Formatted Transportation Law

Transportation law

BarOps Head Acads Head Subject Head

I I I

PY Caunan Beth Liceralde  Justin Christopher C. Mendoza

(based on the outline and class notes from Prof. Rodrigo Lope Quimbo’s Transporation Law class 1st semester, AY 2006–2007)

 TABLE OF CONTENTS I. GENERAL CONSIDERATIONS ........... ....................... ........................ ....................... .................... .............. .......... .......... .......... .......... .......... ....... .. 1 A. PUBLIC U TILITIES............................................................................................................................ 1 B. TRANSPORTATION ............................................................................................................................ ............................................................................................................................3 3

II. COMMON CARRIER CARRIERS S............ ....................... ....................... ........................ ....................... ....................... ...................... ............... .......... .......... ....... .. 11 A. IN GENERAL............................................................................................................................... 11 B. COMMON CARRIAGE OF GOODS......................................................................................................... 13 ART. 361, CODE OF COMMERCE.......................................................................................................... 14  THE MERCHANDISE SHALL BE  TRANSPORTED AT  THE RISK  AND VENTURE OF  THE SHIPPER, IF  THE CONTRARY HAS NOT BEEN EXPRESSLY 14 STIPULATED . ................................................................................................................................... AS A CONSEQUENCE, ALL  THE LOSSES AND DETERIORATIONS WHICH  THE GOODS MAY SUFFER DURING  THE  TRANSPORTATION BY REASON OF FORTUITOUS EVENT , FORCE MAJEURE, OR  THE INHERENT NATURE AND DEFECT OF  THE GOODS, SHALL BE FOR  THE ........................................................................................................14 14 ACCOUNTAND RISK  OF  THE SHIPPER. PROOF OF  THESE ACCIDENTS IS INCUMBENT UPON  THE CARRIER........................................................................... 14 C. COMMON CARRIERS OF PASSENGERS..................................................................................................... 18 D. DAMAGES RECOVERABLE FROM COMMON CARRIERS......... ................. ................ ................ ................ ................ ......................................... .................................21 21

III. CODE OF COMMERCE PROVISIONS ON OVERLAND TRANSPORTATION .................. 25 A. SCOPE OF OVERLAND TRANSPORTATION ............................................................................................... 25 B. NATURE OF CONTRACT .................................................................................................................. 25 C. EFFECT OF CIVIL CODE .................................................................................................................. ..................................................................................................................25 25 D. CONTRACT OF CARRIAGE................................................................................................................. .................................................................................................................25 25 E. RESPONSIBILITY OF  THE CARRIER......................................................................................................... 26 F. RIGHTS AND OBLIGATIONS OF SHIPPER AND/OR CONSIGNEE .......................................................................... 28 G. APPLICABILITY OF PROVISIONS........................................................................................................... 30

IV. ADMIRALTY AND MARITIME COMMERCE ............ ....................... .................... .............. .......... .......... .......... .......... .......... ........ ... 31 A. SOURCES OF MARITIME /ADMIRALTY LAWS IN  THE PHILIPPINES........ ................ ................ ................ ................ ....................................... ...............................31 31 B. CONCEPT OF ADMIRALTY;  JURISDICTION OVER ADMIRALTY CASES...................................................................... ......................................................................31 31 C. VESSELS.................................................................................................................................... ....................................................................................................................................31 31 D. PERSONS PARTICIPATING IN MARITIME COMMERCE........ ................ ................ ................ ................ ................ ............................................ ....................................31 31 E. ACCIDENTS AND DAMAGES IN MARITIME COMMERCE.................................................................................. 39 F. SPECIAL CONTRACTS OF MARITIME COMMERCE....... ................ ................. ................ ................ ................ ................ ........................................ ................................46 46 G. BILL OF LADING........................................................................................................................... ...........................................................................................................................53 53 H. PASSENGERS ON SEA VOYAGE........................................................................................................... ...........................................................................................................54 54 I. CARRIAGE OF GOODS BY SEA ACT (COMMONWEALTH ACT NO. 65; PUBLIC ACT NO. 65; PUBLIC ACT 521, 74 TH US CONGRESS)..................... ............................................ ............................................... ............................................... ............................................... ............................. ........... ............ ......56 56

V. INTERNATIONAL INTERNATIONA L AIR TRANSPORT TRANSPOR T.......... ...................... ........................ ....................... ....................... ........................ ................. ........ ... 65 A. THE WARSAW CONVENTION ............................................................................................................. 65 CHAPTER III - LIABILITY OF  THE CARRIER .................................................................................................. ..................................................................................................65 65 B. APPLICABILITY; MEANING OF INTERNATIONAL  TRANSPORTATION......................................................................... .........................................................................66 66 C. LIABILITIES UNDER  THE CONVENTION .................................................................................................... 66 D. LIMITATIONS ON LIABILITY ................................................................................................................ 67 E. WHEN LIMITATIONS UNAVAILABLE ....................................................................................................... 67 F. CONDITIONS ON LIABILITY................................................................................................................. .................................................................................................................67 67 G. VENUE OF COURT ACTIONS.............................................................................................................. ..............................................................................................................67 67

I. General Considerations Considerations  Transportation  Transportation Law

I. General Considerations A. Public Utilities 1987 Constitution, Article XII Section 11 No fran franch chis ise, e, cert certif ific icate ate,, or any any other other form form of  authorizatio authorization n for the operation operation of a public public utility utility shal hall be gran grante ted d exc except ept to citi itizens zens of the the Phil Philip ippi pine nes s or to corp corpor orati ations ons or asso associ ciat atio ions ns organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizen citizens; s; nor shall shall such such franch franchise ise,, certif certifica icate, te, or author authoriza izatio tion n be exclus exclusive ive in charac character ter or for a longer longer period period than than fifty fifty years. years. Neither Neither shall shall any such franchise or right be granted except under the condit condition ion that it shall shall be subjec subjectt to amendm amendment ent,, altera alteratio tion, n, or repeal repeal by the Congre Congress ss when when the com ommo mon n good good so requi equire res. s. The Sta State sha shall encourage equity participation in public utilities by the genera generall public public.. The partic participa ipation tion of foreig foreign n investors in the governing body of any public utility enterprise enterprise shall be limited limited to their proportionate proportionate shar share e in its capi capital tal,, and and all all the the execu executi tive ve and and mana ma nagi ging ng offi fficers cers of such such corpo orpora rati tio on or association must be citizens of the Philippines. Section 17 In times of national emergency, when the public intere interest st so requir requires, es, the State State may, may, during during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned privately-owned public utility utility or business business affected with public interest. Section 18 The State may, in the interest of national welfare or defense, defense, establish establish and operate operate vital industries industries and, upon payment of just compensation, transfer to publ public ic owne owners rshi hip p utili utiliti ties es and and other other priv privat ate e enterprises to be operated by the Government. Section 19 The State State shall shall regula regulate te or prohib prohibit it monopo monopolie lies s when the public inter terest so requ equires. No comb combin inat atio ions ns in rest restra rain intt of trad trade e or unfa unfair ir competition shall be allowed. The Public Service Law, CA 146, as amended Sec. 13(b) The term term "publi "public c servic service" e" includ includes es every every person person that now or hereafter may own, operate, operate, manage, manage, or cont ontrol in the Philippi ppines, es, for hire or compen com pensat sation ion,, with with genera generall or limited limited cliente clientele, le, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, carrier, railroad, railroad, street railway, railway, traction traction railway, railway, subsub-wa way y mo moto torr vehi vehicl cle, e, eith either er for for frei freigh ghtt or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged engaged in the transp transporta ortatio tion n of passen passengers gers or

UP LAW BAROPS 2007 1 of 71

freight freight or both, shipyard, marine railways, railways, marine repair repair shop, [warehouse] [warehouse] wharf or dock, ice plant, ice-re ice-refri friger gerati ation on plant, plant, canal, canal, irriga irrigatio tion n system, system, gas, gas, electri electric c light, light, heat heat and power power water water supply supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadc broadcast asting ing station stations s and other other simil similar ar public public serv servic ices es:: Prov Provid ided ed,, howe howeve ver, r, That That a pers person on engaged engaged in agricu agricultu lture, re, not otherwi otherwise se a public public serv servic ice, e, who who owns owns a mo moto torr vehi vehicl cle e and and uses uses it person personall ally y and/or and/or enters enters into into a specia speciall contra contract ct whereby said motor vehicle is offered for hire or comp compens ensati ation on to a thir third d party party or third third part partie ies s engaged in agriculture, not itself or themselves a public public service, service, for operat operation ion by the latter for a limited limited time time and for a specif specific ic purpos purpose e directl directly y connected with the cultivation of his or their farm, the transporta transportation, tion, processing, processing, and marketing of  agricultura agriculturall products products of such third party or third part partie ies s shal shalll not not be cons consid ider ered ed as oper operat atin ing g a public service for the purposes of this Act. WHAT IS A PUBLIC UTILITY? Kilusang Mayo Uno Labor Center v. Garcia (1994) Public Public utilities utilities are privately privately owned and operated busine business sses es whose whose servic services es are essent essential ial to the general public. They are enterprises which specially cater to the needs of the public and conduce to their their com comfor fortt and conven convenien ience. ce. As such, such, public public utility utility services services are impressed with public interest and concer concern. n. When, When, therefor therefore, e, one devotes devotes his prop proper erty ty to a use use in whic which h the the publ public ic has has an inter interes est, t, he, he, in effe effect ct gran grants ts to the the publ public ic an interest in that use, and must submit to the control by the public for the common good, to the extent of the interest he has thus created. Albano v. Reyes (1989) Franch Franchise ises s issued issued by Congre Congress ss are not requir required ed before each and every public utility may operate. A public utility is a business or service engaged in regul egula arly rly suppl upplyi ying ng the the publi ublic c with with som ome e commodity commodity or service service of public consequenc consequence, e, such as electricity, gas, water, transportation, telephone or telegraph telegraph services. services. Apart from statutes which define public utilities that are within the purview of  such statutes, it would be difficult to construct a definition of a public utility which would fit every conceivable case. As its name indicates, however, the term public public utility utility implie implies s a public public use and service to the public. WHEN IS A BUSINESS A PUBLIC UTILITY? When it involves a commodity or service of  public consequence. 2

CONCEPTS OF PUBLIC UTILITY UNDER  THE

1987

CONSTITUTION:

1. A public utility is a partly nationalized business endeavor

2. It is a business affected with the public interest. (“na (“natio tiona nall em emer erge genc ncy” y”;;  “common good”)

“gen “gener eral al

welfa welfare re”; ”;

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law 2

TESTS FOR  DETERMINING PUBLIC UTILITY:

1. Is it engaged in regularly supplying the public with some commodity or service (per definition in Albano in Albano v. Reyes below) 2. If #1 is uncer uncerta tain in,, is it a publ public ic servi service ce as defined in the Public Service Law under CA 146 Sec 13(b) 13(b)? ? If it falls falls under under any one of the the examples given under CA 146 Sec 13(b), then it is a public utility. WHAT DOES “REGULARLY SUPPLYING THE PUBLIC…” MEAN? The utility must hold itself out to the public as a public utility by demand and as a matter of right, and and not not by perm permiission sion.. To dete deterrmin mine wha what cons onstitu titute tes s regu regullari arity, ty, look ook at it from from the the perspective of the public, and not the operator. It is a serv servic ice e or a read readin ines ess s to serv serve e an indefinite indefinite portion of the population subject subject only to the limitations of the service as given by the grant such that [the utility] incurs a liability as a violation of its duty if it refuses, such that the availment of  the service has become, through time, a matter of  right and not of mere privilege. privilege. (also in US v. Tan Piaco) Piaco) ARE

ALL PUBLIC UTILITIES COMMODITIES OR  SERVICE OF PUBLIC

CONSEQUENCE? Yes. es. All public util tilities ties have a public consequence. But not all businesses bearing public consequence consequence are public public utilities. utilities. This is because because almost almost all types types of busine business ss have have som some e form form of  regulation from the State.

TO

“PUBLIC” REFER  TO? IS THE WORD “PUBLIC” “PUBLIC UTILITY” THE SAME IN “PUBLIC SERVICE”? There are three senses of the word “public” in Transp Transport ortati ation on Law: Law: a) public public utility ; b) publ public ic service; service; and and c) defi defini niti tion on of a comm common on carr carrier ier under Art. 1732 of the Civil Code. To determi determine ne a public public utility , the two tests abov above e & the the defin definit itio ion n under under   Alban Albano o v. Reyes Reyes apply. WHOM DOES IN

WHAT IS A PUBLIC SERVICE? Kilusang Mayo Uno Labor Center v. Garcia Jr. (1994) In determining public need, the presumption of need for a service shall be deemed in favor of  the applicant. The burden of proving that there is no need for a proposed service shall be with the oppositor(s). Public Public convenience convenience and necessity necessity exists when the proposed facility or service meets a reasonable want of the public and supply a need which the existi existing ng facil faciliti ities es do not adequa adequately tely supply supply.. The existence existence or nonexistence nonexistence of public public convenience convenience and necessity is therefore a question of fact that must must be estab establi lish shed ed by eviden evidence ce,, real real and/ and/or or testim testimoni onial; al; empir empirica icall data; data; statis statistic tics s and such such othe otherr me mean ans s nece necess ssar ary, y, in a publ public ic hear hearin ing g cond conduc ucte ted d for for that that purp purpos ose. e. The The obje object ct and and purpose of such procedure, among other things, is to look out for, and protect, the interests of both the public and the existing transport operators.

UP LAW BAROPS 2007 2 of 71

Albano v. Reyes (1989) Fran Franch chis ises es issu issued ed by Cong Congre ress ss are are not not required before each and every public utility may operate. A publ public ic util utilit ity y is a busi busine ness ss or serv servic ice e engaged engaged in regula regularly rly supply supplying ing the public public with some commodity or service of public consequence, such such as electri electricit city, y, gas, gas, water, water, transp transport ortati ation, on, tel telepho ephone ne or tele telegr grap aph h serv servic ices es.. Apar Apartt from from statutes which define public utilities that are within the purview of such statutes, it would be difficult to construct a definition of a public utility which would fit every conceivable case. As its name indicates, however, the term public utility implies a public use and service to the public. Tatad v Garcia What What consti constitut tutes es a public public utilit utility y is not their their ownership but their use to serve the public.

PAL v. Civil Aeronautics Board (1997) WON “certificates of Public Convenience and Necessity” (franchise required) as used in RA 776 to author thoriize the Boar oard is differen erentt from  “Certific  “Certificates ates of Public Public Convenience Convenience”” (no franchis franchise e required)? No There is no authoritative basis in distinguis distinguishing hing a Certifica Certificate te of Public Public Convenience Convenience and Necessity (franchise required) and a Certificate of Publ Public ic Conv Conveni enienc ence e (no (no fran franch chis ise e requ requir ired) ed) based only on the use of the words convenience and necessity. The use of the word “necessity” in conj conjun unc ction tion with with “pub “publi lic c conv conven enie ienc nce” e” in a certificate of authorization to a public service entity to operate, does not in any way modify the nature of such certification, or the requirements for the iss issuanc uance e of the the sam ame. e. It is the the law whi which determines the requisites for the issuance of such cert certif ific icati ation, on, and and not not the the title title indi indica cati ting ng the the certificate. WHAT WHAT

IS THE THE DIF DIFFERE FEREN NCE BETW BETWEE EEN N A PUBLI BLIC UT UTI ILITY AND A PUBL UBLIC SERVICE?

For all intent intents s and purposes purposes,, they are the same and are used interchangeably. However, However, public public utility utility is a broader concept concept that embraces public service. service. A public service service is necessarily a public utility, but not all public utilities are public services. WHEN IS A PUBLIC UTILITY NOT A PUBLIC SERVICE? If it is not included in the enumeration in the Public Service Act (CA 146 Sec. 13(b)) and  Albano v. Reyes. Reyes. HOW DO THEY DIFFER IN CONSTITUTIONAL RESTRICTIONS AND REQUIREMENTS? If a busi busines ness s is a publ public ic utili utility, ty, then it is subject to the limitations and restrictions provided for for in the the 1987 1987 Con Consti stituti tution on (Ar (Art 12 Sec Secs. 11,17,18,19) Since a public service is necessarily a public utility, therefore public services are subject

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law to the the same same Cons Consti titu tuti tion onal al limi limita tati tion ons s and and restrictions. If a public utility is not a public service, it is still subject to the same Constitutional limitations and restrictions. Therefore, public utility = Constitution public public service service = Constitution Constitution + Public Public Service Act

B. Transportation DEFINITION The movement of goods or persons from one plac place e to anot anothe her, r, by a carr carrie ier. r. (Bla (Black ck’s ’s Law Law Dictionary) A contract of transportati transportation on is one whereby a certain certain person person or association association of persons persons obligate obligate themselves to transport persons, things, news from one place place to another another for a fixed price. price. It is the remova removall of goods goods or person persons s from from one place to another.

PUBLIC NATURE It is for public use, which means that the use is not confin confined ed to privil privileged eged indivi individua duals, ls, but is inst instead ead open open to an indef indefin init ite e publ public ic.. It is this this indefinite indefinite or unrestrict unrestricted ed quality quality that gives it its public public charac character. ter. The true true criteri criterion on by which which to  judge the character of the use is whether the public may enjoy it by right or by permission. There must be, in general, a right under the law which compels the the owne ownerr to give give the the serv servic ice e for for the the gener general al public. PUBLIC SERVICE ACT THE PUBLIC SERVICE LAW (CA 146) (As amended, and as modified particularly by PD No. 1, Integrated Reorganization Plan and EO 546) CHAPTER I ORGANIZATION SECTION 1 This Act shall be known as the "Public Service Act." SECTION 2 There is created under the Department of Justice a commission which shall be designated and known as the Public Service Commission, composed of one Public Public Servic Service e Commis Commissi sioner oner and five five Associ Associate ate Commissioners, and which shall be vested with the powers and duties hereafter specified. specified. Whenever Whenever the word "Commission" is used in this Act, it shall be held to mean the Public Service Commission, and whenever the word "Commissioner" is used in this Act it shall shall be held to mean the Public Public Service Comm Commiissi ssioner oner or anyon nyone e of the the Ass Associa ociate te Commission Commissioners. ers. The Public Public Service Service Commissio Commissioner ner and the Associate Associate Public Public Service Service Commission Commissioners ers shall be natural born citizens and residents of the Philippines, not under thirty years of age; members of the Bar of the Philippines, with at least five years

UP LAW BAROPS 2007 3 of 71

of law practice or five years of employment in the government service requiring a lawyer's diploma; and shall be appoin appointed ted by the President President of the Philippines, with the consent of the Commission on Appointments of the Congress of the Philippines: Provided, however, That the present Commissioner and the personnel of the Commission shall continue in office without the necessity of re-appointment. The The Comm Commis issi sion oner ers s shal shalll have have the the rank rank and and privilege of retirement of Judges of the Courts of  First Instance. (As amended by Republic Act Nos. 178 and 2677) SECTION 3 The Commission Commissioner er and Associate Associate Commissioner Commissioners s shall hold office until they reach the age of seventy years, years, or until until removed removed in accord accordanc ance e with with the procedures prescribed in section one hundred and seven seventyty-thr three ee of Act Act Numb Number ered ed Twen Twentyty-se seve ven n hund hundre red d and and elev eleven en,, know known n as the the Revi Revise sed d Administrative Code: Provided, however, That upon reti retire reme ment nt any any Comm Commis issi sion oner er of Asso Associ ciat ate e Commis Commissio sioner ner shall shall be entitl entitled ed to all retirem retirement ent benefits and privileges for Judges of the Courts of  First Instance or under the retirement law to which he may be entitled on the date of his retirement. In case of the absence, for any reason, of the Public Service Commissioner, the Associate Commissioner with with seni eniorit ority y of app appoint ointm ment ent shal hall act act as Commissioner. If on account of absence, illness, or inca incapa paci city ty of any any of three three Comm Commis issi sion oner ers, s, or whenever by reason of temporary disability of any Commissioner Commissioner or of a vacancy vacancy occurring occurring therein, therein, the requisite number of Commissioners necessary to render a decision or issue an order in any case is not present, or in the event of a tie vote among the Comm Commis issi sion oner ers, s, the the Secr Secreta etary ry of Just Justic ice e ma may y designate such number of Judges of the Courts of  First Instance, or such number of attorneys of the lega legall divi divisi sion on of the the Comm Commis issi sion on,, as ma may y be necessary to sit temporarily as Commissioners in the Public Service Commission. The Public Service Commission shall sit individually or as a body en banc or in two divisions of three Commissioners ers each. The Public Serv ervice Commissioner shall preside when the Commission sits sits en banc banc and in one divi divisi sion on.. In the the other other division, the Associate Commissioner with seniority of appointment in that division shall preside. Five Comm Commis issi sion oner ers s shal shalll cons consti titu tute te a quor quorum um for for sessi sessions ons en banc banc and two Commis Commissio sioner ners s shall shall constitute a quorum for the sessions of a division. In the absence of a quorum, the session shall be adjourned until the requisite number is present. All the powers herein vested upon the Commission shal shalll be consi onside dere red d vest vested ed upon upon any any of the the Commissioners, acting either individually or jointly as hereinafter provided. The Commissioners shall equitabl equitably y divide divide amo among ng themsel themselves ves all pendin pending g cases and those that may hereafter be submitted to the Commissioner, in such manner and form as they may determine, and shall proceed to hear and determi determine ne the case assigned assigned to each each or to their their respective divisions, or to the Commission en banc as foll follow ows: s: unco uncont ntes ested ted case cases, s, exce except pt thos those e pertaining to the fixing of rates, shall be decided by one Commissioner; contested cases and all cases involving the fixing of rates shall be decided by the

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law Commission in division and the concurrence of at least two Commission Commissioners ers in the division division shall be necess necessary ary for the promul promulgati gation on of a decisio decision n or non-interlo non-interlocutor cutory y order in these cases: Provided, Provided, however, That any motion for reconsideration of a dec decisi ision or nonnon-iinter terloc locutor utory y orde orderr of any any Commissioner or division shall be heard directly by the Commission en banc and the concurrence of at least four Commissioners shall be necessary for the promulgation promulgation of a final decision decision or order resolving resolving such motion for reconsideration. (As amended by Republic Act Nos. 723 and 2677) SECTION 4 The Public Service Commissioner shall receive an annual compensation of thirteen thousand pesos; and and each each of the the Asso Associ ciat ate e Comm Commis issi sion oner ers s an annual annual com compens pensati ation on of twelve twelve thousa thousand nd pesos. pesos. The Commissioners shall be assisted by one chief  attorney, attorney, one finance finance and rate regulation officer, officer, one chief chief utilit utilities ies regula regulatio tion n enginee engineer, r, one chief  chief  accountant, accountant, one transportati transportation on regulation regulation chief, chief, one secretary of the Public Public Service Service Commissio Commission, n, and three public utilities advisers who shall receive an annu annual al comp compen ensa sati tion on of not not less less than than ten thousand eight hundred pesos each; five assistant chie chiefs fs of divi divisi sion on who who shal shalll rece receiv ive e an annu annual al compensation of not less than nine thousand six hundred hundred pesos each; twelve attorneys who shall receive an annual compensation of not less than nine nine thousa thousand nd pesos pesos each; each; and a techni technical cal and confidential staff to be composed of two certified publ public ic acco accoun unts ts,, two two elec electr tric ical al engi engine neer ers, s, two two mechanical or communication engineers, and two specia speciall assist assistant ants s who shall shall receiv receive e an annual annual compensation of not less than seven thousand two hundred pesos each. (As amended by Republic Act Nos. 723, 2677 and 3792) SECTION 5 The Public Public Servic Service e Commis Commissio sioner ner,, the Associ Associate ate Public Service Commissioners, and all other officers and employees of the Public Service Service Commissio Commission n shall enjoy the same privileges and rights as the officer and employees of the classified civil service of the Government of the Philippines. They shall also be entitled to receive from the Government of  the Philippines their necessary travelling expenses while travelling on the business of the Commission, which which shall shall be paid paid on proper proper vouche voucherr therefo therefor, r, approved by the Secretary of Justice, out of funds approp appropria riated ted for the contin contingen gentt expense expenses s of the Commission. When the exigency of the service so requires and with the approval of the Secretary of Justice, and subjec subjectt to the provis provision ions s of Common Commonwea wealth lth Act Numbere Numbered d Two hundre hundred d forty-s forty-six, ix, as amended amended,, funds funds may be set aside aside from from the approp appropria riatio tions ns provided for the Commission and/or from the fees collected under Section forty of this Act to defray the expenses to be incurred by the Public Service Commissioner or any of the Associate Comm Commis issi sione oners rs,, offi office cers rs or em empl ploye oyees es of the the Commission to be designated by th e Commissioner, with the approval of the Secretary of Just Justic ice, e, in the the stud study y of mo mode dern rn tren trends ds in supervision and regulation of public services. (As amended by Republic Act No. 3792)

UP LAW BAROPS 2007 4 of 71

SECTION 6 The Secretary of Justice, Justice, upon recommendation recommendation of  the Public Service Commissioner, shall appoint all subo suborrdina dinate te off officer icers s and em empl ploy oyee ees s of the the Commission as may be provided in the Appropriation Act. The Public Service Commissioner shall have general executive control, direction, and supervision over the work of the Commission and of its members, body and personnel, and over all administra administrative tive business. business. (As amended amended by Republic Republic Act Nos. 178 and 3792) SECTION 7 The The Secr Secreta etary ry of the the Comm Commis issi sion, on, under under the the direction of the Commissioner, shall have charge of  the administrative business of the Commission and shall perform such other duties as may be required of him. him. He shal shalll be the the reco record rder er and and offi offici cial al reporter of the proceedings of the Commission and shal shalll have have auth author orit ity y to admi admini nist ster er oath oaths s in all all matt ma tter ers s comi coming ng under under the the juri jurisd sdic icti tion on of the the Comm Commis issi sion on.. He shal shalll be the the cust custod odia ian n of the the records, maps, profiles, tariffs, itineraries, reports, and any other documents and papers filed with the Commission or entrusted to his care and shall be responsible therefor to the Commission. He shall have authority to designate from time to time any of his delegates to perform the duties of Deputy Secretary with any of the Commissioners. SECTION 8 The Commission shall furnish the Secretary such of  its findings and decisions as in its judgment may be of gene genera rall publ public ic inter interes est; t; the the Secre Secretar tary y shal shalll compile compile the same for the purpose of publication publication in a series of volumes to be designated "Reports of  the Public Service Commission of the Philippines," which shall be published in such form and manner manner as may be best adapted for public information and use, use, and such such author authorize ized d publica publication tions s shall shall be competent evidence of the reports and decisions of  the Commis Commissio sion n therein therein contai contained ned withou withoutt any further proof or authentication thereof. SECTION 9 No member or employee of the Commission shall have any official or professional relation with any public service as herein defined, or hold any office of prof profit it or trus trustt with with the the Gover Governm nmen entt of the the Philippines. SECTION 10 The Commission shall have its office in the City of  Man Manila or at such other place as may be des designa ignate ted, d, and ma may y hol hold hear earings ngs on any any proceedings at such times and places, within the Philippines, as it may provide by order in writing: Provided, That during the months of April and May of each year, at least three Commissioners shall be on vacation in such manner that once every two years at least three of them shall be on duty during April April and May: Provid Provided, ed, however however,, That That in the interest of public service, the Secretary of Justice may require any or all the Commissioners not on duty to render services and perform their duties duri during ng the the vaca vacati tion on mo month nths. s. (As am amen ended ded by Republic Act Nos. 176 and 3792)

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law SECTION 11 The Commiss Commission ion shall shall have have the power to make make need needfu full rule rules s for for its its Gove Govern rnme ment nt and and othe otherr proceedings not inconsistent with this Act and shall adopt a common seal, and judicial notice shall be taken for such seal. True copies of said rules and other amendments shall be promptly furnished to the the Bure Bureau au of Prin Printi ting ng and and shal shalll be fort forthw hwith ith published in the Official Gazette. SECTION 13 (a) The The Commi Commiss ssio ion n shal shalll have have juri jurisd sdic icti tion, on, supervisi supervision, on, and control control over all public public services services and and thei theirr fran franch chis ises es,, equi equipm pmen ent, t, and and othe other  r   properties, and in the exercise of its authority, it  shall have the necessary powers and the aid of the  public force: Provided, That public services owned  or operated by government entities or   government-owned or controlled corporations shall  be regulated by the Commission in the same way  as privately-owned public services, but certificates of public public conven convenie ience nce or certif certifica icates tes of public  public  convenience and necessity shall not be required of  such such enti entiti ties es or corp corpor orat atio ions ns:: And And prov provid ided ed,, further, That it shall have no authority to require steamb steamboat oats, s, motor motor ships ships and steams steamship hip lines, lines, whether privately-owned, or owned or operated by  any any Gove Govern rnme ment nt cont contro roll lled ed corp corpor orat atio ion n or  inst instru rume ment ntal alit ity y to obta obtain in cert certif ific icat ate e of publ public  ic  convenience or to prescribe their definite routes or  lines of service. (b) The The term term "pub "publi lic c serv servic ice" e" incl includ udes es ever every  y    person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or  compensat compensation, ion, with general general or limited limited clientel clientele, e, whether permanent, occasional or accidental, and  done for general general business purposes, purposes, any common carrier, carrier, railroad, railroad, street street railway, railway, traction traction railway, railway, sub-w sub-way ay moto motorr vehi vehicl cle, e, eith either er for for frei freigh ghtt or   passenger, or both with or without fixed route and  whether may be its classification, freight or carrier  service of any class, express service, steamboat or  steamship line, pontines, ferries, and water craft, engage engaged d in the transp transport ortati ation on of passen passenger gers s or  freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refri ice-refrigerat geration ion plant, plant, canal, canal, irrigation irrigation system, system, gas, electric electric light, heat and power water water supply  and power, petroleum, sewerage system, wire or  wireless communications system, wire or wireless broadc broadcast asting ing statio stations ns and other other simil similar ar public  public  serv servic ices es:: Prov Provid ided ed,, howe howeve ver, r, That That a pers person on engage engaged d in agric agricult ulture ure,, not otherw otherwise ise a public  public  servic service, e, who owns a motor motor vehicl vehicle e and uses it    personall personally y and/or enters enters into a special special contract  contract  whereby said motor vehicle is offered for hire or  compen compensat sation ion to a third third party party or third third partie parties s engaged in agriculture, not itself or themselves a   publi public c servic service, e, for operatio operation n by the latter latter for a limite limited d time time and for a specif specific ic purpos purpose e direct directly  ly  connected with the cultivation of his or their farm, the transporta transportation tion,, processing processing,, and marketing marketing of  agricultu agricultural ral products of such third party or third    parti parties es shall shall not be consid considere ered d as operat operating ing a  public service for the purposes of this Act. (c) The word "person" includes every individual individual,, co-p o-partnership, joint-st -stock ock company or 

UP LAW BAROPS 2007 5 of 71

corpor corporati ation, on, whethe whetherr domest domestic ic or foreig foreign, n, their  their  lessee lessees, s, trust trustee ees, s, or receiv receivers ers,, as well well as any  municipality, province, city, government-owned or  con control trolle led d corpo orporration tion,, or agen agenc cy of the Government of the Philippines, and whatever other    perso persons ns or entit entities ies that may own or posses possess s or  operate public services. (As amended by Com. Act  454 and RA No. 2677) SECTION 14 The following are exempted from the provisions of  the preceding section: (a) Warehouses; (b) Vehicles drawn by animals and bancas moved  by oar or sail, and tugboats and lighters; (c)   Air Airsh ship ips s with within in the the Phil Philip ippi pine nes s exce except pt as rega regard rds s the the fixi fixing ng of thei theirr maxi maximu mum m rate rates s on freight and passengers; (d) Radio companies companies except with respect respect to the fixing of rates; (e) Public Public services services owned owned or operat operated ed by any  instrumentality of the National Government or by  any government-owned or controlled corporation, exce except pt with with resp respec ectt to the the fixi fixing ng of rate rates. s. (As amended by Com. Act 454, RA No. 2031, and RA No. 2677) SECTION 15  With With the except exception ion of those those enumer enumerate ated d in the  preceding section, no public service shall operate in the Philip Philippin pines es withou withoutt posses possessin sing g a valid valid and  subs subsis isti ting ng cert certif ific icat ate e from from the the Publ Public ic Serv Servic ice e Comm Commis issi sion on know known n as "cer "certi tifi fica cate te of publ public  ic  convenience," or "certificate of public convenience and necessity," as the case may be, to the effect  tha that the the oper operat atio ion n of said aid servi ervice ce and the author authoriza izatio tion n to do busine business ss will will promot promote e the  public interests in a proper and suitable manner. The Commission may prescribe as a condition for  the issuan issuance ce of the certif certific icate ate provid provided ed in the the   pre prece cedi ding ng para paragr grap aph h that that the the serv servic ice e can can be acquired by the Republic of the Philippines or any  instrumentality thereof upon payment of the cost    price price of its useful useful equipm equipment ent,, less less reason reasonabl able e depreciation; and likewise, that the certificate shall  be valid only for a definite period of time; and that  the the viol violat atio ion n of any any of thes these e cond condit itio ions ns shal shall  l    pro produ duce ce the the imme immedi diat ate e canc cancel ella lati tion on of the the certific certificate ate without the necessity necessity of any express express action on the part of the Commission. In estimati estimating ng the depreciation, depreciation, the effect effect of the use of the equipment, its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration. The The fore forego goin ing g is like likewi wise se appl applic icab able le to any  any  extension or amendment of certificates actually in force and to those which may hereafter be issued, to permit to modify itineraries and time schedules of public services, and to authorizations to renew  and increase equipment and properties. SECTION 16 Proceeding Proceedings s of the Commission, Commission, upon notice and  hearing. - The Commission shall have power, upon  proper notice and hearing in accordance with the rules rules and provision provisions s of this this Act, Act, subjec subjectt to the

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law limitatio limitations ns and exceptions exceptions mentioned mentioned and saving saving  provisions to the contrary: (a) To issue certificates which shall be known as certificates of public convenience, authorizing the operation operation of public public service service within within the Philippin Philippines es whenever the Commission finds that the operation of the public service proposed and the auth author oriz izat atio ion n to do busi busine ness ss will will prom promot ote e the the   public public interest interest in a proper proper and suitable manner. manner. Provid Provided, ed, That That therea thereafte fter, r, certif certifica icates tes of public  public  convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or jointstock companies constituted and organized under  the laws of the Philippines; Provided, That sixty per  centum of the stock or paid-up capital of any such corporatio corporations, ns, co-partners co-partnership, hip, associati association on or jointjointstock company must belong entirely to citizens of  the Philippines or of the United States: Provided, further, That no such certificates shall be issued for  a period of more than fifty years. (b) To appr approv ove, e, subj subjec ectt to cons consti titu tuti tion onal  al  limitations any franchise or privilege granted und er  the provisions of Act No. Six Hundred and Sixtyseven, as amended by Act No. One Thousand and  twenty twenty-tw -two, o, by any politi political cal subdiv subdivisi ision on of the Phil Philip ippi pine nes s when when,, in the judg judgme ment nt of the Comm Commis issi sion, on, such such fran franch chis ise e or priv privil ileg ege e will  will    proper properly ly conser conserve ve the public public inter interes ests, ts, and the Commis Commissi sion on shall shall in so approv approving ing impose impose such such cond condit itio ions ns as to cons constr truc ucti tion on,, equi equipm pmen ent, t, maintenanc maintenance, e, service, service, or operation operation as the public  interests and convenience may reasonably require, and to issue certificates of public convenience and  necessity when such is required or provided by any  law or franchise. (c) To fix and determine determine individual individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and  othe otherr spec specia iall rate rates s whic which h shal shalll be impo impose sed  d  observ observed ed and follow followed ed there thereaft after er by any public  public  service: Provided, That the Commission may, in its disc discre reti tion, on, appr approve ove rate rates s propo propose sed d by publ public  ic  services provisionally and without necessity of any  hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipm equipment ent of an opera operator tor is used used princi principal pally ly or  secondarily for the promotion of a private business, the net profit profits s of said said privat private e busine business ss shall shall be considered considered in relation relation with the public service service of  such operator for the purpose of fixing the rates. (d) To fix fix jus just and and reas reason onab able le stan standa dard rds, s, classifications, regul gulations, practices, measurement, or service to be furnished, imposed, observed, observed, and followed followed thereafter thereafter by any public  public  service. (e) To ascertain and fix adequate and serviceable stan standa dard rds s for for the the meas measur urem emen entt of quan quanti tity ty,, quality, pressure, initial voltage, or other condition  pertaining to the supply of the product or service rendered by any public service, and to prescribe reasonable reasonable regulations regulations for the examinati examination on and  test test of such such prod produc uctt or serv servic ice e and and for for the the measurement thereof.

UP LAW BAROPS 2007 6 of 71

(f) To estab establis lish h reason reasonabl able e rules, rules, regula regulatio tions, ns, instru instructi ctions ons,, specif specifica icatio tions, ns, and standa standards rds,, to secure the accuracy of all meters and appliances for measurements. (g) To compel any public service to furnish safe, adeq adequa uate te,, and and prope properr serv servic ice e as rega regard rds s the the mann manner er of furn furnis ishi hing ng the the same same as well well as the the main mainte tena nanc nce e of the the nece necess ssar ary y mate materi rial al and  and  equipment. (h) To requir require e any public public servi service ce to establ establis ish, h, construct construct,, maintain, maintain, and operate operate any reasonable reasonable extens extension ion of its existi existing ng facili facilitie ties, s, where where in the   judgment judgment of said Commission, Commission, such extension extension is reas reason onab able le and and prac practi tica cabl ble e and and will will furn furnis ish h sufficient business to justify the construction and  maintenance of the same and when the financial  condit condition ion of the said said public public servic service e reason reasonabl ably  y  warr warran ants ts the the orig origin inal al expe expend ndit itur ure e requ requir ired ed in making and operating such extension. (i) To direct any railroad, street railway or traction company to establish and maintain at any junction or point point of connec connectio tion n or inters intersect ection ion with with any  other line of said road or track, or with any other  line of any other railroad, street railway or traction to promote, such just and reasonable connection as shall be necessary to promote the convenience of shippers of property, or of passengers, and in like manner direct any railroad, street railway, or  traction company engaged in carrying merchandise, to construct, maintain and operate, upon reasonable terms, a switch connection with any private sidetrack which may be constructed by  any shippe shipperr to connec connectt with with the railro railroad, ad, street  street  railwa railway y or tract traction ion compan company y line line where, where, in the   judgment of the Commission, such connection is reasonable and practicable and can be out in with safety and will furnish sufficient business to justify  the construction and maintenance of the same. (j) To authorize authorize,, in its discretion, discretion, any railroad, railroad, street railway or traction company to lay its tracks across across the track tracks s of any other other railro railroad, ad, stree street  t  railway or traction company or across any public  highway. (k) To dire direct ct any any rail railro road ad or stre street et rail railwa way  y  company company to install install such safety safety devices or about  such such other other reason reasonabl able e measur measures es as may in the  judgment of the Commission be necessary for the  protection of the public are passing grade crossing of (1) public public highways highways and railro railroads ads,, (2) public  public  highways and streets railway, or (3) railways and  street railways. (l) To fix and determine proper and adequate rates of depr deprec ecia iati tion on of the the prop proper erty ty of any any publ public  ic  servic service e which which will will be observ observed ed in a proper proper and  adequate depreciation account to be carried for the  protection of stockholders, bondholders or creditors in acc accord ordanc ance e with with such such rules, rules, regula regulatio tions, ns, and  form of account as the Commission may prescribe. Said Said rate rates s shal shalll be suff suffic icie ient nt to prov provid ide e the the amounts required over and above the expense of  maintenance to keep such property in a state of  effici efficienc ency y corres correspon pondin ding g to the progre progress ss of the indust industry. ry. Each Each public public servic service e shall shall confor conform m its depreciation accounts to the rates so determined  and and fixe fixed, d, and and shal shalll set set asid aside e the the mone moneys ys so  provided for out of its earnings and carry the same in a depr depre eciation fund. The income from investments of money in such fund shall likewise

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law be carried carried in such fund. This fund shall shall not be expe expend nded ed othe otherw rwis ise e than than for for depr deprec ecia iati tion on,, improveme improvements, nts, new construct construction, ion, extension extensions s or  conditions to the properly of such public service. (m) To amen amend, d, modif modify y or revo revoke ke at any any time time certificate issued under the provisions of this Act, whenev whenever er the facts facts and circum circumsta stance nces s on the the strength of which said certificate was issued have been misrepresented or materially changed. (n) To suspend or revoke any certific certificate ate issued  under under the provisio provisions ns of this this Act whenev whenever er the hold holder er ther thereo eoff has has viol violat ated ed or will willfu full lly y and  and  contumaciously refused to comply with any order  rule rule or regu regula lati tion on of the the Comm Commis issi sion on or any  any    pr provi ovision sion of this his Act: Act: Prov Provid ided ed,, That hat the Commis Commissi sion, on, for good cause, cause, may prior prior to the hearing suspend for a period not to exceed thirty  days any certificate or the exercise of any right or  authority issued or granted under this Act by order  of the Commission, whenever such step shall in the  judgment of the Commission be necessary to avoid  serious and irreparable damage or inconvenience to the public or to private interests. (o) To fix, fix, dete determ rmin ine, e, and and regu regula late te,, as the the convenien convenience ce of the state state may require, a special  special  type for auto-busses, trucks, and motor trucks to be hereafter constructed, purchased, and operated  by operators after the approval of this Act; to fix  and determine a special registration fee for autobuses, buses, trucks, trucks, and motor trucks so construct constructed, ed,   purchased and operated: Provided, That said fees shall be smaller than more those charged for autobusses busses,, truck trucks, s, and motor motor trucks trucks of types types not  made regulation under the subsection. SECTION 18 It shal shalll be unla unlawf wful ul for for any any indi indivi vidu dual al,, coco partnership, association, corporation or joint-stock  compan company, y, their their lessee lessees, s, truste trustees es or receiv receivers ers appo appoin inte ted d by any any cour courtt what whatso soev ever er,, or any  any  municipality, province, or other department of the Govern Governmen mentt of the Philip Philippin pines es to engage engage in any   public service business without having first secured  from from the the Comm Commis issi sion on a cert certif ific icat ate e of publ public  ic  convenien convenience ce or certific certificate ate of public public convenien convenience ce and necessity as provided for in this Act, except  gran grante tees es of legi legisl slat ativ ive e fran franch chis ises es expr expres essl sly  y  exempting such grantees from the requirement of  securing a certificate from this Commission as well  as conc concer erns ns at pres presen entt exis existi ting ng expr expres essl sly  y  exempted from the jurisdiction of the Commission, either totally or in part, by the provisions of section thirteen of this Act. SECTION 19 Unlawful Acts. - It shall be unlawful for any public  service: (a) To provid provide e or mainta maintain in any service service that that is unsafe unsafe,, improp improper, er, or inadeq inadequat uate e or withho withhold ld or  refu refuse se any any serv servic ice e whic which h can can reas reason onab ably ly be demanded and furnished, as found and determined  by the Commission in a final order which shall be conclusive and shall take effect in accordance with this Act, upon appeal of otherwise. (b) To make or give, directly or indirectly, by itself  or through its agents, attorneys or brokers, or any  of them, discounts or rebates on authorized rates, or grant credit for the payment of freight charges,

UP LAW BAROPS 2007 7 of 71

or any any undu undue e or unre unreas asona onabl ble e pref prefer eren ence ce or  advantage to any person of corporation or to any  locality or to any particular description of traffic or  serv servic ice, e, or subj subjec ectt any any part partic icul ular ar pers person on or  corporation or locality or any particular description of traffic to any prejudice or disadvantage in any  respect whatsoever; to adopt, maintain, or enforce any regulatio regulation, n, practice practice or measurem measurement ent which which shall be found or determined by the Commission to be unjust, unjust, unreasona unreasonable, ble, unduly preferen preferential tial or  unjustly discriminatory in a final order which shall  be conclusive and shall take effect in accordance with with the provisi provisions ons of this this Act, Act, upon upon repeal repeal or  otherwise. (g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates, privileges, or  rights or any part thereof; or merge or consolidate its property, franchises privileges or rights, or any   part thereof, with those of any other public service. The approval herein required shall be given, given, after  after  noti notice ce to the the publ public ic and and hear hearin ing g the the pers person ons s interested at a public hearing, if it be shown that  there are just and reasonable grounds for making the mortgaged or encumbran encumbrance, ce, for liabiliti liabilities es of  more more than han one one year year matur aturiity, ty, or the sale, ale, alienation alienation,, lease, lease, merger, merger, or consolidat consolidation ion to be approved, and that the same are not detrimental  to the public interest, and in case of a sale, the date date on which which the same is to be consum consummat mated  ed  shall be fixed in the order of approval: Provided, however, however, that nothing nothing herein herein contained contained shall be construed construed to prevent prevent the transaction transaction from being being negotiated or completed before its approval or to  prevent the sale, alienation, or lease by any public  service of any of its property in the ordinary course of its business. (h) To sell or register in its books the transfer or  sale of shares of its capital stock, if the result of  that that sale sale in itself itself or in connec connectio tion n with with anothe another  r    previous previous sale, shall be to vest in the transfere transferee e more more than than forty forty per centu centum m of the subscrib subscribed  ed  capital of said public service. Any transfer made in violation of this provision shall be void and of no effect and shall not be registered in the books of  the public public servic service e corpor corporati ation. on. Nothin Nothing g herein herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by Com.  Act No. 454.) (i) To sell, sell, aliena alienate te or in any manner manner transfer  transfer  shares of its capital stock to any alien if the result result of that sale, sale, alienation, alienation, or transfer transfer in itself itself or in connectio connection n with another previous previous sale shall be the reduction to less than sixty    per centum of the capital stock belonging to Philip Philippin pine e citize citizens. ns. Such Such sale, sale, aliena alienatio tion n or  transfer shall be void and of no effect and shall  be sufficient cause for ordering the cancellation of the certificate. certificate. Y Transit v. NLRC The sale, alienation or other encumbrance of a public public service service operator’s operator’s properties requires the prev previo ious us appr approv oval al and and auth author oriz izat atio ion n of the the Commission. NOTE: NOTE: The Public Public Servic Service e Commis Commissio sion n does does not exis existt anym anymor ore. e. It is now now the the Depa Depart rtme ment nt of  Transportation and Communications.

