe 8 days after the delivery has been
made, and once prescribed, the carrier shall have no other action
than that corresponding to him as an ordinary creditor.
C. Liability for demurrageDemurrage is the compensation provided for in the contract of
affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading. It is a claim for damages for
failure to accept delivery.
*Liability for demurrage exists only when expressly stipulated in
the contract.
EXTRAORDINARY DILIGENCE:
A. Underlying reasonReasons:
1. From the nature of the business and for reasons of
public policy;
2. Relationship of trust;
3. Business is impressed with a special public duty;
4. Possession of the goods;
5. Preciousness of human life
B. Effect of StipulationArticle 1744 of the New Civil Codestates that: A stipulation
between the common carrier and the shipper or owner
limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.Article 1757 of the New Civil Code states that: The
responsibility of a common carrier for the safety of
passengers as required in Articles 1733 and 1755 cannot be
dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.
Article 1758 of the New Civil Code states that: When a
passenger is carried gratuitously, a stipulation limiting the
common carrier's liability for negligence is valid, but not for
wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the
common carrier's liability.
Article 1760 of the New Civil Code states that: The
common carrier's responsibility prescribed in the preceding
article cannot be eliminated or limited by stipulation, by the
posting of notices, by statements on the tickets o
otherwise.
C. Extraordinary diligence in carriage by sea1. Seaworthiness of the vessel
Sec. 3 [1] of the COGSA provides that: The carrieshall be bound before and at the beginning of the
voyage to exercise due diligence to
(a) Make the ship seaworthy;
(b) Properly man,equip, and supply the ship;
(c) Make the holds, refrigerating and cooling
chambers, and all other parts of the ship in which
goods are carried, fit and safe for their reception
carriage, and preservation.
Sec. 3 [2] of the COGSA provides that: The carrie
shall properly and carefully load, handle, stow, carry
keep, care for, and discharge the goods carried.
Sec. 116 of the IC
Sec. 119 of the IC
Article 609 of the Code of Commerce states that
Captains, masters or patrons of vessels must be
Filipinos, have legal capacity to contract in accordance
with this code, and prove the skill, capacity, and
qualifications necessary to command and direct the
vessel, as established by marine or navigation laws
ordinances, or regulations, and must not be
disqualified according to the same for the discharge o
the duties of the position. If the owner of a vesse
desires to be the captain thereof, without having the
legal qualifications therefor, he shall limit himself to
the financial administration of the vessel, and shal
intrust the navigation to a person possessing the
qualifications required by said ordinances andregulations.
*Extraordinary diligence requires that the ship which
will transport the passengers and goods is seaworthy.
*The carriers are deemed to warrant impliedly the
seaworthiness of the ship. The failure of a common
carrier to maintain in seaworthy condition the vesse
involved in its contract of carriage is a clear breach o
its duty prescribed in Article 1755 of the NCC.
*Shippers of goods are not expected to inquire into the
vessels seaworthiness and compliance with al
maritime laws.
*The unseaworthiness can be established by the fact
that it did not withstand the natural and inevitable
action of the sea.
2. Overloading*Duty to exercise due diligence includes the duty to
take passengers or cargoes that are within the carrying
capacity of the vessel.
3. Proper storage*The ship must not be only seaworthy but it must also
be cargoworthy. The ship must be an efficien
storehouse for her cargo.
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*The vessel must be adequately equipped and
properly manned.
4. Obligation of captain and crew*If the negligence of the captain and crew can be
traced to the fact that they are really incompetent, the
Limited Liability Rule cannot be invoked because the
ship owner may be deemed negligent.
5. Rule on deviation and transhipment Deviation*If route is stipulated upon by the shipper and carrier,
carrier cant change unless due toforce majeure.
*Carrier shall be liable for all losses suffered from anyother cause, beside the sum stipulated for such case.
*If due to said force majeure he took another route
and incurred expenses by reason thereof, he shall be
reimbursed for such increase upon formal proof
thereof (Art. 359, Code of Commerce).
Transshipment is the act of taking cargo out of one
ship and loading it in another.
*When done without legal excuse, however
competent and safe the vessel into which the transfer
is made, is a violation of the contract and an
infringement of the right of the shipper and subjects
the carrier to liability if the freight is lost even by a
cause otherwise excepted (Magellan Manufacturing
Corp. v. CA).