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law THE CERTIFICATE OF PUBLIC CONVENIENCE (CPC); THE CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY ULE (CPCN) AND THE PRIOR  OPERATOR  R ULE Does the sale of a CPC, CPCN or other properties of  the public utility have to be approved before it is sold to a third person? No. The approval of the sale of CPCs, CPCNs or other other proper properties ties does not affect affect the validi validity ty (perfection) of the sale between the parties as long as all the elements of a contract are met. This only affectes the relation of the parties to the DOTC or to 3 rd parties. If there is no approval, then the sale does not bind the DOTC or 3 rd partie parties. s. The controlling factor therefore is the registration. If a stockh stockhold older er of a public public utility utility transf transfers ers his rd stock to the 3 person, is there a need to obtain the approval of the DOTC? It depen depends ds.. If the the tran transf sfer er resu result lts s in the the transferee owning more than 40% of the stock of  the public utility, utility, then the approval approval of the DOTC is needed. When must the approval of the DOTC be secured? Before or after the execution of the contract. What if the transferree is an alien? VOID. An alien cannot own more than 40% of  the stock of a public utility.

a mere mere licens license e or privilege privilege.. ( Pantra Pantranco nco v. PSC ) Such privilege is forfeited when the grantee fails to comply with his commitments to serve the public and public public necessity. necessity. However, However, these certifica certificates tes represent property rights to the extent that if the rights which any public utility is exercising pursuant to the lawful orders of the PSC (now DOTC) has been been invad nvaded ed by anoth nother er publ publiic uti utility lity,, in appropriate cases, actions may be maintained by the complainant public utility. Which public utilities are exempted from getting a CPC? The Public Service Law, Sec. 14 The following are exempted from the provisions of  the preceding section: (a) Warehouses; (b) Vehicles drawn by animals and bancas moved  by oar or sail, and tugboats and lighters; (c)   Air Airsh ship ips s with within in the the Phil Philip ippi pine nes s exce except pt as rega regard rds s the the fixi fixing ng of thei theirr maxi maximu mum m rate rates s on freight and passengers; (d) Radio companies companies except with respect respect to the fixing of rates; (e) Public Public services services owned owned or operat operated ed by any  instrumentality of the National Government or by  any government-owned or controlled corporation, exce except pt with with resp respec ectt to the the fixi fixing ng of rate rates. s. (As amended by Com. Act 454, RA No. 2031, and RA No. 2677)

What is a Certificate of Public Convenience? (CPC) The Public Service Law, Sec. 15  With With the except exception ion of those those enumer enumerate ated d in the  preceding section, no public service shall operate in the Philippines without possessing a valid and  subs subsis isti ting ng cert certif ific icat ate e from from the the Publ Public ic Serv Servic ice e Comm Commis issi sion on know known n as "cer "certi tifi fica cate te of publ public  ic  convenience," or "certificate of public convenience and necessity," as the case may be, to the effect  tha that the opera perati tion on of said said servi rvice and and the auth author oriz izat atio ion n to do busi busine ness ss will will prom promot ote e the the  public interests in a proper and suitable manner. The Commission may prescribe as a condition for  the issuan issuance ce of the certif certific icate ate provid provided ed in the   pre prece cedi ding ng para paragr grap aph h that that the the serv servic ice e can can be acquired by the Republic of the Philippines or any  instrumentality thereof upon payment of the cost    price price of its useful useful equipm equipment ent,, less less reason reasonabl able e depreciation; and likewise, that the certificate shall  be valid only for a definite period of time; and that  the the viol violat atio ion n of any any of thes these e cond condit itio ions ns shal shall  l    pro produ duce ce the the imme immedi diat ate e canc cancel ella lati tion on of the the certific certificate ate without the necessity necessity of any express express action on the part of the Commission. A CPC is any authorization to operate a public service issued by the PSC (now DOTC). It is Commission whic which h no legi legisl slati ative ve,, vehicles

an authorizatio tion issued by the for the operation of public services for fran franch chis ise, e, eith either er muni munici cipa pall or e.g. mo motor tor is requ requir ired ed by law) law) e.g.

It cons consti titu tute tes s neit neithe herr a fran franch chis ise e nor nor a contract, it does not confer property rights, and is

UP LAW BAROPS 2007 8 of 71

What What is a Cert Certif ific icate ate of Publ Public ic Conven Convenie ienc nce e &  Necessity? (CPCN) It is a certificate issued by the PSC to a public service to which any political subdivision has grante granted d a franch franchise ise under RA 667 after the PSC has approved the same under Sec. 16(b). It is an authorization issued by the PSC for the operation of public services for which a franchise is required by law. (e.g. (e.g. electric, telephone) What is the difference between a CPC & a CPCN? A CPCN requires a franchise from Congress. The public public utilit utility y cannot cannot be issued issued a CPCN CPCN and cannot operate, therefore, without a franchise from Congress A CPC does not. What is a franchise? It is a legislative grant from Congress or a loca locall legi legisl slat ativ ive e body body.. If it is of nati nation onwi wide de application application (e.g. Philippine Philippine Air Lines), then it must take the form of a Republic Act. How does one get a franchise? It is the same procedure for any law (file a bill, bill, 3 readin readings gs in Congre Congress, ss, etc) etc) The applica applicant nt must a)prove that he or she is a Filipino citizen; b) demonstrate financial capacity, and c) must show that he or she is applying for a business of public convenience, convenience, that the public public shall benefit benefit from the grant of the franchise. Is a franchise enough in order to operate? No. All public utilities require either a CPC or CPCN to operate. operate. Those public public utilities for which franchises have been granted still require a CPCN

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law in order to operate. Those public utilities that did not not requ requir ire e a fran franch chis ise e for for ther there e crea creati tion on stil stilll require a CPC in order to operate.

Raymundo v. Luneta Motor Corporation (1933) The The Publ Public ic Servi Service ce Law, Law, Act Act No. 3108 3108,, as amen am ende ded, d, auth author oriz izes es cert certif ific icat ates es of publ public ic conv conven enie ienc nce e to be secu secure red d by publ public ic serv servic ice e oper operat ator ors s from from the the PSC. PSC. A CPC CPC gran granted ted to the the owner or operator of public service motor vehicles grants a right in the nature of a limited franchise. The Code Code of Civil Civil Proced Procedure ure establi establishe shes s the general rule that "property, both real and personal, or any interest therein of the judgment debtor, not exemp exemptt by law, law, and and all all prope property rty and and righ rights ts of  property seized and held under attachment in the action, shall be liable to execution." The statutory exem exemp ptio tions do not include franchises or cert certif ific icat ates es;; of publ public ic conv conveni enien ence ce.. The The word word "property" as used in section 450 of the Code of  Civil Procedure comprehends every species of title, inchoate or complete, legal or equitable. The TEST to deter determi mine ne wheth whether er or not not prope propert rty y can can be attached attached and sold upon execution is whether the   judgm judgment ent debtor debtor has such such a benefi benefici cial al intere interest st therein that he can sell or otherwise dispose of it for value. Now the Public Service Law permits the PSC to appr approv ove e the the sale sale,, alie aliena nati tion on,, mo mort rtga gagi ging ng,, encumberin encumbering, g, or leasing leasing of property, property, franchises franchises,, privileges, or rights or any part thereof (sec. 16 [h]), [h]), and and in prac practic tice e the the purc purcha hase se and and sale sale of  cert certif ific icat ates es of publ public ic conv conven enie ienc nce e has has been been permitted by the PSC. If the holder of a CPC can sell it voluntaril voluntarily, y, there is no valid valid reason reason why the sam ame e certi ertifi fic cate ate cann cannot ot be take taken n and sold old involuntarily pursuant to court process. CPCs secured by public service operators are liable to execution, and the Public Service Commission is auth author oriz ized ed to appr pprove ove the the tra transf nsfer of the the certificates of public convenience to the execution creditor. What is the prior operator rule? The prior operator rule works to protect the prior operator if it maintains an adequate service and is able to meet the demands demands of the public. His or her investment is protected by not allowing a subsequent operator to be granted a license for the same route. The rationale for this rule is for the preservation of public convenience and to prevent ruinous competition. What are some of the instances where the prior operator rule does NOT apply? The prior operator rule does not apply when the the CPC CPC or CPCN CPCN gran granted ted to the the appl applic ican antt is a maiden franchise that covers a new route, even if it overlaps with the route of the prior operator. The prior operator rule is inapplicable where the corporate existence of the prior operator has expired. Regular operators are preferred over irregular operators.

UP LAW BAROPS 2007 9 of 71

The Commission cannot grant a CPC or CPCN that comprises a larger territory than that applied for. How How do you you know know whet whethe herr ther there e is ruin uinous ous competition enough for the prior operator rule to take effect? Ruin Ruinou ous s comp competi etiti tion on me mean ans s that that ther there e is actual ruin of the business of the operator; that the existi existing ng operato operatorr will will not gain gain enough enough profit profits s if  another person is allowed to enter the business; that which will result in the deprivation of sufficient gain in respect of reasonable return of investment, therefore therefore the oppositor, oppositor, alleging this, must show that he will be deprived of a reasonable return on his investment. The The me merre poss possib ibil ilit ity y of redu reduct ctio ion n in the the earnings of the business or the deterioration in the income income of his business business is not suffic sufficien ientt to prove prove ruinou ruinous s com competi petitio tion. n. It must must be shown shown that that the business would not have sufficient gains to pay a fair rate of interest on his capital investments. Does the prior operator rule create a monopoly? Legally speaking, there cannot be a monopoly when a property is operated as a public utility. The prior operator rule does not encourage a monopoly because the theory is that one operator keeps the prices low. Batangas Transportation Co. v. v. Cayetano Cayetano Orlanes (1928) So long as the 1 st licensee keeps and performs the terms and conditions of its license and complies with with the reason reasonabl able e rules rules and regula regulation tions s of the Commission and meets the demands of the public, it shou should ld have have mo more re or less less of a best bested ed and and pref prefer eren enti tial al righ rightt over over a pers person on who who seek seeks s to acqu acquir ire e anoth another er and and a later later lice licens nse e over over same same route. Otherwise, the first licensee would not have protection protection on his investment investment and would be subject subject to ruinou ruinous s com competi petitio tion n and this defeat defeat the very very purpose and intent for the PSC was created. San Pablo v. Pantranco (1987) Before Before privat private e respon responden dentt may be issued issued a fran franch chis ise e or CPC CPC for for the the oper operati ation on of the the said said service as a common carrier, it must comply with the usual usual require requiremen ments ts of filing filing an applic applicati ation, on, paym paymen entt of the the fees fees,, publ public icat atio ion, n, addu adduci cing ng evidence at a hearing and affording the oppositors the opport opportuni unity ty to be heard, heard, amo among ng others others,, as provid provided ed by law. law. Consid Consideri ering ng the environ environmen mental tal circ circum umsta stanc nces es of the the case case,, the the conv convey eyan ance ce of  passengers, trucks and cargo from Matnog to Allen is certainly not a ferry boat service but a coastwise or inter nteris isla land nd shipp hippin ing g servi ervice ce.. Unde Underr no circum circumsta stance nce can the sea between between Matnog Matnog and Allen be considered a continuation of the highway, Matnog and Allen are separated by an open sea. Its CPC CPC as a bus bus tran transp spor orta tatio tion n cann cannot ot be me mere rely ly amended amended to include this water service under the guise that it is a mere private ferry service. What is an example of the “kabit system”?

ONE UP LAW

I. General Considerations Considerations  Transportation  Transportation Law A, a grantee of a CPC from the LTFRB, is given the authority to operate 10 units of taxis. B, a nongrantee, wishes to operate as a common carried and and “kab “kabit its” s” with with the the CPC CPC of A who who will will obta obtain in approval from the LTFRB to operate another taxi. The taxi will be registered in the name of A, who will be paid by B. Assu Assume me that that A exec execut uted ed a deed deed of sale sale in favor of B in case B decides not to go on with the arrangement, in order to safeguard the rights of B. However, in case of injury to a passenger of the taxi actually actually operated by B (and previously previously sold to B as well) it is still A who will be liable. The illegal contract of sale between A & B cannot be put up as a defense. A does not have a cause of action against B either. They are in pari delicto. delicto .

Contract of transportation, elements; Parties to the contract: Shipper  - one one who who give gives s rise rise to the the cont contra ract ct of  transportation by agreeing to deliver the things or news news to be tran transp spor orted ted,, or to pres presen entt his his own own person or those of other or others in the case of  transportation of passengers Carrier  or conductor  - one who binds himself to transport person, things, or news, as the case may be, or one employed in or engaged in the business of carrying good for others for hire party to whom the carrier carrier is to Consignee - the party deliver the things being transported; to whom the carrier may lawfulyy make delivery in accordance with its contract of carriage. The shipper and the consignee may be the same person.

Teja Marketing v. IAC (1987) Part Partie ies s oper operat ated ed unde underr an arra arrang ngeme ement nt,, commonly known as the "kabit system" whereby a person who has been granted a certificate of public conv conveni enien ence ce allo allows ws anot another her perso person n who who owns owns motor vehicles to operate under such franchise for a fee. fee. A cert certif ific icate ate of publ public ic conv conven enie ienc nce e is a specia speciall privil privilege ege confer conferred red by the govern governmen ment. t. Althou Although gh not outrig outrightl htly y penali penalized zed as a crimin criminal al offense, the kabit system is invariably recognized as being contrary to public policy and, therefore, void and in existent existent under Article 1409 of the Civil Code.

PRIVATE NATURE; RIGHTS AND OBLIGA OBLIGATIO TIONS NS OF PARTIES PARTIES ARISIN ARISING G FROM FROM TRANSACTIONS RELATING TO TRANSPORTATION ABSENT

A TRANSPORTATION CONTRACT

Lara v. Valencia (1958) The own owner and and driv driver er of a vehi vehic cle owes wes to acco accomm mmod odati ation on pass passeng enger ers s or invi invited ted gues guests ts merely the duty to exercise reasonable care so that they may be transported safely to their destination. Thus, Thus, “The “The rule rule is establish established ed by the weight weight of  auth author orit ity y that that the the owne ownerr or oper operat ator or of an automobile owes the duty to an invited guest  to exercise reasonable care in its operation, and not unreasonably to expose him to danger and injury by incr increa easi sing ng the the haza hazard rd of trav travel el.. Vale Valenc ncia ia therefore is only required to observe ordinary care, and is not in duty bound to exercise extraordinary diligence as required of a common carrier by our law (Art. 1755 & 1756, new CC) ARISING

FROM A TRANSPORTATION CONTRACT

Contract of transportation, defined; A contract of transportati transportation on is one whereby a certain certain person person or association association of persons persons obligate obligate themselves to transport persons, things, or news from one to another for a fixed price.

UP LAW BAROPS 2007 10 of 71

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law

II. Common Carriers

What What is the differenc difference e betwee between n a common common carrier and a private carrier?

Unless Unless otherw otherwise ise indicat indicated, ed, refere reference nce is to the Civil Code

COMMON - It holds itself out as ready to engage in the transportation of goods or persons for hire as a publ public ic em empl ploy oyme ment nt and and not not as a casu casual al occupation whether:

A. In General Art. 1732 Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting transporting passengers passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. Art. 1733 Common carriers, from the nature of their business and and for for reas reason ons s of publ public ic poli policy cy,, are are boun bound d to observ observe e extrao extraordi rdinar nary y diligen diligence ce in the vigila vigilance nce over the goods ods and for the safety ety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods goods is further further expressed expressed in Articl Articles es 1734, 1734, 1735 1735,, and and 1745 1745,, Nos. Nos. 5, 6, and and 7, whil while e the the extr extraor aordi dina nary ry dili diligen gence ce for for the the safe safety ty of the the passengers is further set forth in Articles 1755 and 1756. 1. DEFINITION, ESSENTIAL ELEMENTS Art. 1732 Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting transporting passengers passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. What are the classes of carriers? Common or private As to the object: goods or persons What are the elements of a common carrier? engaged d in the busine business ss of carryi carrying ng or 1. It is engage tran transp spor orti ting ng goods goods for for other others s as a publ public ic employment 2. It is for compensation or for hire 3. It is operated generally as a business and not as a casual occupation 4. It holds out to the public as ready to engage in the the tran transp spor orta tati tion on of goods goods of the the kind kind to which his business is confined (see also First  Phil. Industrial v. CA) CA ) Why is there a need to determine whether it is a common carrier or not? Common carriers are subject to the presumption of  neglige negligence nce.. In order order to rebut rebut this this presump presumptio tion, n, they must show that they employed extraordinary extraordinary diligence. Do you you nee need a CPC or CP CPCN CN in orde order r to become a common carrier? No. It is the conduct that makes you a common carrier. (De Guzman v. CA) The liability arises from the Civil Code.

UP LAW BAROPS 2007 11 of 71

1. 2. 3.

regular or scheduled occasional, episodic or unscheduled offe offere red d to the the gener general al publ public ic or merel merely y a narrow segment of the general population (De Guzman v. CA) CA )

PRIVATE - Carriers who transport or undertake to transport goods or persons in a particular instance for hire or for reward  As to its nature Comm Common on - it holds holds itse itself lf out out in comm common on to all all persons who choose to employ him, as ready to carry for hire in such a manner as to render him liable should he refuse to carry anyone who wishes to employ him Priv Private ate - it agre agrees es in some some spec specia iall case case with with a private individual to carry for hire  As to the basis for or consideration of the contract  of transportation Common - it is bound to carry all who offer such goods, as it is accustomed to carry and with tender of reasonable compensation for carrying them Private - it is not bound to carry for any reason unless it enters into a special agreement to do so  As to its regulation Common - it is considered a public service and is therefore subject to regulation Private - it does not hold itself out as engaged in the busine business ss for the public public and is therefo therefore re not subj subjec ectt to the the same same rule rules s on regu regula lati tion on as a common carrier  As to the level of diligence required  Common - extraordinary Private - diligence of a good father  As to stipulations on liability  Common - it cannot stipulate that it will be exempt from liability or future negligence Private - it may stipulate that it will be exempt from liability or future negligence FGU v. Sarmiento Trucking Common carriers are persons, corporations, firms or association engaged in the business of carrying or transporting passengers or goods or both, by land land,, water water,, or air, air, for for hire hire or comp compens ensat atio ion, n, offering their services to the public, whether to the publ public ic in gene genera rall or to a limi limite ted d clie client ntel ele e in partic particula ular, r, but never never on an exclus exclusive ive basis. basis. The true test of a common carrier is the carriage of 

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law passen passenger gers s or goods, goods, provid providing ing space space for those those who opt to avail themselves of its transportation services for a fee. US v. Tan Piaco These trucks, so far as indicated by the evidence and as far as the appellant is concerned, furnished  serv servic ice e unde underr spec specia iall agre agreem emen ents ts to carr carry  y   particular persons and property . . . . So long as the individual or co-partnership, etc., etc., is engaged in a purely private enterprise, without attempting to render service to all who may apply, he can in no sense be considered a public utility, for public use."Public use" means the same as "use by the public”; public”; it is not confined to privileged privileged individuals, individuals, but is open to the indefinite public. If the use is merely merely optional optional with with the owners, owners, or the public public benefit is merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of the publ public ic util utilit ity y comm commis issi sion on.. Publ Public ic use use is not not synonymous with public interest. The true criterion by which to judge of the character of the use is whether the public may enjoy it by right or only by permission. Home Insurance Co. v. American Steamship Stipulations Stipulations of non-liabil non-liability ity of owners owners of carriers carriers are held contrary to public policy by the Civil Code. However, a common carrier undertaking to carry special cargo or chartered to a special person only, become becomes s a privat private e carrie carrier. r. As a privat private e carrie carrier, r, stipulations exempting the owner from liability for negligence of its agent is not against public policy and is deemed valid. The Civil Code should not be applied where the common carrier acted as private carrier. De Guzman v. CA The Civil Civil Code Code define defines s "commo "common n carrie carriers" rs" in the following terms: "Art "Artic icle le 1732 1732.. Comm Common on carr carrie iers rs are are perso persons ns,, corporation corporations, s, firms firms or association associations s engaged engaged in the business of carrying or transporting passengers or goods or both, th, by land, water, er, or air for compensation, offering their services to the public." The above above articl article e makes makes no distin distincti ction on betwee between n one one whos whose e prin princi cipa pall busi busine ness ss acti activi vity ty is the the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local local idiom, idiom, as "a sideli sideline") ne").. Articl Article e 1732 1732 also also avoids making any distinction between a person or enterpr enterprise ise offeri offering ng transp transport ortati ation on servic service e on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basi basis. s. Neit Neithe herr does does Arti Articl cle e 1732 1732 dist distin ingu guis ish h betwe between en a carr carrie ierr offe offeri ring ng its serv servic ices es to the the "gener "general al public public," ," i.e., i.e., the genera generall com commun munity ity or population, and one who offers services or solicits busi busine ness ss only only from from a narr narrow ow segm segmen entt of the the general population. Under Article 1745 (6), a common carrier is held responsible and will not be allowed to divest or to dimi dimini nish sh such such resp respon onsi sibi bili lity ty even even for for acts acts of  strang strangers ers like like thieves thieves or robber robbers, s, except except where where such thieves or robbers in fact acted "with grave or irresistib irresistible le threat, threat, violence violence or force." force." We believe believe and so hold that the the limits of the duty of 

UP LAW BAROPS 2007 12 of 71

extraor extraordin dinary ary diligen diligence ce in the vigila vigilance nce over the goods carried are reached where the goods are lost as a resu result lt of a robb robber ery y whic which h is atten attended ded by "grave or irresistible threat, violence or force." First Phil. Industrial Corp v. CA The The test test for for deter determi mini ning ng wheth whether er a part party y is a comm common on carr carrie ierr of goods goods is: (1). (1). He must must be engag engaged ed in the the busin busines ess s of carr carryi ying ng goods goods for for others others as a public public employmen employment, t, and must hold hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; (2) He must undertake to carry goods of the kind to which his business is confined; (3). He must undertake to carr carry y by the the me metho thod d by whic which h his his busi busines ness s is conduc conducted ted and over over his establi establishe shed d roads; roads; and (4)The transportation must be for hire. 2. NATURE NATURE OF BUSINE BUSINESS; SS; AND POWER OF THE STATE TO REGULATE Art. 1765. The Public Service Commission may, on its own motion motion or on petitio petition n of any interest interested ed party, after due hearing, cancel the certificate of  public convenience granted to any common carrier that repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section. Pantranco v. PSC Under Section 16 (a) of CA 146 ., the Commission is emp em power owered ed to issu issue e certi ertifi fic cates ates of publ publiic convenience whenever it "finds that the operation of the public service proposed and th e authorization to do business will promote the public interests in a proper and suitable manner." When private property is "affected with a pub lic interest it ceased to be juris privati  only." When, therefore, one devotes devotes his proper property ty to a use in which which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by discounting the use, but but so long long as he ma main intai tains ns the the use use he must must submit to control. Indeed, this right of regulation is so far beyond question that it is well settled that the the powe powerr of the the stat state e to exerc exercis ise e legi legisl slat ativ ive e cont contro roll over over publ public ic util utiliti ities es ma may y be exerc exercis ised ed through boards of commissioners. This right of the state to regulate public utilities is founded upon the police power. If one voluntarily voluntarily places his property in publ public ic serv servic ice e he cann cannot ot comp compla lain in that that it becomes subject to the regulatory powers of the stat state. e. A certi ertifi fic cate ate of publ publiic conve onveni nien enc ce consti constitut tutes es neithe neitherr a franch franchise ise nor a contra contract, ct, confers confers no property property right, and is a mere license license or privilege. 3. NATURE AND BASIS OF LIABILITY Art. 1733 Common carriers, from the nature of their business and and for for reas reason ons s of publ public ic polic policy, y, are are boun bound d to observ observe e extrao extraordi rdinar nary y dilige diligence nce in the vigila vigilance nce over the goods and for the safety of the passengers tran trans spor ported ted by them them,, acc accordi ording ng to all all the the circumstances of each case.

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law Such extraordinary diligence in the vigilance over the goods goods is further further expressed expressed in Articl Articles es 1734, 1734, 1735 1735,, and and 1745 1745,, Nos. Nos. 5, 6, and and 7, whil while e the the extr extraor aordi dina nary ry dili diligen gence ce for for the the safe safety ty of the the passengers is further set forth in Articles 1755 and 1756. Cangco v. MRR  The liability of the carrier is contractual in nature. It arises from the contract of carriage. The liability is dir direct ect and and imm mmed ediiate, ate, and and diff differ ers s from from presum presumpti ptive ve respon responsib sibili ility ty for the neglige negligence nce of  [Manila Railroad’s] servants. The The contr ontrac actt of Mani Manila la Rail Railro road ad Coma Comapn pny y to transport Cangco carried with it the duty to carry him in safety and provide safe means of entering and leaving its trains. That duty, being contractual, was direct and immediate, and its non-performance could not be excused by proof that the fault was morally morally imputable imputable to Manila Manila Railroad’s Railroad’s servants. servants. There was no contributory negligence on the part of Cangco.

extr extrao aord rdin inar ary y dili dilige genc nce e for for the the safe safety ty of the the passengers is further set forth in Articles 1755 and 1756. Art. 1755 A common carrier is bound to carry the passengers safel safely y as far far as huma human n care care and and fore foresi sigh ghtt can can prov provid ide, e, usin using g the the utmo utmost st dili dilige genc nce e of very very cautiou cautious s person persons, s, with with a due regard regard for all the circumstances. 5. LAWS APPLICABLE Art. 1766 In all matters not regulated by this Code, the rights and and obli obliga gati tion ons s of comm common on carr carrie iers rs shal shalll be governed by the Code of Commerce and by special laws. Art. 1753 The law of the country to which the goods are to be tran transp spor orte ted d shal shalll gove govern rn the the liab liabil ilit ity y of the the comm common on carr carrie ierr for for thei theirr loss loss,, destr destruc uctio tion n or deterioration.

What laws govern over common carriers? The Civil Civil Code Code primar primaril ily y govern governs s over common carriers. The Code of Commerce and special laws have suppletory effect. What What are are the the limi limita tatio tions ns on the the power power to regulate common carriers? The The same same rule rules s on due due proc proces ess s appl apply y to the the regulation of common carriers. Phil. Rabbit v. IAC The driver driver cannot cannot be held held jointl jointly y liable liable with the owenrs of the jeep in case of breach of the contract of carriage. carriage. The contract contract of carri carriage age is between between the carrier and the passenger, and in the event of  cont contra ract ctua uall liab liabil ilit ity, y, the the carr carrie ierr is excl exclus usiv ivel ely y respons responsibl ible e therefor therefore e to the passen passenger, ger, even even if  such breach be due to the negligence of the driver. To make the driver jointly liable would make the carr carrie ier’ r’s s liab liabil ility ity perso persona nall inst instead ead of me mere rely ly vicarious and consequently, the victim is entitled to recover only the share which corresponds to the driver. 4.

CLASSES OF COMMON CARRIERS CARRIE RS

Art. 1732 Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting transporting passengers passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. Art. 1733 Common carriers, from the nature of their business and and for for reas reason ons s of publ public ic poli policy cy,, are are boun bound d to observ observe e extrao extraordi rdinar nary y diligen diligence ce in the vigila vigilance nce over the goods ods and for the safety ety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods goods is further further expressed expressed in Articl Articles es 1734, 1734, 1735 1735,, and and 1745 1745,, Nos. Nos. 5, 6, and and 7, whil while e the the

UP LAW BAROPS 2007 13 of 71

B. Common Carriage of Goods 1.

LIABILITY AND NEGLIGENCE

PRESUMPTION

OF

Art. 1733 Common carriers, from the nature of their business and and for for reas reason ons s of publ public ic polic policy, y, are are boun bound d to observ observe e extrao extraordi rdinar nary y dilige diligence nce in the vigila vigilance nce over the goods and for the safety of the passengers tran trans spor ported ted by them them,, acc accordi ording ng to all all the the circumstances of each case. Such extraordinary diligence in the vigilance over the goods goods is further further expressed expressed in Articl Articles es 1734, 1734, 1735 1735,, and and 1745 1745,, Nos. Nos. 5, 6, and and 7, whil while e the the extr extrao aord rdin inar ary y dili dilige genc nce e for for the the safe safety ty of the the passengers is further set forth in Articles 1755 and 1756. Art. 1734 Common Common carrie carriers rs are respons responsibl ible e for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the follow following ing causes causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; Act of the the publ public ic enemy enemy in war, war, wheth whether er (2) Act international or civil; shipper or owner of the (3) Act of omission of the shipper goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Art. 1735 In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are are lost lost,, dest destro roye yed d or dete deteri rior orat ated, ed, comm common on

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observ observed ed extrao extraordi rdinar nary y diligen diligence ce as requir required ed in Article 1733. When does extraordinary diligence for goods start? Extrao Extraordi rdinar nary y diligen diligence ce starts starts from from the time time the goods are loaded into the vessels. When does extraordinary diligence for goods stop? Extraordinary diligence ends when the goods are discharged and delivered to the consignee Ynchausti vs. Dexter (1920) The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of destinati destination on in bad order, order, makes makes out a prima prima faci facie e case case agai agains nstt the the carr carrie ier, r, so that that if no explanation is given as to how the injury occurred, the the carr arrier ier mus must be held eld resp respon onsi sibl ble. e. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstance inconsistent with its liability.

Art. 361, Code of Commerce The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been expressly stipulated. As a consequence, all the losses and deteriorations whic which h the the good goods s ma may y suff suffer er duri during ng the the transportation by reason of fortuitous event, force majeure, majeure, or the inherent nature and defe defec ct of the the good goods s, sha shall be for the the accountand risk of the shipper. Proof Proof of these these acciden accidents ts is incumb incumbent ent upon upon the carrier. What are the requisites for exemption due to natural disaster? 1. The natural disaster must have been the the proximate and only cause 2. The common carrier must exercise due diligence to prevent or minimize the loss before, during and after the occurrence of the flood, storm or natural disaster 3. The common carrier must not not have been guilty guilty of delay 4. The shipment was at shipper’s risk

2. EXEMPTION FROM LIABILITY NATURAL DISASTER  Art. 1734 Common Common carrie carriers rs are respon responsib sible le for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the followi following ng causes causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; Art. 1739 In orde orderr tha that the the com ommo mon n carri arrier er ma may y be exempted from responsibi responsibility, lity, the natural natural disaster disaster must have been the proximate and only cause of  the the loss loss.. Howev However er,, the the comm common on carr carrie ierr must 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 duty is incumb incumbent ent upon the common common carr carrie ierr in case case of an act act of the the publ public ic enemy enemy referred to in Article 1734, No. 2. Art. 1740 If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

UP LAW BAROPS 2007 14 of 71

Tan Chiong Sian v. Inchausti & Co. (1912) Loss of a ship and of its cargo, in a wreck due to accident or force force majeure must, as a general rule, fall upon their respective owners, except in cases wher where e the the wrec wrecki king ng or stra strand ndin ing g of the the vess vessel el occurred occurred through malice, malice, carelessnes carelessness s or lack of  skill on the part of the captain and in the remaining case cases s indi indica cate ted d in arti articl cle e 841 841 of the the Code Code of  Commerce. Unde Underr arti articl cle e 361 361 of the the Code Code of Comm Commer erce ce transportation of merchandise is for account, risk and hazard of the shipper, unless the contrary has been expressly stipulated. stipulated. The carrier is exempt from liability if he proves, as it is incumbent upon him him to do, do, that that the the loss loss or destr destruc ucti tion on of the the merc me rcha hand ndis ise e was was due due to acci accide dent nt and and force orce majeure and not to fraud, fault, or negligence on the part of the captain or owners of the ship. Martini v. Macondray (1919) In every contract of affreightment, losses by the dangers of the seas are excepted from the risks w/c the master takes upon himself, whether the exception is expressed in the contract or not. The exception is made by law, & falls whether or not the general principle principle that no one is responsibl responsible e for fortuitous events & accidents of major force. But the general general law is subjec subjectt to an exception exception,, that that when the inevitable accident is preceded by fault of  the debtor or person bound, without which it would not have happened, then he becomes responsible for it. The master master is respon responsib sible le for the safe safe & proper proper stowage of the cargo, & there is no doubt that by the general maritime law he is bound to secure the cargo safely safely under  deck. deck. If the master master carrie carries s goods on deck w/o the consent  of the shipper, he does it at his own risk. If they are damaged or lost in conseq consequen uence ce of their their being being thus thus exposed exposed,, he cann cannot ot prote protect ct hims himsel elff from from resp respon onsi sibi bili lity ty by showing that they were damaged or lost by the dangers of the seas. When the shipper consents

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law to his goods being carried on deck, he takes the risks of any damage or loss sustained as a consequence of their being so carried. Eastern Shipping Lines v. IAC (1987) However However,, fire fire may not be consid considered ered a natura naturall disast disaster/ er/cal calami amity. ty. This This must must be so as it arises arises almo almost st inva invari riab ably ly from from some some act act of ma man n or by human means. It does not fall within the category of an act of God unless caused by lightning or boy other other natura naturall disast disaster/c er/cala alamit mity. y. It may even be caused by the actual fault or privity of the carrier. ACT

OF PUBLIC ENEMY

Art. 1734 Common Common carrie carriers rs are respon responsib sible le for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the followi following ng causes causes only: Act of the the publ public ic enem enemy y in war, war, wheth whether er (2) Act international or civil; Art. 1739 In orde orderr tha that the the com ommo mon n carri arrier er ma may y be exempted from responsibi responsibility, lity, the natural natural disaster disaster must have been the proximate and only cause of  the the loss loss.. Howev However er,, the the comm common on carr carrie ierr must 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 duty is incumb incumbent ent upon the common common carr carrie ierr in case case of an act act of the the publ public ic enemy enemy referred to in Article 1734, No. 2. What are the requisites for exemption due to the act of a public enemy? 1. The act of the public enemy must have been the proximate and only cause The com ommo mon n carr carrie ierr mus must exer exerci cise se due due 2. The dili diligen gence ce to prev prevent ent or mini minimi mize ze the the loss loss before, during and after the act of the public enem enemy y caus causin ing g the the loss loss,, dest destru ruct ctio ion n or deterioration of the goods. ACT

OR  OMISSION OF SHIPPER 

Art. 1734 Common Common carrie carriers rs are respon responsib sible le for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the followi following ng causes causes only: shipper or owner of the (3) Act of omission of the shipper goods;

Art. 1741 If the shipper or owner merely contributed to the loss, loss, destruction destruction or deterioration deterioration of the goods, the proximate proximate cause thereof being the negligence negligence of  the common common carrie carrier, r, the latter latter shall be liable liable in dama damages ges,, whic which h howev however er,, shal shalll be equi equitab tably ly reduced.

UP LAW BAROPS 2007 15 of 71

What are the requisites for exemption due to the act or omission of the shipper? 1. The act act or omission omission of of the shipper shipper must must have have been the proximate and only cause 2. If the shipper owner merely merely contributed contributed to the loss, destruction or deterioration of the goods, the proxim proximate ate cause cause being being the neglige negligence nce of  the common carrier, then the common carrier shall shall be liable liable for the damages, damages, which which shall, shall, however, be equitably reduced. HARACTER  OF CHARACTER OF

GOODS

Art. 1734 Common Common carrie carriers rs are respons responsibl ible e for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the follow following ing causes causes only: (4) The character of the goods or defects in the packing or in the containers; Art. 1742 Even if the loss, destruction, or deterioration of the goods 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. Art. 366, Code of Commerce With Within in 24 hour hours s foll follow owin ing g the the rece receip iptt of the the mercha merchandi ndise, se, the claim claim agains againstt the carrie carrierr for damage damage or average average which which may be found found therein therein upon opening the package, may be made, provided that the indications of damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim claim shall shall be admitt admitted ed only only at the time time of  receipt. After the periods mentioned have elapsed, or the transp transport ortati ation on charge charges s have have been paid paid no claim claim shall be admitted against the carrier with regard to the condition in which the goods were transported and delivered. Southern Lines v. CA (1962) If the fact fact of improper improper packing packing is known known to the carrier or its servants or apparent upon ordinary observ observati ation, on, but [the [the carri carrier] er] accepts accepts the goods goods notwithstanding such condition, it is not relieved of  liability for loss or injury resulting the refrom. ORDER  OF

COMPETENT AUTHORITY

Art. 1734 Common Common carrie carriers rs are respons responsibl ible e for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the follow following ing causes causes only: (5) Order or act of competent public authority. Art. 1743 If through the order of public authority the goods are seized or destroyed, the common carrier is not respon responsib sible, le, provid provided ed said said public public authori authority ty had power to issue the order. What are the requisites for exemption due to an order of competent authority?

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law 1. Ther There e must must be an order order or act act of comp compete etent nt authority 2. The The said said public public author authority ity must must have have had the the power power to issue issue the order. order. If the officer officer acts acts without legal process, then the common carrier will be held liable Ganzon v. CA (1988) The intervention of the municipal officials was not of a charac character ter that that would would render render imposs impossibl ible e the fulfil fulfillme lment nt by the carri carrier er of the obliga obligatio tion. n. The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron. There is absence of sufficient proof that the issuance of the order was attended with such force or intimidation as to completely overpower the will of petitioner’s employees. The mere difficulty in the fulfillment of  the obligation is not force majeure. Through the “order Melencio-Herrera, dissent: Through or act” act” of “com “compe pete tent nt publ public ic auth author orit ity, y,”” the the perfor performa mance nce of the contra contractu ctual al obliga obligation tion was rendered rendered impossible. impossible. Apparently, Apparently, the seizure seizure and destru destructi ction on of the goods goods was done under under legal legal process process or authority authority so that petitioner should should be freed from responsibility. 3.

DURA URATION OF RESPONSIBILITY

EXT EXTR RAORDIN DINARY

Art. 1736 The extraor extraordin dinary ary respon responsib sibili ility ty of the com common mon carri arrier er lasts asts from from the the time time the the goods oods are are uncondition unconditionally ally 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. Art. 1737 The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporaril temporarily y unloaded unloaded or stored in transit, transit, unless the shipper or owner has made use of the right of  stoppage in transitu. transitu. The extr extrao aord rdin inar ary y liab liabil ilit ity y of the the Art. Art. 1738 1738.. The common com mon carrie carrierr contin continues ues to be operat operative ive even dur during ing the the tim time the the good goods s are stor stored ed in a wareho ehouse of the the carrier at the the place of  destination, until the consignee has been advised of the arrival of the goods and has had reasonable oppo opport rtun unit ity y ther therea eaft fter er to rem emov ove e them them or otherwise dispose of them. What does “unconditionally placed” mean? It means that the shipper cannot get the goods back from the common carrier at will. Whe When is the the cont contra ract ct of tran transp spor orta tati tion on perfected? A contr contrac actt of tran transp spor ortat tatio ion n is cons consen ensu sual al in nature, therefore it is perfected at the meeting of  the minds of the parties.