Article 359 of the Code of Commerceprovides that: If
there is an agreement between the shipper and the
carrier as to the road over which the conveyance is to
be made, the carrier may not change the route, unless
it be by reason of force majeure; and should he do so
without this cause, he shall be liable for all the losses
which the goods he transports may suffer from any
other cause, beside paying the sum which may have
been stipulated for such case. When on account of said
cause of force majeure, the carrier had to take another
route which produced an increase in transportation
charges, he shall be reimbursed for such increase upon
formal proof thereof.
D. Extraordinary diligence in carriage by land1. Vehicles condition
*Owners are required to make sure that the vehicles
they are using are in good order and condition.
2. Traffic rules (RA 4136)*In cases involving breach of contract of carriage,
proof of violation of traffic rules confirms that the
carrier failed to exercise extraordinary diligence.
3. Obligation to Inspect*in overland transportation, common carrier is not
bound nor empowered to make an examination of the
contents of packages or bags particularly those hand
carried. Airline companies are required to inspect each
and every cargo brought into the aircraft (RA 6235).
E. Extraordinary diligence in carriage by air1. Airworthiness - an aircraft, its engines, propellers and
other components and accessories are of proper design and
construction, and are safe for air navigation purposes, such
design and construction being consistent with accepted
engineering practice and in accordance with aerodynamic
laws and aircraft science (RA 779).
2. Competent and well trained crew
3. To take the required and prescribed route
4. Adverse weather conditions or extreme climatic
changes are some of the perils involved in air trave
consequence of which the passenger must assume o
expect.
5. RA 6235 (An Act Prohibiting Certain Acts Inimical to
Civil Aviation and for Other Purposes) - acts punishable:
a. to compel a change in the course or destination of an
aircraft of Philippine registry; or
b. to seize or usurp control of the aircraft while in flight.
ACTIONS IN CASE OF BREACH OF CONTRACT OF CARRIAGE:
A. Causes of action and nature/extent of liability (culpacontractual, culpa aquiliana and culpa delictual)
Culpa contractual only the carrier is primarily liable and no
the driver.
Reason: There is no privity between the driver and the
passenger.
*The party to be impleaded is the carrier itself.
Basis: Article 1759 of the New Civil Code
Culpa delictual/criminal the driver is primarily liable. The
carrier is subsidiarily liable only if the driver is convicted and
declared insolvent.
Basis: Article 100 of the Revised Penal Code
Culpa aquiliana the carrier and the driver are solidarily liable
as joint tortfeasor.
Basis: Article 2180 of the New Civil Code
B. Prescriptive period and conditions precedent1. Overland transportation of goods and coastwise
shipping (Domestic)
Article 366 of the Code of Commerce provides that
Within the 24 hours following the receipt of the
merchandise, the claim against the carrier for damage
or average which may be found therein upon opening
the packages, may be made, provided that the
indications of the damage or average which gives rise
to the claim cannot be ascertained from the outside
part of such packages, in which case the claim shall be
admitted only at the time of receipt. After the periods
mentioned have elapsed, or the transportation charge
have been paid, no claim shall be admitted against the
carrier with regard to the condition in which the goods
transported were delivered.
*Prior notice of claim does not apply to misdelivery of
goods.
Purpose of notice: To inform the carrier that the
shipment has been damaged and that it is charged
with liability therefor, and to give it an opportunity to
make an investigation and fix responsibility while the
matter is fresh.*The filing of notice of claim is a condition precedent
for recovery in case of damage condition of the goods.
*Not provided by Article 366 of the Code of
Commerce. Thus, in such absence, the New Civil Code
rules on prescription apply.
Prescriptive period:
General Rule: If written, 10 years, if not written, 6
years
Exceptions:
1. COGSA 1 year
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2. Warsaw Convention 2 years
Example: Q: In case of pending extrajudicial claim,
does it suspend the one year period?
A: NO
*One year period applies to shipper, assignee, insurer,
subrogees, and successor in interest.
*One year period does not apply in cases of delay or
misdelivery.
International Carriage of Goods by Sea Sec. 3 [6] ofthe COGSA substantially provides that in case of
patent damage, the shipper should file a claim with the
carrier immediately upon delivery. In case of latent
damage, the shipper should file a claim with the carrier
within 3 days from delivery. Action for loss or damage
to the cargo should be brought within one year after:
delivery of the goods (delivered but damaged goods);
or the date when the goods should have been
delivered (loss).