If the common carrier received the goods not for transportati transportation on but only for safekeeping, safekeeping, where the goods have already been purchased by the shipper and and read ready y for tran transp spor orta tati tion on,, then then the the duty duty of  extraordinary diligence has not yet started. Who are these persons or entities who have “a right to receive” the goods? These These persons persons includ include e agents agents,, broker brokers, s, and the like. What is stoppage in transitu? This is the act by which the unpaid vendor of goods stops stops their their progre progress ss and resume resumes s posses possessio sion n of  them constructively while they are in the court of  transi transitt from from him to the purchase purchaser, r, and not yet actual actually ly delive delivered red to the latter. latter. The The duty duty of the common carrier to exercise extraordinary diligence ends in the middle of the journey or transit. When the buyer of the goods becomes insolvent, the the unpa npaid sell seller er who has has part parted ed with with the the possession of the goods at any time while they are in transit, may resume the possession of the goods as he would have had if he had never parted with the possession. Compania Maritima v. Insurance Company of  North America (1964) The liability of the carrier as common carrier begins with the actua tual deli elivery ery of the the goods ods for transp transport ortati ation, on, and and not merely merely with with the formal formal execution of a receipt or bill of lading; the issuance of a bill bill of lading lading is not necess necessary ary to com comple plete te delivery and acceptance. Even where it is provided by stat statut ute e that that liab liabil ilit ity y comm commenc ences es with with the the issuance of the bill of lading, actual delivery and acceptance are sufficient to bind the carrier. Lu Do v. Binamira (1957) Whil While e deli delive very ry of the the carg cargo o to the the cust custom oms s authorities is not delivery to the consignee, or “to the the pers person on who who has has a righ rightt to rece receiv ive e them” them”,, contemplated in Article 1736, because in such case the goods are still in the hands of the Government and and the the owne ownerr cann cannot ot exerc exercis ise e domi domini nion on over over them, however the parties may agree to limit the liability liability of the carrier considering considering that the goods have still to through through the inspection inspection of the customs authorities authorities before they are actually turned over to the consignee. This is a situation where we may say that the carrier carrier losses losses control control of the goods goods because of a custom regulation and it is unfair that it be made responsible for what may happen during the interregnum. although Section 4(5) of the Carriage of Goods by Sea Act states that the carrier shall not be liable in an amount exceeding 8500.00 per package package unless unless the value of the goods had been declared by the ship shipper per and and inse insert rted ed in the the bill bill of ladi lading ng,, said said section is merely suppletory to the provisions of  the Civil Code. 4.

AS

STIP STIPUL ULAT ATIO IONS NS/A /AGRE GREEM EMEN ENT T LIABILITY

LIMI LIMITI TING NG

TO DILIGENCE REQUIRED

What if the goods are only for safekeeping? Art. 1744

UP LAW BAROPS 2007 16 of 71

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, loss, destru destructi ction, on, or deterio deteriorat ration ion 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; Supported by a valuable valuable consideration consideration other (2) Supported than the service service rendered by the common carrier; carrier; and Reasonabl able, e, just just and not contra contrary ry to publi public c (3) Reason policy. Art. 1745 Any of the following or similar stipulations shall be considered considered unreasonable, unreasonable, unjust unjust and contrary 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; That the the comm common on carr carrie ierr shal shalll exer exerci cise se a (4) That 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; That the the com omm mon car carrier ier shal hall not not be (5) That responsible for the acts or omission of his or its employees; That the com common mon carrie carrier's r's liabil liability ity for acts acts (6) That 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 accoun accountt of the defective defective conditio condition n of the car, vehicle, ship, airplane or other equipment used in the contract of carriage. Art. 1751 The fact that the common carrier has no comp compet etit itor or alon along g the the line line or rout route, e, or a part part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipul stipulati ation on limiti limiting ng the com common mon carrie carrier's r's liability is reasonable, just and in consonance with public policy. AS

TO AMOUNT OF LIABILITY

Art. 1749 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. Art. 1750 A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or dete deteri rior orat atio ion n of the the good goods s is val valid, id, if it is reasonable reasonable and just under the circumstan circumstances, ces, and has been fairly and freely agreed upon. Heacock v. Macondray (1921) Shewaram v. PAL (1966)

UP LAW BAROPS 2007 17 of 71

There are two requisites that must be fulfilled in order that the liability of PAL be limited according to the the stipulations behind the ticket stub: 1. that the contract is just and reasonable under the circumstances 2. that the contract was fairly and freely agreed upon (per Art. 1750) The fact that the conditions are printed at the back of the ticket stub in letters so small that they are hard to read would not warrant the presumption that plaintiff was aware of those conditions such that that he had “fairl “fairly y and freely freely agreed” agreed” to those those conditions. Ong Yiu v. CA (1979) Whil While e the the pass passeng enger er had had not not sign signed ed the the plan plane e ticket, he is nevertheless bound by the provision thereof; such provisions have been held to be part of the contract of carriage and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation. It is what is known as a contract of adhesion wherein one party imposes a ready made form of contract on the other. The one who adheres to the contract is in real realit ity y free free to rejec rejectt it enti entire rely ly.. A cont contra ract ct limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence. FACTORS

AFFECTING AGREEMENT

Art. 1746 An agre agreem emen entt limi limiti ting ng the the comm common on carr carrie ier' r's s liability may be annulled by the shipper or owner if  the com common mon carrier carrier refuse refused d to carry carry the goods goods unless the former agreed to such stipulation. Art. 1747 If the common carrier, without just cause, delays the transp transporta ortatio tion n of the goods goods or change changes s 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. Art. 1748 An agre agreem emen entt limi limiti ting ng the the comm common on carr carrie ier' r's s liability for delay on account of strikes or riots is valid. Art. 1751 The fact that the the common carrier has no comp compet etit itor or alon along g the the line line or rout route, e, or a part part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipul stipulati ation on limiti limiting ng the com common mon carrie carrier's r's liability is reasonable, just and in consonance with public policy. Art. 1752 Even Even when when ther there e is an agre agreem emen entt limi limiti ting ng the the liability of the common carrier in the vigilance over the the good goods, s, the the comm common on carr carrie ierr is disp disput utab ably ly presumed to have been negligent in case of their loss, destruction or deterioration.

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law 5. APPL APPLIC ICAB ABLE LE LAW LAW ON FO FORE REIG IGN N

TRAD TRADE E

Art. 1753 The law of the country to which the goods are to be tran transp spor orte ted d shal shalll gove govern rn the the liab liabil ilit ity y of the the comm common on carr carrier ier for for thei theirr loss loss,, destr destruc ucti tion on or deterioration. 6. RULES ON PASSENGER BAGGAGE Art. 1754 The provisions of Articles 1733 to 1753 shall apply to the passenger passenger's 's baggage baggage which 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 2003 concer concernin ning g the respons responsibi ibilit lity y of hotelhotelkeepers shall be applicable. Art. 1998 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, 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, latter, they take the precautions precautions which said hotelkeepers or their substitutes substitutes advised relative relative to the care and vigilance of their effects. Art. 2000 The responsibility referred to in the two preceding articles shall include the loss of, or injury to the person personal al proper property ty of the guests guests caused caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may procee proceed d from from any force majeur majeure. e. The fact fact that 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. Art. 2001 The act of a thief or robber, who has entered the hotel hotel is not deemed deemed force majeure, majeure, unless unless it is done with the use of arms or through an irresistible force. Art. 2002 The hotel-keeper is not liable for compensation if  the loss is due to the acts of the guest, his family, family, servants or visitors, or if the loss arises from the character of the things brought into the hotel. Art. 2003 The The hote hotell-kee -keepe perr cann cannot ot free free hims himsel elff from from responsibility by posting notices to the effect that he is not not liab liable le for for the the arti articl cles es brou brough ghtt by the the guest. guest. Any stipul stipulati ation on between between the hotel-k hotel-keepe eeperr and the guest guest whereb whereby y the respon responsib sibili ility ty of the form former er as set set fort forth h in arti articl cles es 1998 1998 to 2001 2001 is suppressed or diminished shall be void. What is passenger baggage? They are the things that a passenger will bring with him consi consisten stentt with with a tempora temporary ry absenc absence e from from where where he lives. lives. Passen Passenger ger baggag baggage e must must have have a dire direct ct rela relati tions onshi hip p with with the the pass passeng enger er who who is travelling.

UP LAW BAROPS 2007 18 of 71

e.g. A balikb balikbaya ayan n box or suitca suitcase se is passen passenger ger baggage. However, 10,000 cans of corned beef is not consid considered ered as passen passenger ger baggag baggage. e. They They are are considered as goods. If you carry goods with you, you cannot bring them with you as part of your [passenger] contract of carriage. You will need to get a separate contract of carriage (“bill of lading”) in order to transport them. These goods will then be transported whether or not you are physically travelling with them. What are the kinds of passenger baggage and the laws applicable to them? 1.

2.

Pass Passen enger ger bagg baggag age e in the the cust custod ody y of the the passenger passenger (e.g. carry-on carry-on luggage) These are consid considered ered as necess necessary ary deposi deposits. ts. Articl Articles es 1998, 2000-2003 apply. Passenger baggage not in the custody of the passen passenger ger (e.g. (e.g. checke checked-i d-in n luggage luggage). ). Arts. Arts. 1733-1753 1733-1753 on extraordina extraordinary ry diligence diligence apply. The liability is greater for baggage that is in the custody of the carrier because if the bag is within the custody of the passenger, then there is a pres presum umpti ption on that that the the pass passen enge gerr had had possession of the baggage.

C. Common carriers of passengers 1.

NATURE AND EXTENT OF RESPONSIBILITY

Art. 1733 Common carriers, from the nature of their business and and for for reas reason ons s of publ public ic polic policy, y, are are boun bound d to observ observe e extrao extraordi rdinar nary y dilige diligence nce in the vigila vigilance nce over the goods and for the safety of the passengers tran trans spor ported ted by them them,, acc accordi ording ng to all all the the circumstances of each case. Such extraordinary diligence in the vigilance over the goods goods is further further expressed expressed in Articl Articles es 1734, 1734, 1735 1735,, and and 1745 1745,, Nos. Nos. 5, 6, and and 7, whil while e the the extr extrao aord rdin inar ary y dili dilige genc nce e for for the the safe safety ty of the the passengers is further set forth in Articles 1755 and 1756. Art. 1755 A common carrier is bound to carry the passengers safel safely y as far far as huma human n care care and and fore foresi sigh ghtt can can prov provid ide, e, usin using g the the utmo utmost st dili dilige genc nce e of very very cautiou cautious s person persons, s, with with a due regard regard for all the circumstances. Is there any difference between th e extr extrao aord rdin inar ary y dili dilige genc nce e for for good goods s and and for for persons? In the case of transport of persons, there are no exceptions to the presumption of negligence in the case of injuries or death, unlike in goods under Art. 1734. Isaac v. A. L. Ammen Transportation (1975) It is the prevailing rule that it is negligence per se for for a pass passen enge gerr on a rail railro road ad volu volunt ntar aril ily y or inadvertentl inadvertently y to protrude protrude his arm, hand, elbow, or any other part of his body through the window of a moving car beyond the outer edge of the window or oute outerr surf surfac ace e of the the car, car, so as to come come in

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law contact contact with objects objects or obstacles near the track, track, and and that that no reco recover very y can can be had had for for an inju injury ry which but for such negligence would not have been sustained. Spouses Landingin v. PANTRANCO (1970) As a common carrier, PANTRANCO was duty bound to carry carry its passengers "safely as far as human care and foresight can provide, using the utmost  dilige diligence nce of very very cautio cautious us person persons, s, with with a due regard for all the circumstances. " (Article 1755; Civi Civill Code Code)) The The me merre fact fact that that the the bus bus was was inspected only recently and found to be in order would not exempt the carrier from liability unless it is shown that the particular particular circumstances circumstances under which the bus would travel were also considered such as being heavily laden with passengers. When a passenger dies or is injured, the presumption is that the common carrier is at fault or that it acted negligently (Article 1756). This presumption is only rebu rebutte tted d by proof proof on the the carr carrie ier' r's s part part that that it observed the "extraordinary diligence" required in Articl Article e 1733 1733 and and the "utmost "utmost dilige diligence nce of very very cautious persons" required in Article 1755 (Article 1756). Necesito v. Paras While the carrier is not an insurer of the safety of  the passen passenger gers, s, it should should neverth nevertheles eless s be held held answerable for the flaws of its equioment, if such flaw flaws s were were disc discov over erab able le.. The The liab liabil ilit ity y of the the common carrier rests upon the negligence or his failure to exercise the utmost degree of diligence tha that the the law law requ requir ires es.. The The rati ration onal ale e for for the the common carrier’s liability for manufacturing defects is the fact that the passenger has neither choice nor control over the carrier in the selection and use of the equipmen equipmentt and applianc appliances es in use by the carr carrie ier. r. Havi Having ng no priv privit ity y what whatev ever er with with the the manufactur turer or vend endor of the def defecti ectiv ve equipment, the passenger has no remedy against him. him. In this this case case,, the the defec defectt coul could d have have been been detected with the exercise of utmost diligence by the common carrier. Sulpicio Lines v. CA (1995) ALC had a contract of carriage with petitioner. The presence presence of the stevedores stevedores sent by ALC on boar board d the the barg barge e of SLI SLI was was call called ed for for by the the contract of carriage. For how else would its lumber be transported unless it is place in board? And by whom? Of course, the stevedores. Definitely, SLI coul could d not not expec expectt the the ship shippe perr itse itself lf to load load the the lumbe umberr with witho out the the aid aid of the the stev tevedor edores es.. Furthermore, SLI know of the presence and role of  the stevedores in its barge and thus consented to thei theirr pres presen enc ce. Henc Hence, e, Sulpi ulpici cio o Line Lines s was was respons responsibl ible e for their their safety safety while while on board board the barge. 2. DURATION OF RESPONSIBILITY La Mallorca v. CA (1966) It has been recognized as a rule that the relation of  carr carrie ierr and and pass passen enge gerr does does not not cease ease at the the moment moment the passenger alights from the carrier's carrier's vehicle at a place selected by the carrier at the poin pointt of dest destin inat atio ion, n, but but cont contin inue ues s unti untill the the

UP LAW BAROPS 2007 19 of 71

pas passeng senger er has has had had a reas reason ona able ble time time or a reas reasona onabl ble e oppo opport rtun unity ity to leave leave the the carr carrier ier's 's prem premis ises es.. And, And, what what is a reas reasona onabl ble e time time or a reas easona onable ble dela delay y with withiin thi this rul rule is to be determined from all the circumstances. Thus, a person who, after alighting from a train walks along the station platform is considered still a pass passen enge ger. r. In the the pres presen entt case case,, the the fath father er return returned ed to the bus to get one of his baggages baggages which was not unloaded when they alighted from the bus. Raquel, the child that she 'was, must have followed the father. Aboitiz vs CA The The rul rule is that that the the relat elatiion of carr arrier ier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owner's dock or premises. All persons who remain remain on the premis premises es a reason reasonabl able e time time after after leav leaviing the the conve onveya yanc nce e are to be deem deemed ed passengers, and what is a reasonable time or a reas easona onable ble dela delay y with withiin thi this rul rule is to be dete determ rmin ined ed from from all all the the circ circum umst stan ance ces, s, and and includes a reasonable time to see after his baggage and prepare for his departure. It is of common knowledge that, by the very nature of peti petiti tion oner er's 's busi busine nes ss as a shipp hipper er,, the the passengers of vessels are allotted a longer period of time time to dise disemb mbar ark k from from the the ship ship than than othe otherr common com mon carri carriers ers such such as a passen passenger ger bus. bus. With With respect to the bulk of cargoes and the number of  passengers it can load, such vessels are capable of  acco accomm mmod odat atin ing g a bigg bigger er volu volume me of both both as compared to the capacity of a regular commuter bus. Consequently, a ship passenger will need at least an hour as is the usual practice, to disembark from the vessel and claim his baggage whereas a bus bus pass passen enge gerr can can easi easily ly get get off off the the bus bus and and retrieve his luggage in a very short period of time. Does the duty of extraordinary diligence occur righ rightt at the the perf perfec ecti tion on of the the cont contra ract ct of  transportation? The perfection of the contract of carriage does not necessarily coincide with the commencement of the duty of extraordinary diligence. It may occur at the same time or later. Does the duty of extraordinary diligence get interrupted? No. In PAL v. CA, CA , it was held held that that PAL had to continue to exercise extraordinary diligence even in the case case of strand stranded ed passen passenger gers s until until they they have have reached their final destination. Is there a duty of extraordinary diligence for comfort and safety? No. No. The The duty duty real really ly only only invo involv lves es brin bringi ging ng the the person to the destination. But in PAL v. CA, CA, the Court held that PAL had the duty to provide all mea me ans and com omffort ort and and conv onvenie enienc nce e to its passengers when they got stranded. 3. PRESUMPTION OF NEGLIGENCE Art. 1756 In case of death of or injuries to passengers, common carriers are presumed to have been

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755. Is the last clear chance doctrine applicable applicable in contracts of carriage? No. No. The The cont contra ract ct of carr carria iage ge is contr contrac actua tuall in nature. This doctrine is a defense only for torts and quasi-delicts. 4. FORCE MAJEURE Bachelor Express v. CA Force majeur eure is not in itse tself a defen efens se. Extrao Extraordi rdinar nary y dilige diligence nce is the defense defense.. Proof Proof of  force majeure becomes relevant in complying with the requirement of extraordinary diligence. 5. LIMITATION OF LIABILITY; VALIDITY OF STIPULATIONS Art. 1757 The respons responsibi ibilit lity y of a com common mon carrie carrierr for the safety of passengers as required in Articles 1733 and 1755 cannot be dispensed with or lessened by stipu tipullatio ation, n, by the the post postin ing g of noti notice ces, s, by statements on tickets, or otherwise. Art. 1758 When When a pass passen enge gerr is carr carrie ied d grat gratui uito tous usly ly,, 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.

the time was that of another would be passenger, a stranger also awaiting transportation, and not that of an employee assigned to discharge any of the duti duties es that that the the Rail Railro road ad had had assu assume med d by its its contract with the deceased. Maranan v. Perez (1967) As can be gleaned from Art. 1759, the Civil Code of  the Philippines evidently follows the rule that it is enough that the assault happens within the course of the employee's duty. It is no defense for the carrier that the act was done in excess of authority or in diso disobed bedien ience ce of the the carr carrie ier' r's s orde orders rs.. The The carrier's carrier's liability liability here is absolute in the sense that it practically secures the passengers from assaults committed by its own employees. At least least three three very very cogent cogent reason reasons s underl underlie ie this this rule rule.. As expl explai aine ned d in Texa Texas s Midl Midlan and d R.R. R.R. vs. vs. Monroe: (1) the special undertaking of the carrier requ requir ires es that that it furn furnis ish h its its pass passeng enger er that that full full measure of protection afforded by the exercise of  the high degree of care prescribed by the law, inter alia alia from from viol violen ence ce and and insu insult lts s at the the hand hands s of  strang strangers ers and other other passen passenger gers, s, but above above all, all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said liability of the carr carrie ierr for for the the serv servan ant' t's s viol violat atio ion n of duty duty to passengers, is the result of the former's confiding in the the serv servan ant's t's hand hands s the the perf perfor orma manc nce e of his his cont contra ract ct to safe safely ly tran transp spor ortt the the pass passen enge ger, r, delegat delegating ing therew therewith ith the duty duty of protec protecting ting the passenger with the utmost care prescribed by law; and (3) as between the carrier carrier and the passenger, passenger, the former must bear the risk of wrongful acts or negli negligen gence ce of the the carr carrie ier' r's s em empl ploye oyees es agai agains nstt passengers, since it, and not the passengers, has power to select and remove them.

6. RESPONSIBILITY FOR ACTS OF EMPLOYEES Art. 1759 Common Common carrier carriers s are liable liable for the death death of or injuries injuries to passengers passengers through the negligence negligence or wilful wilful acts acts of the former former's 's employ employees, ees, althou although gh 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 good fath father er of a fami family ly in the the sele select ctio ion n and and supervision of their employees. Art. 1760 The common common carrier's carrier's responsibi responsibility lity prescribed prescribed in the the prec precedi eding ng arti articl cle e cann cannot ot be elimi elimina nated ted or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise. De Gillaco v. Manila Railroad Company (1955) While While a passen passenger ger is entitle entitled d to protec protection tion from person personal al violen violence ce by the com common mon carrier carrier or its agen agents ts or emplo employe yees es,, the the resp respon onsi sibi bili lity ty of the the common carrier extends only to those acts that the common carrier could foresee or avoid through the exer exerci cise se of the the degr degree ee of care care and and dili dilige genc nce e requ requir ired ed of it. it. When When the the crim crime e took took plac place, e, the the guar guard d Deve Devesa sa had had no duti duties es to disc discha harg rge e in connection with the transportation of the deceased from Calamba to Manila. The position of Devesa at

UP LAW BAROPS 2007 20 of 71

7. RESPONSIBILITY FOR ACTS OF STRANGERS AND CO-PASSENGERS Art. 1763 A comm common on carr carrie ierr is resp respon onsi sibl ble e for for inju injuri ries es suffered by a passenger on account of the wilful acts acts or negl neglig igenc ence e of othe otherr pass passeng enger ers s or of  stra strang nger ers, s, if the the comm common on carr carrie ier' r's s em empl ploye oyees es through through the exercis exercise e of the dilige diligence nce of a good good father of a family could have prevented or stopped the act or omission. Pilapil v. CA (1989) In consideration of the right granted to it by the public public to engage engage in the busine business ss of transp transporti orting ng passengers and goods, a common carrier does not give its consent to become an insurer of any and all risks isks to pas passeng engers ers and and good goods s. It merel erely y undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach thereof. Art 1755 qualifies the duty of extraordinary care, vigi vigila lanc nce e and and prec precau auti tion on in the the carr carria iage ge of  passen passengers gers by com common mon carrie carriers rs to only only such such as huma human n care care and and fore foresi sigh ghtt can can prov provid ide. e. what what constitutes compliance with said duty is adjudged with due regard to all the circumstances First, the presumption of fault/negligence against the carrier is disputable. It gives in where contrary facts are established proving either that the carrier

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law had exercised the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous event. Second, while as a general rule, common carriers are bound to exercise extraordinary diligence in the safe transport of their passengers, it would seem that this is not the standard by which its liability is to be dete deterrmine mined d when when inte interv rven enin ing g acts acts of  strang strangers ers is to be determi determined ned directl directly y cause cause the injury, while the contract of carriage exists. Under Art. 1763, a tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. The neglige negligence nce for which a com common mon carrie carrierr is held held resp respons onsib ible le is the the negl neglig igent ent om omis issi sion on by the the carrier's employees to prevent the tort from being comm commit itte ted d when when the the same same coul could d have have been been forese foreseen en and preven prevented ted by them. them. Further Further,, when when the violation of the contract is due to the willful acts of strangers, as in the instant case, the degree of care essential to be exercised by the common carrier for the protection of its passenger is only that of a good father of a family What is the common carrier’s carrier’s responsibility responsibility towards employees? The common carrier is responsible even beyond the scop scope e of auth author orit ity y and and in viol violati ation on of order orders s compared to quasi-delicts under Art. 2180, which exempts the employer if it was doine outside of  employment. However, there must be a reasonable connec connectio tion n between between the act and the contra contract ct of  carriage. What is the common carrier’s carrier’s responsibility responsibility toiwards strangers? Art. Art. 1763 1763 impo impose ses s only only the the duty duty of ordi ordina nary ry diligence. In Bachelor Express, Express , the Court held that the com common mon carrie carrierr has a duty of extraor extraordin dinary ary diligence for the act of a co-passenger. However, in Pilapil , the standard standard of dilige diligence nce is only only ordina ordinary ry dili diligen gence ce,, (Art (Art.. 1763 1763), ), refer referri ring ng to the the acts acts of  strangers. 8.

DUTY OF PASSENGER; EFFECT CONTRIBUTORY NEGLIGENCE

OF

Art. 1761 The passen passenger ger must observ observe e the diligen diligence ce of a good father of a family to avoid injury to himself. Art. 1762 The contributory contributory negligence of the passenger does not not bar bar reco recove very ry of dama damage ges s for for his his death death or inju injuri ries es,, if the the prox proxim imat ate e caus cause e ther thereof eof is the the negligence of the common carrier, but the amount of damages shall be equitably reduced

D. Damages Damages Recoverab Recoverable le from Common Carriers

UP LAW BAROPS 2007 21 of 71

1. IN GENERAL Art. 1764 Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Art. 2197 Damages may be: (1) Actual or compensatory; (2) Moral; (3) Nominal; (4) Temperate or moderate; (5) Liquidated; or (6) Exemplary or corrective. 2. ACTUAL OR COMPENSATORY COMPENSATORY Art. 2219 Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, Seduction, abduction, abduction, rape, or other lascivious lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The The pare parent nts s of the the fema female le sedu seduce ced, d, abdu abduct cted, ed, raped raped,, or abus abused, ed, referr referred ed to in No. No. 3 of this this article, may also recover moral damages. The The spou spouse se,, desc descen enda dant nts, s, asce ascend ndan ants ts,, and and brot brothe herrs and and sist sister ers s may bri bring the the acti ction menti me ntion oned ed in No. No. 9 of this this artic article le,, in the the order order named. Art. 2201 In contracts contracts and quasi-contr quasi-contracts, acts, the damages damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which which the parties parties have forese foreseen en or could could have have reasonably foreseen at the time the obligation was constituted. In case case of frau fraud, d, bad bad fait faith, h, ma mali lice ce or want wanton on attitude attitude,, the obligo obligorr shall shall be respon responsib sible le for all damages damages which may be reasonably reasonably attributed attributed to the non-performance of the obligation. (1107a) Art. 2203 The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. Cariaga v. Laguna Tayabas Bus Co. (1960) From From the the depo deposi siti tion on of Dr. Dr. Rome Romeo o Gust Gustil ilo, o, a neurosurgeon, it appears that, as a result of the injuries suffered by Edgardo, his right forehead was fractured fractured necessitatin necessitating g the removal removal of practical practically ly all of the right frontal lobe of his brain. From the

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law testimony of Dr. Jose A. Fernandez, a psychiatrist, it may be gathered that, because of the physical injuri injuries es suffer suffered ed by Edgard Edgardo, o, his mental mentality ity has been so reduced that he can no longer finish his studies as a medical student; that he has become completely misfit for any kind of work; that he can hardly hardly walk around without someone someone helping helping him, and has to use a brace on his left leg and feet. The lower lower court court found found that that the removal removal of the right fronta frontall lobe lobe of the brain of Edgardo Edgardo reduced reduced his inte intell llig igen ence ce by abou aboutt 50%; 50%; that that due due to the the replacement of the right frontal bone of his head with a tantalum plate Edgardo has to lead a quite and retired life because "if the tantalum plate is pressed in or dented it would cause his death." The impression impression one gathers gathers from this evidence is that, as a result result of the physical physical injuries injuries suffered suffered by Edgardo Cariaga, he is now in a helpless condition, virtually an invalid, both physically and mentally. His award of actual damages is thus increased to (a measly measly)) P25,00 P25,000. 0. However However,, he cannot cannot recover recover moral damages as LTB never acted fraudulently or in bad faith. Villa Rey v. CA (1970) The The dete determ rmin inat atio ion n of the the am amou ount nt invo involv lves es 2 factors. 1. The number number of years years on the basis basis of which which the damages shall be computed and 2. The rate at which the losses sustained by his sisters should be fixed The determination determination of the indemnity to be awarded to the heirs of a deceased person has therefore no fixed basis. Much is left to the discretion of the court considering the moral and material damages involved, involved, and so it has been said that "(t)here "(t)here can be no exact exact or unif unifor orm m rule rule for for measu measuri ring ng the the value of a human life and the measure of damages cann cannot ot be arri arrive ved d at by prec precis ise e ma math them emati atica call calculati calculation, on, but the amount amount recoverabl recoverable e depends on the particular facts and circumstances of each case. The life expectancy of the deceased or of the beneficiary, whichever is shorter, is an important factor. As to the the rate rate:: tota totall earn earnin ings gs less less expe expens nses es necess necessary ary in the creati creation on of such such earnin earnings gs and income (net earnings) Pan Am World v. IAC, supra IAC, supra (1988) The rule laid down in Mendoza vs PAL is clear: clear: Under Art. 1107, a debtor in good faith like the defen defenda dant nt here herein in,, ma may y be held held liab liable le only only for for damages that were foreseen or might have been foreseen at the time the contract of transportation was entered into. In the absence of a showing that PAN PAN AM’s AM’s atte attent ntio ion n was was call called ed to the the spec specia iall circ circum umst stan ance ces s requ requir irin ing g prom prompt pt deli delive very ry of  respondent Pangan’s luggages, PAN AM cannot be held held liab liable le for for the the canc cancel ella lati tion on of Pang Pangan an’s ’s contra contracts cts as it could could not have foresee foreseen n such such an even eventua tuali lity ty when when it acce accepte pted d the the lugga luggage ges s for for transit 3. MORAL DAMAGES Art. 2206 The amount amount of damages damages for death caused caused by a crim crime e or quas quasii-de deli lict ct shal shalll be at leas leastt thre three e

UP LAW BAROPS 2007 22 of 71

thousand pesos, even though there may have been mitigating circumstances. In addition: (3) (3) The The spou spouse se,, legi legiti tima mate te and and ille illegi giti tima mate te descendants and ascendants of the deceased may demand demand moral moral damages damages for mental mental anguis anguish h by reason of the death of the deceased.

Art. 2216 No proof of pecuniary loss is necessary in order that that mo mora ral, l, nomi nomina nal, l, temper temperat ate, e, liqu liquid idat ated ed or exempla exemplary ry damage damages, s, may be adjudi adjudicat cated. ed. The assess assessmen mentt of such such damage damages, s, except except liquid liquidated ated ones, is left to the discretion of the court, according to the circumstances of each case. Art. 2217 Moral damages include physical suffering, mental angu anguis ish, h, frig fright, ht, seri seriou ous s anxi anxiety ety,, besmi besmirc rche hed d reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of  pecuni pecuniary ary com comput putati ation, on, moral moral damage damages s may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219 Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, Seduction, abduction, abduction, rape, or other lascivious lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The The pare parent nts s of the the fema female le sedu seduce ced, d, abdu abduct cted, ed, raped raped,, or abus abused, ed, referr referred ed to in No. No. 3 of this this article, may also recover moral damages. The The spou spouse se,, desc descen enda dant nts, s, asce ascend ndan ants ts,, and and brot brothe herrs and and sist sister ers s may bri bring the the acti ction menti me ntion oned ed in No. No. 9 of this this artic article le,, in the the order order named. Art. 2220 Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are   justly due. The same rule applies to breaches of  contract where the defendant acted fraudulently or in bad faith. Fores v. Miranda (1959) Moral Moral damage damages s are not recover recoverabl able e in damage damage actions predicted on a breach of the contract of  transportation, in view of Articles 2219 and 2220 of  the new Civil Code. By contrasting the provisions of  these two articles it immediately becomes apparent that: (a) In case of breach of contract (including one of  transportation) proof of bad faith or fraud ( dolus), dolus), i.e., wanton or deliberately deliberately injurious injurious conduct, is essent essential ial to justif justify y an award award of moral moral damages damages;; and

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law (b) That a breach of contract can not be considered included in the descriptive term "analogous cases" used used in Art. Art. 2219 2219;; not not only only beca becaus use e Art. Art. 2220 2220 specif specifica ically lly provid provides es for the damage damages s that that are caused caused by contra contractu ctual al breach breach,, but becaus because e the definition of  quasi-delict  in Art. 2176 of the Code expressly excludes the the case cases s wher where e ther there e is a "pre "preex exis isti ting ng cont contra ract ctua uall rela relatio tion n betw between een the the parties." An exception to this rule is Art 1764 which makes the common carrier expressly subject to the rule of  Art. 2206, that entitles entitles the deceased deceased passenger to "deman "demand d moral moral damage damages s for mental mental anguis anguish h by reason of the death of the deceased" but where the injured passenger does not die, moral damages are not recoverable unless it is proved that the carrier is guilty of malice or bad faith. Air France v. Carrascoso (1966) Ther There e was was a cont contra ract ct to furn furnis ish h a firs firstt clas class s passag passage. e. The contra contract ct was breached breached when when the airlin airline e failed failed to furnis furnish h the first first class class ticket ticket at Bangkok. There was bad faith when Air France’s employee compelled Carrascoso to leave his first class class seat seat for an econom economy y class class one by forcib forcibly ly ejecting him. PAL v. Miano (1995) In breach breach of contra contract ct of carria carriage ge by air, air, moral moral damages are awarded only if the defendant acted fraudu fraudulen lently tly or in bad faith. faith. Bad faith faith means means a breach of a known duty through same motive of  intere interest st or ill will. will. "Bad "Bad faith faith does not simpl simply y connote bad judgment or negligence, it imports a dishon dishonest est purpos purpose e or som some e moral moral obliqu obliquity ity and consc consciou ious s doing doing of a wrong, wrong, a breach breach of known known duty through some motive or interest or ill-will that partakes of the nature of fraud.”  If the breach does not result in death, then there is a need need to prov prove e frau fraud d or bad bad fait faith h in order order to obtain the award of moral damages. Where Where in breach breaching ing the contra contract ct of carri carriage age the defen defenda dant nt airl airlin ine e is not not show shown n to have have acted acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. In that case, case, such such liabil liability ity does not includ include e moral moral and exemplary damages. 4. EXEMPLARY Art. 2229 Exemplary Exemplary or corrective corrective damages are imposed, by way of example or correction for the public good, in additi addition on to the moral, moral, temper temperate, ate, liquid liquidated ated or compensatory damages. Art. 2232 In contracts contracts and quasi-contr quasi-contracts, acts, the court court may award exemplary damages if the defendant acted in a wanton, wanton, fraudulent, fraudulent, reckless, reckless, oppressive, oppressive, or malevolent manner. Art. 2233

UP LAW BAROPS 2007 23 of 71

Exemp Exempla lary ry dama damages ges cann cannot ot be reco recover vered ed as a matter of right; the court will decide whether or not they should be adjudicated. Mecenas v. CA As for the captain, he was playing mahjong before and up to the time of the collision. collision. Whether or not he was then off-duty is immaterial. There is, both realistically speaking and in contemplation of law, no such thing as off-duty hours for the master of a vessel at sea that is a common carrier upon whom the the law law impo impose ses s the the duty uty of extr extrao aorrdina dinarry diligence. As for Negros Navigation, in permitting or in failing to discover and correct the regularity of  the captain’s mahjong sessions sessions while the ship was at sea, it must be deemed grossly negligent. In discussin the rule of exemplary damages in law, the Supreme Court looks to it as an instruction to serv serve e the the ends ends of law and publ publiic pol policy icy by resh eshapin aping g soc sociall ially y dele delete terrious ious beha behavi vior ors, s, specifically in the case, to compel common carriers to control their employees, to tame their reckless instincts, and to force them to take adequate care of humans beings and their property. 5. NOMINAL, TEMPERATE AND LIQUIDATED Art. 2221 Nominal damages are adjudicated in order that a right right of the plaintif plaintiff, f, which which has been violat violated ed or invaded invaded by the defendant defendant,, may be vindic vindicated ated or recognized, and not for the purpose of   indemnifying the plaintiff for any loss suffered by him Art. 2224 Temperate Temperate or moderate moderate damages, which are more tha than nomi nomina nall but less less tha than com omp pens ensator atory y damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty. Art. 2226 Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. Art. 1757 The respons responsibi ibilit lity y of a com common mon carri carrier er for the safety of passengers as required in Articles 1733 and 1755 cannot be dispensed with or lessened by stip stipul ulat atiion, on, by the the posti osting ng of noti notic ces, es, by statements on tickets, or otherwise. Alitalia v. IAC (1990) There are some species of injury was caused to Dr. Pablo because Alitalia misplaced her baggage and failed to deliver it to her at the time appointed, a breach of the contract of carriage, with the result that she was unable to read her paper. She is not entitled to be compensated for loss or damage to her luggage since they were ultimately deli delive vere red d to her. her. She She is howe howeve verr enti entitl tled ed to nomina nominall damage damages, s, which which is adjudi adjudicat cated ed in order order that the right of the passenger, which has been viol violat ated ed or inva invade ded, d, ma may y be vind vindic icat ated ed or

ONE UP LAW

II. Common Carriers  Transportation  Transportation Law recognized, and not for the purpose of   indemnifying the passenger for any loss suffered. Saludo v. CA The lamenta lamentable ble actuat actuation ions s of TWA's TWA's employ employees ees leave leave much much to be desire desired, d, partic particula ularly rly so in the face face of petitio petitioner ners' s' grief grief over the death death of their their mother mother,, exacer exacerbat bated ed by the tension tension and anxie anxiety ty wrough wroughtt by the impasse impasse and confusio confusion n over over the failure to ascertain over an appreciable period of  time what happened to her remains. Airline Airline companies companies are hereby sternly admonished that it is their duty not only to cursorily instruct but to stri strict ctly ly requi require re thei theirr perso personn nnel el to be mo more re accomm accommoda odatin ting g toward towards s custom customers ers,, passen passenger gers s and the general public. 6. ATTORNEY’S FEES AND INTEREST Art. 2208 In the absence of stipulation, attorney's fees and expense expenses s of litiga litigatio tion, n, other other than than judici judicial al costs, costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) (2) When When the the defen defenda dant' nt's s act act or om omis issi sion on has has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In crimi criminal nal cases cases of malici malicious ous prosec prosecuti ution on against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) (5) Wher Where e the the defe defend ndan antt acte acted d in gros gross s and and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) (7) In acti action ons s for for the the reco recove very ry of wage wages s of  household helpers, laborers and skilled workers; (8) (8) In acti action ons s for for indem indemni nity ty under under work workme men' n's s compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) (10) When When at leas leastt doub double le judi judici cial al cost costs s are are awarded; (11) In any other case where the court deems it   jus justt and and equi equita tabl ble e tha that atto attorn rney ey's 's fees fees and and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of  litigation must be reasonable. Art. 2210 Interes Interestt may, may, in the discretio discretion n of the court, court, be allo allowed wed upon upon dama damage ges s awar awarde ded d for for breac breach h of  contract. Art. 2212 Interest due shall earn legal interest from the time it is judicially judicially demanded, demanded, although the obligation obligation may be silent upon this point. (1109a)

UP LAW BAROPS 2007 24 of 71

ONE UP LAW

III. Code of Commerce Provisions Provisions on Overland Transportation  Transportation  Transportation Law

III. Code of Commerce Provisions on Overland Transportation (unless otherwise indicated, reference is to Code of  Commerce) What does the Code of Commerce cover? It gove govern rns s over over over overla land nd tran transp spor orat atio ion n and and mariti maritime me admira admiralty lty.. It govern governs s only only com commer merci cial al contracts. Commercial contracts involving common carriers  refer first to the Civil Code, then to the Code of  Commerce Private carriers involved in commercial contracts  refer first to the Code of Commerce, then to the Civil Code, but excluding the Civil Code provisions on common carriers

A. Scope of Overland Transportation What is overland transport? Overland transport applies to transport on land and on small bodies of water, waterways, both natural and artificial, artificial, including including transport transport on rivers rivers which are not very large. (If it is transport at sea, then it is admiralty)

B. Nature of Contract ARTICLE 349 A contract for all kinds of transportation over land or river shall be considered commercial: 1. When it involves merchandise or any commercial goods. 2. When When,, no matt matter er wha whatt its obj objec ectt may may be, the the carrier is a merchant or is customarily engaged in making transportation for the public.

C. Effect of Civil Code Art 1766 In all matters not regulated by this Code, the rights and and obli obliga gati tion ons s of comm common on carr carrie iers rs shal shalll be governed by the Code of Commerce and by special laws. Art. 2270 The follow following ing laws laws and regula regulation tions s are hereby hereby repealed: (1) Those parts and provisions provisions of the Civil Code of  1889 which are in force on the date when this new Civil Code becomes effective: (2) (2) The The provi provisi sion ons s of the the Code Code of Comm Commer erce ce governing sales, partnership, agency, loan, deposit and guaranty; (3) The provisions of the Code of Civil Procedure on prescription as far as inconsistent with this Code; and (4) All laws, laws, Acts, parts of Acts, Acts, rules rules of court, court, executive executive orders, orders, and administra administrative tive regulations regulations which are inconsistent with this Code. (n)

UP LAW BAROPS 2007 25 of 71

D. Contract of Carriage 1.

BILL OF LADING

DEFINITION, SUBJECT MATTER  ARTICLE 352 Bills of lading or tickets in the case of   transportation of passengers may be different, one for persons persons and another another for baggage, baggage, but all of  them shall shall contai contain n the name of the carrier, carrier, the date date of ship shipme ment, nt, the the points points of depar departu ture re and and arrival, arrival, the price, price, and with regard to baggage, the number and weight of the packages, with any other indications which may be considered necessary in order to easily identify them. What is a bill of lading? It may be defined as a written written acknowledgment acknowledgment of  the receipt of goods and an agreement to transport and to deliver them at a specified place to a person named or on his order. It comprehends all methods of transportation. Each bill of lading is a contract in itself and the parties are bound by its terms. A bill of lading is also a receipt, and it is likewise a symbol of the goods covered by it. It is also a document of title. Who are the parties to a bill of lading? 1. shipper 2. consignee 3. carrier FORM, CONTENTS ARTICLE 350 The shipper as well as the carrier of merchandise and goods may mutually demand of each other the issue issue of a bill bill of lading lading in which there there shall shall be stated: 1. The name, surname, and dom domicile of the the shipper. 2. The name, surname, and dom domicile of the the carrier. 3. The name, surname and domicile of the person to whom or to whose order the goods are addressed, or whether they are to be delivered to the bearer of the said bill. 4. A desc escriptio tion of the the good oods, stati tatin ng their eir generic generic character character,, their weight, and the external marks marks or signs signs of the packages packages contai containin ning g the same. 5. The The cost cost of of the the tran transp spor orta tati tion on.. 6. The The date date on on whi which ch the the shi shipm pmen entt is ma made. de. 7. The The plac place e of the the deli deliver very y to the the car carri rier er.. 8. The The plac place e and and time time at at whic which h the the deliv deliver ery y is to to be made to the consignee. 9. The The dama damages ges to be be paid paid by by the the carr carrie ierr in cas case e of delay, if any agreement is made on this point.