*The filing of a notice of claim is not a condition
precedent.
Recoverable Damages
The court may award the following damages:
1. Actual/Compensatory Damages
2. Temperate Damages
3. Liquidated Damages
4. Exemplary Damages
5. Moral Damages
6. Nominal Damages
Actual/Compensatory damages are those awarded to the
aggrieved party as adequate compensation only for such
pecuniary loss suffered by him as he has alleged and duly proved.
Article 2199 of the Civil Codestates that: Except as provided by
law or by stipulation, one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly
proved. Such compensation is referred to as actual or
compensatory damages.
*To claim this award, proving the amount is necessary.
*Procedures or plastic surgeries performed to restore the part of
the body injured are included as a component of actual damages.
Temperate damages or moderate damages these are damages
the amount of which is left to the sound discretion of the court,
but it is necessary that there be some injury or pecuniary loss
established, the exact amount of which, could not be determined
by the plaintiff by reason of the nature of the case.
Article 2224 of the New Civil Codeprovides that: Temperate or
moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty.
*The court is convinced that there is pecuniary loss.
*There is no actual certainty of the actual amount loss. The court
is allowed to calculate the amount.
*This is in the form of actual damages
Liquidated damages are fixed damages previously agreed by the
parties to the contract and payable to the innocent party in case
of breach by the other.
Article 2226 of the New Civil Code provides that: Liquidated
damages are those agreed upon by the parties to a contract, to be
paid in case of breach thereof.
*This is in the form of actual damages but a stipulated one.
*Proving the amount is not necessary.
*In this kind of damages, estoppel applies.
General Rule: The court cannot change the amount.
Exception: If the amount stipulated is excessive the court may
disregard said amount and may compute the actual damages.
*The only thing to be proved is the fact of loss.
Exemplary damages are mere accessories to other forms odamages except nominal damages. They are mere additions to
actual, moral, temperate and liquidated damages which may o
may not be granted at all depending upon the necessity of setting
an example for the public good as a form of deterrent to the
repetition of the same act by any one.
Article 2229 of the New Civil Code provides that: Exemplary o
corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate
liquidated or compensatory damages.
*Awarded because of the wanton, fraudulent, malevolent
oppressive acts of the carrier.
*This is awarded to prevent other carrier to commit oppressive
acts.
*This cannot be awarded unless the plaintiff is entitled to moral a
the same time actual or temperate damages.
Article 2231 of the New Civil Codestates that: In quasi-delicts
exemplary damages may be granted if the defendant acted with
gross negligence.
Article 2232 of the New Civil Codestates that: In contracts and
quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.
Article 2233 of the New Civil Code states that: Exemplary
damages cannot be recovered as a matter of right; the court wil
decide whether or not they should be adjudicated.
Article 2234 of the New Civil Codestates that: While the amoun
of the exemplary damages need not be proved, the plaintiff mustshow that he is entitled to moral, temperate or compensatory
damages before the court may consider the question of whethe
or not exemplary damages should be awarded In case liquidated
damages have been agreed upon, although no proof of loss is
necessary in order that such liquidated damages may be
recovered, nevertheless, before the court may consider the
question of granting exemplary in addition to the liquidated
damages, the plaintiff must show that he would be entitled to
moral, temperate or compensatory damages were it not for the
stipulation for liquidated damages.
Article 2235 of the New Civil Code states that: A stipulation
whereby exemplary damages are renounced in advance shall be
null and void.
Nominal damages are not for indemnification of loss but fo
vindication of a right violated.
Article 2221 of the New Civil Code provides that: Nomina
damages are adjudicated in order that a right of the plaintiff
which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.
Article 2222 of the New Civil Code states that: The court may
award nominal damages in every obligation arising from any
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source enumerated in Article 1157, or in every case where any
property right has been invaded.
Article 2223 of the New Civil Codestates that: The adjudication
of nominal damages shall preclude further contest upon the right
involved and all accessory questions, as between the parties to
the suit, or their respective heirs and assigns.
*In Japan Airlines v CA, JAL failed to give the plaintiff the priority
for the first available flight. The SC awarded nominal damages.
Moral damages are in the category of an award designed to
compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer.Article 2217 of the New Civil Codeprovides that: Moral damages
include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Though incapable of pecuniary
computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for omission.
Q: When moral damages may be awarded?
A: 1. Death of a passenger; 2. Carrier is guilty of fraud, malice, bad
faith even if there is no death of a passenger (Case: Lopez v Pan-
American); 3. In Air France case
MARITIME LAW:
Source: Code of Commerce
A. Concept of Maritime LawMaritime Law is the system of laws which particularly relates to
the affairs and business of the sea, to ships, their crews and
navigation, and to maritime conveyance of persons and property.
*Apply only to maritime trade and sea voyages.
B. Limited Liability Rule1. Concept
The exclusively real and hypothecary nature of maritime law
operates to limit the liability of the shipowner to the value
of the vessel, earned freightage and proceeds of the
insurance, if any. NO VESSEL NO LIABILITY expresses in a
nutshell the limited liability rule. The total destruction of the
vessel extinguishes maritime lien as there is no longer any
res to which it can attach.
Q: Is this rule applies in the handling of the passengers?
A:YES
Q: Whose liability is this?
A: Shipowner or Agents.
Article 586 2nd
paragraph states that: By ship agent is
understood the person entrusted with provisioning or
representing the vessel in the port in which it may be
found.
*Ship agent is the only person that can be sued directly.
Reason: Article 618 of the Code of Commerce provides so.
Article 618 1st
paragraphstates that: The ship captain shallbe civilly liable to the ship agent, and the latter to the third
persons who may have made contracts with the former; x x
x.
Q: What kind?
A: Maritime in nature; marine transactions connected with
maritime law; maritime trade and commerce
Purpose: To encourage shipbuilding and maritime
transactions
Article 587 of the Code of Commerce provides that: The
ship agent shall also be civilly liable for the indemnities in
favor of third persons which may arise from the conduct of
the captain in the care of the goods which he loaded on the
vessel; but he may exempt himself therefrom by abandoning
the vessel with all her equipments and the freight it may
have earned during the voyage.
Article 590 of the Code of Commerce provides that: The
co-owners of a vessel shall be civilly liable in the proportion
of their interests in the common fund, for the results of the
acts of the captain, referred to in Article 587. Each co-owner
may exempt himself from this liability by the abandonment
before a notary, of the part of the vessel belonging to him. Article 837 of the Code of Commerce provides that: The
civil liability incurred by the shipowners in the case
prescribed in this section, shall be understood as limited to
the value of the vessel with all its appurtenances and
freightage earned during the voyage.
When applicable:
The Code of Commerce sanctions the application of the
doctrine in the following cases: 1. Civil liability for
indemnities in favor of third persons which arise from the
conduct of the captain in the case of the goods which the
vessel carried; 2. Civil liability arising from collisions; 3
Unpaid wages of the captain and the crew if the vessel and
its cargo are totally lost by reason of capture of shipwreck.
2. Exceptions to the ruleExceptions:
1. When the injury to or death of a passenger is due
either to the fault of the shipowner, or to the
concurring negligence of the shipowner and the
captain;
2. When the vessel is insured to the extent of the
insurance proceeds; and
*Freightage collectible
Q: How come insurance is an exception?
A: Because there is no loss. The loss was compensated
by the insurance company
3. In Workmens Compensation claims
Q: Why is an exception?A: Because not maritime in nature
*In Yangco v Laserna case, the SC held that it covers
anything that is connected with maritime transactions
3. AbandonmentQ: If theres partial loss can the shipowner/agent be
exempted from liability?
A:YES. If there is abandonment.
Q: If there is total loss, is it necessary to abandon?
A:NO. There is nothing to abandon.
Case: Luzon Stevedoring
Article 587 of the Code of Commerce states that: The ship
agent shall also be civilly liable for the indemnities in favo
of third persons which may arise from the conduct of the
captain in the care of the goods which he loaded on the
vessel; but he may exempt himself therefrom by abandoning
the vessel with all her equipments and the freight it may
have earned during the voyage.
Q: How claims are satisfied under the Limited Liability Rule?
A: All claims should be collated before they can be satisfied
from what remains of the insurance proceeds and freightage
at the time of the loss. No claimant should be given
preference over the others by the simple expedience o
having filed or completed its action earlier than the rest
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Thus, the execution of judgment in earlier completed cases,
even those already final and executory, must be stayed
pending completion of all cases occasioned by the subject
sinking. Then and only then can all such claims be
simultaneously settled, either completely or pro-rata should
the insurance proceeds and freightage be not enough to
satisfy the claim.