ONE UP LAW

III. Code of Commerce Provisions Provisions on Overland Transportation  Transportation  Transportation Law ARTICLE 351 In ship shipme ment nts s ma made de over over rail railro road ads s or by other other enterprises which are subject to schedules or the time fixed by regulations, it shall be sufficient that the the bill bills s of ladi lading ng or decla declara ratio tions ns of ship shipmen mentt furnished by the shipper refer, with regard to the rate, ate, ter terms ms,, and specia eciall condi onditi tion ons s of the the transporta transportation, tion, to the schedules schedules and regulations, regulations, the application of which is requested; and should no schedule be determined the carrier must apply the rate of the merchandise paying the lowest, with the conditi condition on inhere inherent nt theret thereto, o, always always includ including ing such statement or reference in the bill of lading delivered to the shipper. Is the form material? No. As long as it contains an acknowledgment by the carrier of the receipt of goods for transporation, it is in legal effect, a bill of lading. FUNCTION ARTICLE 353 The legal basis of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which all disputes which may arise with regard regard to their execution execution and fulfillment fulfillment shall be decided without admission of other exceptions than forgery or material errors in the drafting thereof. After the contract has been complied with the bill of lading issued by the carrier carrier shall be returned returned to him, him, and by vir virtue tue of the the exch excha ange nge of this this certificate for the article transported, the respective obliga obligation tions s and action actions s shall shall be consid considered ered as canceled, unless in the same act the claims which the the cont contra ract ctin ing g part partie ies s desi desire red d to rese reserv rve e are are reduce reduced d to writin writing, g, excepti exception on being being made made of the provisions of Article 366. If in case of loss oss or for any oth other reas eason whatso whatsoever ever,, the consig consignee nee can not return return upon upon rece receiv ivin ing g the the me merc rcha hand ndis ise e the the bill bill of ladi lading ng subscribed by the carrier, he shall give said carrier a rece receip iptt for for the the goods goods deliv deliver ered, ed, this this rece receip iptt producing the same effects as the return of the bill of lading. 2.

REFUSAL TO TRANSPORT TRANSPOR T

ARTICLE 356 Carr Carrie ierr ma may y refu refuse se to acce accept pt pack packag ages es whic which h appe appear ar unfi unfitt for for tran transp spor orta tati tion on;; and and if said said transportation is to be made by railway and the shipment is insisted on, the company shall carry them them,, bein being g exem exemp pt from from all all liabi iabili lity ty if its objections are so stated in the bill of lading. 3.

DOUBTFUL DOUBTF UL DECLARATION DECLAR ATION OF CONTENTS

ARTICLE 357 If the carrier carrier by reason reason of well-founded well-founded suspicions suspicions as to the the corr correc ectn tnes ess s of the the decla declara rati tion on of the the contents of a package should determine to examine it, he shall do so before witnesses, in the presence of the shipper or of the consignee. Should Should the shipper shipper or consig consignee nee to be cited cited not appear appear,, the examin examinati ation on shall shall be made made before before a notary, who shall draft a certificate of the result of  the examination, for the proper purposes.

UP LAW BAROPS 2007 26 of 71

If the declaration declaration of the shipper shipper should be correct, correct, the expenses caused by the examination and those of care carefu full lly y repa repack ckin ing g the the pack packag ages es shal shalll be defrayed by the carrier, and in a contrary case by the shipper. 4. NO BILL OF LADING ARTICLE 354 In the absence of a bill of lading the respective claims of the parties shall be decided by the legal proofs that each one may submit in support of his claims, in accordance with the general provisions established in this Code for commercial contracts. ARTICLE 351 In tran transp spor orat atio ion n ma made de by rail railro road ads s or othe otherr enterprises which are subject to schedules or the time fixed by regulations, it shall be sufficient that the bills of lading or the declarations of shipment furnished by the shipper refer, with respect to the rate, ate, ter terms ms,, and and speci pecial al cond condit itio ions ns of the the transportati transportation, on, to the schedules schedules and regulations regulations,, the application of which he requests, and should no schedule by determined, the carrier must apply the rate of the merchandise paying the lowest, with the conditions inherent therein, always including such statement or reference to them in the bill of lading which he delivers to the shipper. Is a bill of lading essential to a contract of  transportation? No. No. Whil While e under under Art. 350 350 the the ship shipper per and the the common carrier may mutually demand that a bill of  lading be made, it is not obligatory. The fact that a bill of lading is not issued does not preclude the existence of a contract of transportation. Wher Where e no bill bill of ladi lading ng is issu issued, ed, the the disp disput utes es between the parties shall be decided according to the rules laid down in Art. 354.

E. Responsibility of the carrier 1. WHEN IT COMMENCES ARTICLE 355 The liabilit liability y of the carrier carrier shall shall begin begin from from the moment he receives the merchandise, in person or through through a person person intrus intrusted ted theret thereto o in the place place indicated for their reception. 2.

ROUTE

ARTICLE 359 If ther there e shou should ld be an agre agreeme ement nt betw between een the the shipper and the carrier with regard to the road over which the transportation is to be made, the carrier can not change the route, unless obliged to do so by force force majeure; majeure; and should should he do so without without being forced to, he shall be liable for any damage which may be suffered by the goods transported for any other other cause cause whatso whatsoever ever,, beside besides s being being required to pay the amount which may have been stipulated for such a case. When When on accoun accountt of the said said force force majeure majeure the carrier is obliged to take another route, causing an

ONE UP LAW

III. Code of Commerce Provisions Provisions on Overland Transportation  Transportation  Transportation Law increase increase in the transportation transportation charges, he shall be reimbursed for said increase after presenting the formal proof thereof. 3.

CARE CAR E OF GOO GOODS DS

ARTICLE 361 Merchandise Merchandise shall be transported transported at the risk and ventur venture e of the shipper shipper,, if the contrary contrary was not expressly stipulated. Therefore, all damages and impairment suffered by the goods during the transportation, by reason of  accident, accident, force majeure, or by virtue virtue of the nature or defect of the articles, shall be for the account and risk of the shipper. cdta The proof of these accidents is incumbent on the carrier. ARTICLE 362 The carrier, carrier, however, however, shall shall be liable for the losses and damages arising from the causes mentioned in the the fore foregoi going ng arti articl cle e if it is prov proved ed that that they they occurred on account of his negligence or because he did not take the precautions usually adopted by careful careful person persons, s, unless unless the shipper shipper com commi mitted tted fraud fraud in the bill of lading, lading, making him believe believe that the goods were of a class or quality different from what they really were. If, notwithstanding notwithstanding the precaution precaution referred to in this article, the goods transported run the risk of  being lost on account of the nature or by reason of  an unavoidable accident, without there being time for the owners of the same to dispose thereof, the carrier shall proceed to their sale, placing them for this this purp purpos ose e at the the disp dispos osal al,, of the the judi judici cial al author authority ity or the offici officials als determi determined ned by specia speciall provisions. Art 1734 Common Common carrie carriers rs are respon responsib sible le for the loss, loss, destruction, or deterioration of the goods, unless the same is due to any of the followi following ng causes causes only: (1) Flood, storm, storm, earthquake, earthquake, lightning, lightning, or other natural disaster or calamity; (2) (2) Act Act of the the publ public ic enem enemy y in war, war, whet whethe herr 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; (5) Order or act of competent public authority. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding preceding article, article, if  the the goods goods are are lost lost,, destr destroye oyed d or deter deterio iora rated ted,, common com mon carrier carriers s are presumed presumed to have have been at fault fault or to have have acted acted neglig negligentl ently, y, unless unless they prove that they observed extraordinary diligence as required in Article 1733. 4. DELIVERY CONDITION

OF GOODS

ARTICLE 363 With the exception of the cases prescribed in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods transported in the

UP LAW BAROPS 2007 27 of 71

same condition in which, according to the bill of  ladi lading ng,, they they were were at the the time time of thei theirr rece receip ipt, t, without any detriment or impairment, and should he not do so, he shall be obliged to pay the value of the goods not delivered delivered at the point where they shoul should d have have been been and and at the the time time the the deliv deliver ery y should have taken place. If part of the goods transported should be delivered the consignee may refuse to receive them, when he prov proves es that that he can can not not ma make ke use use ther thereo eof  f  without the others. ARTICLE 364 If the effect of the damage referred to in Article 361 should be only a reduction in the value of the goods, the obligation of the carrier shall be reduced to the payment of the amount of said reduction in value, after appraisal by experts. ARTICLE 365 If, If, on acco accoun untt of the the dama damage ge,, the the good goods s are are rend endered ered useles eless s for purposes oses of sale or consumption in the use for which they are properly destin destined ed the the cons consig igne nee e shal shalll not not be boun bound d to receive them, and may leave them on the hands of  the carrier, demanding payment therefor at current market prices. If among the goods damaged there should be some in good good cond condit itio ion n and and with withou outt any any def defect ect what whatso soev ever er,, the the fore forego goin ing g prov provis isio ion n shal shalll be applicable with regard to the damaged ones, and the consignee shall receive those which are sound, this this sepa separa rati tion on bein being g ma made de by dist distin inct ct and separate articles, no object being divided for the purp purpos ose, e, unle unless ss the the cons onsigne ignee e prov proves es the the impossibility of conveniently making use thereof in this form. The same provision shall be applied to merchandise in bale bales s or pack packag ages es,, with with dist distin inct ctio ion n of the the packages which appear sound. ARTICLE 366 Within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the indications of the damage or average giving rise to the claim can not be ascertained ascertained from the exterior exterior of said packages, in which case said claim would only be admitted on the receipt of the packages. After the periods mentioned have elapsed, or after the transp transport ortati ation on charge charges s have have been paid, paid, no claim claim whatso whatsoever ever shall shall be admitte admitted d agains againstt the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 367 If there should occur doubts and disputes between the consignee and the carrier with regard to the condition of goods transported at the time of their deliver delivery y to the former, former, the said goods goods shall shall be examined by experts appointed by the parties, and a third one, in case of disagreement, disagreement, appointed by the judicial authority, the result of the examination bein being g redu reduce ced d to writ writin ing; g; and and if the the pers person ons s interested should not agree to the report of the experts experts and could could not settle settle their their dispute disputes, s, said said   judic judicial ial author authority ity shall shall order order the deposi deposits ts of the

ONE UP LAW

III. Code of Commerce Provisions Provisions on Overland Transportation  Transportation  Transportation Law merchandise in a safe warehouse, and the parties intere interested sted shall shall make make use of their their rights rights in the proper manner.

ARTICLE 368 The carrier must deliver to the consignee without any delay or difficulty the merchandise received by him, by reas eason of the the mere ere fact of bein eing designated in the bill of lading to receive it; and should said carrier not do so he shall be liable for the damages which may arise therefrom.

directly responsible for the fault which gives rise to the claim of the shipper or of the consignee. The carrier making the delivery shall also assume all the actions and rights of those who may have preceded him in the transportation. The The send sender er and and the the cons consig igne nee e shal shalll have have an immediate right of action against the carrier who executed executed the transportati transportation on contract, contract, or against against the the oth other carr arriers iers who who recei eceive ved d the the goods oods transported without reserve. The The rese reserv rvati ation ons s ma made de by the the latte latterr shal shalll not not exempt exempt them, them, however however,, from from the liabil liabiliti ities es they may have incurred by reason of their own acts.

JUDICIAL

OBLIGATION TO

TO

WHOM DELIVERY MADE

DEPOSIT

KEEP REGISTRY

ARTICLE 369 Should Should the consignee consignee be not found at the domicile domicile indicated in the bill of lading, or should refuse to pay the transportation charges and expenses, or to receive the goods, the deposit of said goods shall be ordered by the municipal judge, where there is no judg judge e of firs firstt insta instanc nce, e, to be plac placed ed at the the disposal of the shipper or sender, without prejudice to a perso person n havi having ng a better better righ right, t, this this depos deposit it having all the effects of a delivery.

ARTICLE 378 Transportation agents shall be obliged to keep a special special registry, registry, with the formalities formalities required required by Artic Article le 36, 36, in whic which h ther there e shal shalll be enter entered, ed, in progre progressi ssive ve order order of number numbers s and dates, all the goods the transportati transportation on of which is undertaken, stating stating the circumstan circumstances ces required required by Articles Articles 350 et seq. for the responsive bills of lading.

Art. 1752 Even Even when when ther there e is an agre agreem emen entt limi limitin ting g the the liability of the common carrier in the vigilance over the the goods goods,, the the comm common on carr carrier ier is disp disputa utabl bly y presumed to have been negligent in case of their loss, destruction or deterioration.

ARTICLE 377 The carrier shall be liable liable for all the consequences consequences arising arising from noncomplia noncompliance nce on his part with the formalities prescribed by the laws and regulations of the the publ public ic admi admini nist stra rati tion on duri during ng the the enti entire re course course of the trip and on the arrival arrival at the point of  destination, except when his omission arises from his his havi having ng been been indu induce ced d into into erro errorr by fals false e statements statements of the shipper in the declaration declaration of the merchandise. If the carrier has acted in accordance with a formal order received from the shipper or consignee of the merchandise both shall incur liability.

WHEN

TO BE MADE

ARTICLE 370 If a period has been fixed for the delivery of the good goods, s, it must must be ma made de with within in the the same, same, and and other otherwi wise se the the carr carrie ierr shal shalll pay pay the the indem indemni nity ty agre agreed ed upon upon in the the bill bill of ladi lading ng,, neith neither er the the shipper shipper nor consignee consignee being entitled to anything anything else. Should no indemnity have been agreed upon and the the delay delay exceed exceeds s the the time time fixe fixed d in the the bill bill of  lading, the carrier shall be liable for the damages which may have been caused by the delay. ARTICLE 358 Should Should no period period within within which which goods are to be delivered be previously fixed, the carrier shall be under the obligation to forward them in the first shipment of the same or similar merchandise which he may make to the point of delivery; and should he not do so, the damages occasioned by the delay shall be suffered by him. TWO

OR  MORE CARRIERS

ARTICLE 373 A carrier who delivers merchandise to a consignee by virtue of agreements or combined services with other carriers shall assume the obligations of the carriers who preceded him, reserving his right to proc proceed eed agai agains nstt the the latte latterr if he shou should ld not not be

UP LAW BAROPS 2007 28 of 71

COMPLIANCE WITH

ADMINISTRATIVE REGULATIONS

F. Righ Rights ts and and Obli Obliga gati tion ons s of Ship Shippe per r and/or Consignee 1. RIGHTS TO DAMAGES CONDITION

IMPOSED ON RIGHT

ARTICLE 366 Within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the indications of the damage or average giving rise to the claim can not be ascertained ascertained from the exterior exterior of said packages, in which case said claim would only be admitted on the receipt of the packages. After the periods mentioned have elapsed, or after the transp transport ortati ation on charge charges s have have been paid, paid, no claim claim whatso whatsoever ever shall shall be admitte admitted d agains againstt the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 357 If the carrier by reason reason of well-founded well-founded suspicions suspicions as to the the corr correc ectne tness ss of the the decla declara rati tion on of the the

ONE UP LAW

III. Code of Commerce Provisions Provisions on Overland Transportation  Transportation  Transportation Law contents of a package should determine to examine it, he shall do so before witnesses, in the presence of the shipper or of the consignee. Should Should the shipper shipper or consig consignee nee to be cited cited not appear appear,, the examin examinati ation on shall shall be made made before before a notary, who shall draft a certificate of the result of  the examination, for the proper purposes. If the declaratio declaration n of the shipper should be correct, the expenses caused by the examination and those of care carefu full lly y repa repack ckin ing g the the pack packag ages es shal shalll be defrayed by the carrier, and in a contrary case by the shipper. ARTICLE 353 The legal basis of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which all disputes which may arise with regard regard to their execution execution and fulfillment fulfillment shall be decided without admission of other exceptions than forgery or material errors in the drafting thereof. After the contract has been complied with the bill of lading issued by the carrier carrier shall be returned returned to him, him, and by vir virtue tue of the the exch excha ange nge of this this certificate for the article transported, the respective obliga obligation tions s and action actions s shall shall be consid considered ered as canceled, unless in the same act the claims which the the cont contra ract ctin ing g part partie ies s desi desire red d to rese reserv rve e are are reduce reduced d to writin writing, g, excepti exception on being being made made of the provisions of Article 366. If in case of loss oss or for any oth other reas eason whatso whatsoever ever,, the consig consignee nee can not return return upon upon rece receiv ivin ing g the the me merc rcha hand ndis ise e the the bill bill of ladi lading ng subscribed by the carrier, he shall give said carrier a rece receip iptt for for the the goods goods deliv deliver ered, ed, this this rece receip iptt producing the same effects as the return of the bill of lading. AMOUNT

OF DAMAGES FOR  LOSS

ARTICLE 372 The appraisement of the goods which the carrier must pay in case of their being lost or mislaid shall be fixed in accordance with what is stated in the bill of lading, no proofs being allowed on the part of  the the ship shipper per that that ther there e were were am amon ong g the the goods goods declar declared ed therein therein articl articles es of greater greater value, value, and money. Horses, Horses, vehicles, vehicles, vessels, equipment, and all the other principal and access essory ory mean eans of  transportation, shall be especially obligated in favor of the shipper, although with relation to railroads said said obli obliga gati tion on shal shalll be subo subord rdin inat ated ed to the the provisions of the laws of concession with regard to property and to those of this Code with regard to the manner and form of making attachments and retentions against the said companies. Art. 1744 A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, loss, destru destructi ction, on, or deterio deteriorat ration ion 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) Suppor Supported ted by a valuab valuable le consi considera deration tion other other than the service service rendered by the common carrier; carrier; and

UP LAW BAROPS 2007 29 of 71

(3) Reason Reasonabl able, e, just just and not contra contrary ry to public public policy. AMOUNT

OF DAMAGES FOR  DELAY

ARTICLE 371(3). Should the abandonment not occur the indemnity for loss and damages on account of the delays can not not exce exceed ed the the cur current ent pric price e of the the good goods s transported transported on the day and at the place where the deli delive very ry was was to have have been been ma made de.. The The same same provision shall be observed in all cases where this indemnity is due. 2.

RIGHT TO ABANDON

ARTICLE 371 In cases of delay on account of the fault of the carri carrier, er, referr referred ed to in the foregoi foregoing ng artic articles les,, the consignee may leave the goods transported on the hand hands s of the the carr carrie ier, r, info inform rmin ing g him him ther thereof eof in writing before the arrival of the same at the point of destination. When this abandonment abandonment occurs, the carrier carrier shall shall satisfy the total value of the goods, as if they had been lost or mislaid. aisadc Should the abandonment not occur the indemnity for loss and damages on account of the delays can not not exce exceed ed the the cur current ent pric price e of the the good goods s transported transported on the day and at the place where the deli delive very ry was was to have have been been ma made de.. The The same same provision shall be observed in all cases where this indemnity is due. ARTICLE 360 The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and and the the latt latter er shal shalll comp comply ly with with his his orde orders rs,, provided that at the time of making the change of  the consignee the bill of lading subscribed by the carri carrier er be return returned ed to him, him, if one were issued, issued, exchanging it for another containing the novation of the contract. The expenses arising from the change of  consignment shall be defrayed by the shipper. ARTICLE 363 With the exception of the cases prescribed in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods transported in the same condition in which, according to the bill of  ladi lading ng,, they they were were at the the time time of thei theirr rece receip ipt, t, without any detriment or impairment, and should he not do so, he shall be obliged to pay the value of the goods not delivered delivered at the point where they shoul should d have have been been and and at the the time time the the deliv deliver ery y should have taken place. If part of the goods transported should be delivered the consignee may refuse to receive them, when he prov proves es that that he can can not not ma make ke use use ther thereo eof  f  without the others. ARTICLE 365 If, If, on acco accoun untt of the the dama damage ge,, the the good goods s are are rend endered ered useles eless s for purposes oses of sale or consumption in the use for which they are properly destin destined ed the the cons consig igne nee e shal shalll not not be boun bound d to

ONE UP LAW

III. Code of Commerce Provisions Provisions on Overland Transportation  Transportation  Transportation Law receive them, and may leave them on the hands of  the carrier, demanding payment therefor at current market prices. If among the goods damaged there should be some in good good condi onditi tio on and with withou outt any def defect ect what whatso soeve ever, r, the the fore forego goin ing g provi provisi sion on shal shalll be applicable with regard to the damaged ones, and the consignee shall receive those which are sound, this this separ eparat atio ion n bein being g ma made de by dist distin inct ct and and separate articles, no object being divided for the pur purpos pose, unl unless ess the the cons onsignee gnee prov proves es the the impossibility of conveniently making use thereof in this form. The same provision shall be applied to me rchandise in bale bales s or pack packag ages es,, with with dist distin inct ctio ion n of the the packages which appear sound. 3. RIGHT TO CHANGE CONSIGNMENT ARTICLE 360 The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and and the the latt latter er shal shalll comp comply ly with with his his orde orders rs,, provided that at the time of making the change of  the consignee the bill of lading subscribed by the carrie carrierr be return returned ed to him, him, if one were issued, issued, exchanging it for another containing the novation of the contract. The exp expens enses arising from the change of  consignment shall be defrayed by the shipper. 4.

OBLIGATION TO PAY TRANSPORTATION CHARGES

ARTICLE 374 The consignees to whom the remittance may have been been ma made de can can not not defer defer the the paym payment ent of the the expenses and transportation charges on the goods that that they receiv received ed after after twenty twenty-fo -four ur hours hours have have elapsed from the time of the delivery; and in case of delay in making this payment, the carrier may requ equest est the the judicial sale of the goods ods he transp transport orted ed to a suffic sufficien ientt amo amount unt to cover cover the transportation charges and the expenses incurred.

Art. 2241 With reference to specific movable property of the debtor debtor,, the the foll follow owin ing g clai claims ms or lien liens s shal shalll be preferred: (9) Credit Credits s for transp transport ortati ation, on, upon upon the goods goods carried, for the price of the contract and incidental expenses, expenses, until their delivery and for thirty thirty days thereafter; 5.

OBLIGATION LADING

TO

RETURN

BILL

OF

ARTICLE 353. (2) (3) After the contract has been complied with the bill of lading issued by the carrier shall shall be returned returned to him him, and and by virt virtue ue of the the exc exchan hange of thi this certificate for the article transported, the respective obliga obligatio tions ns and action actions s shall shall be consi considere dered d as canceled, unless in the same act the claims which the the cont contra ract ctin ing g part partie ies s desir desired ed to rese reserv rve e are are reduce reduced d to writin writing, g, excepti exception on being being made made of the provisions of Article 366. If in case of loss or for any other reason whatsoe whatsoever ver,, the consig consignee nee can not return return upon upon rece receiv ivin ing g the the me merc rcha hand ndis ise e the the bill bill of ladi lading ng subscribed by the carrier, he shall give said carrier a rece receip iptt for for the the goods goods deli deliver vered, ed, this this rece receip iptt producing the same effects as the return of the bill of lading.

G. Applicability of Provisions ARTICLE 379 The provis provision ions s contai contained ned in Articl Articles es 349 et seq. seq. shall shall also also be unders understood tood as relati relating ng to person persons s who, who, althou although gh they do not person personall ally y effect effect the transportation of commercial goods, contract to do so thro through ugh other others, s, eith either er as contr contrac actor tors s for for a specia speciall and fixed fixed transa transacti ction on or as freigh freightt and transportation agents. In either case they shall be subrogated to the place of the carriers with regard to the obligations and liability of the latter, as well as with regard to their right.

ARTICLE 375 The The good goods s tran transp spor orte ted d shal shalll be spec specif ific ical ally ly obligated to answer for the transportation charges and for the expenses and fees caused by the same during during their their transp transport ortati ations ons,, or until until the time of  their delivery. This This special special right right shall be limited limited to eight eight days after the delivery has been made, and after said prescription the carrier shall have no further right of action than that corresponding corresponding to an ordinary creditor.

ARTICLE 376 The preference of the carrier to the payment of  what what is due due him him for for the the tran transp spor orta tati tion on and and expenses of the goods delivered to the consignee shal shalll not not be affe affecte cted d by the the bank bankru ruptc ptcy y of the the latter latter,, provid provided ed the action action is brough broughtt within within the eight days mentioned in the foregoing article.

UP LAW BAROPS 2007 30 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law

IV.

Admiralty and Maritime Commerce

A. Sources Sources of Maritime/ Maritime/Admi Admiralty ralty Laws in the Philippines Main source of law: Code of Commerce If common carrier, apply Civil Code first, then Code of Commerce and special laws. Maritime Maritime law includes includes coastwise, coastwise, oceanwise oceanwise and commercial laws.

B. Concept of Admiralty; jurisdiction over admiralty cases Admi Admira ralt lty y is dist distin ingu guis ished hed from from over overla land nd transportation on the size of the vessel and size of the body body of water water over which which a vesse vessell traverses. However, it is now the amount of the claim that is relevant, and not whether it is an admiralty or maritime claim. BP 129 Sec 19   Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive original jurisdiction: (3) (3) In all all acti action ons s in admi admira ralt lty y and and ma mari riti time me  jurisdiction where he demand or claim excee ds One hundr hundred ed thousa thousand nd pesos pesos (P100, (P100,000 000.00 .00)) or , in Metro Manila, where such demand or claim exceeds Two hundred thousand pesos (200,000.00); Secti Section on 33. 33.   Juris Jurisdic dictio tion n of Metrop Metropoli olitan tan Trial  Trial  Courts, Municipal Trial Courts and Municipal Circuit  Trial Trial Courts Courts in civil civil cas cases. es. — Metropolitan Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: (1) Exclusive original jurisdiction over civil actions and probat probate e procee proceedin dings, gs, testate testate and intest intestate, ate, incl includ udin ing g the the gran grantt of prov provis isio iona nall remed remedie ies s in prope properr case cases, s, wher where e the the valu value e of the the pers person onal al property, estate, or amount of the demand does not exc exceed eed One hundred thousand pesos esos (P100, (P100,000 000.00 .00)) or, in Metro Metro Manila Manila where where such such pers person onal al prop proper erty ty,, esta estate te,, or am amou ount nt of the the demand demand does not exceed Two hundred thousand thousand pesos (P200,000.00) exclusive of interest damages of what whatev ever er kind kind,, atto attorn rney ey's 's fees fees,, liti litiga gati tion on expenses, and costs, the amount of which must be specifically alleged: Provided, That where there are severa severall claims claims or causes causes of action action between between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions;

C. Vessels 1. MEANING Vessels Vessels are those engaged engaged in navigation, navigation, whether coastwide or on the high seas, including floating floating docks, docks, pontoons, pontoons, dredges, scows, and any other floating apparatus destined for the services of the industry or maritime commerce.

UP LAW BAROPS 2007 31 of 71

Vessels engaged in the business of carrying or transporting passengers or goods for compensation, offering their services to the public, are common carriers, and are governed primarily by the Civil Code and suppletorily by the Code of  Commerce and special laws. 2. NATURE AND ACQUISITION OF Lopez v. Duruelo The The word word vess vessel el used used in the the sect sectio ion n was was not not inte intend nded ed to incl includ ude e all all ship ships, s, craf craftt or floa floatin ting g structures of every kind without limitation, and the provis provision ion of that that section section should should not be held held to include minor craft engaged only in river or bay traffi traffic. c. Vessel Vessels s of a minor minor natur nature, e, such such as river river boats and those carrying passengers from ship to shor shore, e, are gove goverrned ned as to thei theirr liab liabil iliity in passengers by the Civil Code. ARTICLE 573 Merchant vessels constitute property which may be acqu acquir ired ed and and tran transf sfer erre red d by any any of the the me mean ans s recognized by law. The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if  not recorded in the mercantile registry. The ownership of a vessel shall also be acquired by the the poss posses essi sion on ther thereo eoff in good good fait faith h for for three three years, with a good title duly recorded. In the the absen bsenc ce of any of thes these e requ requis isit ites es,, uninter uninterrup rupted ted posses possessio sion n for ten years years shall shall be necessary in order to acquire ownership. A captain can not acquire by prescription the ship of which he is in command. ARTICLE 574 The builders of vessels may employ the material and with regard to their construction and rigging may follow the system which is most convenient to their interests. Ship agents and seamen shall be subj subjec ectt to the the prov provis isio ions ns of the the laws laws and and regu regula lati tion ons s of the the publ public ic admi admini nist stra rati tion on on navigation, navigation, customs, health, safety of the vessels, vessels, and other similar provisions. ARTICLE 585 For all purposes of law not modified or restricted by the provisions of this Code, vessels shall continue to be considered as personal property. Art. 712 Owne Owners rshi hip p is acqu acquir ired ed by occu occupa pati tion on and and by intellectual creation. Ownership and other real rights over property are acquired and transmitted by law, by donation, by esta estate te and intes testat tate success ession, and in consequence of certain contracts, by tradition. They may also be acquired by means of   prescription.

D.

Pers Person ons s Part Partic icip ipat atin ing g Commerce

in

Mari Mariti time me

1.

SHIPOWNERS AND SHIPAGENTS

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law Owners of Vessels and Ship Agents ARTICLE 586 The owner of a vessel and the agent shall be civilly liab liable le for for the the acts acts of the the capt captai ain n and and for for the the obli obliga gatio tions ns cont contra ract cted ed by the the latte latterr to repa repair ir,, equip equip,, and and provi provisi sion on the the vess vessel el,, prov provid ided ed the the cred credito itorr prov proves es that that the the am amou ount nt clai claimed med was was invested therein. By agent is understood the person intrusted with the provisioning of a vessel, or who represents her in the port in which she happens to be.

ARTICLE 587 The The agen agentt shal shalll also also be civi civill lly y liab liable le for for the the indemnities indemnities in favor of third third persons persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her her equip equipme ments nts and and the the frei freigh ghtt he ma may y have have earned during the voyage. ARTICLE 588 Neither the owner of the vessel nor the agent shall be liab liable le for for the the obli obliga gati tions ons contr contrac acted ted by the the capt captai ain n if the the latt latter er exce exceed eds s his his powe powers rs and and privileges which are his by reason of his position or have been conferred upon him by the former. However, if the amounts claimed were made use of  for the benefit of the vessel, the owner or agent shall be liable. ARTICLE 589 If two or more persons persons should be part owners of a merchant vessel, an association shall be presumed as established by the part owners. This his ass associa ociati tion on sha shall be gove goverrned by the the resolutions of a majority of the members. A majori majority ty shall shall be the relative relative majori majority ty of the voting members. If there should be only two part owners, in case of  disagreement the vote of the member having the largest largest interest interest shall be decisive. decisive. If the interests are equal, it shall be decided by lot. The The repr repres esen entat tatio ion n of the the sm smal alle lest st part part in the the ownership shall have one vote; and proportionately the other part owners as many votes as they have parts equal to the smallest one. aisadc A vessel can not be detained, attached or levied upon execution in her entirety for the private debts of a part part owner owner,, but but the the proc proceed eedin ings gs shal shalll be limited to the interest the debtor may have in the vessel, without interfering with her navigation. ARTICLE 590 The owners of a vessel shall be civilly liable in the propor proportion tion of their their contri contribut bution ion to the com common mon fund, fund, for the result results s of the acts acts of the captai captain, n, referred to in Article 587. Each Each part part owner owner may exempt himself himself from from this this liability by the abandonment before a notary of the part of the vessel belonging to him. ARTICLE 591 All the part owners owners shall be liable, liable, in proportion proportion to their their respec respectiv tive e owners ownership hip,, for the expens expenses es of  repairs to the vessel, and for other expenses which

UP LAW BAROPS 2007 32 of 71

are are incu incurr rred ed by virt virtue ue of a reso resolu luti tion on of the the majority. They shall likewise be liable in the same proportion for the expenses of maintenance, equipment, and prov proviision sioniing of the the vesse essell, nec necess essary ary for navigation. ARTICLE 592 The resolutions of the majority with regard to the repair, equipment, and provisioning of the vessel in the port of departure shall bind the majority unless the the part partne ners rs in the the mino minori rity ty reno renoun unce ce thei theirr participatio participation n therein, therein, which which must be acquired acquired by the other part owners after a judicial appraisement of the value of the portion or portions assigned. The resolu resolution tions s of the majori majority ty relati relating ng to the dissolution of the association and sale of the vessel shall also be binding on the minority. The sale of the vessel must take place at a public auction, subject to the provisions of the law of civil proced procedure ure unless unless the part part owners owners unanim unanimous ously ly agree agree otherw otherwise ise,, the right right of option option to purcha purchase se and to withdraw withdraw mention mentioned ed in Article Article 575 being being always reserved in favor of said part owners. ARTICLE 593 The owners of a vessel shall have preference in her charter charter to other persons, offering offering equal conditions conditions and price. price. If two or more of the former former should should claim claim said said right right the one having having greater greater interest interest shall be preferred, and should they have an equal interest it shall be decided by lot. ARTICLE 594 The part owners shall elect the manager who is to represent them in the capacity of agent. The The appo appoin intm tmen entt of dire direct ctor or or agen agentt shal shalll be revocable at the will of the members. ARTICLE 595 The agent, be he at the same time an owner of a vess vessel el or a ma mana nage gerr for for an owne ownerr or for for an association of co-owners, must be qualified to trade and must be recorded in the merchant's registry of  the province. The agent shall shall repres represent ent the ownership ownership of the vesse vessel, l, and and ma may y in his own own name name and and in such capacity take judicial and extrajudicial steps in all that relates to commerce. ARTICLE 596 The agent may discharge the duties of captain of  the vessel, subject, in every case, to the provisions contained in Article 609. If two or more co-owners request the position of  captai captain, n, the disagr disagreeme eement nt shall shall be decide decided d by a vote of the members; and if the vote should result in a tie, tie, the the posi positi tion on shal shalll be given given to the the part part owner having the larger interest in the vessel. If the intere interest st of the petitioner petitioners s should should be the same, and there should be a tie, the matter shall be decided by lot. ARTICLE 597 The agent shall select and come to an agreement with the captain, and shall contract in the name of  the owners, who shall be bound in all that refers to repai epairs rs,, deta detaiils of equi equipm pme ent, nt, arma mame men nt,

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law provisions, fuel, and freight of the vessel, and, in general, in all that relates to the requirements of  navigation. ARTICLE 598 The agent can not order a new voyage, nor make contracts for a new charter, nor insure the vessel, without the authority of her owner or by virtue of a resolution of the majority of the co-owners, unless these privileges were granted him in the certificate of his appointment. If he should should insure insure the vessel vessel withou withoutt author authority ity ther theref efor or he shal shalll be seco second ndar aril ily y liab liable le for for the the solvency of the underwriter. ARTICLE 599 The managing agent of an association, shall give his co-owners an account of the results of each voyage of the vessel, without prejudice to always having the books and correspondence relating to the vessel and to its voyages at the disposal of the same. ARTICLE 600 After the account of the managing managing agent has been approv approved ed by a relati relative ve majori majority, ty, the co-own co-owners ers shall shall satisf satisfy y the expens expenses es in propor proportio tion n to their their interest, without prejudice to the civil or criminal actions which the minority may deem fit to institute afterwards. In order order to enforc enforce e the paymen payment, t, the ma manag naging ing agen agentt shal shalll have have a righ rightt of acti action on to secu secure re execution, which shall be instituted by virtue of a resolu resolutio tion n of the majori majority, ty, and withou withoutt further further proc proceed eedin ings gs than than the the ackn acknowl owledg edgme ment nt of the the signatures of the persons who voted the resolution. ARTICLE 601 Should Should there there be any any profit profits, s, the co-own co-owners ers may demand demand of the managing managing agent the am amoun ountt due them, them, by means means of an executo executory ry action action without without further further requisites requisites than the acknowledgment acknowledgment of the sign signat atur ures es of the the inst instru rume ment nt appr approv ovin ing g the the account. ARTICLE 602 The agent shall indemnify the captain for all the expenses he may have incurred from his own funds or from those of other persons, for the benefit of  the vessel. ARTICLE 603 Before a vessel goes out to sea the agent shall have have at his discret discretion ion,, a right right to discha discharge rge the captain and members of the crew whose contract did did not not stat state e a defi defini nite te peri period od nor nor a defi defini nite te voyage, paying them the salaries earned according to thei theirr contr contrac acts, ts, and and with without out any any indem indemni nity ty whatsoever, unless there is a special and specific agreement in respect thereto. ARTICLE 604 If the captain or any other member of the crew should be discharged during the voyage, they shall receiv receive e their their salar salary y until until the return to the place place where where the contra contract ct was made, unless unless there there are good reasons for the discharge, all in accordance with Articles 636 et seq. of this Code.