Case: Aboitiz Shipping Co. v General Accident Fire and Life
Insurance Corporation
C. Vessels- Those engaged in navigation, whether coastwise or on
the high seas, including floating docks, pontoons,
dredges, scows and any other floating apparatus
destined for the services of the industry or maritime
commerce. Excluded are local and foreign military
vessels, bancas and other watercrafts of less than 3
tons gross capacity and small watercrafts engaged in
river and bay traffic.
1. Acquisitiona. By prescription
Article 573 of the Code of Commerce states that:
Merchant vessels constitute property which may be
acquired and transferred by any of the means
recognized by law. The acquisition of a vessel must
appear in a written instrument, which shall not
produce any effect with respect to third persons if not
inscribed in the registry of vessels. The ownership of a
vessel shall likewise be acquired by possession in good
faith, continued for three years, with a just title duly
recorded. In the absence of any of these requisites,
continuous possession for ten years shall be necessary
in order to acquire ownership. A captain may not
acquire by prescription the vessel of which he is in
command.
Requisites:
1. Acquisition must appear in a written instrument
2. Such shall not produce any effect to third personsif not inscribed in the registry of vessels
3. Shall be acquired by possession in good faith,
continued for 3 years
4. With a just title duly recorded
5. In the absence of any of there, continuous
possession for 10 years shall be necessary to
acquire ownership
Q: Can the ship captain acquire vessel by prescription?
A:NO. The character of possession he has is not those
for acquisitive possession. The requisite for acquisitive
possession is that possession as an owner.
Article 575 of the Code of Commerce states that: Co-
owners of vessels shall have the right of repurchase
and redemption in sales made to strangers, but they
may exercise the same only within the 9 days following
the inscription of the sale in the registry, and by
depositing the price at the same time.
b. By saleArticle 576 of the Code of Commerce states that: In
the sale of a vessel it shall always be understood as
included the rigging, masts, stores and engine of a
steamer appurtenant thereto, which at the time
belongs to the vendor. The arms, munitions of war,
provisions and fuel shall not be considered as included
in the sale. The vendor shall be under the obligation to
deliver to the purchaser a certified copy of the record
sheet of the vessel in the registry up to the date o
sale.
Article 577 of the Code of Commerce states that: I
the alienation of the vessel should be made while it is
on voyage, the freightage which it earns from the time
it receives its last cargo shall pertain entirely to the
purchaser, and the payment of the crew and othe
persons who make up its complement for the samevoyage shall be for his account. If the sale is made afte
the vessel has arrived at the port of its destination, the
freightage shall pertain to the vendor, and the
payment of the crew and other individuals who make
up its complement shall be for his account, unless the
contrary is stipulated in either case.
*If made while it is on voyage, the freightage which it
earns from the time it receives its last cargo shal
pertain entirely to the purchaser, and the payment o
the crew and other persons who make up its
complement shall be for his account.
*If made after vessel arrived at port of its destination
freightage shall pertain to the vendor, and the
payment of the crew and other individuals who make
up its complement shall be for his account, unless the
contrary is stipulated in either case.
Article 578 of the Code of Commerce states that: I
the vessel being on a voyage or in a foreign port, it
owner or owners should voluntarily alienate it, eithe
to Filipinos or to foreigners domiciled in the capital o
in a port of another country, the bill of sale shall be
executed before the consul of the Republic of the
Philippines at the port where it terminates its voyage
and said instrument shall produce no effect with
respect to third persons if it is not inscribed in the
registry of the consulate. The consul shall immediately
forward a true copy of the instrument of purchase andsale of the vessel to the registry of vessels of the port
where said vessel is inscribed and registered. In every
case the alienation of the vessel must be made to
appear with a statement of whether the vendo
receives its price in whole or in part, or whether he
preserves in whole or in part any claim on said vessel
In case the sale is made to a Filipino, this fact shall be
stated in the certificate of navigation. When a vessel
being in a voyage, shall be rendered useless fo
navigation, the captain shall apply to the competen
judge or court of the port of arrival, should it be in the
Philippines; and should it be in a foreign country, to
the consul of the Republic of the Philippines, should
there be one, or, where there is none, to the judge or
court or to the local authority; and the consul, or the
judge or court, shall order an examination of the vesse
to be made. If the consignee or the insurer should
reside at said port, or should have representatives
there, they must be cited in order that they may take
part in the proceedings on behalf of whoever may be
concerned.
c. Registration
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Section 810 of the Tariff and Customs Code provides
that: The Bureau of Customs is vested with exclusive
authority over the registration and documentation of
Philippine vessels. By it shall be kept and preserved the
records of registration and of transfers and
encumbrances of vessels; and by it shall be issued all
certificates, licenses or other documents incident to
registration and documentation, or otherwise requisite
for Philippine vessels.