UP LAW BAROPS 2007 33 of 71

ARTICLE 605 If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, voyage, they can not be discha discharge rged d until until the fulfillment fulfillment of their contracts, contracts, except for reasons of  insubordin insubordination ation in serious serious matters, matters, robbery, robbery, theft, habitual drunkenness, and damage caused to the vesse vessell or to its its carg cargo o by ma mali lice ce or ma mani nifes festt or proven negligence. ARTICLE 606 If the captain should be a part owner in the vessel, he can can not not be disc discha harg rged ed with withou outt the the agen agentt returning him the amount of his interest therein, which, in the absence of an agreement between the the part partiies, es, sha shall be appr ppraise aised d by expe expert rts s appointed in the manner established in the law of  civil procedure. ARTICLE 607 If the captai captain n who is a part part owner owner should should have have obtained obtained the command command of the vessel by virtue of a special agreement contained in the articles of copartnership, he can not be deprived thereof except for the reasons mentioned in Article 605. ARTICLE 608 In case case of the the volun voluntar tary y sale sale of the the vesse vessel, l, all all contra contracts cts between between the agent agent and captai captain n shall shall termin terminate, ate, the right right to proper proper indemn indemnity ity being being reserved in favor of the captain, according to the agreements made with the agent. They They vess vessel el sold sold shal shalll rema remain in subj subjec ectt to the the security of the payment of said indemnity if, after the action against the vendor has been instituted, the latter should be insolvent. ARTICLE 618 The captain shall be civilly liable to the agent, and the latter to the third persons who may have made contracts with the former — 1. For For all all the the dam damages ages suff suffer ered ed by the ves vessel and and his his carg cargo o by reas eason of want ant of ski skill or negligence negligence on his part. If a misdemeanor misdemeanor or crime crime has been een com omm mitted tted he shall be liable in accordance with the Penal Code. cda 2. For all the thef thefts ts com committed ted by the the crew, ew, rese reserv rvin ing g his his righ rightt of acti action on agai agains nstt the the guil guilty ty parties. 3. For the losses, es, fines, es, and confiscation tions s imposed an account of violation of the laws and regu regula lati tion ons s of cust custom oms, s, poli police ce,, heal health th,, and and navigation. 4. For the losses and damages caused by mutinies on board the vessel, or by reason of faults committed by the crew in the service and defense of the same, if he does not prove that he made full use of his authority to prevent or avoid them. 5. For For thos those e aris arisin ing g by rea reaso son n of an an undu undue e use use of  powers and non-fulfillment of the obligations which are his in accordance with Articles 610 and 612. 6. For For thos those e aris arisin ing g by rea reaso son n of his his goi going ng out out of  of  his course or taking a course which he should not have taken without sufficient cause, in the opinion of the officers of the vessel, at a meeting with the shippers or supercargoes who may be on board.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law No excepti exception on whatsoe whatsoever ver shall shall exempt exempt him from this obligation. 7. For For those those aris arisin ing g by reas reason on of his his vol volun unta tari rily ly entering a port other than his destination, with the exception of the cases or without the formalities referred to in Article 612. 8. For those arising by reason of the nonobser observa vanc nce e of the the prov provis isio ions ns cont contai ained ned in the the regu regula lati tion ons s for for ligh lights ts and and evol evolut utio ions ns for for the the purpose of preventing collisions. Standard Oil v. Castelo (1921) In consi consideri dering ng the question question now before before us it is important to remember that the owner of the ship ordinarily has vastly more capital embarked upon a voyage than has any individual shipper of cargo. Moreover, the owner of the ship, in the person of  the captain, has complete and exclusive control of  the crew and of the navigation of the ship, as well as of the disposition of the cargo at the end of the voyage. voyage. It is theref therefore ore proper proper that any person person whose property may have been cast overboard by order of the captain should have a right of action directly against the ship's owner for the breach of  any duty which the law may have imposed on the captain with respect to such cargo. To adopt the interpretati interpretation on of the law for which the appellant contends would place the shipowner in a position to escape all responsibility for a general average of  this character by means of the delinquency of his own captain. This cannot be permitted. The evident intention of the Code, taken in all of its provisions, is to place place the primar primary y liabil liability ity upon the person person who has actual actual control control over over the conduct conduct of the voyage and who has most capital capital embarked in the ventur venture, e, namely namely,, the owner owner of the ship, ship, leavin leaving g him to obtain recourse, as it is very easy to do, from other individuals who have been drawn into the venture as shippers. ESPONSIBILITIES AND R ESPONSIBILITIES

LIABILITIES

Yu Con v. Ipil (1916) Estasen en,, ma makes kes the the As to the the ship shipow owne ner: r: Estas follow following ing remarks: remarks: It is well well and good that that the shipow shipowner ner be not held held crimin criminall ally y liable liable for such crimes or quasi crimes; but the cannot be excused from liability for the damage and harm which, in consequence of those acts, may be suffered by the third parties who contracted with the captain, in his double double capaci capacity ty of agent agent and subord subordina inate te of the shipow shipowner ner himsel himself. f. In mariti maritime me com commer merce, ce, the shippers and passengers in making contracts with the captain do so through the confidence they have in the shipowner who appointed him; they presume that the owner made a most careful investigation befo before re appo appoin inti ting ng him, him, and, and, abov above e all, all, they they the themselves are unable to make such an investigati investigation, on, and even though they should should do so, they could not obtain complete security, security, inasmuch inasmuch as the the ship shipow owne nerr can, can, when whenev ever er he sees sees fir, fir, appoint another captain instead. DOCTRINE OF

LIMITED LIABILITY AND EXCEPTIONS

ARTICLE 587 The The agen agentt shal shalll also also be civi civill lly y liab liable le for for the the indemnities indemnities in favor of third third persons persons which arise

UP LAW BAROPS 2007 34 of 71

from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipm equipment ents s and and the the frei freigh ghtt he ma may y have have earned during the voyage. ARTICLE 590 The owners of a vessel shall be civilly liable in the propor proportion tion of their their contri contributi bution on to the com common mon fund, fund, for the result results s of the acts of the captain, captain, referred to in Article 587. Each Each part part owner owner may exempt himself himself from from this this liability by the abandonment before a notary of the part of the vessel belonging to him. ARTICLE 837 The civil liability contracted by the shipowners in the the case cases s pres prescr crib ibed ed in this this sect sectio ion, n, shal shalll be understood as limited to the value of the vessel with with all all her appu appurt rtena enanc nces es and and all all the the frei freigh ghtt earned during the voyage. Yangco v. Laserna et al (1941) If the shipowner or agent may in any way be held civi civill lly y liab liable le at all all for for inju injury ry to or deat death h of  pass passen enger gers s aris arisin ing g from from the the negl neglig igenc ence e of the the captai captain n in cases cases of collis collision ions s or shipwr shipwreck ecks, s, his liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. In arriving at this conclusion, the fact is not ignored that the ill-fated S. S. Negros, as a vessel engaged in interisland trade, is a common carr carrie ier, r, and and that that the the rela relati tions onshi hip p betwe between en the the peti petitio tioner ner and and the the pass passen enger gers s who who died died in the the mish mishap ap res rests on a cont contra ract ct of carr carria iage ge.. But But assuming that petitioner is liable for a breach of  cont contra ract ct of carr carria iage, ge, the the excl exclus usiv ivel ely y "rea "reall and and hypothecary nature" of maritime law operates to limit such liability to the value of the vessel, or to the insurance thereon, if any. In the instant case it does not appear that the vessel was insured. Art. 587 of the Code of Commerce Commerce appears to deal only only with with the the limi limited ted liab liabil ilit ity y of ship shipow owner ners s or agents for damages arising from the misconduct of  the the capta captain in in the the care care of the the good goods s whic which h the the vessel vessel carries, carries, but this is a mere mere defici deficienc ency y of  language and in no way indicates the true extent of  such liability. Whether the abandonment of the vessel sought by the petitioner in the instant case was in accordance with law or not is immaterial. The vessel having totally perished, any act of abandonment would be an idle idle cere ceremo mony ny.. Judgm Judgmen entt is reve revers rsed ed and and petitioner is hereby absolved of all the complaints, without costs. ABUEG vs. SAN DIEGO(1946) The real  and hypothecary  nature of the liability of  the shipowner or agent embodied in the provisions of the Maritime Law, Bk III, Code of Commerce, had its origin origin in the prevai prevailin ling g contin continues ues of the mari ma riti time me trad trade e and and sea sea voya voyage ges s duri during ng the the medieval medieval ages, attended by innumerabl innumerable e hazards hazards and and peri perils ls.. To offs offset et agai agains nstt thes these e adve advers rse e cond condit itio ions ns and and enco encour urag age e ship shipbu buil ildi ding ng and and maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from from the the oper operat atiion of a ship hip to the the vesse essel, l,

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law equipme equipment, nt, and freight, freight, or insura insurance nce,, if any, any, so that if the shipowner or agent abandoned the ship, equ equipment, ent, and freight, his liability was extinguished. If an accident is compensable under the Workmen's Compensation Act, it must be compensated even when the workman's right is not recognized by or is in conflict with other provisions of the Civil Code or the Code of Commerce. The reason behind this principle is that the Workmen's Compensation Act was enacted by the Legislature in abrogation of the other existing laws. SPECIFIC

RIGHTS AND PREROGATIVES

ARTICLE 575 Part Part owne owners rs of vess vessel els s shal shalll enjo enjoy y the the right right of  option option of purcha purchase se and withdrawa withdrawall in the sales sales made to strangers; but they can only exercise it within the nine days following the record of the sale in the registry and by delivering the price at once. ARTICLE 593 The owners of a vessel shall have preference in her charter to other persons, offering equal conditions and price. price. If two or more of the former former should should claim claim said said right right the one having having greate greaterr intere interest st shall be preferred, and should they have an equal interest it shall be decided by lot. ARTICLE 594 The part owners shall elect the manager who is to represent them in the capacity of agent. The The appo appoin intm tmen entt of dire direct ctor or or agen agentt shal shalll be revocable at the will of the members. ARTICLE 596 The agent may discharge the duties of captain of  the vessel, subject, in every case, to the provisions contained in Article 609. If two or more co-owners request the position of  captai captain, n, the disagr disagreeme eement nt shall shall be decided decided by a vote of the members; and if the vote should result in a tie, tie, the the positi position on shal shalll be give given n to the the part part owner having the larger interest in the vessel. If the the inter interes estt of the the peti petitio tioner ners s shou should ld be the the same, and there should be a tie, the matter shall be decided by lot. ARTICLE ARTICLE 601. Should Should there be any any profits, profits, the coowners may demand of the managing agent the amou am ount nt due due them them,, by me mean ans s of an exec execut utor ory y acti action on with withou outt furth urther er requi equisi site tes s than than the the ackn acknow owle ledg dgm ment ent of the the sign signat atur ures es of the the instrument approving the account. 2. CAPTAINS AND MASTERS QUALIFICATIONS AND

LICENSING

ARTICLE 609 Captains and masters of vessels must be Spaniards * havi having ng lega legall capa capaci city ty to bind bind them themse selv lves es in accord accordanc ance e with with this this Code, Code, and must prove prove that that they they have have the skill, skill, capaci capacity, ty, and qualif qualifica icatio tions ns requir required ed to com comman mand d and direct direct the vessel vessel,, as esta establ blis ishe hed d by ma mari rine ne laws laws,, ordi ordina nanc nces es,, or regula regulation tions, s, or by those those of naviga navigatio tion, n, and that that

UP LAW BAROPS 2007 35 of 71

they are not disqualified according to the same for the discharge of the duties of that position. cdt If the owner of a vessel desires to be the captain thereof and does not have the legal qualifications therefor therefor,, he shall shall limit limit himsel himselff to the financ financial ial administration of the vessel, and shall intrust her navigation to a person possessing the qualifications required by said ordinances and regulations. POWERS

AND DUTIES

ARTICLE 610 The following powers are inherent in the position of  captain or master of a vessel: 1. To appo appoin intt or mak make e cont contra ract cts s with with the the cre crew w in the absence of the agent and propose said crew, should said agent be present; but the agent shall not be permitted to employ any member against the captain's express refusal. 2. To com comma mand nd the the cre crew w and and dire direct ct the the ves vesse sell to the port of its destination, in accordance with the instructions he may have received from the agent. 3. To imp impos ose, e, in acc accor orda danc nce e with with the the agree agreeme ments nts and the laws and and regula regulatio tions ns of the merchant merchants s marrine, ma ne, on boar board d the the ves vessel, el, corre orrect ctiional onal punishment upon those who do not comply with his orde orderrs or who cond conduc uctt them themse selv lves es agai agains nstt discipline, discipline, holding a preliminar preliminary y investigation investigation on the crimes committed on board the vessel on the high high seas seas,, whic which h shal shalll be turn turned ed over over to the the authorities, who are are to take cognizance thereof, at the first port touched. 4. To make contracts for for the charter ter of the the vess vessel el in the the abse absenc nce e of the the agen agentt or of her her cons consig igne nee e, acti acting ng in accor ccorda danc nce e with with the the instructions received and protecting the interests of  the owner most carefully. 5. To adopt opt all the the meas easures whi which may be necess necessary ary to keep keep the vessel vessel well suppli supplied ed and and equipped, purchasing for the purpose all that may be necessary, provided there is is no time to request instructions of the agent. 6. To make, make, in sim simiilar lar urge urgent nt case cases s and and on a voyage, the repairs to the hull and engines of the vessel and to her rigging and equipment which are absolutely necessary in order for her to be able to cont contin inue ue and and conc conclu lude de her her voyag voyage; e; but but if she she should arrive at a point where there is a consignee of the vessel, he shall act in concurrence with the latter. ARTICLE 611 In order to comply comply with the obligations obligations mentioned mentioned in the foregoing article, the captain, when he has no funds and does not expect to receive any from the agent, shall procure the same in the successive order stated below: 1. By requ reques esti ting ng sai said d funds funds of of the the cons consig ignee nees s or correspondents of a vessel. 2. By appl applyi ying ng to the the cons consig igne nees es of of the the carg cargo o or to the persons interested therein. 3. By dra drawing wing on the the agen agent. t. 4. By borr borrow owin ing g the amou amount nt requ requir ired ed by mean means s of a bottomry bond. 5. By sel selli ling ng a suf suffi fici cien entt amoun amountt of the the carg cargo o to cover the amount amount absolutely absolutely necessary necessary to repair repair the vessel, and to equip her to pursue the voyage.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law In the two latter cases he must apply to the judicial auth author orit ity y of the the port, port, if in Spai Spain n * and and to the the Span Spanis ish h * cons consul ul,, if in a fore foreig ign n coun countr try; y; and and where there should be none, to the local authority, proceeding in accordance with the prescriptions of  Article 583, and with the provisions of the law of  civil procedure. ARTICLE 622 If while on a voyage the captain should learn of the appearance of privateers or men of war against his flag flag,, he shal shalll be oblig obliged ed to ma make ke the the near neares estt neutra neutrall port, port, inform inform his agent or shipper shippers, s, and await an occasion to sail under convoy, or until the danger is over or he has received express orders from the ship agent or the shippers. ARTICLE 624 A capt captai ain n whos whose e vess vessel el has has gone gone thro throug ugh h a hurr hurric ican ane e or who who belie believes ves that that the the carg cargo o has has suff suffer ered ed dama damages ges or aver averag ages es,, shal shalll ma make ke a protest thereon before the competent authority at the first port he touches, within 24 hours following his arrival and shall ratify it within the same period when when he arrive arrives s at his destina destination tion,, immedi immediatel ately y proceeding with the proof of the facts, and he may not not open open the the hatc hatches hes unti untill after after this this has has been been done. The captain shall proceed in the same manner, if, the vessel having been wrecked; he is saved alone or with part of his crew, in which case he shall appear before the nearest authority, and make a sworn statement of facts. The author authority ity or the consul consul shall verify verify the said said facts receiving sworn statements of the members of the crew and passengers who may have been saved; and taking such other steps as may assist in arriving at the facts he shall make a statement of the result of the proceedings in the log book and in that of the sailing sailing mate, and shall deliver deliver to the captai captain n the origin original al record records s of the procee proceedin dings, gs, stamped and folioed, with a memorandum of the folios, which he must rubricate, in order that it may be presented to the judge or court of the port of  destination. The statement of the captain shall be accepted if it is in acco accord rdan ance ce with with thos those e of the the crew crew and and passen passenger gers; s; if they they disagr disagree, ee, the latter latter shall shall be accepted, always saving proof to the contrary. ARTICLE 625 The captain, captain, under his personal personal responsibi responsibility, lity, as soon soon as he arri arrives ves at the the port port of destin destinat atio ion, n, shou should ld get the the neces necessa sary ry permi permiss ssio ion n from from the the health and customs officers, and perform the other form formal aliti ities es requ requir ired ed by the the regu regula lati tion ons s of the the administra administration, tion, delivering the cargo without any defalcation, to the consignee, and in a proper case, the the vesse vessel, l, riggi rigging ng and and frei freigh ghta tage ge to the the ship ship agent. If by reason of the absence absence of the consignee consignee or on account of the nonappearance of a legal holder of  the bills of lading, the captain should not know to whom whom he is to legally legally make make the delivery delivery of the cargo, he shall place it at the disposal of the proper  judge or court or authority, in order that he may

UP LAW BAROPS 2007 36 of 71

deter determi mine ne what what is prop proper er with with rega regard rds s to its its deposit, preservation and custody. PROHIBITED

ACTS AND TRANSACTIONS

ARTICLE 613 A captain who navigates for freight in common or on shares shares can not make any transact transaction ion for his exclusive account, and should he do so the profit shall belong to the other persons in interest, and the losses shall be for his own exclusive account. ARTICLE 614 A captain who, having made an agreement to make a voyage, fails to perform his undertaking, without being being preven prevented ted by fortui fortuitio tious us acciden accidentt or force force majeure, shall indemnify for all the losses which he may ma y caus cause, e, with withou outt preju prejudi dice ce to the the crim crimin inal al penalties which may be proper. ARTICLE 615 Without the consent of the agent, the captain can not have himself himself substituted substituted by another another person; and should he do so, besides being liable for all the acts of the substitute and bound to the indemnities mentioned in the foregoing article, the substitute as well as the captain may be discharged by the agent. ARTICLE 617 The captain can not contract loans on respondentia, and should he do so the contracts shall be void. Neither can he borrow money on bottomry for his own transact transaction ions, s, except except on the portion portion of the vesse vessell he owns owns,, prov provid ided ed no mo money ney has has been been prev previo ious usly ly borr borrow owed ed on the the whol whole e vess vessel el,, and and provided there does not exist any other kind of lien or obligation thereon. When he is permitted to do so, he must necessaril necessarily y state what interest he has in the vessel. In case case of violat violation ion of this article article the principa principal, l, interest, and costs shall be charged to the private acco accoun untt of the the capt capta ain, in, and and the the agen agentt ma may y furthermore have the right to discharge him. ARTICLE 621 A captain who borrows money on bottomry, or who pledges or sells merchandise or provisions in other cases and without the formalities prescribed in this Code, shall be liable for the principle, interest, and costs, and shall indemnify for the damages he may cause. The captai captain n who com commit mits s fraud fraud in his accounts accounts shall reimburse the amount defrauded, and shall be subjec subjectt to the provis provision ions s contai contained ned in the Penal Penal Code. ARTICLE 583 If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Spanish Spanish * territory, territory, and otherwise to the consul consul of  Spain, * should there be one, and, in his absence to the the judg judge e or cour courtt or to the the prop proper er loca locall authority, authority, presenting the certifica certificate te of the registry

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law of the vessel vessel treated treated of in Article Article 612, 612, and the instruments proving the obligation contracted. The judge or court, the consul or the local authority as the case may be, in view of the result of the procee proceedin dings gs institu instituted, ted, shall shall make make a tempora temporary ry memorandum in the certificate of their result, in order that it may be recorded recorded in the registry registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obliga obligation tion in case case of sale before before the return, return, by reas reason on of the the sale sale of the the vesse vessell by virtue virtue of a declaration of unseaworthiness. The lack of this formality shall make the captain perso persona nall lly y liab liable le to the the credi creditor tors s who who ma may y be prejudiced through his fault. 3. OTHER OFFICERS AND CREW CONTRACTS

AND FORMALITIES

ARTICLE 634 The The capt captai ain n ma may y ma make ke up his his crew crew with with the the number number he may consider consider advisabl advisable, e, and in the abs absenc ence of Span Spaniish * sail sailor ors s he may shi ship foreign foreigners ers residi residing ng in the countr country, y, the number number thereof not to exceed one-fifth of the total crew. If  in fore foreig ign n ports ports the the capta captain in shou should ld not not find find a suffic sufficien ientt number number of Spanis Spanish h * sailor sailors, s, he may make up the crew with foreigners, with the consent of the consul or marine authorities. The agreements which the captain may make with the members of the crew and others who go to make up the complement of the vessels, to which reference is made in Article 612, must be reduced to wri writing ting in the the acc account ount book book with withou outt the the intervention of a notary public or clerk, signed by the the part partie ies s ther thereto eto,, and and vise vised d by the the ma mari rine ne auth author orit ity y if they they are are exec execut uted ed in Span Spanis ish h * territory, or by the consuls or consular agents of  Spain * if executed abroad, stating therein all the obligations obligations which each one contracts contracts and all the rights rights they they acquir acquire, e, said said author authoriti ities es taking taking care care that these obligations and rights are recorded in a concise and clear manner, which will not give rise to doubts or claims. cd The captain shall take care to read to them the articles of this Code, which concern them, stating that they were read in the said document. If the book includes includes the requis requisites ites prescri prescribed bed in Article 612, and there should not appear any signs of alterations alterations in its clauses, clauses, it shall shall be admitted admitted as evidence in questions which may arise between the captai tain and the crew with rega egard to the the agreeme agreements nts contai contained ned therei therein n and the amo amount unts s paid on account of the same. Every member of the crew may request a copy of  the captain, signed by the latter, of the agreement and of the liquidation of his wages, as they appear in the book. DUTIES

AND LIABILITIES

ARTICLE 635 A sailor who has been contracted to serve on a vess vessel el can can not not resc rescin ind d his his contr contrac actt nor nor fail fail to comply therewith except by reason of a legitimate impediment which may have occurred.

UP LAW BAROPS 2007 37 of 71

Neither can he pass from the service of one vessel to another without obtaining the written consent of  the vessel on which he may be. If, withou withoutt obtaini obtaining ng said said permis permissio sion, n, the sailor sailor who who has has sign signed ed for for one one vess vessel el shou should ld sign sign for for another one, the second contract shall be void, and the captai captain n may choose choose between between forcin forcing g him to fulfill the service to which he first bound himself or look for a person to substitute him at his expense. Said sailor shall furthermore lose the wages earned on his first contract to the benefit of the vessel for which he may have signed. A capta captain in who, who, know knowin ing g that that a sail sailor or is in the the service of another vessel, should have made a new agreement with him, without having requested the permission referred to in the foregoing paragraphs, shal shalll be pers person onal ally ly liab liable le to the the capta captain in of the the vessel vessel to which which the sailor sailor first first belong belonged ed for that part part of the the inde indemn mnit ity, y, refe referr rred ed to in the the thir third d paragraph of this article, which the sailor could not pay. IGHTS R IGHTS

ARTICLE 636 Should a fixed period for which a sailor has signed not be stated, he can not be discharged until the end of the the retu return rn voya voyage ge to the the port port wher where e he enrolled. ARTICLE 637 Neither can the captain discharge a sailor during the time of his contract except for sufficient cause, the following being considered as such: 1. The The perp perpet etra rati tion on of a crim crime e whic which h dist distur urbs bs order on the vessel. 2. Repea Repeated ted offen offense ses s of insu insubo bord rdin inat atio ion, n, again against st discipline, or against the fulfillment of the service. 3. Repeate eated d incapacity or negligen gence in the the fulfillment of the service to be rendered. 4. Habi Habitu tual al dru drunk nken enne nes ss. 5. Any Any occur occurre renc nce e which which inca incapa paci citat tates es the the sailo sailorr to carry out the work under his charge, with the excepti exception on of the provis provision ions s contai contained ned in Articl Article e 644. 6. Desertion. The captain may, however, however, before setting setting out on a voyage and without giving any reason whatsoever, refuse refuse to permit permit a sailor sailor he may have engaged engaged from going on board and may leave him on land, in which case he will be obliged to pay him his wages as if he had rendered services. This indemnity shall be paid from the funds of the vessel if the captain should have acted for reasons of prudence and in the interest of the safety and good service of the former. Should this not be the case, case, it shall shall be paid paid by the captai captain n person personall ally. y. aisadc After the vessel has sailed, and during the voyage and until the conclusion thereof, the captain can not abandon any member of his crew on land or on the sea, unless, by reason of being guilty of some crim crime, e, his his impr impris ison onme ment nt and and deliv deliver ery y to the the comp compete etent nt auth author ority ity is prop proper er in the the firs firstt port port touched, which will be obligatory on the captain. ARTICLE 638

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law If, the crew having been engaged, the voyage is revo evoked by the will of the the agent or of the charterers before or after the vessel has put to sea or if the the vess vessel el is in the the same same ma mann nner er given given a diff differ eren entt dest destin inat atio ion n than than that that fixe fixed d in the the agre agreem emen entt with with the the crew crew,, the the latt latter er shal shalll be indem indemni nifi fied ed beca becaus use e of the the resc rescis issi sion on of the the contract according to the case, viz: 1. If the the revo revoc cation tion of the the voya voyage ge shou shoulld be decided before the departure of the vessel from the port, port, each each sail sailor or engag engaged ed shal shalll be give given n one one month's salary, besides what may be due him in acco accord rdan ance ce with with his his contr contrac act, t, for for the the serv servic ices es rend render ered ed to the the vess vessel el up to the the date date of the the revocation. 2. If the the agr agree eeme ment nt sho shoul uld d have have been been for for a fixed fixed amou am ount nt for for the the whol whole e voya voyage, ge, ther there e shal shalll be graduated what may be due for said month and days, days, calcul calculati ating ng the same same in propor proportion tion to the estimated duration of the voyage, in the judgment of experts, in the manner established in the law of  civil procedure; and if the proposed voyage should be of such short duration that it is calculated at one month more or less, the indemnity shall be fixed for fifteen days, discounting in all cases the sums advanced. 3. If the the revoc revocat atio ion n shoul should d take take place place afte afterr the vessel has put to sea, the sailors engaged for a fixed fixed am amou ount nt for for the the voya voyage ge shal shalll rece receiv ive e the the salary which may have been offered them in full as if the voyage had terminated, and those engaged by the month shall receive the amount corresponding to the time they might have been on board and to the time they may require to arrive at the port of destination, the captain being obliged, furthermore, to pay said sailors the passage to the said port or to the port of sailing of the vessel, as may be convenient for them. 4. If the the agen agentt or the the char charte tere rers rs of of the the vesse vessell should should give said said vessel vessel a destin destinati ation on other other than than that fixed in the agreement, and the members of  the crew should not agree thereto, they shall be given by way of indemnity half the amount fixed in case No. 1, besides what may be owed them for the part of the monthly wages corresponding to the days days which which have elapse elapsed d from from the date of their agreements. If they accept accept the change change,, and the voyage, voyage, on acco accoun untt of the the grea greate terr dist distan ance ce or for for othe otherr reasons, should give rise to an increase of wages, the latter shall be privately regulated, or through amicable arbitrators in case of disagreement. Even though the voyage may be to a nearer point, this shal shalll not not give give rise rise to a redu reducti ction on in the the wages wages agreed upon. If the revocation or change of the voyage should originate from the shippers or charterers, the agent shall have a right to demand of t hem the indemnity which is justly due. ARTICLE 639 If the revocation of the voyage should arise from a  just cause independent of the will of the agent or charterers, and the vessel should not have left the port, the members of the crew shall not have any other right than to receive the wages earned up to the day on which the revocation took place.

UP LAW BAROPS 2007 38 of 71

ARTICLE 640 The The follo ollowi wing ng sha shall be jus just caus causes es for for the the revocation of the voyage: 1. A declaration of war or interdiction of   commerce with the power to whose territory the vessel was bound. 2. The The bloc blocka kade de of the the port port of of dest destin inat atio ion n or the the breaking out of an epidemic after the agreement. 3. The proh prohiibiti bition on to recei receive ve in said said por port the the goods which make up the cargo of the vessel. 4. The deten etenttion or emb embargo of the same by order of the Government, or for any other reason independent of the will of the agent. 5. The The inab inabil ilit ity y of the the ves vesse sell to nav navig igate ate.. ARTICLE 641 If, after a voyage has been begun, any of the first three three causes causes mentio mentioned ned in the foregoi foregoing ng articl article e should occur, the sailors shall be paid at the port the captain may deem it advisable to make for the benefit of the vessel and cargo, according to the time time they may have served served thereon; thereon; but if the vessel is to continue the voyage, the captain and the crew may mutually demand the enforcement of  the contract. In case of the occurrence of the fourth cause, the crew shall continue to be paid half wages, if the agreement agreement is by month but if the detention detention should exceed exceed three three months, months, the engagem engagement ent shall shall be resci rescinded nded and the crew shall shall be paid paid what what they should have earned, according to the contract, if  the voyage had been made. And if the agreement had been made for a fixed sum for the voyage, the contract must be complied within the terms agreed upon. In the fifth case, the crew shall not have any other right than be entitled to recover the wages earned; but if the disability disability of the vessel should have been caused caused by the negligenc negligence e or lack of skill skill of the capta captain in,, engin engineer eer,, or sail sailin ing g ma mate, te, they they shal shalll indemnify indemnify the crew for the loss suffered, suffered, always rese reserv rvin ing g the the crim crimin inal al liab liabil ilit ity y whic which h ma may y be proper. ARTICLE 642 If the crew has been engaged to work on shares they they shal shalll not not be enti entitl tled ed,, by reas reason on of the the revo revoca catio tion, n, delay delay,, or great greater er exten extensi sion on of the the voyage, to anything but the proportionate part of  the indemnity paid into the common funds of the vessel by the persons liable for said occurrences. ARTICLE 643 If the vessel and her freight should be totally totally lost, by reason reason of captur capture e or wreck, wreck, all rights rights of the crew crew to demand demand any wages wages whatso whatsoever ever shall shall be extinguished, as well as that of the agent for the recovery of the advances made. If a port portio ion n of the the vesse vessell or frei freigh ghtt shoul should d be saved saved,, or part part of eith either er,, the the crew crew enga engaged ged on wages, wages, includ including ing the captai captain, n, shall shall retain retain their their rights on the salvage, so far as they go, on the remain remainder der of the vessel vessel as well as value value of the freightage or the cargo saved; but sailors who are enga engage ged d on shar shares es shal shalll not not have have any any righ rightt whatsoever to the salvage of the hull, but only on the portion of the freightage saved. If they should have worked to collect the remainder of the ship-

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law wrecked vessel, they shall be given an award in propor proportion tion to the efforts efforts made made and to the risks risks encountered in order to accomplish the salvage. ARTICLE 644 A sailor who falls sick shall not lose his right to wages wages during during the voyage voyage,, unless unless the sickness sickness is the result of his own fault. At any rate, the costs of  the attendance and cure shall be defrayed from the common funds, in the form of a loan. If the the sick sickne ness ss shoul should d be caus caused ed by an inju injury ry received in the service or defense of the vessel the sail sailor or shal shalll be atte attend nded ed and and cure cured d from from the the comm common on fund funds, s, ther there e being being deduc deducted ted befo before re anything else from the proceeds of the freight, the cost of the attendance and cure. ARTICLE 645 If a sailor should die during the voyage his heir shall shall be given the wages earned and not received, according to his engagement and the reason for his death, namely — If he should have died a natural death and should have been engaged on wages there shall be paid what may have been earned up to the date of his death. If the engagement had been made for a fixed sum for the whole voyage there shall be paid half the amount earned if the sailor died on the voyage out, and and the the whol whole e am amou ount nt if he died died on the the retu return rn voyage. And if the engagement had been made on shares and and the the death death shoul should d have have occu occurr rred ed afte afterr the the voya voyage ge was was begun begun,, the the heir heirs s shal shalll be paid paid the the entire portion due the sailor; but should the latter have died before the departure of the vessel from the port, the heirs shall not be entitled to claim anything. If the death should have occurred in the defense of  the vessel, the sailor shall be considered as living, and and his his heirs heirs shall shall be paid paid,, at the end end of the the voyage, the full amount of wages or the full part of  the profits due him as to the others of his grade. The sailor shall likewise be considered as present in the event of his capture when defending the vessel, in order to enjoy the same benefits as the rest; but shou should ld he have have been been captu capture red d on acco accoun untt of  carelessness or other accident not related to the service, he shall only receive the wages due up to the day of his capture. ARTICLE 646 The vessel with her engines, rigging, equipment, and freights shall be liable for the wages earned by the crew engaged per month or for the trip, the liqu liquid idat atio ion n and and paym paymen entt ough oughtt to take take plac place e between one voyage and the other. After a new voyage has been undertaken, credits such such as the the form former er shal shalll lose lose thei theirr righ rightt of  preference. ARTICLE 647 The officer officers s and the crew crew of the vessel vessel shall shall be exempted from all obligations obligations contracted, contracted, if they deem it proper, in the following cases: 1. If, If, bef before ore the the begi beginn nnin ing g of the the voya oyage, ge, the the captain attempts to change it, or there occurs a

UP LAW BAROPS 2007 39 of 71

naval war with the power to which the vessel was destined. 2. If a dise diseas ase e shoul should d break break out out and and be off offic icia iall lly y declared epidemic in the port of destination. 3. If the vessel vessel should should change change owner owner or captai captain. n. 4.

SUPERCARGOES

ARTICLE 649 Supercargoes shall discharge on board the vessel the the admi admini nist stra rati tive ve duti duties es whic which h the the agen agentt or shippers may have assigned them; they shall keep an accoun accountt and record record of their their transa transacti ctions ons in a book book which which shall shall have have the same same conditi conditions ons and requisites as required for the accounting book of  the the capta captain in,, and and shal shalll resp respec ectt the the latte latterr in his his duties as chief of the vessel. cdta The The powe powers rs and and liab liabil ilit itie ies s of the the capta captain in shal shalll cease, when there is a supercargo, with regard to that that part part of the the admi admini nist stra rati tion on legi legiti tima mate tely ly confer conferred red upon upon the latter latter,, but shall shall contin continue ue in force force for all acts acts which which are insepar inseparabl able e from from his authority and office. ARTICLE 650 All the provisions contained in the second section of Title III, Book II, with regard to qualifications, mann ma nner er of ma maki king ng cont contra racts cts,, and and liab liabil ilit itie ies s of  factors shall be applicable to supercargoes.

ARTICLE 651 Supercargoes can not, without special authorization or agreement, make any transaction transaction for their own account during the voyage, with the exception of  the ventures which, in accordance with the custom of the port of destination, they are permitted to do. Neither Neither shall shall they they be permit permitted ted to invest invest in the return trip more than the profits from the ventures, unless there is a special authorization thereto from the principals. What is a supercargo? He or she is an agen agentt of the the owne ownerr of good goods s shipped as cargo on a vessel, who has charge of  the the carg cargo o on board board,, sell sells s the the same same to the the best best advantage in the foreign markets, buys cargo to be brought back on the return voyage of the ship, and comes home with it.

E. Accide Accidents nts and Damag Damages es in Mariti Maritime me Commerce 1.

AVERAGES

NATURE

AND KINDS

ARTICLE 806 For the purposes of this Code the following shall be considered averages: 1. All extraor extraordin dinary ary or accide accidenta ntall expen expenses ses which which may ma y be incu incurr rred ed duri during ng the the navi naviga gatio tion n for for the the preservation of the vessel or cargo, or both. 2. All All dama damage ges s or deter deterio iora rati tion on the the vess vessel el may may suffer from from the time she puts to sea from the port of departure until she casts anchor in the port of  destination, and those suffered by the merchandise

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law from the time it is loaded in the port of shipment until it is unloaded in the port of consignment. ARTICLE 807 The petty petty and ordina ordinary ry expense expenses s of naviga navigatio tion, n, such as pilotage of coasts and ports, lighterage and towa towage, ge, anch anchor orag age e dues dues,, insp inspec ecti tion on,, heal health th,, quaran quarantin tine, e, lazare lazaretto, tto, and other other so-cal so-called led port port expenses, costs of barges, and unloading, until the merchandise is placed on the wharf, and any other expe expen nses common to navigation shall be consi considere dered d ordina ordinary ry expense expenses s to be defray defrayed ed by the shipowner, unless there is a special agreement to the contrary. ARTICLE 808 Averages shall be: 1. Simp Simple le or part partic icul ula ar. 2. Genera eral or gros gross s. i.

Simple or Particular

(a)

Defined

ARTICLE 809 Simple or particular averages shall be, as a general rule, all the expenses and damages caused to the vessel or to her cargo which have not redounded to the benefit and common profit of all the persons inte interreste ested d in the the vess vessel el and and her her carg cargo, o, and and especially the following: 1. The The damag damages es suff suffer ered ed by the the cargo cargo from from the the time of its embarkation until it is unloaded, either on account of the nature of the goods or by reason of an accident at sea or force majeure, and the expenses incurred to avoid and repair the same. 2. The dama damage ges s suff suffer ered ed by the the ves vessel in her her hull, rigging, arms, and equipment, for the same causes and reasons, from the time she puts to sea from the port of departure until she anchored in the port of destination. 3. The dam damages ages suf suffered ered by the the me merc rcha hand ndiise loaded on deck, except in coastwise navigation, if  the marine ordinances allow it. 4. The The wages wages and and vict victua uals ls of the the cre crew w when when the the vess vessel el shou should ld be detai detained ned or em emba barg rgoed oed by a legitimate legitimate order or force force majeure, majeure, if the charter charter should have been for a fixed sum for the voyage. 5. The The neces necessa sary ry expe expens nses es on arri arriva vall at a port port,, in order to make repairs or secure provisions. 6. The low lowes estt valu value e of the the goods oods sol sold d by the captain in arrivals under stress for the payment of  provis provision ions s and in order order to save save the crew, or to cover any other requirement of the vessel against which the proper amount shall be charged. 7. The The vict victua uals ls and and wag wages es of of the the crew crew dur durin ing g the the time the vessel is in quarantine. 8. The The damag damage e suff suffer ered ed by the the vesse vessell or carg cargo o by reason of an impact or collision with another, if  it were accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the damage caused. 9. Any Any dama damage ge suff suffer ered ed by the the carg cargo o thr through ough the faults, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freight.

UP LAW BAROPS 2007 40 of 71

(b) (b) Effe Effect cts s ARTICLE 810 The owner of the goods goods which gave rise rise to the expense expense or suffer suffered ed the damage damage shall shall bear bear the simple or particular averages. ii.

Gross or General

(a) Defined ARTICLE 811 General or gross averages shall be, as a general rule, rule, all all the the dama damages ges and and expen expense ses s whic which h are are deliberately caused in order to save the vessel, her cargo, or both at the same time, from a real and known risk, and particularly the following: 1. The The goods goods or cas cash h inves invested ted in in the the rede redemp mpti tion on of the the vess vessel el or carg cargo o capt captur ured ed by enem enemie ies, s, privateers, or pirates, and the provisions, wages, and expenses expenses of the vessel vessel detained detained during during the time time the the arra arrang ngem emen entt or redem redempt ptio ion n is takin taking g place. 2. The good goods s jett jettiisoned oned to ligh lighte ten n the the ves vessel, el, whether they belong to the vessel, to the cargo, or to the crew, and the damage suffered through said act by the goods kept. 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are are aban abando doned ned in order order to save save the the carg cargo, o, the the vessel, or both. 4. The The expe expens nses es of remo removi ving ng or tran transf sfer erri ring ng a portion of the cargo in order to lighten the vessel and and plac place e her her in cond condit itio ion n to ente enterr a port port or roadstead, roadstead, and the damage resulting resulting therefrom therefrom to the goods removed or transferred. 5. The dam damage suffered ered by the good oods of the the cargo through the opening made in the vessel in order to drain her and prevent her sinking. 6. The The expen expense ses s cause caused d throu through gh floa floati ting ng a vesse vessell intenti intentiona onall lly y strand stranded ed for the purpos purpose e of saving saving her. 7. The The damag damage e caus caused ed to the the vesse vessell whic which h it is necessary to break open, scuttle, or smash in order to save the cargo. 8. The The expe expens nses es of curi curing ng and and maint maintai aini ning ng the the members of the crew who may have been wounded or crippled in defending or saving the vessel. 9. The wages of any member of the crew detaine detained d as hostag hostage e by enemies enemies,, privat privateers eers,, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it. 10. The wages wages and and victuals victuals of the crew of a vessel chartered by the month during the time it should be embargoed or detained by force majeure or by order of the Government, or in order to repair the damage caused for the common good. 11. 11. The The loss suf suffe fere red d in the value value of the good goods s sold at arrivals under stress in order to repair the vessel because of gross average. 12. The expe expen nses of the liqui quidatio tion of the the average. ARTICLE 817 If in lightening a vessel on account of a storm, in orde orderr to faci facili lita tate te her entr entry y into a por port or

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law roadstead, roadstead, part of her cargo cargo should should be transferr transferred ed to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss has originated from a gross average, the amount thereof being distributed between the entire vessel and cargo which caused the same. If, on the contrary, the merchandis merchandise e transferred transferred should be saved and the vessel should be lost, no liability can be demanded of the salvage. ARTICLE 818 If, as a necessary measure to extinguish a fire in a port; roadstead; creek, or bay, it should be decided to sink sink any vessel, vessel, this this loss loss shall shall be consid considered ered gross gross average, average, to which which the vessel vessels s saved saved shall shall contribute. (b) Essenti Essential al Requis Requisites ites ARTICLE 813 In order order to incu incurr the the expe expens nses es and and caus cause e the the dama damage ges s corr corres espo pond ndin ing g to gros gross s aver averag age, e, a previous previous resolution of the captain, captain, adopted after deliberation with the sailing mate and other officers of the vessel, and with a hearing of the persons interested in the cargo who may be present, shall be required. If the the latte latterr shal shalll obje object, ct, and and the the capta captain in and and officers, or a majority, or the captain, if opposed to the majori majority, ty, should should consid consider er certai certain n measur measures es nece necess ssar ary, y, they they ma may y be exec execut uted ed unde underr his his liab liabil ilit ity, y, with withou outt prej prejud udic ice e to the the frei freigh ghte ters rs exercising exercising their rights against against the captain captain before the judge or court of competent jurisdiction, if they can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on the vess vessel el,, shou should ld not not be hear heard, d, they they shal shalll not not contribute to the gross average, which contribution shall be paid by the captain, unless the urgency of  the case should be such that the time necessary for previous deliberation was lacking. ARTICLE 814 The The reso resolu lutio tion n adop adopted ted to caus cause e the the dama damages ges whi which cons consti titu tute te a gene generral aver avera age must ust necessarily be entered in the log book, stating the motives and reasons therefor, the votes against it, and the reasons for the disagreement should there be any, any, and and the the irre irresi sist stib ible le and and urgen urgentt caus causes es which moved the captain if he acted of his own accord. In the first case the minutes shall be signed by all the persons present who could do so before taking action tion if possible, and if not at the first opportunity; in the second case by the captain and by the officers of the vessel. In the minutes minutes and after the resolution there shall be stated in detail all the goods cast away, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deli delive verr one one copy copy of thes these e minu minute tes s to the the maritime judicial authority of the first port he may make make within within twenty-f twenty-four our hours hours after after his arriva arrival, l, and to ratify it immediately by an oath.

If, notwithstanding the jettison of the merchandise, breaka breakage ge of masts, masts, ropes, ropes, and equipme equipment, nt, the vess vessel el shou should ld be lost lost runn runnin ing g said said risk risk,, no cont contri ribu buti tion on wha whatsoe tsoeve verr by reas reason on of gros gross s average shall be proper. The owners of the goods saved shall not be liable for for the the inde indemn mnit ity y of thos those e jetti jettiso sone ned, d, lost lost,, or damaged. MAGSAYSAY INC. vs AGAN (1955) REQUISITES FOR GENERAL AVERAGE: 1. Ther There e must must be be a com commo mon n dang danger er.. This This mea means ns,, that both the ship and the cargo, after it has been loaded, are subject to the same danger, whether duri during ng the the voya voyage, ge, or in the the port port of load loadin ing g or unlo unload adin ing; g; that that the the dang danger er aris arises es from from the the accidents accidents of the sea, dispositions dispositions of the authority, or faults of men, provided that the circumstances prod produc ucin ing g the the peril peril shoul should d be asce ascert rtai aine ned d and and imminent or may rationally be said to be certain and and immi immine nent. nt. This This last last requ requir irem emen entt exclu exclude de measures undertaken against a distant peril. 2. That That for for the the com commo mon n safe safety ty,, part part of of the the vess vessel el or of the cargo or both is sacrificed deliberately. 3. That That from from the the expen expense ses s or damag damages es caus caused ed follow follows s the succes successfu sfull saving saving of the vessel vessel and cargo. 4. That That the the expen expense ses s or dama damage ges s shou should ld hav have e been incurred or inflicted inflicted after taking proper legal steps and authority (c) Effects ARTICLE 812 In order order to sati satisf sfy y the the am amou ount nt of the the gros gross s or gene genera rall aver averag ages es,, all all the the pers person ons s havi having ng an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute. (d) (d) Jett Jettis ison on ARTICLE 815 The captain shall supervise the jettison, and shall order order the goods goods cast cast overboar overboard d in the follow following ing order: 1. Those ose which are on deck eck, begin ginning with those which embarrass the handling of the vessel or damage her, preferring, if possible, the heaviest ones and those of least utility and value. cda 2. Those ose in the hold old, alway ways begi begin nning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable. ARTICLE 816 In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary in so far as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by mean me ans s of the the inve invent ntor ory y ma made de up befo before re the the departure, in accordance with the first paragraph of  Article 612. (e) (e) Jaso Jason n Clau Clause ses s (Yor (York k Rule D)

Antwe Antwerp rp Rules Rules,,

ARTICLE 860

UP LAW BAROPS 2007 41 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law Rights to contributio contribution n in general average shall not be affected, though the event which gave rise to the sacrifice sacrifice or expenditure expenditure may have been due to the fault of one of the parties to the adventure; but this shall not prejudice any remedies which may be open against that party for such fault. What What are are the the YorkYork-An Antw twer erp p Rule Rules s and and the Jason Clause? The York-Antwerp Rules is an international system of rules (they are not law or international treaties, but are just widely in use) for the liquidation and paym paymen entt of aver averag age e to avoi avoid d the the prob proble lem m of  characterization. The The Jaso Jason n Clau Clause se is a stan standa dard rd prov provis isio ion n in maritime contracts. It provides for uniform rules on adjustment, adjustment, proof and liquidation liquidation of avergaes avergaes in maritime accidents to address various systems of  determining the same. PROOF i.

AND

LIQUIDATION OF AVERAGES

Modes

ARTICLE 846 The persons interested in the proof and liquidation of aver avera ages ges ma may y mutu mutual ally ly agree gree and and bind bind themselves at any time with regard to the liability, liquidation, and payment thereof. cdt In the absence of agreements, the following rules shall be observed: 1. The The proof proof of the the aver averag age e shal shalll take take plac place e in the port where the repairs are made, should any be necessary, or in the port of unloading. 2. The The liqui liquida dati tion on sha shall ll take take plac place e in the the port port of  unloading should it be a Spanish * port. 3. Shou Should ld the the aver averag age e have have occu occurr rred ed outs outsid ide e of  the waters under the jurisdiction of the Philippines or the cargo should have been sold in a foreign port port by reas reason on of an arri arrival val unde underr stre stress ss,, the the liquidations shall be made in the port of arrival. arrival. 4. If the the aver averag age e shou should ld hav have e occu occurr rred ed nea nearr the the port of destination, so that said port can be made, the proceedings treated of in Rules 1 and 2 shall be held there. ARTICLE 847 In case of making the liquidation of the averages privately by virtue of agreement, as well as when a  judicial  judicial authority authority takes part therein at the request of any of the parties interested who do not agree ther theret eto, o, all all of them them shal shalll be cited cited and and hear heard, d, should they not have renounced this right. Should the they not be presen esentt or not have a legitimate legitimate representati representative, ve, the liquidation liquidation shall be made by the consul in a foreign port, and where there is none, by the judge or court of competent  jurisdiction, according to the laws of the country, and for the account of the proper person. When the representative is a person well known in the place place where where the liquid liquidati ation on takes takes place, place, his intervention intervention shall be admitted admitted and produce legal effects, even though he be authorized only by a letter of the shipowner, freighter, or underwriter. ARTICLE 848

UP LAW BAROPS 2007 42 of 71

Claims for averages shall not be admitted if they do not exceed 5 per cent of the interest which the claimant may have in the vessel or cargo if it is gros gross s aver averag age, e, and and 1 per per cent cent of the the good goods s damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an agreement to the contrary. ii. ii.

Appr Apprai aisa sall of gen gener eral al ave avera rage ge

ARTICLE 850 If by reason of one or more accidents of the sea particular and gross averages of the vessel or the cargo, or of both, should take place on the same voyage, the expenses expenses and damages correspondin corresponding g to each one shall be determined separately in the port port wher where e the the repa repair irs s are are ma made de or wher where e the the cargo is discharged, or sold, or the merchandise is benefited. For this purpose the captains shall be obliged to dema demand nd of the the expe expert rt appr apprai aise sers rs and and of the the contractors making the repairs, as well as of those appraising and taking part in the unloading, repair, sale, sale, or the benefi benefitin ting g of the mercha merchandi ndise, se, that that they they sepa eparate and detai tail exa exactly tly in their eir appraisemen appraisements ts or estimates and accounts accounts all the expenses and damages belonging to each average, and in those of each average those corresponding to the the vess vessel el and and to the the carg cargo, o, stat statin ing g also also separately whether there are or not any damages proceeding from the nature of the goods, and not by reason reason of a sea accident accident;; and in case case there there shoul should d be expen expense ses s comm common on to the the diff differ eren entt averages and to the vessel and her cargo, there must be calculated calculated the amount amount correspondi corresponding ng to each and stated distinctly. SECTION II Liquidation of Gross Averages ARTICLE 851 At the instan instance ce of the captai captain, n, the adjus adjustmen tment, t, liquidation, and distribution of gross averages shall be held privately, with the consent of all the parties in interest. For this purpose, within forty-eight hours following the arrival of the vessel at the port, the captain shall call all the persons interested, in order that they may decide as to whether the adjustment or liquidation of the gross average is to be made by experts and liquidators appointed by themselves, in which case this shall be done should the persons interested agree. Should an agreement not be possible, the captain shal shalll appl apply y to the the judge judge or cour courtt of comp compete etent nt  jurisdiction, who shall be the one of the port where these these procee proceedin dings gs are to be held held in accord accordanc ance e with the provisions of this Code, or to the consul of  Spain, * should there be one, and otherwise to the loca locall auth author orit ity y when when they they are are to be held held in a foreign port. cdta ARTICLE 852 If the the capta aptain in shoul hould d not not comp comply ly with with the the provisions provisions contained contained in the foregoing foregoing article, the shipowner shipowner or agent or the freighters shall demand the liquidation, without prejudice to the action they may bring to demand indemnity from him.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law ARTICLE 853 Afte Afterr the the exper experts ts have have been been appo appoin inte ted d by the the persons interested, or by the judge or court, before the acceptance, an examination of the vessel and of the repairs required shall be made, as well as an estimate of their cost, separating these losses and damages from those arising from the natural vice of the thing. The experts shall also declare whether the repairs can be ma mad de imme immedi dia ately tely,, or whet wheth her it is necess necessary ary to unload unload the vessel vessel to examin examine e and repair her. With With regard regard to the mercha merchandi ndise, se, if the averag average e should be visible at a mere glance, the examination thereof must be made before it is delivered. Should it not not be visi visibl ble e at the the time time of unlo unload adin ing, g, said said exam examin inat atio ion n ma may y be held held afte afterr the the deli delive very ry provided provided it is done within within forty-eight forty-eight hours from the unloading and without prejudice to the other proofs which the experts may deem necessary. ARTICLE 854 The The appr apprai aise seme ment nt of the the good goods s whic which h are are to contribute to the gross average, and that of those which constitute constitute the average, average, shall conform conform to the following rules: 1. The The merch merchan andi dise se save saved d which which is is to cont contri ribu bute te to the the paym paymen entt of the the gros gross s aver averag age e shal shalll be valued at the current price thereof at the port of  unloading, unloading, deducting the freights, freights, customs customs duties, and charges for unloading, as may appear from a materi material al inspec inspection tion of the same, same, not taking taking into considerati consideration on the bills of lading, unless there is an agreement to the contrary. 2. If the the liq liqui uida dati tion on is is to tak take e plac place e in the the por portt of  sailing, the value of the merchandise loaded shall be fixe fixed d by the the purc purcha hase se pric price, e, incl includ udin ing g the the expenses until they are put on board, excluding the insurance premium. 3. If the the merc erchand handiise shou should ld be dama damag ged, ed, it shall be appraised at its true value. 4. If the the voyage should be inter terrupted ted, the the merchandise having been sold in a foreign port and the average can not be estimated, there shall be taken as the contributing capital the value of the merc me rcha hand ndis ise e in the the port port of arri arriva val, l, or the the net net proceeds obtained at the sale thereof. 5. Merch Merchan andi dise se lost lost,, which which shou should ld cons consti titu tute te the the gross gross averag average, e, shall shall be apprai appraised sed at the value value merchandise of its kind may have in the port of  unloading, provided its kind and quality appears in the bill of lading; and should this not be the case, the invoices of the purchase issued in the port of  shipment shall be taken as a basis, adding to its valu value e the the expen expense ses s and and frei freigh ghts ts subs subsequ equen entl tly y arising. cd 6. The mas masts cut cut down down,, the the sail sails, s, cabl cables es,, and and other equipment of the vessel rendered useless for the purpose of saving her, shall be appraised at the current value, deducting one-third by reason of the difference between new and old. This deduction deduction shall not be made in regard to anchors and chains. 7. The The vesse vessell shal shalll be appr apprai aise sed d at her her rea reall valu value e in her condition at the time. 8. The The freig freight hts s shall shall repr repres esen entt 50 per cent cent by way of contributing capital.

UP LAW BAROPS 2007 43 of 71

ARTICLE 855 The merchandise loaded on the upper deck of the vessel shall contribute to the gross average should it be saved aved;; but but ther there e shal hall be no right ght to indemnity if it should be lost by reason of being   jettis jettisoned oned for genera generall safety, safety, except except when when the mari ma rine ne ordi ordina nanc nces es allo allow w its its ship shipme ment nt in this this manner in coastwise navigation. The same shall take place with that which is on board and is not included in the bills of lading or inventories, according to the cases. In any case the shipowner and the captain shall be liable to freighters for the loss of the jettison, if the storage on the upper deck took place without the consent of the latter. ARTICLE 857 After After the appraise appraisemen mentt of the goods saved saved has been concluded by the experts, as well as that of  the goods lost which which constitute the gross average, and and after after the repa repair irs s have have been been ma made de to the the vessel, should any have to be made, and in such case after the approval of the accounts of the same by the persons interested or by the judge or court, the the enti entire re reco record rd shal shalll be turn turned ed over over to the the liquidator appointed, in order that he may proceed with the distribution of the average. iii. iii.

Liquid Liquidatio ation n of of genera generall a aver verage ages s

ARTICLE 858 In order to effect the liquidation the liquidator shall exami examine ne the the swor sworn n stat statem emen entt of the the capta captain in,, comparing it, if necessary, with the log book and all all the the cont contra ract cts s whic which h ma may y have have been been ma made de between the persons interested in the average, the appraisements, expert examinations, and accounts of repairs made. If, as a result of this examination, he should find any defect in this procedure which might injure the rights of the persons interested or affe affect ct the the liab liabil ilit ity y of the the capt captai ain, n, he shal shalll call call attention thereto in order that it be corrected, if  possible, and otherwise he shall include it in the preliminaries of the liquidation. Immediately thereafter he shall proceed with the dist distri ribu buti tion on of the the am amou ount nt of the the aver averag age, e, for for which purpose he shall fix: 1. The contri tributin ting capital tal, which he shall determine by the value of the cargo, in accordance with the rules established in Article 854. 2. That hat of the the vess vessel el in her actu actua al condi onditi tion on,, according to a statement of experts. 3. The The 50 per per cen centt of the the amo amoun untt of the the fre freig ight ht,, deducting the remaining 50 per cent for wages and maintenance of the crew. After the amount of the gross average has been determi determined ned in accord accordanc ance e with with the provis provision ions s of  this Code, it shall be distributed pro rata among the goods which are to cover the same. ARTICLE 865 The distribution of the gross average shall not be final until it has been agreed to, or in the absence thereof, until it has been approved by the judge or court after an examination of the liquidation and a heari hearing ng of the the perso persons ns inter interes ested ted who who ma may y be present, or of their representatives.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law ARTICLE 866 After the liquidation has been approved it shall be the duty of the captain to collect the amount of the distribution, and he shall be liable to the owners of  the the goods goods aver averag aged ed for for the the loss losses es they they suff suffer er through his delay or negligence. ARTICLE 867 If the contributors should not pay the amount of  the assessment within the third day after having been requested requested to do so, the goods saved shall be attached, at the request of the captain, and shall be sold to cover the payment. ARTICLE 868 If the person persons s intere intereste sted d in receiv receiving ing the goods goods saved should not give security sufficient to answer for the amount corresponding to the gross average, the captai captain n may defer defer the deliver delivery y thereof thereof until until payment has been made. aisadc

ARTICLE 820 The arriva arrivall under under stress stress shall shall not be consid considere ered d legal in the following cases: 1. If the the lack lack of prov provis isio ions ns sho shoul uld d aris arise e from from the failur failure e to take take the necess necessary ary provis provision ions s for the voyage, according to usage and custom, or if they should have been rendered useless or lost through bad stowage or negligence in their care. 2. If the the risk risk of enem enemie ies, s, priv privat atee eers rs,, or pira pirate tes s should not have been well known, manifest, and based on positive and justifiable facts. 3. If the the inju injury ry to the the ves vesse sell shou should ld hav have e been been caused by reason of her not being repaired, rigged, equipped, and arranged in a convenient manner for the voyage, or by reason of some erroneous erroneous order of the captain. 4. Whenever malice, negligence, want of   foresight, or lack of skill on the part of the captain is the reason for the act causing the damage. FORMALITIES

SECTION III Liquidation of Ordinary Averages ARTICLE 869 The The expe expert rts s whic which h the the judg judge e or cour courtt or the the persons interested may appoint, according to the cases, cases, shall shall proceed proceed with with the apprai appraisem sement ent and exam examin inat atio ion n of the the aver averag ages es in the the ma mann nner er prescribed in Article 853 and in Article 854, Rules 2 to 7, in so far as they are applicable. iv.

Liquid Liquidatio ation n of of partic particular ular averag average e

ARTICLE 869 The The expe expert rts s whic which h the the judg judge e or cour courtt or the the persons interested may appoint, according to the cases, cases, shall shall proceed proceed with with the apprai appraisem sement ent and exam examin inat atio ion n of the the aver averag ages es in the the ma mann nner er prescribed in Article 853 and in Article 854, Rules 2 to 7, in so far as they are applicable. 2.

ARRIVALS ARRIVA LS UNDER STRESS

CAUSES ARTICLE 819 If the captain during the navigation should believe that the vessel can not continue the voyage to the port port of dest destin inat atio ion n on acco accoun untt of the the lack lack of  provisions, well founded fear of seizure, privateers or pirates, or by reason of any accident of the sea disabl disabling ing her to naviga navigate, te, he shall shall assembl assemble e the officers and shall call the persons interested in the cargo who may be present, and who may attend the meeting without without the right right to vote; and if, after exam examin inin ing g the the circ circum umst stan ance ces s of the the case case,, the the reasons should be considered well founded, it shall be deci decide ded d to make ake the the near neares estt and and mo mos st conven convenien ientt port port drafti drafting ng and enteri entering ng in the log book the proper minutes, which shall be signed by all. The captain shall have the deciding vote and the person persons s intere intereste sted d in the cargo may make make the objecti objections ons and protest protests s they may deem proper, proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable.

ARTICLE 819 If the captain during the navigation should believe that the vessel can not continue the voyage to the port port of des destina tinati tion on on acco accoun untt of the the lack lack of  provisions, well founded fear of seizure, privateers or pirates, or by reason of any accident of the sea disabl disabling ing her to naviga navigate, te, he shall shall assembl assemble e the officers and shall call the persons interested in the cargo who may be present, and who may attend the meeting without without the right to vote; and if, after exami examini ning ng the the circ circum umst stan ance ces s of the the case case,, the the reasons should be considered well founded, it shall be dec decided ided to ma make ke the the nea neares rest and and mo mos st conven convenien ientt port port drafti drafting ng and enteri entering ng in the log book the proper minutes, minutes, which shall be signed by all. The captain shall have the deciding vote and the perso persons ns inter interes ested ted in the the carg cargo o ma may y ma make ke the the objecti objections ons and protes protests ts they they may deem proper, proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable. ARTICLE 822 If in order to make repairs to the vessel or because ther there e shoul should d be dang danger er of the the carg cargo o suff suffer erin ing g dama damage ge it shoul should d be nece necess ssar ary y to unlo unload ad,, the the captain must request authorization of the judge or cour courtt of comp compete etent nt juri jurisd sdic icti tion on to light lighten en the the vessel, and do so with the knowledge of the person interested interested or representati representative ve of the cargo, cargo, should should there be one. In a foreign port, it shall be the duty of the Spanish * cons onsul, where ere there is one one, to giv give the authorization. In the first case, the expenses shall be defrayed by the ship agent or owner, and in the second, they shal shalll be for for the the acco accoun untt of the the owne owners rs of the the merchandise, for whose benefit the act took place. If the unloading should take place for both reasons, the expenses shall be defrayed in proportion to the value of the vessel and that of the cargo. EXPENSES ARTICLE 821

UP LAW BAROPS 2007 44 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law The expenses caused by the arrival under stress shall always be for the account of the shipowner or agent, agent, but the latter latter shall shall not be liable liable for the dama damage ge whic which h ma may y be caus caused ed the the ship shippe pers rs by reason reason of the arriva arrivall under under stress stress,, provid provided ed the latter is legitimate. Otherwise, the shipowner or agent and the captain shall be jointly liable. ARTICLE 822 If in order to make repairs to the vessel or because ther there e shou should ld be dang danger er of the the carg cargo o suff suffer erin ing g dama damage ge it shou should ld be nece necess ssar ary y to unlo unload ad,, the the captain captain must request request authorizati authorization on of the judge or cour courtt of comp compete etent nt juri jurisd sdic icti tion on to ligh lighten ten the the vessel, and do so with the knowledge of the person interested interested or representat representative ive of the cargo, should should there be one. In a foreign port, it shall be the duty of the Spanish * consul, where ere ther there e is one, to give the the authorization. In the first case, the expenses shall be defrayed by the ship agent or owner, and in the second, they shal shalll be for for the the acco accoun untt of the the owne owners rs of the the merchandise, for whose benefit the act took place. If the unloading should take place for both reasons, the expenses shall be defrayed in proportion to the value of the vessel and that of the cargo. ESPONSIBILITY OF R ESPONSIBILITY

THE

CAPTAIN

ARTICLE 823 The care and preservation of the cargo which has been unloaded shall be in charge of the captain, who shall be responsible for the same, except in cases of force majeure. ARTICLE 824 If the entire cargo or part thereof should appear to be damaged, or there should be imminent danger of its being damaged, the captain may request of  the judge or court of competent jurisdiction or the consul, in a proper case, the sale of all or of part of  the former, and the person taking cognizance of  the matter shall authorize it after an examination and declara declaratio tion n of experts experts,, adverti advertisem sements ents,, and other formalities required by the case and an entry in the book, in accordance with the provisions of  Article 624. The captain captain shall, shall, in a proper proper case, justif justify y the legali legality ty of the procedu procedure, re, under under the penalty penalty of  answ answer eriing to the the shi shipper pper for the the pric price e the the merchandise would have brought if it should have arri arrive ved d at the the port port of its its dest destin inat atio ion n in good good condition. ARTICLE 825 The captain shall answer for the damages caused by his delay, delay, if the reason reason for the arrival arrival under stress having ceased, he should not continue the voyage. If the reason for said arrival should have been the fear fear of enemie enemies, s, private privateers ers,, or pirates pirates,, before before sailing, a discussion and resolution of a meeting of  the officers of the vessel and persons interested in the cargo who may be present shall take place, in accordance with the provisions contained in Article 819.

UP LAW BAROPS 2007 45 of 71

3.

COLLISIONS

CLASSES i.

AND

EFFECTS

Fortuitous

ARTICLE 830 If a vessel should collide with another by reason of  an accident or through through force majeure, majeure, each vessel and her cargo shall be liable for their own damage. ARTICLE 831 If a vessel should be forced to collide with another one by a third vessel, the owner of the third vessel shall indemnify for the losses and damages caused, the the capt captai ain n ther thereof eof being being civi civill lly y liab liable le to said said owner. ARTICLE 832 If, by reason of a storm or other cause of force majeure, a vessel which is properly anchored and moored should collide with those in her immediate vic vicinity nity,, caus ausing ing them them dama damage ge,, the the injur njury y occa occasi sion oned ed shal shalll be look looked ed upon upon as part partic icul ular ar average to the vessel run into. ii.

Culpable

ARTICLE 826 If a vessel should should collide with another through the fault, fault, neglig negligenc ence, e, or lack lack of skill skill of the captai captain, n, sail sailin ing g ma mate te,, or any oth other mem emb ber of the the complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert appraisal. aisadc ARTICLE 827 If both vessels vessels may be blamed blamed for the collis collision ion,, each one shall be liable for his own damages, and both shall be jointly jointly responsible responsible for the losses and damages suffered by their cargoes. ARTICLE 831 If a vessel should be forced to collide with another one by a third vessel, the owner of the third vessel shall indemnify for the losses and damages caused, the the capt captai ain n ther thereof eof being being civi civill lly y liab liable le to said said owner. iii. iii.

Insc Inscru ruta tabl ble e Fau Fault lt

ARTICLE 828 The The prov provis isio ions ns of the the fore forego goin ing g arti articl cle e are are appl applic icab able le to the the case case in whic which h it can can not not be decided which of the two vessels was the cause of  the collision. PRESUMPTION

OF

LOSS

BY

COLLISION

ARTICLE 833 A vessel shall be presumed as lost thru a collision which, upon being run into, sinks immediately, and also any vessel which is obliged to make a port to repair the damages caused by the collision should be lost during the voyage, or should be obliged to be stranded in order to be saved.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law LIABILITIES i.

Shipowner or or agent

ARTICLE 837 The civil liability contracted by the shipowners in the the case cases s pres prescr crib ibed ed in this this sect sectio ion, n, shal shalll be understood as limited to the value of the vessel with with all all her appu appurt rtena enanc nces es and and all all the the frei freight ght earned during the voyage. ARTICLE 838 When the value of the vessel and her appurtenances should not be sufficient to cover all the liabilities, the indemnity due by reason of the death or injury of persons shall have preference.

ii.

Captain, pilot, others

ARTICLE 829 In the cases above mentioned the civil action of the owner against the person liable for the damage is reserved, reserved, as well as the criminal criminal liabilities liabilities which may be proper. ARTICLE 834 If the vessels colliding should have pilots on board discharging their duties at the time of the collision, their presence shall not exempt the captains from the liabilities they incur; but the latter shall have the right to be indemnified by the pilots without prejudice to the criminal liability which the latter may incur. iii. iii.

Cond Condit itio ions ns,, prot protes estt

ARTICLE 835 The action for the recovery of losses and damages arisin arising g from from collis collision ions s can not be admitte admitted d if a prote protest st or decl declar arati ation on is not not pres presen ented ted withi within n twenty-f twenty-four our hours hours to the com compete petent nt authori authority ty of  the point where the collision took place, or that of  the first port of arrival of the vessel, if in Spain, * and and to the the cons consul ul of Spain Spain * if it shou should ld have have occurred in a foreign country. ARTICLE 836 In so far as the damages caused to persons or to the cargo are concerned, the absence of a protest can not prejudice the persons persons interested who who were not on board or were not in a condition to make known their wishes. ARTICLE 839 If the collis collision ion shoul should d occur occur between between Spanis Spanish h * vessels in foreign waters, or if it should take place in open waters waters,, and the vessel vessels s should should make a foreign port, the Spanish * consul in said port shall hold hold a summar summary y investi investigati gation on of the accide accident, nt, forwarding forwarding the proceedings proceedings to the captain-gen captain-general eral of the nearest department * for continuation and conclusion. 4.

SHIPWRE SHIP WRECKS CKS

ARTICLE 840 The losses and deteriorations suffered by a vessel and her cargo by reason of shipwreck or stranding

UP LAW BAROPS 2007 46 of 71

shall be individually for the account of the owners, the the par part of the the wrec wreck k whic which h may be saved aved belonging to them in the same proportion. ARTICLE 841 If the wreck or stranding should arise through the malice, negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and prepar prepared, ed, the owner owner or the freigh freighter ters s may demand indemnity indemnity of the captain for the damages damages caused to the vessel or cargo by the accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621. ARTICLE 842 The goods saved from the wreck shall be specially liab liable le for for the the paym paymen entt of the the expe expens nses es of the the respective salvage, and the amount thereof must be paid by the owners of the former before they are delivered to them, and with preference to any other obligation, if the merchandise should be sold. ARTICLE 843 If several vessels navigate under convoy, and any of them should be wrecked, the cargo saved shall be distributed among the rest in the proportion to the amount each one can receive. If any captai captain n should should refuse refuse,, withou withoutt suffic sufficien ientt cause, to receive what may correspond to him, the captain of the wrecked vessel shall enter a protest against him before two sea officials of the losses and damages damages result resulting ing theref therefrom rom,, ratif ratifyin ying g the complaint within twenty-four hours after arrival at the first port, and including it in the proceedings he must institute in accordance accordance with the provisions contained in Article 612. Should it not be possible to transfer to the other vessels the entire cargo of the one wrecked, the goods goods of the highes highestt value value and smalle smallest st volume volume shall be saved first, the designation thereof being made ma de by the the capta captain in,, in conc concur urre renc nce e with with the the officers of his vessel.

F.

1.

Special Contracts Commerce

of

Maritime

CHARTER PARTIES

DEFINITION A charter party is a contract by virture of which the owen owenrr or agen agentt of a vess vessel el bind binds s hims himsel elff to transport merchandise or persons for a fixed price. It is a contract contract by which the owner or agent of the vesse vessell leas leases es for for a cert certai ain n pric price e the the whol whole e or portio portion n of a vessel vessel for the transp transporta ortatio tion n of the goods or persons from one port to another. Towage is not a charter party. It is a contract for the hire of  serv servic ices es by whic which h a vess vessel el is enga engaged ged to tow tow anot anothe herr vess vessel el from from one one port port to anot anothe herr for for consideration. KINDS As to extent of vessel hired: Total Partial - charterer as a rule does not acquire the right to fix the date

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law when when the vessel vessel should should depart, depart, unless unless such such right is expressly granted in the contract As to time: Until a fixed day or for a determined number of days or months For a voyage As to freightage: For a fixed fixed amount amount for the whole whole cargo For a fixed rate per ton For so much per month Coastwise Lighterage Corp vs. CA and Phil. Gen. Insurance Co. (1995) The distinction between the two kinds of charter parties parties (i.e. bareboat at or demise and contra contract ct of  i.e. barebo affreightment) is more clearly set out in the case of  Puromines, Inc. vs. Court of Appeals: Appeals : Under Under the the demi demise se or bare bareboa boatt char charter ter of the the vessel, the charterer will generally be regarded as the owner for the voyage or service stipulated. The charterer mans the vessel with his own people and becomes the owner pro hac vice, vice , subject to liability to others others for damages damages caused caused by neglig negligenc ence. e. To crea create te a demi demise se,, the the owne ownerr of a vess vessel el must must completely completely and exclusivel exclusively y relinquis relinquish h possession, possession, command command and navigation thereof to the charterer, charterer, anythi anything ng short short of such such a com comple plete te transf transfer er is a contract of affreightment (time or voyage charter party) or not a charter party at all. A contra contract ct of affrei affreight ghtmen mentt is one in which which the owner of the vessel leases part or all of its space to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the posses possessio sion, n, com comman mand d and naviga navigation tion of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment on account of  the aforementioned distinctions between the two. Thus, Thus, Coastwise, Coastwise, by the contract contract of affreightm affreightment, ent, was was not not conv conver erted ted into into a priv privat ate e carr carrie ier, r, but but remained a common carrier and was still liable as such. FORMS

AND

ARTICLE 653 If the the frei freigh ghtt shou should ld be rece receiv ived ed with withou outt the the charter party having been signed, the contract shall be understood as executed in accordance with what appears in the bill of lading, which shall be the only instrument instrument with regard to the freight to determine determine the rights and obliga obligation tions s of the owner, owner, of the captain, and of the charterer. cdt ARTICLE 654 The charter parties executed with the intervention of a broker, who certifies to the authenticity of the signatures of the contracting parties made in his presence, shall be full evidence in court; and if said signatures should not agree the ones identical with the signatures the broker must keep in his registry, if kept in accordance to law, shall be final. The contracts shall also be admitted as evidence, even though a broker has not taken part therein, if  the contracting parties acknowledge the signatures to be the same as their own. Should no broker have taken part in the charter party party and should should the signatur signatures es not have have been acknowledged, doubts shall be decided by what is provided for in the bill of lading, and in the absence thereof by the proofs submitted by the parties.

EFFECTS

Charter Parties 1. Forms and Effects of Charter Parties ARTICLE 652 A charter party must be drawn in duplicate and signed signed by the contracting contracting parties, parties, and when either does does not know know how or can can not not do so, by two witnesses at their request. The The char charte terr part party y shal shalll incl includ ude, e, besi beside des s the the conditions conditions unrestricted unrestrictedly ly stipulated, stipulated, the following following statements: 1. The The kind kind,, name name,, and and tonn tonnag age e of the the ves vesse sel. l. 2. Her Her fla flag g and and por port of regi regist stry ry.. 3. The name, surname, and domicile of the captain. 4. The name, surname, and domicile of the agent, if the latter should make the charter party.

UP LAW BAROPS 2007 47 of 71

5. The name, surname, and dom domicile of the the charter charterer, er, and if he states states that he is acting acting by commission, that of the person for whose account he makes the contract. 6. The The por portt of of loa loadi ding ng and and unl unloa oadi ding ng.. 7. The capa capaci city ty,, numbe umberr of tons tons or wei weight, ght, or measure which they respectively bind themselves to load and transport, or whether it is the total cargo. 8. The The freig freight htag age e to be pai paid, d, stat statin ing g wheth whether er it it is to be a fixed amount for the voyage or so much per month, or for the space to be occupied, or for the weight or measure of the goods of which the cargo cons consis ists ts,, or in any any other other ma mann nner er what whatso soeve everr agreed upon. 9. The amoun ount of primage to be pai paid to the the captain. 10. The days agreed upon for load oading and unloading. 11. The lay lay days days and and extra extra lay lay days days to be allow allowed ed and the rate of demurrage.

ARTICLE 655 Charter Charter parties parties execute executed d by the captai captain n in the absence of the agent shall be valid and efficient, even though though in executi executing ng them them he should should have acted in violation violation of the orders and instructio instructions ns of  the agent or shipowner; but the latter shall have a righ rightt of actio action n agai agains nstt the the capta captain in to reco recove verr damages. ARTICLE 656 If in the charter party the time in which the loading and unloading is to take place is not stated, the customs of the port where these acts take place shall be observed. After the period stipulated or the customary one has passed, and should there not be in the freight contract an express clause fixing the indemnification for the delay, the captain shall

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law be entitled to demand demurrage for the usual and extra lay days which may have elapsed in loading and unloading. ARTICLE 657 If during the voyage the vessel should be rendered unseaworthy the captain shall be obliged to charter another one at his expense, in good condition, to take the cargo to its destination, for which purpose he shall be obliged to look for a vessel not only at the port of arrival but in the other ports within a distance of 150 kilometers. If the captain should not furnish a vessel to take the the carg cargo o to its its dest destin inat atio ion, n, eith either er thro throug ugh h indolence or malice, the freighters, after a demand of the the capt captai ain n to char charte terr a vess vessel el with within in an unextendible period, may charter one and apply to the judicial authority requesting requesting that the charter charter party which may have been made be immediately approved. The same same author authority ity shall shall judic judicial ially ly com compel pel the capt captai ain n to conf confir irm m the the char charte terr ma made de by the the shippers for his account and under his responsibility. If the captain, notwithstanding his efforts, should not find a vessel to charter, he shall deposit the cargo at the disposal of the freighters, to whom he shall communicate the facts on the first opportunity presen presentin ting g itself itself,, the charte charterr being being regula regulated ted in such cases by the distance covered by the vessel, ther there e bein being g no righ rightt to any any inde indemn mnif ific icat atio ion n whatsoever. Is ther there e a vali valid d cont contra ract ct if ther there e was was no charter party and bill of lading? If we take Art. 653 literally, no. However, if we take into account the fact that delivery of the cargo does not constitute the making of a contract but rather the partial performance thereof, the mere fact of delivery and receipt of such cargo, the good faith faith and mutual mutual consent consent with with which which they have been made, should be a better substitute for the chater party than the bill of lading which is nothing more than proof of such delivery. What is primage? It was formerly a small allowance or compensation payable to the master and marines of a ship, to the form former er for for the the use use of his his cabl cables es and and ropes ropes to discharge the goods of the merchant; to the latter for the lading and unlading in any port of haven. Today, it is no longer a gratuity but is included in the freight rate. What is demurrage? It is the sum fixed by the contract of carriage, or which is allowed, as remuneration to the owner of  a ship for the detention of his vessel beyond the number of days allowed by the charter party for load loadin ing g and and unlo unload adin ing g of for for sail sailin ing. g. It is an exte extend nded ed frei freigh ghtt or rewa reward rd to the the vess vessel el in compensatio compensation n for the earnings earnings she is improperly caused to lose. What are lay days? Lay days are days allowed to charter parties for loading and unloading the cargo.

IGHTS R IGHTS

AND

OBLIGATIONS OF

SHIPOWNERS

2. Rights and Obligations of Owners ARTICLE 669 The owners or the captain shall observe in charter parties the capacity of the vessel or that expressly designated in the registry of the same, a difference greater than 2 per cent between that stated and her true capacity not being permissible. If the owners owners or the captai captain n should should contract contract to carry a greater amount of cargo than the vessel can can hold hold,, in view view of her her tonn tonnag age, e, they they shal shalll indemnify the freighters whose contracts they do not fulfill fulfill for the losses losses they may have caused caused them by reason of their default, according to the cases, viz: If the vessel has been chartered by one freighter only, and there should appear to be an error or fraud in her capacity, and the charterer should not wish to rescind the contract, when he has a right to do so, the charter should be reduced in proportion proportion to the cargo the vessel can not receive, the person from whom the vessel is chartered ered bein eing furthermore furthermore obliged to indemnify indemnify the charterer charterer for the losses he may have caused. If, on the contrary, there should be several charter parties, parties, and by reason reason of the want of space all the cargo contracted for can not be received, and none of the charterers desires to rescind the contract, preference shall be given to the person who has alread already y loaded loaded and arranged arranged the freigh freightt in the vess essel, el, and the the rest est shall tak take the place corresponding to them in the order of the dates of  their contracts. Should Should there there be no priori priority, ty, the charte charterer rers s may load load,, if they they wish wish,, pro pro rata rata of the the am amou ount nts s of  weight or space they may have engaged, and the person from whom the vessel was chartered shall be obli obliged ged to indem indemni nify fy them them for for the the loss loss and and damage. ARTICLE 670 If the person from whom the vessel is chartered, after receiving a part of the freight, should not find sufficient to make up at least three-fifths of the amount which the vessel can hold, at the price he may ma y have have fix fixed, ed, he ma may y subs ubstitu titute te for the the tran transp spor ortat tatio ion n anoth another er vesse vessell insp inspec ecte ted d and and decl declar ared ed suit suitab able le for for the the same same voya voyage ge,, the the expenses of transfer being defrayed by him, as well as the increase, should there be any, in the price of  the charter. Should he not be able to make this change, the voyage shall be undertaken at the time agreed upon; and should no time have been fixed, within fifteen days from the time of beginning to load, load, shoul should d nothin nothing g to the contra contrary ry have have been been stipulated. If the the owne ownerr of the the part part of the the frei freigh ghtt alre alread ady y loaded loaded shoul should d procur procure e som some e more more at the same same price and under similar or proportionate conditions to those those accepte accepted d for the freigh freightt receiv received, ed, the person from whom the vessel is chartered or the captain can not refuse to accept the rest of the cargo; cargo; and shoul should d he do so, the freigh freighter ter shall have a right to demand that the vessel put to sea with the cargo she may have on board. ARTICLE 671

UP LAW BAROPS 2007 48 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law After three-fifths of the vessel is loaded, the person from whom she is chartered can not, without the consent of the charterers or freighters substitute the the vess vessel el desi design gnat ated ed in the the char charter ter part party y by another one, under the penalty of making himself  ther thereby eby liab liable le for for all all the the loss losses es and and dama damages ges occurr occurring ing during during the voyage to the cargo of the person who did not consent to the change. ARTICLE 672 If the vessel vessel has been charte chartered red in whole, whole, the captain can not, without the consent of the person char charter terin ing g her, her, acce accept pt frei freigh ghtt from from any any othe otherr person; and should he do so, said charterer may obli oblige ge him him to unloa nload d it and requi equirre him him to indemnify him for the losses suffered thereby. ARTICLE 673 The person from whom the vessel is chartered shall be liable for all the losses caused the charterer by reason reason of the voluntar voluntary y delay delay of the captain captain in putting to sea, according to the rules prescribed, provided he has been requested to put to sea at the proper time through a notary or judicially. ARTICLE 674 If the charterer should carry to the vessel more freight than that contracted for, the excess may be admitted in accordance with the price stipulated in the the cont contra ract ct,, if it can can be well well stowe stowed d with withou outt injuring the other freighters, but if in order to stow said said freigh freightt it should should be necess necessary ary to stow stow it in such manner as to throw the vessel out of trim the captain must refuse it or unload it at the expense of its owner. The captain may likewise, before leaving the port, unload oad the merc erchandise placed on board clandestinely, or transport it, if he can do so and keep keep the the vesse vessell in trim trim,, dema demand ndin ing g by way way of  freightage the highest price which may have been stipulated for said voyage. ARTICLE 675 If the vessel vessel has been charte chartered red to receiv receive e the cargo cargo in another another port, the captai captain n shall shall appear appear before before the consig consignee nee design designated ated in the charte charterr party, and, should the latter not deliver the cargo to him, he shall inform the charterer and await his instru instructi ctions ons,, and in the meanti meantime me the lay days days agreed upon shall begin to run, or those allowed by cust custom om in the the port port,, unle unless ss ther there e is a spec specia iall agreement to the contrary. Should the captain not receive an answer within the time necessary necessary therefor, he shall shall make efforts to find freight; and should he not find any after the lay days and extra lay days have elapsed, elapsed, he shall shall make a protest and return to the port where the charter was made. The The char charter terer er shal shalll pay pay the the frei freigh ghta tage ge in full full,, discounting that which may have been earned on the merchandise which may have been carried on the voyage out or on the return trip, if carried for the account of third persons. The same shall be done if a vessel, having been chartered for the round trip, should not be given any cargo for her return.

The captai captain n shall shall lose lose the freigh freightag tage e and shall shall indemnify the charterers if the latter should prove, even against the certificate certificate of inspection inspection,, should should one have taken place at the port of departure, that the vessel was not in a condition to navigate at the time of receiving the cargo. ARTICLE 677 The charter party shall be enforced if the captain shou shoulld not not have any any ins instruc tructi tion ons s from from the the charterer, and a declaration of war or a blockade should take place during the voyage. In such case the captain shall be obliged to make the nearest safe and neutral port, and request and await orders from the freighter; freighter; and the expenses incurred and salaries earned during the detention shall be paid as general average. If, by orders of the freighter, the cargo should be discharged at the port of arrival, the freight for the voyage out shall be paid in full. ARTICLE 678 If the time necessary, in the opinion of the judge or cour court, t, in whic which h to rece receiv ive e orde orders rs from rom the the freighters should have elapsed without the captain having received any instructions, the cargo shall be deposited, and it shall be liable for the payment of  the freight and expenses incurred by reason of the delay which shall be paid from the proceeds of the part first sold. OBLIGATIONS OF

CHARTERERS

3. Obligations of Charterers ARTICLE 679 The charterer of an entire vessel may subcharter the whole or part thereof for the amounts he may consid consider er mos mostt conveni convenient, ent, withou withoutt the captai captain n being allowed to refuse to receive on board the frei freigh ghtt deli delive vere red d by the the seco second nd char charte tere rers rs,, provided provided the conditions conditions of the first charter are not chan changed ged,, and and that that the the perso person n from from whom whom the the vessel is chartered be paid the full price agreed upon even though the full cargo is not embarked, with the limitation established in the next article. cdtai ARTICLE 680 A charterer who does not make up the full cargo he bound himself to ship shall pay the freightage of  the amount he fails to ship, if the captain did not take take other other frei freigh ghtt to ma make ke up the the carg cargo o of the the vess vessel el,, in whic which h case case he shal shalll pay pay the the firs firstt charterer the difference should there be any. ARTICLE 681 If the charterer should ship goods different from those indicated at the time of executing the charter party, without the knowledge of the person from whom the vessel was chartered or of the captain, and should thereby give rise to losses, by reason of  confiscati confiscation, on, embargo, embargo, detention, detention, or other causes, to the person from whom the vessel was chartered or to the shippers, the person giving rise thereto shall be liable with the value of his shipment and fur further thermo more re with with his his prop proper erty ty,, for for the the full ull indemnity to all those injured through his fault.

ARTICLE 676

UP LAW BAROPS 2007 49 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law ARTICLE 682 If the merchandise shipped should have been for the purpose of illicit commerce, and was taken on boar board d with with the the know knowle ledg dge e of the the perso person n from from whom the vessel was chartered or of the captain, the latter, jointly with the owner of the same, shall be liable for all the losses which may be caused the other shippers, and even though it may have been agre agreed ed,, they they can can not not dema demand nd any any inde indemn mnit ity y whatsoever of the charterer for the damage caused the vessel. ARTICLE 683 In case case of ma maki king ng a port port to repa repair ir the the hull hull,, mach ma chin iner ery, y, or equi equipm pmen entt of the the vess vessel el,, the the freighters freighters must wait until the vessel is repaired, being permitted to unload her at their own expense should they deem it advisable. If, If, for the the benef enefit it of the the cargo argo subje ubjec ct to deterio deteriorat ration ion,, the freigh freighter ters s or the court, court, or the consul, or the competent authority in a foreign land should order the merchandise to be unloaded, the expenses expenses of loading loading and unloading unloading shall be for the account of the former. ARTICLE 684 If the charterer, without the occurrence of any of  the the case cases s of forc force e ma majeu jeure re me ment ntio ione ned d in the the fore forego goin ing g arti articl cle, e, shou should ld wish wish to unlo unload ad his his merc me rcha hand ndiise befo before re arr arrivi iving at the the port port of  desti destina nati tion, on, he shal shalll pay pay the the full full freig freight ht,, the the expenses expenses of the stop made at his request, request, and the losses losses and damages caused the other freighters, freighters, should there be any. ARTICLE 685 In charters for transportation of general freight any of the the freig freight hter ers s ma may y unlo unload ad the the merch merchan andi dise se before the beginning of the voyage, by paying onehalf half the the frei freigh ght, t, the the expe expens nse e of stow stowin ing g and and restowing the cargo, and any other damage which may be caused the other shippers. ARTICLE 686 After the vessel has been unloaded and the cargo placed at the disposal of the consignee, the latter must immediately pay the captain the freight due and the other expenses to which he may be liable for said cargo. The primage must be paid in the same proportion and and at the the same same time time as the the frei freigh ght, t, all all the the chan changes ges and and mo modi difi fica cati tion ons s to whic which h the the latt latter er should be subject also governing the former. ARTICLE 687 The The char charter ters s and and frei freigh ghter ters s can can not not aban abando don n merchandise damaged on account of the inherent vice of the goods or by reason of an accidental case case,, for for the the paym paymen entt of the the frei freigh ghtt and and other other expenses. aisadc The abandonment shall be proper, however, if the cargo cargo shoul should d consis consistt of liquid liquids s and should should they have have leak leaked ed out, out, ther there e not not rema remain inin ing g in the the containers more than one-quarter of their contents. ESCISSION R ESCISSION

UP LAW BAROPS 2007 50 of 71

4. Total Total or Parti Partial al Resc Resciss issio ions ns of Char Charte ter r Parties ARTICLE 688 A charter party may be annulled at the request of  the charterer: 1. If before loading the vessel he should abandon abandon the charter, paying half of the freightage freightage agreed upon. 2. If the the capa capaci city ty of the the ves vesse sell shou should ld not not agr agree ee with that stated in the certificate of the tonnage, or if there is an error in the statement of the flag under which she sails. 3. If the vess essel sho should not be pla placed at the the disposal of the charterer within the period and in the manner agreed upon. 4. If, If, after after the the vesse vessell has has put put to sea sea,, she she shoul should d return to the port of departure, on account of risk of pira pirates tes,, enem enemie ies, s, or bad bad weat weather her,, and and the the freighters should agree to unload her. In the second second and third cases the person person from whom the vessel was chartered shall indemnify the charterer for the losses he may suffer. In the the four fourth th case case the the pers person on from from whom whom the the vesse vessell was was char charter tered ed shal shalll have have a righ rightt to the the freightage in full for the voyage out. If the the char charter ter should should have have been been ma made de by the the months, the charterers shall pay the full freightage for one month, if the voyage were to a port in the same waters, and two months, if the voyage were to a port in different waters. From From one port to another another of the Peninsul Peninsula a and adjacent islands, the freightage for one month only shall be paid. 5. If a vess vessel shou shoulld make ake a port port duri during ng the the voyage in order to make urgent repairs and the frei freigh ghte terrs shou should ld pref prefer er to dis dispos pose of the the merchandise. When the delay does not exceed thirty days, the freighters shall pay the full freight for the voyage out. Should the delay exceed thirty days, they shall only pay pay the the frei freigh ghtt in prop propor orti tion on to the the dist distan ance ce covered by the vessel. ARTICLE 689 At the request of the person from whom the vessel is chartered the charter party may be rescinded: 1. If the charte charterer rer at the termin terminati ation on of the extra extra lay days does not place place the cargo alongsid alongside e the vessel. In such case the charterer must pay half the freight stipulated besides the demurrage for the lay days and extra lay days elapsed. 2. If the pers erson fro from who whom the vessel was was chartered should sell her before the charterer has begun to load her and the purchaser should load her for his own account. In such such case case the the vend vendor or shal shalll inde indemn mnif ify y the the charterer for the losses he may suffer. If the new owner of the vessel should should not load her for for his his own own acco accoun untt the the char charter ter part party y shal shalll be respec respected, ted, and the vendor vendor shall shall indemn indemnify ify the purchaser if the former did not inform him of the charter pending at the time of making the sale. ARTICLE 690 The charter party shall be rescinded and all action arising arising therefrom therefrom shall be extinguishe extinguished d if, before before

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law the vessel puts to sea from the port of departure, any of the following cases should occur: 1. A declaration of war or interdiction of   comm commer erce ce with with the the power power to whos whose e port ports s the the vessel was going to sail. 2. A condition of blockade of the port of   destination of said vessel, or the breaking out of an epidemic after the contract was executed. 3. The The prohi prohibi biti tion on to rec recei eive ve the the merch merchan andi dise se of  the vessel at the said port. 4. An indefi efinite det detenti ention on,, by reas eason of an embargo embargo of the vessel by order of the government government or for any other reason independent of the will of  the agent. 5. The The impo imposs ssib ibil ilit ity y of the the vess vessel el to navig navigat ate, e, without fault of the captain or agent. The unloading shall be made for the account of the charterer. ARTICLE 691 If the vessel can not put to sea on account of the clos closin ing g of the the port port of depa depart rtur ure, e, or any any other other tempor temporary ary cause, cause, the charte charterr shall shall be in force force withou withoutt any of the contra contracti cting ng parties parties having having a right to claim damages. The subsistence and wages of the crew shall be considered as general average. During the interruption the charterer may, at the proper time and for his own account, unload and load load the mercha merchandi ndise, se, paying paying demurr demurrage age if the reloading should continue after the reason for the detention has ceased. ARTICLE 692 A charter charter party shall shall be partially rescinded, rescinded, unless there there is an agreem agreement ent to the contrary contrary,, and the captain shall only be entitled to the freight for the voyage out, if, by reason of a declaration of war, clos closin ing g of ports, ports, or inter interdi dict ctio ion n of comm commer erci cial al relati relations ons during during the voyage, voyage, the vessel vessel should should make the port designated for such a case in the instructions of the charterer. 2.