*Through the MARINA
d. Ships manifestSec. 906 of the Tariff and Customs Code provides that:
Manifests shall be required for cargo and passengers
transported from one place or port in the Philippines
to another only when one or both of such places is a
port of entry.*Declaration of the entire cargo. The object is to
furnish customs officers with a list to check against, to
inform the revenue officers what goods are brought
into a port of the country on a vessel. Hence, the
requirement that a vessel must carry a manifest is not
complied with even if a bill of lading can be presented.
*A bill of lading is just a declaration of a specific cargo
rather than the entire cargo. It is issued as a matter of
convenience by virtue of a contract.
D. Persons who take part in Maritime Commerce1. Shipowners and shipagents
Article 586 of the Code of Commerce provides that: The
shipowner and the ship agent shall be civilly liable for the
acts of the captain and for the obligations contracted by the
latter to repair, equip, and provision the vessel, provided the
creditor proves that the amount claimed was invested for
the benefit of the same. By ship agent is understood the
person entrusted with provisioning or representing the
vessel in the port in which it may be found.
Article 587 of the Code of Commerce provides that: The
ship agent shall also be civilly liable for the indemnities infavor of third persons which may arise from the conduct of
the captain in the care of the goods which he loaded on the
vessel; but he may exempt himself thereform by abandoning
the vessel with all her equipments and the freight it may
have earned during the voyage.
Article 588 of the Code of Commerce provides that:
Neither the shipowner nor the ship agent shall be liable for
the obligations contracted by the captain, if the latter
exceeds the powers and privileges pertaining to him by
reason of his position or conferred upon him by the former.
Nevertheless, if the amounts claimed were invested for the
benefit of the vessel, the responsibility therefor shall
devolve upon its owner or agent.
a. Rules in case of part-ownersArticle 589 of the Code of Commerceprovides that: If
two or more persons should be part owners of a
merchant vessel, a partnership shall be presumes as
estrablished by the co-owners. This partnership shall
be governed by the resolution of the majority of the
members. If the part-owners should not be more than
two, the disagreement of views, if any, shall be
decided by the vote of the member having the largest
interest. If the interests are equal, it should be decided
by lot. The person having the smallest share in the
ownership shall have one vote; and proportionately
the other part owners as many votes as they have
parts equal to the smallest one. A vessel may not be
detained, attached or levied upon in execution in it
entirety, for the private debts of a part owner, but the
proceedings shall be limited to the interest which the
debtor may have in the vessel, without interfering with
the navigation.
Article 590 of the Code of Commerce provides that
The co-owners of a vessel shall be civilly liable in theproportion of their interests in the common fund, fo
the results of the acts of the captain, referred to in
Article 587.
Article 591 of the Code of Commerce provides that
All the part owners shall be liable, in proportion to
their respective ownership, for the expenses fo
repairing the vessel, and for other expenses which are
incurred by virtue of a resolution of the majority. They
shall likewise be liable in the same proportion for the
expenses for the maintenance, equipment, and
provisioning of the vessel, necessary for navigation.
Article 592 of the Code of Commerce provides that
The resolution of the majority with regard to the
repair, equipment, and provisioning of the vessel in the
port of departure shall bind the minority, unless the
minority members renounce their interests, which
must be acquired by the other co-owners, after a
judicial appraisement of the value of the portion o
portions assigned. The resolutions of the majority
relating to the dissolution of the partnership and sale
of the vessel shall also be binding on the minority. The
sale of the vessel must be made at public auction
subject to the provisions of the law of civil procedure
unless the co-owners unanimously agree otherwise
saving always the right of repurchase and redemption
provided for in Article 575.
Article 593 of the Code of Commerce provides thatThe owners of a vessel shall have preference in he
charter over other persons, under the same conditions
and price. If two or more of them should claim this
right, the one having the greater interest shall be
preferred; and should they have equal interests, the
matter shall be decided by lot.
Article 594 of the Code of Commercestates that: The
co-owners shall elect the manager who is to represen
them in the capaci