LOANS ON RESPONDENTIA

BOTTOMRY

AND

LOAN ON BOTTOMRY, DEFINED It is a contract in the nature of a mortgage, by which the owner of the ship borrows money for the use, use, equi equipm pmen entt and and repa repair ir of the the vess vessel el for for a definite term, and pledges the ship as a security for its repaym repayment ent,, with with mariti maritime me or extraor extraordin dinary ary intere interest st on account account of the maritime maritime risks risks to be borne by the lender, it being stipultaed that if the ship be lost in the course of the specific voyage or duri during ng the the limi limite ted d time time,, by any any of the the peri perils ls enumerated in the contract, the lender shall also lose his money. ESPONDENTIA, DEFINED LOAN ON R ESPONDENTIA It is a contract made on the goods laden on board the hsip, and which are to be sold or exchanged in the course of the voyage, the borrower’s personal responsibility being deemed the principal security for the perfor performan mance ce of the contra contract. ct. The lender lender must be paid his principal and interest, though the ship perishes, provided that the goods are saved.

ARTICLE 719 A loan loan on bott bottom omry ry or resp respon onde dent ntia ia shal shalll be considered that which the repayment of the sum loaned loaned and the premiu premium m stipul stipulated ated,, under under any condition whatsoever, depends on the safe arrival in port of the goods on which it is made, or of their value in case of accident. FORMS

AND

EQUISITES R EQUISITES

ARTICLE 720 Loan Loans s on bott bottom omry ry or resp respon onde dent ntia ia ma may y be executed: 1. By me mean ans s of a publ public ic inst instru rume ment nt.. 2. By mea means ns of of a bon bond d sign signed ed by the the cont contra ract ctin ing g parties and the broker who took part therein. cdt 3. By me mean ans s of of a priv privat ate e ins instr trum umen ent. t. Under Under whiche whichever ver of these these forms forms the contra contract ct is executed, it shall be entered in the certificate of  the registry of the vessel and shall be recorded in the commercial commercial registry, without which requisites requisites the credit credits s origin originati ating ng from from the same same shall shall not have, with regard to other credits, the preference which, according to their nature, they should have, although the obligation shall be valid between the contracting parties. The The cont contra ract cts s ma made de duri during ng a voya voyage ge shal shalll be governed by the provisions of Articles 583 and 611, and shall be effective with regard to third persons from the date of their execution, if they should be recorded in the commercial registry of the port of  regi regist stry ry of the the vess vessel el befor before e eight eight days days have have elapsed from the date of her arrival. If said eight days should elapse without the record having been made made in the com commer mercia ciall regist registry, ry, the contra contracts cts made during the voyage of a vessel shall not have any effect with regard regard to third third person persons, s, except except from the day and date of their entry. In order that the bonds of the contracts celebrated in accord accordanc ance e with No. 2 may have legal force, force, they must conform to the registry of the broker who who took took part part ther therei ein. n. In thos those e cele celebr brat ated ed in accordance with No. 3 the acknowledgment of the signature must precede. Contracts which are not reduced to writing shall not be the basis for a judicial action. ARTICLE 721 In a bottomry or respondentia bond there must be stated: 1. The The kind kind,, name name,, and and regi regist stry ry of of the the vess vessel el.. 2. The name, surname, and dom domicile of the the captain. 3. The nam names, es, surna urname mes s, and and domi domici cile le of the the person giving and of the person receiving the loan. 4. The amoun ount of the the loan and the pre premium stipulated. 5. The tim time for for repay epayme ment nt.. 6. The The good goods s pled pledged ged to sec secur ure e repa repaym ymen ent. t. 7. The The voya voyage ge for for whi which ch the the ris risk k is is run run.. ARTICLE 722 The bonds may be issued to order, in which case they shall be transferable by indorsement, and the assignee shall acquire all the rights and run all the risks corresponding to the indorser.

HARACTER  OF LOAN, ART. 719 CHARACTER OF

UP LAW BAROPS 2007 51 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law ON WHAT CONSTITUTED ARTICLE 724 The loans may be constituted jointly or separately: 1. On the the hull hull of th the ves vesse sel. l. 2. On the rigging. 3. On the the equ equip ipmen ment, t, pro provi visi sion ons, s, and and fue fuel. l. 4. On the the eng engin ine, e, if if the the vess vessel el is is a stea steame mer. r. 5. On the cargo. If the loan is constituted on the hull of the vessel, there shall be understood as also subject to the liabil liability ity of the loan, loan, the riggin rigging, g, equipm equipment ent and other goods, provisions, fuel, steam engines, and the freight earned during the voyage subject to the loan. cdta If the loan oan is made on the the cargo, all that cons consti titu tute tes s the the same same shal shalll be subj subjec ectt to the the repaym repayment; ent; and if on a partic particula ularr object object of the vessel or of the cargo, the object exclusively and specifically mentioned only shall be liable. ARTICLE 725 No loans can be made on the salaries of the crew, nor on the profits which it is expected to earn. AMOUNT

ARTICLE 723 Loans made be made in goods and in merchandise, fixi fixing ng thei theirr valu value e in orde orderr to dete determ rmin ine e the the principal of the loan. ARTICLE 726 If the lender should prove that he loaned a larger amount than the value of the article liable for the bottomry loan, by reason of fraudulent measures employed by the borrower the loan shall only be vali valid d for for the the am amou ount nt at whic which h said said obje object ct is appraised by experts. The surplus principal shall be returned with legal interest for the whole period of the duration of the disbursement. ARTICLE 727 If the full amount of the loan contracted to load the vessel should not be made use of for the cargo, the surplus shall be returned before clearing. The same procedure shall be observed with regard to the goods taken as a loan if they could not all have been loaded. ARTICLE 728 The loan which the captain takes at the point of  residen residence ce of the owners of the vessel vessel shall shall only only affect that part of the latter which belongs to the captain, if the other owners or their agents should not have given their express authorization authorization thereto or should not have taken part in the transaction. If one or more of the owners should be requested to furn furnis ish h the the am amou ount nt nece necess ssar ary y to repa repair ir or provision the vessel, and should not do so within twenty-four hours, the interest which the parties in default may have in the vessel shall be liable for the loan in the proper proportion.

UP LAW BAROPS 2007 52 of 71

Outside of the residence of the owners the captain may ma y cont contra ract ct loan loans s in acco accord rdan ance ce with with the the provisions of Articles 583 and 611. BY WHOM ARTICLE 611 In order to comply comply with the obligations obligations mentioned mentioned in the foregoing article, the captain, when he has no funds and does not expect to receive any from the agent, shall procure the same in the successive order stated below: 1. By requ reques esti ting ng sai said d funds funds of of the the cons consig ignee nees s or correspondents of a vessel. 2. By appl applyi ying ng to the the cons consig igne nees es of of the the carg cargo o or to the persons interested therein. 3. By dra drawing wing on the the agen agent. t. 4. By borr borrow owin ing g the amou amount nt requ requir ired ed by mean means s of a bottomry bond. 5. By sel selli ling ng a suf suffi fici cien entt amoun amountt of the the carg cargo o to cover the amount amount absolutely absolutely necessary necessary to repair repair the vessel, and to equip her to pursue the voyage. In the two latter cases he must apply to the judicial auth author ority ity of the the port, port, if in Spai Spain n * and and to the the Spanish * consul, if in a foreign country; and where ther there e shou should ld be none none,, to the the loca locall autho authori rity, ty, proceeding in accordance with the prescriptions of  Article 583, and with the provisions of the law of  civil procedure. ARTICLE 617 The captain can not contract loans on respondentia, and should he do so the contracts shall be void. Neither can he borrow money on bottomry for his own transact transaction ions, s, except except on the portion portion of the vesse vessell he owns owns,, prov provid ided ed no mo money ney has has been been prev previo ious usly ly borr borrow owed ed on the the whol whole e vess vessel el,, and and provided there does not exist any other kind of lien or obligation thereon. When he is permitted to do so, he must necessaril necessarily y state what interest he has in the vessel. In case case of violat violation ion of this article article the principa principal, l, interest, and costs shall be charged to the private acco accoun untt of the the capt capta ain, in, and and the the agen agentt ma may y furthermore have the right to discharge him. ARTICLE 583 If whil while e on voya voyage ge the the capta captain in shou should ld find find it neces necessa sary ry to contr contrac actt one one or more more obli obliga gati tion ons s mentioned in subdivisions 8 and 9 of Article 580, he shall apply to the judge or court if he is in Philippine Philippine territory, territory, and otherwise otherwise to the consul of  the Republ Republic ic of the Philip Philippin pines, es, should should there be one, and in his absence, to the judge or court or proper local authority, presenting the certificate of  the registration registration sheet treated of in Article 612 and the instruments proving the obligation contracted. The The judg judge e or cour court, t, the the cons consul ul,, or the the loca locall authority, as the case may be, in view of the result of the the proc procee eedi ding ngs s inst instit itut uted ed,, shal shalll ma make ke a tempo tempora rary ry me memo mora rand ndum um of thei theirr resu result lt in the the certficate, in order that it may be recorded in the registry when the vessel returns to the port of its registry, or so that it can be admitted as a legal and preferred obligation in case of sale before its

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law retu return rn,, by reas reason on of the the sale sale of the the vess vessel el on account of a declaration of unseaworthiness. EFFECTS

OF

CONTRACT

ARTICLE 719 A loan loan on bott bottom omry ry or resp respon onde dent ntia ia shal shalll be considered that which the repayment of the sum loaned loaned and and the premiu premium m stipul stipulated ated,, under under any condition whatsoever, depends on the safe arrival in port of the goods on which it is made, or of their value in case of accident. ARTICLE 726 If the lender should prove that he loaned a larger amount than the value of the article liable for the bottomry loan, by reason of fraudulent measures employed by the borrower the loan shall only be vali valid d for for the the am amou ount nt at whic which h said said obje object ct is appraised by experts. The surplus principal shall be returned with legal interest for the whole period of the duration of the disbursement. ARTICLE 727 If the full amount of the loan contracted to load the vessel should not be made use of for the cargo, the surplus shall be returned before clearing. The same procedure shall be observed with regard to the goods taken as a loan if they could not all have been loaded. ARTICLE 729 Should the goods on which money is taken not be subj subjec ecte ted d to any any risk risk,, the the cont contra ract ct shal shalll be considered considered an ordinary ordinary loan, the borrower borrower being under under the obliga obligation tion to return return the princi principal pal and interest at the legal rate, if the interest stipulated should not have been lower. ARTICLE 730 Loan oans ma made de dur during the the voy voyage age shal hall have have preference over those made before the clearing of  the vessel, vessel, and they shall shall be gradua graduated ted by the inverse order to that of their dates. The loans for the last voyage shall have preference over prior ones. Should several loans have been made at a port made under stress and for the same purpose, all of  them shall be paid pro rata.

G. Bill of Lading 1.

CONTE CON TENTS NTS

ARTICLE 706 The captain captain and the freigh freighter ter of the vessel are obliged to draft the bill of lading, in which there shall be stated: 1. The name, registry, and tonnage of the vessel. 2. The The name name of of the the capta captain in and and his his dom domic icil ile. e. 3. The The port port of of load loadin ing g and and that that of of unlo unload adin ing. g. 4. The nam name of of the the shipp hipper er.. 5. The name name of the consig consignee, nee, if the bill bill of lading lading is issued to order.

6. The The quan quanti tity ty,, qual qualit ity, y, numbe numberr of packa package ges, s, and marks of the merchandise. 7. The The frei freigh ghtt and and the the prim primag age e stip stipul ulat ated ed.. The bill of lading may be issued to bearer, to order, or in the name of a specific person, and must be signed within twenty-four hours after the cargo has been received on board, the freighter being able to request the unloading thereof at the expense of the captain should he not sign it, and in every case indemn indemnity ity for the losses losses and damage damages s suffer suffered ed thereby. ARTICLE 707 Four true copies of the original bill of lading shall be ma made de,, all all of whic which h shal shalll be sign signed ed by the the captain and by the freighter. Of these copies the freighter shall keep one and send another to the cons consig ignee nee;; the the capta captain in shal shalll take take two, two, one one for for himself and another for the agent. There may, furthermore, be made as many copies of the bill of lading as may be considered necessary by the the perso persons ns inter interes ested ted;; but but when when they they are are issu issued ed to order order or to the the bear bearer er ther there e shal shalll be stated in all the copies, be they either of the first four or of the subsequent ones, the destination of  each one, stating whether it is for the agent, for the captain, for the freighter, or for the consignee. If the copy sent to the latter should be duplicated there must be stated in said duplicate this fact, and that it is not valid valid except in case of the loss of the first one. ARTICLE 713 If before delivering the cargo a new bill of lading shou should ld be dema demand nded ed of the the capt captai ain, n, it bein being g alleged that the previous ones are not presented on account of their loss or for any other sufficient cause, cause, he shall shall be oblige obliged d to issue issue it, provided provided security for the value of the cargo is given to his satisfaction; but without changing the consignment and stating therein the circumstances prescribed in the last paragraph of Article 707, when the bills of  lading referred to therein are in question, under the penalty otherwise to be liable for said cargo if not properly delivered through his fault. ARTICLE 714 If before the vessel puts to sea the captain should die or should should discontinu discontinue e in his position position through any accident, the freighters shall have a right to demand of the new captain the ratification of the firs firstt bill bills s of ladi lading ng,, and and the the latte latterr must must do so, so, prov provid ided ed all all the the copi copies es prev previo ious usly ly issu issued ed be presented or returned to him, and it should appear from from an examinati examination on of the cargo that they are correct. The expenses arising from the examination of the carg cargo o shal shalll be defra defraye yed d by the the agent agent,, witho without ut prejudice to the right of action of the latter against the first captain, if he ceased to be such through his his own own faul fault. t. Shou Should ld said said exami examina natio tion n not not be made, it shall be understood that the new captain accepts the cargo as it appears from the bills of  lading issued. 2.

PROBATIVE VALUE

ARTICLE 709

UP LAW BAROPS 2007 53 of 71

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law A bill of lading drawn up in accordance with the provisions of this title shall be proof as between all those those interes interested ted in the cargo and between between the latter and the underwriters, proof to the contrary being reserved by the latter.

and damages; but if the suspension was due to an accidental cause, or to force majeure, or to any other cause beyond the control of the captain or agent, the passengers shall only be entitled to the return of the passage money.

ARTICLE 710 Should Should the bills bills of lading lading not agree, agree, and there should not be observed any correction or erasure in any of them, those possessed by the freighter or consi consignee gnee signed signed by the captai captain n shall shall be proof  proof  agai agains nstt the the capt captai ain n or agen agentt in favo favorr of the the consignee or freighter; and those possessed by the captain or agent signed by the freighter shall be proof against the freighter or consignee in favor of  the captain or agent.

ARTICLE 698 In case ase a voya voyage ge alrea lready dy begu begun n shou should ld be interrupted the passengers shall be obliged only to pay pay the the pass passag age e in prop propor orti tion on to the the dist distan ance ce covered, and shall not be entitled to recover for losses and damages if the interruption is due to an accidental cause or to force majeure, but have a right to indemnity if the interruption should have been been caus caused ed by the the capta captain in excl exclus usiv ivel ely. y. If the the interruption should be by reason of the disability of  the vessel vessel,, and the passen passenger ger should should agree agree to await her repair, he can not be required to pay any increased price of passage, but his living expenses during the delay shall be for his own account. In case the departure of the vessel is delayed the passengers have a right to remain on board and to be furn furnis ished hed with with food food for for the the acco accoun untt of the the vessel vessel,, unless unless the delay delay is due to an accidenta accidentall caus cause e or to forc force e ma maje jeur ure. e. If the the delay delay shou should ld exceed exceed ten days, days, the passen passenger gers s who request request it shall be entitled to the return of the passage; and if it were due exclusively to the captain or agent they may furthermore demand indemnity for losses and damages. A vess vessel el whic which h is exclu exclusi sivel vely y desti destine ned d to the the tran transp spor ortat tatio ion n of pass passeng enger ers s must must take take them them dire direct ctly ly to the the port port or ports ports of destin destinat atio ion, n, no matter what the number of passengers may be, making all the stops indicated in her itinerary.

H. Passengers on Sea Voyage 1.

NATURE OF CONTRACT CONTRAC T

ARTICLE 695 The The righ rightt to pass passag age, e, if issu issued ed to a spec specif ifie ied d person, can not be transferred without the consent of the captain or of the consignee. 2.

OBLIGATIONS OBLIGA TIONS OF PASSENGE RS

ARTICLE 693 Should Should the passag passage e price price not have been agreed agreed upon, upon, the judge or court court shall shall summar summarily ily fix it, after a statement of experts. ARTICLE 699 After the contract has been rescinded, rescinded, before or afte afterr the the comm commen ence ceme ment nt of the the voya voyage ge,, the the captai captain n shall shall have have a right right to claim claim paymen paymentt for what he may have furnished the passengers. ARTICLE 704 The captain, captain, in order order to collec collectt the price of the passage and expenses of maintenance, may retain the goods belonging to the passenger, passenger, and in case of the the sale of the same he shall be giv given preference over the other creditors, acting in the same way as in the collection of freight. ARTICLE 694 Should the passenger not arrive on board at the time time fixed fixed,, or shou should ld leav leave e the the vess vessel el with without out permis permissio sion n from from the captai captain, n, when when the latter latter is ready to leave the port, the captain may continue the voyage and demand the full passage price. ARTICLE 700 In all that relates to the preservation of order and police police on board board the vessel vessel the passen passenger gers s shall shall conform to the orders given by t he captain, without any distinction whatsoever. 3.

RIGHTS OF PASSENGE RS

ARTICLE 697 If befo before re begi beginn nnin ing g the the voya voyage ge it shou should ld be suspended through the sole fault of the captain or agent, agent, the passen passenger gers s shall shall be entitled entitled to have have their passage refunded and to recover for losses

UP LAW BAROPS 2007 54 of 71

4.

RESPONSIBILITIES OF CAPTAIN

ARTICLE 701 The convenience or the interest of the passengers shall not obligate nor empower the captain to stand in shore or enter places which may take the vessel out of her course, nor to remain in the ports he must or is under the necessity of touching for a period longer than that required for the business of  the navigation. ARTICLE 702 In the absence absence of an agreement agreement to the contrary, contrary, it shall be understood that the maintenance of the passen passengers gers during during the voyage voyage is includ included ed in the price of the passage; but should said maintenance be for the account of the latter, the captain shall be unde underr the the obli obliga gati tion, on, in case case of neces necessi sity ty,, to furnis furnish h them them the victual victuals s at a reason reasonabl able e price price necessary for their maintenance. ARTICLE 703 A passenger shall be looked upon as a shipper in so far as the goods he carries on board are concerned, and the captain shall not be liable for what said passenger passenger may preserve preserve under his immediate immediate and special custody unless the damage arises from an act of the captain or of the crew. ARTICLE 705 In case of the death death of a passen passenger ger during during the voyage voyage the captai captain n is author authorize ized, d, with with regard regard to

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law the the body body,, to take take the the step steps s requ requir ired ed by the the circumstances, and shall carefully take care of the papers and goods there may be on board belonging to the passenger, observing the provisions of Case No. 10 of Article 612 with regard to members of  the crew. ARTICLE 612 The following following obligations obligations are inherent inherent in the office office of captain: 1. To hav have e on boa board rd bef befor ore e star startin ting g on a voya voyage ge a detailed inventory of the hull, engines, rigging, tackle, stores, and other equipments of the vessel; the navigation certificate; the roll of the persons who who ma make ke up the crew crew of the vess vessel el,, and and the the contra contracts cts entered entered into into with with the crew; crew; the list of  passengers; the health certificate; the certificate of  the registry proving the ownership of the vessel, and all the obligations which encumber the same up to that that date; date; the the char charter ters s or authe authent ntic icate ated d copies copies thereof thereof;; the invoic invoices es or manife manifest st of the cargo, and the instrument of the expert visit or inspection, should it have been made at the port of  departure. 2. To have have a cop copy y of this this Code Code on boar board. d. 3. To hav have thr three foli folioe oed d and and stam tamped ped book books, s, placing at the beginning of each one a note of the number of folios it contains, signed by the maritime offi offici cial al,, and and in his his abse absenc nce e by the the comp compet etent ent authority. In the first book, which shall be called "log book," he shal shalll enter enter every every day day the the cond condit itio ion n of the the atmo atmosp spher here, e, the the prev prevai aili ling ng wind winds, s, the the cour course se sailed, the rigging carried, the horsepower of the engines engines,, the distanc distance e covere covered, d, the maneuve maneuvers rs executed executed,, and other other incide incidents nts of naviga navigatio tion. n. He shall shall also enter the damage suffered suffered by the vessel in her hull, engines, rigging, and tackle, no matter what is its cause, cause, as well as the imperfection imperfections s and aver averag ages es of the the carg cargo, o, and and the the effe effec cts and and consequence of the jettison, should there be any; and in cases of grave resolutions which require the advice or a meeting of the officers of the vessel, or even of the passengers and crew, he shall record the the deci decisi sion on adop adopte ted. d. For For the the info inform rmat atio ions ns indicated he shall make use of the binnacle book, and and of the the stea steam m or engi engine ne book book kept kept by the the engineer. In the second book, called the "accounting book," he shall enter all the amounts collected and paid for the account of the vessel, entering specifically article by article, the sources of the collection, and the the am amou ount nts s inve invest sted ed in prov provis isio ions ns,, repa repair irs, s, acquisition of rigging or goods, fuel, outfits, wages, and all other expenses. He shall furthermore enter ther therei ein n a list list of all all the the me memb mber ers s of the the crew crew,, stating stating their domiciles, domiciles, their wages and salaries, salaries, and and the the am amoun ounts ts they they ma may y have have rece receiv ived ed on acco accoun unt, t, eithe eitherr dire direct ctly ly or by deliv deliver ery y to thei theirr families. In the third book, called "freight book," he shall record the entry and exit of all the goods, stating their marks and packages, names of the shippers and and of the the cons consig igne nees es,, port ports s of load loadin ing g and and unload unloading ing,, and the freigh freightt earned. earned. In the same same book book he shal shalll reco record rd the the name names s and and plac places es of  sail sailin ing g of the the pass passeng enger ers s and and the the numb number er of 

UP LAW BAROPS 2007 55 of 71

packages of which their baggage consists, and the price of the passage. 4. To make, make, befor before e recei receivin ving g the the freigh freight, t, with with the offi office cers rs of the the crew crew,, and and the the two two expe expert rts, s, if  requ requir ired ed by the the ship shipper pers s and and pass passeng enger ers, s, an examin examinati ation on of the vessel vessel,, in order order to ascert ascertain ain whether she is watertight, and whether the rigging and engines are in good condition; and if she has the the equi equipm pmen entt requ requir ired ed for for good good navi naviga gati tion, on, preserving a certificate of the memorandum of this inspection, signed by all the persons who may have taken part therein, under their liability. The experts shall be appointed one by the captain of the vessel and the other one by the persons who requ equest est the the exa examinatio tion, and in case of  disagr disagreeme eement nt a third third shall shall be appoin appointed ted by the marine authority of the port. 5. To rem remai ain n cons consta tantl ntly y on boar board d the ves vesse sell with with the crew during the time the freight is taken on board and carefully watch the stowage thereof; not to cons consent ent to any any me merc rcha hand ndis ise e or goods goods of a dang danger erou ous s char charac acter ter to be take taken n on, on, such such as inflammable or explosive substances, without the prec precau autio tions ns whic which h are are reco recomm mmen ende ded d for for thei theirr packing, packing, management and isolation; not to permit that any freight be carried on deck which by reason of its dispos dispositi ition, on, volume volume,, or weight weight makes makes the work work of the the sail sailor ors s diff diffic icul ult, t, and and whic which h migh mightt endan endange gerr the the safe safety ty of the the vesse vessel; l; and and if, if, on acco accoun untt of the the natu nature re of the the me merc rcha hand ndis ise, e, the the special character of the shipment, and principally the the favor favorab able le seas season on it take takes s plac place, e, he allo allows ws merchandise to be carried on deck, he must hear the opinion of the officers of the vessel, and have the consent of the shippers and of the agent. 6. To demand a pilot at the expense of the vesse vessell when whenev ever er requ requir ired ed by navi naviga gati tion, on, and and prin princi cipa pall lly y when when a port port,, cana canal, l, or rive river, r, or a roadstead roadstead or anchoring anchoring place is to be entered with which which neither neither he, the office officers rs nor the crew are acquainted. 7. To be be on dec deck k at the the tim time e of sigh sighti ting ng lan land d and and to take command on entering and leaving ports, canals, canals, roadsteads, roadsteads, and rivers, rivers, unless unless there is a pilot on board discharging his duties. He shall not spend the night away from the vessel except for serious serious causes causes or by reason of official official business. business. cdtai 8. To pres presen entt hims himsel elf, f, when when maki making ng a port ort in distress, to the maritime authority if in Spain * and to the Spanish Spanish * consul consul if in a foreign foreign country country,, before twenty-four hours have elapsed, and make a stateme statement nt of the name, registry registry,, and port of  departure of the vessel, of its cargo, and reason of  arriva arrival, l, which which declara declaratio tion n shall shall be vised vised by the authority or by the consul if after examining the same same it is foun found d to be acce accept ptab able le,, givi giving ng the the captain the proper certificate in order to show his arrival arrival under stress stress and the reasons reasons therefor. In the absence of marine officials or of the consul, the dec declar laratio ation n mus must be made ade bef before ore the the local ocal authority. 9. To take the steps necessary before the comp compet eten entt auth author orit ity y in orde orderr to ente enterr in the the certificate of the Commercial Registry of the vessel the the obl obliga igation tions s whi which he may contr ontrac actt in accordance with Article 583.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law 10. To put put in a safe safe place place and keep keep all the the papers papers and belongings of any members of the crew who might might die on the vessel, vessel, drawin drawing g up a detaile detailed d inve invent ntor ory, y, in the the pres presen ence ce of pass passen enge gers rs as witnes witnesses ses,, and, and, in their their absenc absence, e, of member members s of  the crew. 11. To conduc conductt himself himself accor accordin ding g to the rules rules and precepts contained in the instructions of the agent, being being liab liable le for for all all that that he ma may y do in viol violat atio ion n thereof. 12. To give give an acc accoun ountt to the agent agent from from the port port where where the vessel vessel arrive arrives, s, of the reason reason thereof, thereof, taking taking advant advantage age of the semaph semaphore, ore, telegra telegraph, ph, mail, etc., according to the cases; notify him the freigh freightt he may have receiv received, ed, statin stating g the name and domicile of the shippers, freight earned, and amounts borrowed on bottomry bond, advise him of his departure, and give him any information and data which may be of interest. 13. To observ observe e the rules rules on the situa situation tion of of lights lights and evolutions to prevent collisions. 14. 14. To rema remain in on boar board d in case case of danger danger to the vessel, until all hope to save her is lost, and before abandoning her to hear the officers of the crew, abiding by the decision of the majority; and if he should should have to take a boat he shall take with him, before anything else, the books and papers, and then the articles of most value, being obliged to prove in case of the loss of the books and papers that he did all he could to save them. 15. 15. In case case of wreck wreck he shal shalll ma make ke the prop proper er protest in due form at the first port reached, before the competent authority or the Spanish * consul, within within twenty twenty-fo -four ur hours, hours, statin stating g therein therein all the incidents of the wreck, in accordance with case 8 of  this article. 16. To comply comply with the obliga obligations tions imposed imposed by the laws and rules of navigation, customs, health, and others.

I.

Carriage of Goods by Sea Act (Commonwealth Act No. 65; Public Act No. 65; Public Act 521, 74th US Congress)

CA No. 65 ACT TO DECLARE THAT   PUBLIC ACT NUMBERED FIVE HUNDRED AND TWEN TW ENTY TY-O -ONE NE,, KNOW KNOWN N AS "CAR "CARRI RIAG AGE E OF  GOO OODS DS BY SEA ACT, ACT," " EN ENAC ACTE TED D BY TH THE  E  SEVENTY-FOURTH CONGRESS OF THE UNITED STAT STATES ES,, BE ACCE ACCEPT PTED ED,, AS IT IS HE HERE REBY  BY   ACCEPTED BY THE NATIONAL ASSEMBLY  WHEREA WHEREAS, S, the Seventy Seventy-fo -fourt urth h Congre Congress ss of the United United States States enacte enacted d Public Public Act Number Numbered ed Five Five hundred and twenty-one, entitled: "Carriage of Goods by Sea Act"; WHEREAS, the primordial purpose of the said Acts is to bring about uniformity in ocean bills of lading and to give effect to the Brussels Treaty, signed by the United States with other powers; WHEREA WHEREAS, S, the Govern Governmen mentt of the United United States States has left it to the Philippine Government to decide whether or not the said Act shall apply to carriage of good goods s by sea sea in fore foreig ign n trad trade e to and and from from Philippine ports;

UP LAW BAROPS 2007 56 of 71

WHER WHEREA EAS, S, the the said said Act Act of Cong Congre ress ss conta contain ins s advanced legislation, which is in consonance with modern modern mariti maritime me rules rules and the practi practices ces of the great shipping countries of the world; WHER WHEREA EAS, S, ship shippi ping ng comp compan anie ies, s, ship shipper pers, s, and and marrine ma ins insuran uranc ce com ompa pani nies es,, and vario arious us chambers of commerce, which are directly affected by such such legisla legislatio tion, n, have have express expressed ed their their desir desire e that said Congressional Act be made applicable and extended to the Philippines; therefore, Be it enacted enacted by the Nationa Nationall Ass Assemb embly ly of the Philippines: Philippines: Section 1 That That the provis provision ions s of Public Public Act Number Numbered ed Five Five hundre hundred d and twenty-o twenty-one ne of the Seventy Seventy-fo -fourt urth h Congress of the United States, approved on April sixteen sixteenth, th, ninetee nineteen n hundre hundred d and thirty thirty-si -six, x, be acce accepte pted, d, as it is hereby hereby acce accepte pted d to be ma made de applicable to all contracts for the carriage of goods by sea sea to and and from from Phil Philip ippi pine ne ports ports in fore foreig ign n trade: Provided , That nothing in the Act shall be construed as repealing any existing provision of the Code of Commerce which is now in force, or as limiting its application. Section 2 This Act shall take effect upon its approval. Approved: October 22,1936. An Act Relating to the Carriage of Goods by Sea. Be it enact acted by the Sena Senate te and and Hous ouse of  Representatives of the United States of America in Congress assembled , That every bill of landing or simila similarr docume document nt of title title which which is evidence evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of the Act. TITLE I Section 1 When used in this Act — (a) The term "carrier" includes the owner or the charter charterer er who enters enters into into a contra contract ct of carria carriage ge with a shipper. (b) The term "contract of carriage" applies only to contracts of carriage covered by a bill of lading or any any simi simila larr docu docume ment nt of titl title, e, inso insofa farr as such such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid aforesaid issued issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations relations between a carrier and a holder of the same. (c ) The The term term "good "goods" s" incl includ udes es goods goods,, ware wares, s, merc erchandise, and articles of ever every y kind whatsoever, except live animals and cargo which by the the cont contra ract ct of carr carria iage ge is stat stated ed as being being carried on deck and is so carried. (d ) The term "ship" means any vessel used for the carriage of goods by sea. (e) The term "carriage of goods" covers the period from the time when the goods are loaded on to the time when they are discharged from the ship. RISKS Section 2 Subject to the provisions of section 6, under every contract of carriage of goods by sea, the carrier in

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law relation to the loading handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled entitled to the rights and immunities immunities hereinafter hereinafter set forth. RESPONSIBILITIES AND LIABILITIES Section 3 1) The carrier shall 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) (c) Make Make the the hold holds, s, refr refrig iger erati ating ng and and cool coolin ing g chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception carriage and preservation. (2) The carrier carrier shall properly properly and carefully carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. (3) After receiving the goods into his charge the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things — (a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods star starts ts,, prov provid ided ed such such ma mark rks s are are stam stampe ped d or othe otherrwis wise shown own clea clearrly upon upon the the goods oods if  uncovered, or on the cases or coverings in which such such goods goods are containe contained, d, in such such a manner manner as should ordinarily remain legible until the end of the voyage. (b) Either the number of packages or pieces, or the quan quanti tity ty or wei weight, ght, as the the case case ma may y be, be, as furnished in writing by the shipper. (c) The apparent order and condition of the goods: Provided, That no carrier, master, or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting not accu accura rate tely ly to repr repres esen entt the the good goods s actu actual ally ly rece receiv ived, ed, or whic which h he has has had had no reas reason onab able le means of checking. (4) (4) Such Such a bill bill of ladi lading ng shal shalll be prim prima a faci facie e evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs (3) (a), (b), and (c) of this section: Provided, That nothing in this Act shall be construed as repealing or limiting the application of any part of the Act, as amended, entitled "An Act relating to bills of lading in inters interstate tate and foreig foreign n com commer merce," ce," approv approved ed August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the "Pomerene Bills of Lading Act." (5) The shipper per shall be deemed to have guaranteed guaranteed to the carrier the accuracy accuracy at the time of shipment of the marks, number, quantity, and weight, weight, as furnished furnished by him; and the shipper shipper shall indemnify the carrier against all loss damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity indemnity shall in no way limit his responsibility responsibility and liability under the contract of carriage or to any person other than the shipper. (6) (6) Unle Unless ss noti notice ce of loss loss or dama damage ge and and the the general nature of such loss or damage be given in writing to the carrier or his agent at the port of 

UP LAW BAROPS 2007 57 of 71

discharge before or at the time of the removal of  the goods into the custody of the person entitled to deliver delivery y thereo thereoff under under the contra contract ct of carria carriage, ge, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the the bill bill of lading lading.. If the loss loss or dama damage ge is not appare apparent, nt, the notice notice must must be given given within within three days of the delivery. Said Said notice notice of loss loss or damage damage maybe endors endorsed ed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. In any any even eventt the the carr carrie ierr and and the the ship ship shal shalll be discha discharge rged d from from all liabilit liability y in respec respectt of loss loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should should have been been delive delivered red:: Provid Provided, ed, That That if a noti notice ce of loss loss or dama damage ge,, eith either er appa appare rent nt or conc conceal ealed, ed, is not not give given n as prov provid ided ed for in this this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable reasonable facilities facilities to each other for inspecting and tallying the goods. (7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of the carr carrie ierr to the the ship shipper per shal shall, l, if the the ship shipper per so demands demands,, be a "shipp "shipped" ed" bill bill of lading lading Provid Provided, ed, That if the shipper shall have previously taken up any any docu docume ment nt of title title to such such goods goods,, he shal shalll surren surrender der the same same as agains againstt the issue issue of the "shipped" bill of lading, but at the option of the carrier such document of title may be noted at the port of shipment by the carrier, master, or agent with name or name the names of the ship or ships upon which the goods have been shipped and the date or dates of shipment, and when so noted the same same shal shalll for for the the purp purpos ose e of this this sect sectio ion n be deemed to constitute a "shipped" bill of lading. (8) (8) Any Any clau clause se,, cove covena nant nt,, or agre agreem emen entt in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this Act, shall be null and void and of  no effect effect.. A benefi benefitt of insuranc insurance e in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the carrier from liability. RIGHTS AND IMMUNITIES Section 4 (1) Neither the carrier nor the ship shall be liable for for loss loss or dama damage ge aris arisin ing g or resu result ltin ing g from from unseaw unseawort orthin hiness ess unless unless caused caused by want want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to make to the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried fit fit and and safe safe for for their their rece recepti ption, on, carr carria iage, ge, and and preservation in accordance with the provisions of  para paragr grap aph h (1) (1) of secti section on 3. When Whenev ever er loss loss or

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law damage damage has resulted from unseaworthi unseaworthiness, ness, the burden burden of provin proving g the exercis exercise e of due dilige diligence nce shall be on the carrier or other persons claiming exemption under the section. (2) (2) Neit Neithe herr the the carr carrie ierr nor nor the the ship ship shal shalll be responsible for loss or damage arising or resulting from — (a) Act, neglect, or default of the master, mariner, pil pilot, ot, or the the serv serva ants nts of the the carri arrier er in the the navigation or in the management of the ship; (b) Fire, unless caused by the actual fault or privity of the carrier; (c) Perils, Perils, danger dangers, s, and acciden accidents ts of the sea or other navigable waters; (d) Act of God; (e) Act of war, (f) Act of public enemies; (g) Arrest or restraint of princes, rulers, or people, or seizure under legal process; (h) Quarantine restrictions; (i) Act or omission of the shipper or owner of the goods, his agent or representative; (j) Strikes or lockouts or stoppage or restraint of  labor labor from from whatev whatever er cause, cause, whether whether partial partial or general; Provided, That nothing herein contained shal shalll be const onstru rued ed to reli reliev eve e a carr carrie ierr from from responsibility for the carrier's own acts; (k) Riots and civil commotions (l) Saving or attempting to save life or property at sea; (m) Wastage in bulk or weight or any other loss or damage damage arising arising from inherent inherent defect, defect, quality, quality, or vice of the goods; (n) Insufficiency of packing; (o) Insufficiency of inadequacy of marks; (p) (p) Late Latent nt defe defect cts s not not disc discov over erab able le by due due diligence; and (q) Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. (3) The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising from any cause without the act, fault, or neglect of  the shipper, his agents, or servants. (4) Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shal shalll not not be deem deemed ed to be an infr infrin inge gemen mentt or breach of this Act or of the contract of carriage, and the carrier shall not be liable for any loss or damage damage resulting resulting therefrom: therefrom: Provided, Provided, however, however, That if the deviation is for the purpose of loading cargo cargo or unload unloading ing cargo cargo or passen passenger gers s it shall shall,, prima facie, be regarded as unreasonable. (5) Neither Neither the carrier carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $600 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the the equiv equival alent ent of that that sum sum in other other curr currenc ency, y, unless the nature and value of such goods have been declared by the shipper before shipment and insert inserted ed in the bill of lading lading.. This This declar declarati ation, on, if 

UP LAW BAROPS 2007 58 of 71

embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier. By agre agreem emen entt betw between een the the carr carrie ier, r, ma mast ster er,, or agen agentt of the the carr carrie ier, r, and and the the ship shipper per anoth another er maxi ma ximu mum m am amou ount nt than than that that me ment ntio ioned ned in this this para paragr grap aph h ma may y be fixed fixed:: Prov Provid ided, ed, That That such such maximum shall not be less than the figure above named. In no event shall the carrier be liable for morre tha mo than the the amo moun untt of dama damage ge actua ctuallly sustained. Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with the transportation of the goods if the nature or val value ther thereo eoff has has been been knowi nowing nglly and fraudulently misstated by the shipper in the bill of  lading. (6) (6) Good Goods s of an infl inflam amma mabl ble, e, expl explos osiv ive, e, or danger dangerous ous nature nature to the shipmen shipmentt whereo whereoff the carri carrier, er, master master or agent agent of the carrie carrier, r, has not cons consen ented ted with with knowl knowledg edge e of thei theirr natu nature re and and charac character, ter, may at any time before before discha discharge rge be land landed ed at any any plac place e or destr destroye oyed d or rend render ered ed innocu innocuous ous by the carrie carrierr withou withoutt com compen pensat sation ion,, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge knowledge and consent shall become a danger to the ship or cargo, they may ma y in like ma mann nner er be lande landed d at any any plac place, e, or destroy destroyed ed or render rendered ed innocu innocuous ous by the carrie carrierr without liability on the part of the carrier except to general average, if any. SURR SURREN ENDER DER OF RIGH RIGHTS TS AND AND IMMU IMMUNI NITI TIES ES AND INCREA INCREASE SE OF RESPON RESPONSIBI SIBILITI LITIES ES AND LIABILITIES Section 5 A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase increase any of his responsibilities responsibilities and liabilities liabilities under this Act, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper. The provisions of this Act shall not be applicable to charter parties; but if bills of lading are issued in the case of a ship under charter party, they shall comply with the terms of this Act. Nothing in this Act shall be held to prevent the insertion in a bill of  lading lading of any lawful lawful provis provision ion regard regarding ing genera generall average. SPECIAL CONDITIONS Section 6 Notwithstandi Notwithstanding ng the provisions provisions of the preceding preceding sections, a carrier, master or agent of the carrier, and a shipper shipper shall, shall, in regard regard to any particula particularr goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of  the carrier for such goods, and as to the rights and immunities immunities of the carrier in respect respect of such goods, or his obligation as to seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public public policy) policy),, or the care or diligenc diligence e of his serv servan ants ts or agen agents ts in rega regard rd to the the load loadin ing, g, handli handling ng stowag stowage, e, carria carriage, ge, custody custody,, care, care, and discharge discharge of the goods carried carried by sea: Provided, Provided, That in this case no bill of lading has been or shall be issu issued ed and and that that the the terms terms agre agreed ed shal shalll be

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law embodi embo died ed in a rece receip iptt whic which h shal shalll be a nonnonnegotiable document and shall be marked as such. Any agreement so entered into shall have full legal effect: Provided , That this section shall not apply to ordi ordina nary ry comm commer erci cial al ship shipme ments nts ma made de in the the ordi ordina narry cour cours se of tra trade but but only only to othe otherr shipments shipments where the character character or condition condition of the property to be carried or the circumstances, terms, and conditions under which the carriage is to be perfo perform rmed ed are are such such as reas reason onab ably ly to just justif ify y a special agreement. Section 7 Nothing contained in this Act shall prevent a carrier or a shipper shipper from enteri entering ng into into any agreem agreement, ent, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage damage to or in connection with the custody and care and handling of goods prio priorr to the the load loadin ing g on and and subs subsequ equen entt to the the discharge from the ship on which the goods are carried by sea. Section 8 The provisions of this Act shall not affect the rights and obligations of the carrier under the provisions of the Shipping Act, 1916, or under the provisions of section 4281 to 4289, inclusive, of the Revised Statu tatuttes of the United State tates s, or of any amendments amendments thereto; or under the provisions provisions of  any other enactment for the time being in force rela relati ting ng to the the limi limitat tatio ion n of the the liab liabil ilit ity y of the the owners of seagoing vessels. TITLE II Section 9 Nothing contained in this Act shall be construed as per permitt mittin ing g a com omm mon carr arrier ier by wate waterr to discriminate between competing shippers similarly place in time and circumstan circumstances, ces, either (a) with respect to the right to demand and receive bills of  lading subject to the provisions of this Act; or (b) when when issuin issuing g such such bills bills of lading lading,, either either in the surr surren ende derr of any any of the the carr carrie ier' r's s righ rights ts and and immunities or in the increase of any of the carrier's responsibilities and liabilities pursuant to section 6, title I, of this Act or (c) in any other way prohibited by the Shipping Act, 1916, s amended. Section 10 Secti Section on 25 of the the Inte Inters rstat tate e Comm Commer erce ce Act Act is hereby amended by adding the following proviso at the the end end of para paragr grap aph h 4 ther thereo eof: f: "Pro "Provi vide ded, d, howe howeve verr, Tha That ins insofar ofar as any any bill bill of ladi lading ng author authorize ized d hereun hereunder der relates relates to the carri carriage age of  goods by sea, such bill of lading shall be subject to the provisio provisions ns of the Carriag Carriage e of Goods Goods by Sea Act." Section 11 Where under the customs of any trade the weight of any bulk cargo inserted in the bill of lading is a weight weight ascerta ascertaine ined d or accepte accepted d by a third third party party other than the carrier or the shipper, and the fact that that the weight weight is so ascerta ascertaine ined d or accepted accepted is stated in the bill of lading, then, notwithstanding any thing in this Act, the bill of lading shall not be deemed deemed to be prima prima facie facie eviden evidence ce agains againstt the

UP LAW BAROPS 2007 59 of 71

carri carrier er of the receip receiptt of goods of the weight weight so inserte inserted d in the bill of lading lading,, and the accura accuracy cy ther thereo eoff at the the time time of ship shipme ment nt shal shalll not not be deemed to have been guaranteed by the shipper. Section 12 Noth Nothiing in this Act shall be cons onstru trued as superseding any part of the Act entitled "An act relating to navigation of vessels, bills of lading, and to cer certain tain obli obliga gati tion ons, s, duti duties es,, and and righ rights ts in connection with the carriage of property," approved February 13,1893, or of any other law which would be applicable applicable in the absence absence of this Act, insofar as they they rela relate te to the the duti duties es,, resp respon onsi sibi bili liti ties es,, and and liabil liabiliti ities es of the ship or carrie carrierr prior prior to the time when the goods are loaded on or after the time they are discharged from the ship. Section 13 This Act shall apply to all contracts for carriage of  goods by sea to or from ports of the United States in fore foreig ign n trad trade. e. As used used in this this Act Act the the term term "United States" includes includes its districts, districts, territories territories,, and possessions possessions:: Provided, Provided, however  however , That hat the the Phil Philip ippi pine ne legi legisl slatu ature re ma may y by law law exclu exclude de its its application to transportation to or from ports of the Philippine Islands. The term "foreign trade" means the transportation of goods between the ports of  the United States and ports of foreign countries. Noth Nothin ing g in this this Act Act shal shalll be held held to appl apply y to contracts for carriage of goods by sea between any port of the United States or its possessions, and any any oth other por port of the the Uni United ted Sta States tes or its possession: Provided, Provided, however  however , That That any bill bill of  ladi lading ng or simi simila larr docu docume ment nt of titl title e whic which h is evidence of a contract for the carriage of goods by sea between between such such ports, ports, contai containin ning g an expres express s statement statement that it shall be subject subject to the provisions provisions of this Act, shall be subjected hereto as fully as if  subject hereto as fully as if subject hereto by the express express provisions provisions of this Act: Provided, Provided, further, further, That every bill of lading or similar document of title which is evidence of a contract for the carriage of  goods by sea from ports of the United States, in foreign trade, shall contain a statement that it shall have effect subject to the provisions of this Act. Section 14 Upon Upon the the certi ertifi fic catio ation n of the the Secre ecreta tarry of  Commerce that the foreign commerce of the United States States in its its comp competi etiti tion on with with that that of fore foreig ign n nations nations is prejud prejudice iced d the provis provision ions, s, or any of  them, of Title I of this Act, or by the laws of any foreign country or countries relating to the carriage of goods by sea, the President of the United States, may, from time to time, by proclamation, suspend any or all provisions of Title I of this Act for such peri eriods of time or indefinitel tely as may be designated in the proclamation. The President may at any any time time resc rescin ind d such such susp suspens ensio ion n of Titl Title e I hereof, and any provisions thereof which may have been suspend suspended ed shall shall thereby thereby be reinst reinstated ated and again apply to contracts contracts thereafter thereafter made for the carri carriage age of goods goods by sea. sea. Any proclama proclamatio tion n of  suspension suspension or rescissi rescission on of any such suspension suspension shall take effect on a date named therein, which date shall be not less than ten days from the issue of the proclamation.

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law Any Any cont contra ract ct for the the carr carria iage ge of goods goods by sea, sea, subj subjec ectt to the the provi provisi sion ons s of this this Act, Act, effec effecti tive ve during any period when title I hereof, or any part ther thereof eof,, is susp suspen ende ded, d, shal shalll be subj subjec ectt to all all provis provision ions s of law now or hereaf hereafter ter applic applicabl able e to that that part part of Title Title I whic which h ma may y have have thus thus been been suspended. Section 15 This Act shall take effect ninety days after the date of its approval; but nothing in this Act shall apply during a period not to exceed one year following its approval to any contract for the carriage of goods by sea, made before the date on which this Act is appr approve oved, d, nor nor to any any bill bill of ladi lading ng or simi simila larr document of title issued, whether before or after such date of approval in pursuance of any such contract as aforesaid. Section 16 This Act may be cited as the "Carriage of Goods by Sea Act." Approved, April 16, 1936. PUBLIC ACT 521 BY SEA ACT 

CARRIAGE OF GOODS  

Section 1 That the provisions of Public Act No. 521 of the 7th Congress of the United States, approved on April 16, 1936, be accepted, as it is hereby accepted to be made applicable to all contracts for the carriage of goods by sea to and from Philipp Philippine ine ports in foreign foreign trade: Provided, Provided, that that nothin nothing g in this Act shal shalll be cons constr trued ued as repe repeal alin ing g any any exist existin ing g provision of the Code of Commerce which is now in force, or as limiting its application. . Sec. 2 This This Act Act shal shalll take take effe effect ct upon upon its its appr approv oval al.. (Approved October 22, 1936). TITLE I Sec. 1 When used in this Act —. (a) The term "carr "carrier" ier" includes includes the the owner or the the charter charterer er who enters enters into into a contra contract ct of carria carriage ge with a shipper. (b) The term "contract of carriage" carriage" applies applies only to contracts contracts of carriage carriage by covered by a bill of lading or any similar similar document of title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as afor afores esai aid d issu issued ed unde underr or purs pursua uant nt to a character party from the moment at which such bill of lading or similar document of title regulates the relati relations ons between between a carrie carrierr and a holder holder of the same. . (c) (c) The The term term "goo "goods ds"" incl includ udes es good goods, s, ware wares, s, merchandise, and articles of ever every y kind whatsoever, except live animals and cargo which by the the cont contra ract ct of carr carria iage ge is stat stated ed as bein being g carried on deck and is so carried.. (d) The term term "ship" "ship" means any vessel vessel used used for the carriage of goods by sea.. (e) (e) The The term term "car "carri riag age e of goods goods"" cover covers s the the period from the time when the goods are loaded to the time when they are discharged from the ship.

UP LAW BAROPS 2007 60 of 71

RISKS Sec. 2 Subject to the provisions of Section 6, under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods shall be subjec subjectt to the respon responsib sibil iliti ities es and liabi liabilit lities ies and entitled entitled to the rights and immunities immunities hereinafter hereinafter set forth.. RESPONSIBILITIES AND LIABILITIES Sec. 3 (1) The carrier shall 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) (c) Make Make the the hold holds, s, refr refrig iger erat atin ing g and and cool coolin ing g chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation. (2) The carrier carrier shall properly properly and carefully carefully load, handle, stow, carry, keep, care for,and discharge the goods carried. (3) After receivin receiving g the goods into his carri carrier, er, or the the ma mast ster er or agen agentt of the the carr carrie ier, r, shal shall, l, on demand of the shipper, issue to the shipper a bill of  lading showing among other things —. (a) The loading loading marks marks necessary necessary for identification identification of the goods as the same are furnished in writing by the shipper before the loading of such goods star starts ts,, prov provid ided ed such such ma mark rksa sare re stam stampe ped d or othe otherrwis wise shown own clear learly ly upon upon the the good goods s if  uncovered,in uncovered,in such a manner as should should ordinaril ordinarily y remain legible until the end of the voyage.. (b) Either the the number number of packages packages or pieces, pieces, or the the quan quanti tity ty or weig weight ht,, as the the case casema may y be, be, as furnished in writing by the shipper. (c) (c) The The appa appare rent nt order order and cond condit itio ions ns of the the goods: Provided, that no carrier, master, or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weig weight ht whic which h he has has reas reason onab able le grou ground nd for for suspec suspectin ting g not accura accurately tely to repres represent ent the good good actu actual allly recei eceive ved d or whic which h he has has had no reasonable means of checking.. (4) (4) Such Such a bill bill of ladi lading ng shal shalll be prim prima a faci facie e evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs (3) (a), (b), and (c), of this section: (The rest of  the provision is not applicable to the Philippines). (5) (5) The shipp hipper er shal shalll be deem deemed ed to have have guaranteed guaranteed to the carrier the accuracy accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished furnished by him; and the shipper shipper shall indemnify the carrier against all loss, damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity indemnity shall in no way limit his responsibility responsibility and liability under the contract of carriage to any person other than the shipper.. (6) (6) Unle Unless ss notice notice or loss loss or dama damage ge and and the the general nature of such loss or damage by given in writing to the carrier or his agent at the port of  disc discha harg rge e or at the the time time of the the remo remova vall of the the goods into the custody of the person entitled to deliver delivery y thereo thereoff under under the contra contract ct of carria carriage, ge,

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the the bill bill of ladi lading ng.. If the loss loss or dama damage ge is not appare apparent, nt, the notice notice must be given given within within three days of the delivery.. Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. In any any even eventt the the carr carrie ierr and and the the ship ship shall shall be discha discharge rged d from from all liabilit liability y in respec respectt of loss loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should should have been delivered delivered:: Provid Provided, ed, that, that, if a notic notice e of loss loss or dama damage, ge, eithe eitherr appa appare rent nt or conc concea eale led, d, is not not given given as prov provid ided ed for for in this this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered. In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable reasonable facilities facilities to each other for inspecting inspecting and tallying the goods.. (7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of the carr carrie ierr to the the ship shippe perr shal shalll if the the ship shippe perr so demands, be a "shipped" bill of lading: Provided, that if the shipper shall have previously taken up any any docu documen mentt of titl title e to such such goods goods,, he shal shalll surren surrender der the same same as agains againstt the issue issue of the "shipped" bill of lading, but at the option of the carrier such document of title may be noted at the port of shipment by the carrier, master, or agent with the name or names of the ship or ships upon which the goods have been shipped and the date or dates of shipment, and when so noted the same shall for the purpose of this section be deemed to constitute a "shipped" bill of lading. (8) (8) Any Any clau clause se,, coven covenan ant, t, or agre agreem emen entt in a contract of carriage relieving the carrier of the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure failure in the duties and obligations obligations provide provide in this section or lessening such liability otherwise than as provided in this Act, shall be null and void and of  no effect. A benefit of insurance in favor of the carrier, or similar clause, shall be deemed to be a clau clause se reli reliev evin ing g the the carr carrie ierr from from liab liabil ilit ity. y. RIGHTS AND IMMUNITIES Sec. 4 (1) Neither the carrier nor the ship shall be liable for for loss loss or dama damage ge aris arisin ing g or resu result ltin ing g from from unseaw unseawort orthin hiness ess unless unless caused caused by want want of due diligence on the part of the carrier to make the ship seaworthy and to secure that the ship is properly manned, manned, equipped, and supplied, and to make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried fit fit and and safe safe for for thei theirr rece recepti ption on,, carr carria iage ge,, and and preservation, in accordance with the provisions of  paragr paragraph aph (1) of Sectio Section n (3). (3). Whenev Whenever er loss loss or damage damage has resulted from unseaworthi unseaworthiness, ness, the burden burden of provin proving g the exercis exercise e of due dilige diligence nce

UP LAW BAROPS 2007 61 of 71

shall shall be on the carrie carrierr or other other person person claimin claiming g exemption under this section.. (2) (2) Neith Neither er the the carr carrie ierr nor nor the the ship ship shal shalll be responsible for loss or damage arising or resulting from — (a) (a) Act, Act, negl neglec ect, t, or defa defaul ultt of the the ma mast ster er,, mariner, mariner, pilot, or the servants of the carrier carrier in the navigation or in the management of the ship; (b) (b) Fire Fire,, unle unless ss caus caused ed by the the actua actuall faul faultt or privity of the carrier;. (c) Perils, Perils, dangers, dangers, and accidents accidents of the the sea or other navigable water;. (d) Act of God;. (e) Act of war;. (f) Act of public enemies; (g) (g) Arre Arrest st or rest restra rain intt of prin prince ces, s, ruler rulers, s, or people, or seizure under legal process; (h) Quarantine restrictions;. (i) Act or omission of the shipper or owner of the goods, his agent or representative;. (j) Strikes or lockouts or stoppage or restraint of  labor labor from from whatev whatever er cause, cause, whether whether partia partiall or general: general: Provided, Provided, that nothing herein herein contained contained shal shalll be cons constr true ued d to reli reliev eve e a carr carrie ierr from from responsibility for the carrier's own acts;. (k) Riotsand civil commotions;. (l) Saving Saving or attempti attempting ng to save life life or property property at sea;. (m) Wastage Wastage in bulk or weight or any other loss loss or dama damage ge aris arisin ing g from from inher inheren entt defe defect ct,, quality, or vice of the goods; (n) Insufficiency or packing; (o) Insufficiency or inadequacy of marks;. (p) (p) Late Latent nt defe defect cts s not not disc discov over erab able le by due due diligence; and. (q) Any other cause cause arisin arising g withou withoutt the actual actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden burden of proof proof shall be on the person person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. (3) The shipper shall not not be responsible for loss or damage sustained by the carrier or the ship arising or resulti resulting ng from from any cause cause withou withoutt the act, or neglect of the shipper, his agents, or his servants.. (4) Any deviation in saving saving or attempting to save life or property at sea, or any reasonable deviation shal shalll not not be deem deemed ed to be an infr infrin inge gemen mentt or breach or this Act or of the contract of carriage, and and carr carrie ierr shal shalll not not be liab liable le for for any any loss loss or damage resulting therefrom: Provided, Provided, however, however, that if the deviation is for the purpose of loading or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable.. (5) Neither the the carrier carrier nor the ship shall shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package of lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the the equiv equival alen entt of that that sum sum in other other curr currenc ency, y, unless the nature and value of such goods have been declared by the shipper before shipment and inserte inserted d in the bill bill of lading lading.. This This declar declarati ation, on, if  embodied in the bill of lading, shall be prima facie

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law evid eviden ence ce,, but but shal shalll not not be conc conclu lusi sive ve on the the carrier.. By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, that such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of  damage actually sustained.. Neither the carrier nor the ship shall be responsible in any event for loss damage to or in connection with the transportation of the goods if the nature or value ther thereo eoff has been een knowingly and fraudulently misstated by the shipper in the bill of  lading.. (6) (6) Good Goods s of an infl inflam amma mabl ble, e, expl explos osiv ive, e, or danger dangerous ous nature nature to the shipmen shipmentt whereo whereof, f, the carrie carrier, r, master master or agent agent of the carrier, carrier, has not cons consen ented ted with with know knowled ledge ge of thei theirr natur nature e and and charac character, ter, may at any time before before discha discharge rge be land landed ed at any any plac place e or destr destroy oyed ed or rend render ered ed innocu innocuous ous by the carrie carrierr withou withoutt com compen pensat sation ion,, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge knowledge and consent consent shall become a danger to the ship or cargo, they may ma y in like like ma mann nner er be land landed ed at any any plac place, e, or destroy destroyed ed or render rendered ed innocu innocuous ous by the carrie carrierr without liability on the part of the carrier except to general average if any.. SURREN SURRENDER DER OF RIGHTS RIGHTS AND IMMUNI IMMUNITIE TIES S AND INCREA INCREASE SE OF RESPON RESPONSIB SIBILI ILITIE TIES S AND LIABILITIES Sec. 5 A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase increase any of his responsibiliti responsibilities es and liabiliti liabilities es under this Act, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper. The provisions of this Act shall not be applicable to charter parties; but if bills of lading are issued in the case of a ship under a charter party, they shall comply with the terms of this Act. Nothing in this Act shall be held to prevent the insertion in a bill of  lading lading of any lawful lawful provisions provisions regarding general average.. SPECIAL CONDITIONS Sec. 6 Notwith Notwithsta standi nding ng the provis provision ions s of the preced preceding ing section, a carrier, master or agent of the carrier, and a shipper shipper shall, shall, in regard regard to any particul particular ar goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of  the carrier for such goods, and as to the rights and immunities of the carrier in respect to such goods, or his obligation to seaworthiness, (so far as the stipulation stipulation regarding seaworthin seaworthiness ess is contrary contrary to publ public ic poli policy cy), ), or the the care care or dili diligen gence ce of his his serv servan ants ts or agen agents ts in rega regard rd to the the load loadin ing, g, handli handling, ng, stowag stowage, e, carria carriage, ge, custody custody,, care care and discharge of the goods carried by sea; provided, that in this case no bill of lading has been or shall be issued and that the terms agreed shall be a

UP LAW BAROPS 2007 62 of 71

non-negotiable document and shall be marked as such. . Any agreement so entered into shall have full legal effect: Provided, that this section shall not apply to ordi ordina nary ry comm commer erci cial al ship shipme ments nts ma made de in the the ordi ordina narry cour ourse of trad trade e but but only only to othe otherr shipments shipments where the character character or condition condition of the property to be carried or the circumstances, terms and conditions under which the carriage is to be perfor performe med d are are such such as reas reasona onabl bly y to just justif ify y a special agreement. Sec. 7 Nothing contained in this Act shall prevent a carrier or a shipper shipper from enteri entering ng into into any agreement agreement,, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prio priorr to the the load loadin ing g on and and subs subsequ equen entt to the the discharge from the ship on which the goods are carried by sea.. Sec. 8 The provisions of this Act shall not affect the rights and obligations obligations of the carrier carrier under the provisions provisions of the Shipping Act, 1916, or under the provisions of Sections 4281 to 4292, inclusive, of the Revised Statu tatuttes of the United States tes, or of any amendm amendment ents s theret thereto, o, or under under the provis provision ions s of  any other enactment for the time being in force rela relatin ting g to the the limi limita tati tion on of the the liab liabil ilit ity y of the the owners of seagoing vessels.. TITLE II Sec. 9 Nothing contained in this Act shall be construed as per permitt mittin ing g a com ommo mon n carr arrier ier by wate waterr to discriminate between competing shippers similarly placed in time and circumstances, either (a) with respect to their right to demand and receive bills of  lading subject to the provisions of this Act; or (b) when when issu issuin ing g such such bill bills s of ladi lading ng eith either er in the the surr surren ende derr of any any of the the carr carrie ier' r's s righ rights ts and and immunities or in the increase of any of the carrier's responsibilities and liabilities pursuant to Section 5, Title I, of this Act; (c) in any other way prohibited by the Shipping Act, 1916, as amended.. Sec. 10 (Not applicable to the Philippines.). Sec. 11 When under the custom of any trade the weight of  any bulk cargo inserted in the bill of lading is a weight weight ascerta ascertaine ined d or accepte accepted d by a third third party party other than the carrier or the shipper and the fact that the weight as ascertained or accepted is stated in the bill of lading, then notwithstanding anything in this Act, the bill of lading shall not be deemed to be prima facie evidence against the carrier of the receipt of goods of the weight so inserted in the bills of lading, and the accuracy thereof at the time of shipment shipment shall not be deemed deemed to have have been guaranteed by the shipper.. Sec. 12 (Not applicable to the Philippines.).

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law Sec. 13 This Act shall apply to all contracts for carriage of  goods by seas to or from ports of the United States in fore foreig ign n trad trade. e. As used used in this this Act Act the the term term "United "United States" includes its districts, districts, territories, territories, and and poss posses essi sion ons: s: Prov Provid ided, ed, howev however er,, that that the the Phil Philip ippi pine ne Legis Legisla latur ture e ma may y by law law exclu exclude de its its application to transportation to or from ports of the Philippine Islands. The term "foreign trade" means the transportation of goods between the ports of  the United States and ports of foreign countries. Noth Nothin ing g in this this Act Act shal shalll be held held to appl apply y to contracts for carriage of goods by sea between any port of the United States or its possessions and any other port of the United States or its possessions: Provided, however, that any bill of lading or similar docu docume ment nt of the the titl title e whic which h is evid eviden ence ce of a contract for the carriage of goods by sea between such ports, containing an express statement that it shall be subject to the provisions of this Act; shall be subjected hereto as fully as if subject hereto by the the expr expres ess s prov provis isio ions ns of this this Act: Act: Prov Provid ided, ed, furt furthe her, r, that that ever every y bill bill of ladi lading ng or simi simila larr document of title which is evidence of a contract for the carriage of goods by sea from ports of the Unit United ed States States in fore foreig ign n trad trade, e, shal shalll cont contai ain n a statement that it shall have effect subject to the provisions of this Act. . Sec. 14 Upon Upon the the cer certifi tifica cati tion on of the the Secr ecreta etary of  Commerce that the foreign commerce of the United States States in its comp competi etitio tion n with with that that of fore foreig ign n nations is prejudiced by the provisions, or any of  them, of the Title I of this Act, or by the laws of  any foreign foreign country country or countr countries ies relati relating ng to the carr carria iage ge of good goods s by sea, sea, the the Pres Presid iden entt of the the United ted Stat tates may, from tim time to tim time by proclamation, suspend any or all provisions of Title I of this Act for such periods of time or indefinitely as may be design designated ated in the proclama proclamatio tion. n. The President may at any time rescind such suspension of Title I hereof, and any provisions thereof which may ma y have have been been susp suspen ende ded d shal shalll ther thereb eby y be reinstated and again apply to contracts thereafter made for carriage of goods by sea. Any procla proclamati mation on of suspens suspension ion or rescis rescissio sion n of any such such susp suspen ensi sion on shal shalll take take effec effectt on the the date date named therein, which date shall be not less than ten days from the issue of the proclamation. Any Any cont contra ract ct for the the carr carria iage ge of goods goods by sea, sea, subj subjec ectt to the the provi provisi sion ons s of this this Act, Act, effec effecti tive ve during any period when Title I hereof, or any part ther thereof eof,, is susp suspen ende ded, d, shal shalll be subj subjec ectt to all all provis provision ions s of law now or hereaf hereafter ter applic applicabl able e to that that part part of Title Title I whic which h ma may y have have thus thus been been suspended.. Sec. 15 This Act shall take effect ninety days after the date of its approval; but nothing in this Act shall apply during a period not to exceed one year following its approval to any contract for the carriage of goods by sea, made before the date on which this Act is appr approv oved ed nor nor to any any bill bill of ladi lading ng or simi simila larr document of title issued, whether before or after

UP LAW BAROPS 2007 63 of 71

such such date date of approv approval al in pursua pursuance nce of any such contract as aforesaid.. Sec. 16 This Act may be cited as the "Carriage of Goods by Sea Act.". 1.

CONTRACTS COVERED UNDER COGSA

COGSA is a special law that governs in all contracts of carriage of: goods by sea between or to and from Philippine ports vessels involved in foreign trade Application of laws: If the common carrier is coming to the Philippines: First: Civil Code Second: COGSA (in foreign trade) Third: Code of Commerce If the private private carrie carrierr is coming coming to the Philippines: First: COGSA Second: Code of Commerce Third: Civil Code (excluding rules on common carriers) If the private or common carrier is from the Philippines to a foreign country: Apply the law of the foreign country (per Art. 1753, CC) UNLESS the parties make COGSA applicable Hierarchy of laws:

1) Art. 1766, CC (COGSA as only in matters not regulated by th i s Code) This is notwits notwitstan tandin ding g that that COGSA COGSA is a specia speciall law. law. Goods in a foreign country shipped to the Philippines are governed by the Civil Code 2)

Art. 1753, CC (Conflict of Laws Laws provision)

2.

LIMIT OF LIABILITY PER PACKAGE

BELGIAN OVERSEAS vs. PHILIPPINE FIRST INSURANCE CO., INC. (2002) The Civil Code does does not limit limit the liabilit liability y of the common carrier to a fixed amount per package. In all matters matters not regulat regulated ed by the Civil Code, the right and the obligations of common carriers shall be governed by the Code of Commerce and special laws. Thus, the COGSA, which is suppletory suppletory to the provisions of the Civil Code, supplements the latter by establishi establishing ng a statutory statutory provision limiting limiting the carri carrier's er's liabil liability ity in the absenc absence e of a shipper shipper's 's declaration of a higher value in the bill of lading. In the case before us, there was no stipulation stipulation in the Bill of Lading limiting the carrier's liability. Neither did the shipper declare a higher valuation of the goods to be shipped. Petitioners' liability should be comput computed ed based based on US$500 US$500 per packag package e and not on the per metric ton price declared

ONE UP LAW

IV. Admiralty and Maritime Commerce  Transportation  Transportation Law in the Letter of Credit. On Notice of Claim/On Prescription of Action: First , the provisio provision n of COGSA COGSA provid provides es that that the notice of claim need not be given if the state of the goods, at the time of their receipt, has been the subjec subjectt of a joint joint inspec inspectio tion n or survey. survey. Prior to unloading the cargo, an Inspection Report as to the condition of the goods was prepared and signed by representativ representatives es of both parties. parties. Second , as stated in the same provision, a failure to file a notice of  claim within three days will not bar recovery if it is nonetheless nonetheless filed within one year. This one-year prescripti prescriptive ve period also applies to the shipper, the consignee, the insurer of the goods or any legal hold holder er of the the bill bill of ladi lading ng.. "Ina "Inasm smuc uch h as the the neither the Civil Code nor the Code of Commerce states a specific specific prescriptive prescriptive period on the matter, matter, the Carriage of Goods by Sea Act (COGSA)--which provid provides es for a one-yea one-yearr period period of limita limitatio tion n on claims for loss of, or damage to, cargoes sustained during transit--may be applied suppletorily to the case at bar." In the present case, the cargo was discharged on July 31, 1990, while the Complaint was filed by respondent on July 25, 1991, within the one-year prescriptive period. 3.

NOTICE OF LOSS OF CLAIM

4.

PRESCRIPTION PRESCR IPTION OF ACTION

Filipino Merchants Insurance, Inc. v. Alejandro (1986) Clea Clearl rly, y, the the cover coverag age e of the the Act Act incl includ udes es the the insu insure rerr of the the good goods. s. Other Otherwi wise se,, what what the the Act Act intends to prohibit after the lapse of the one-year prescripti prescriptive ve period period can be done indirectly indirectly by the shipper or owner of the goods by simply filing a claim against the insurer even after the lapse of  one year. Maritime Agencies & Services, Inc. v. CA The The peri period od for for fili filing ng the the clai claim m is one one year, year, in accordance with the Carriage of Goods by Sea Act. This was adopted and embodied embodied by our legislatur legislature e in Com. Act No. 65 which, as a special law, prevails over the general provisions of the Civil Code on prescripti prescription on of actions. actions. Section Section 3(6) of that that Act provides as follows: In any event, the carrier and the ship ship shall shall be discha discharge rged d from from all liabilit liability y in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; Provided, that if a notice of loss for damage; either apparent or concealed, is not given as provided for in this section, that fact shall not effect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered. 5. WAIVER UNDER COGSA

UP LAW BAROPS 2007 64 of 71

ONE UP LAW

V. International Air Transport  Transportation  Transportation Law

V.

INTERNATION IONAL TRANSPORT

AI R

A. The Warsaw Convention Chapter III - Liability of the Carrier Article 17 The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if  the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Article 18 1. The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air. 2. The carriage by air within the meaning of the preceding paragraph comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever. 3. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of  loading, delivery or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air. Article 19 The carrier is liable for damage occasioned by delay in the carriage by air of passengers, luggage or goods. Article 20 1. The carrier is not liable if he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures. 2. In the carriage of goods and luggage the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage. Article 21 If the carrier proves that the damage was caused by or contributed to by the negligence of the injured person the Court may, in accordance with the provisions of its own law, exonerate the carrier wholly or partly from his liability. Article 22 1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of  125,000 francs. Where, in accordance with the law

UP LAW BAROPS 2007 65 of 71

of the Court seised of the case, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed 125,000 francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability. 2. In the carriage of registered luggage and of  goods, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of  the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery. 3. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to 5,000 francs per passenger. 4. The sums mentioned above shall be deemed to refer to the French franc consisting of 65 « milligrams gold of millesimal fineness 900. These sums may be converted into any national currency in round figures. Article 23 Any provision tending to relieve the carrier of  liability or to fix a lower limit than that which is laid down in this Convention shall be null and void, but the nullity of any such provision does not involve the nullity of the whole contract, which shall remain subject to the provisions of this Convention. Article 24 1. In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention. 2. In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights. Article 25 1. The carrier shall not be entitled to avail himself  of the provisions of this Convention which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the Court seised of  the case, is considered to be equivalent to wilful misconduct. 2. Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused as aforesaid by any agent of the carrier acting within the scope of his employment. Article 26 1. Receipt by the person entitled to delivery of  luggage or goods without complaint is prima facie evidence that the same have been delivered in good condition and in accordance with the document of carriage. 2. In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within three days from the date of receipt in

ONE UP LAW

V. International Air Transport  Transportation  Transportation Law the case of luggage and seven days from the date of receipt in the case of goods. In the case of delay the complaint must be made at the latest within fourteen days from the date on which the luggage or goods have been placed at his disposal. 3. Every complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the times aforesaid. 4. Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part. Article 27 In the case of the death of the person liable, an action for damages lies in accordance with the terms of this Convention against those legally representing his estate. Article 2 8 1. An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court having jurisdiction where the carrier is ordinarily resident, or has his principal place o f business, or has an establishment by which the contract has been made or before the Court having jurisdiction at the place of destination. 2. Questions of procedure shall be governed by the law of the Court seised of the case. Article 29 1. The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped. 2. The method of calculating the period of  limitation shall be determined by the law of the Court seised of the case. Article 3 0 1. In the case of carriage to be performed by various successive carriers and falling within the definition set out in the third paragraph of Article 1, each carrier who accepts passengers, luggage or goods is subjected to the rules set out in this Convention, and is deemed to be one of the contracting parties to the contract of carriage in so far as the contract deals with that part of the carriage which is performed under his supervision. 2. In the case of carriage of this nature, the passenger or his representative can take action only against the carrier who performed the carriage during which the accident or the delay occurred, save in the case where, by express agreement, the first carrier has assumed liability for the whole  journey. 3. As regards luggage or goods, the passenger or consignor will have a right of action against the first carrier, and the passenger or consignee who is entitled to delivery will have a right of action

UP LAW BAROPS 2007 66 of 71

against the last carrier, and further, each may take action against the carrier who performed the carriage during which the destruction, loss, damage or delay took place. These carriers will be  jointly and severally liable to the passenger or to the consignor or consignee.

B. Applicability; meaning of international transportation International air transportation is transportation by air between points of contact of  two high high contra contracti cting ng parties parties,, or those those countr countries ies that have acceded to the Convention.

C. Liabilities under the Convention The enumerati enumeration on of causes causes of action action in the Warsaw Convention is not an exclusive list. You can have a cause of action even if it is not: a) death or wounding of the passenger; b) damage or loss or destruction of checked baggage, or c) delay in the transportation of passengers, luggage and goods. Note however, that the limitations of liability in the Convention favor the carrier. NORTHWEST AIRLINES, INC., vs. CUENCA (1965) The Articl Articles es merely merely declar declare e the carrie carrierr liable liable for damages in the enumerated cases, if the conditions ther therei ein n spec specif ifie ied d are are pres presen ent. t. Neit Neithe herr said said prov provis isio ions ns nor nor other others s in the the afor aforem ement entio ione ned d Convention Convention regulate or exclude exclude liability liability for other brea breach ches es of contr ontrac actt by the the carr carrie ier. r. Unde Underr petitioner's theory, an air carrier would be exempt from any liability for damages in the event of its absolu absolute te refusa refusal, l, in bad faith, faith, to com comply ply with a contract of carriage, which is absurd.

ALITALIA vs IAC (1990) Under the Warsaw Convention, an air carrier is made liable for damages for: 1. the the death, death, wou wound ndin ing g or oth other er bodi bodily ly inj injur ury y of  a passenger if the accident causing it took place on board the aircraft or in the course of its operations of embarking/disembarking 2. the the destr destruc ucti tion on or los loss s of, of, or dama damage ge to, to, any regist registered ered luggag luggage e or goods, goods, if the occurr occurrenc ence e causing it took place during the carriage by air 3. delay in the transportation by air of   passengers, luggage or goods. In these cases, the Convention provides that the “actio “action n for damages damages,, however however founde founded, d, can only be brought subject to the conditions and limits set out therein.”  The Warsaw Warsaw Conven Convention tion however however denies denies to the carrier availment “of the provisions w/c exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance w/ the law of the court seized of the case case,, is cons consid ider ered ed to be equiv equival alent ent to will willfu full misconduct, or if the damage is similarly caused by any agent of the carrier acting w/n the scope of his employment.”  The The Conv Conven enti tion on does does not not oper operat ate e as an exclu exclusi sive ve enum enumer erat atio ion n of the the inst instan ance ces s of an

ONE UP LAW

V. International Air Transport  Transportation  Transportation Law airlin airline’s e’s liabil liability ity,, or as an absolu absolute te limit limit of the extent of that liability. Moreov Moreover er,, it shoul should d be deeme deemed d a limi limitt of  liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage damage to property property or delay in its transport is not attr attriibuta butabl ble e to or atte attend nded ed by any any will willfu full misconduct, misconduct, bad faith, recklessness, recklessness, or otherwise otherwise improp improper er conduc conductt on the part of any official official or employee employee for which the carrier carrier is responsibl responsible, e, and there is otherwise no special or extraordinary form of resulting injury. The The Conv Conven enti tion on has has inva invari riab ably ly been been held held inapplica inapplicable, ble, or as not restrictive restrictive of the carrier’s carrier’s liability, where there was satisfactory evidence of  malice or bad faith attributable to its officers and employees.

D. Limitations on Liability PAL INC. v CA and JESUS SAMSON (1981) Ratio: The limitation of their liability under 1711 of  NCC: If the mishap was due to the employee's own noto notorrious ous negl neglig igen enc ce, or vol volunta untary ry act, act, or drunkenness, the employer shall not be liable for compen com pensat sation ion.. When When the employ employee's ee's lack lack of due care care cont contri ribu bute ted d to his his deat death h or inju injury ry,, the the compen com pensat sation ion shall shall be equitabl equitably y reduce reduced. d. AND unde underr 1712 1712 If a fell fellow ow work worker er's 's inte intent ntio iona nall malici malicious ous act is the only only cause cause of the death death or injury injury,, the employ employer er shall shall not be answer answerabl able… e… PAL vs. CA, DR. JOSEFINO MIRANDA and LUISA MIRANDA (1996) The appellees do not seek payment for loss of any baggage. baggage. They are claiming claiming damages arising from the discr discrimi iminato natory ry off-loa off-loadin ding g of their their baggag baggage. e. That cannot be limited by the printed conditions in the tickets and baggage checks. Neither can the Wars Warsaw aw Conv Conven enti tion on excl exclud ude e nor nor regu regula late te the the liab liabil ilit ity y for for other other brea breach ches es of cont contra ract ct by air air carriers carriers.. A recognition recognition of the Warsaw Convention does not preclude the operation of our Civil Code and and rela related ted laws laws in deter determi mini ning ng the the exten extentt of  liability of common carriers in breach of contract of  carriage, particularly for willful misconduct of their employees. Said convention does not operate as an excl exclus usiv ive e enum enumer erat atio ion n of the the inst instan ance ces s for for declaring a carrier liable for breach of contract of  carriage or as an absolute limit of the extent of  that liability. liability. The Warsaw Warsaw Convention Convention declares the carrier liable in the enumerated cases and under cert certai ain n limi limita tati tion ons. s. Howe Howeve ver, r, it must must not not be constr construed ued to preclu preclude de the operati operation on of the Civil Civil Code Code and pertinent pertinent laws. It does not regula regulate, te, much much less less exempt, exempt, the carrie carrierr from from liabil liability ity for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established, which is the case before Us.

E. When Limitations Unavailable TWA v. CA and Vinluan (1988)

UP LAW BAROPS 2007 67 of 71

The petitioner’s petitioner’s contention contention that it is not liable is devoid devoid of merit. merit. Private Private respond respondent ent had a first first class ticket for Flight No. 41 of petitioner from New York to San Francisco on April 20, 1979. It was twice confirmed and yet respondent unceremoniously told him that there was no first class seat available for him and that he had to be downgraded to the econ econo omy class. As he protested, he was arrogantly threatened by one Mr. Braam. Worst still, while he was waiting for the flight, he saw that several Caucasians who arrived much later were accommodated in first class seats when the other passengers did not show up. The discri discrimin minati ation on is obvious obvious and the humili humiliati ation on to whic which h priv privat ate e resp respon onde dent nt was was subj subjec ecte ted d is undeniable. undeniable. Consequently, Consequently, the award of moral and exemplary damages by the respondent court is in order. At the time of this unfortunate incident, the private resp respon onde dent nt was was a prac practi tici cing ng lawy lawyer er,, a seni senior or part partner ner of a big big law law firm firm in Mani Manila la.. He was was a directo directorr of severa severall com compan panies ies and was active active in civic civic and social social organi organizat zation ions s in the Phili Philippi ppines nes.. Considering the circumstances of this case and the soci social al stan standi ding ng of priv privat ate e resp respon onde dent nt in the the community, he is entitled to the award of moral and and exem exempl plar ary y dama damages ges.. Howev However er,, the the mo mora rall damages should be reduced to P300,000.00, and the the exem exempl plar ary y dama damages ges shou should ld be redu reduce ced d to P200,0 P200,000. 00.00. 00. This This award award shoul should d be reason reasonabl ably y sufficient to indemnify private respondent for the humiliation humiliation and embarrass embarrassment ment that he suffered suffered and and to serv serve e as an examp example le to disc discour ourag age e the the repetition repetition of similar similar oppressive oppressive and discrimi discriminatory natory acts.

F. Conditions on Liability Luna v. Estrada (1992) HELD: The Warsaw Convention was a treaty commitment voluntarily assumed by the Philippine government; consequently, it has the force and effect of law in this country. But, in the same token, jurisprudence show shows s that that the the Wars Warsaw aw Conve Convent ntio ion n does does not not oper operat ate e as an excl exclus usiv ive e enum enumer erat atio ion n of the the instances for declaring an airline liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The failure of private respondent to deliver their luggage at the designated time and place does not ipso facto amount to willful misconduct. For willful misconduct misconduct to exist, there must be a showing that the the acts acts comp compla lain ined ed of were were impe impell lled ed by an intention to violate the law, or were in persistent disregard of one's rights. It must be evidenced by a flag flagra rant ntly ly or sham shamef eful ully ly wron wrong g or impr improp oper er conduct.

G. Venue of Court Actions SANTOS vs NORTHWEST ORIENT AIRLINES (1992)

ONE UP LAW

V. International Air Transport  Transportation  Transportation Law (Petitioner claims that Art 28(1) is a rule merely of  venue and was waived by NOA when it did not move to dismiss on the ground of improper venue.) SC: A number of reasons tend to support the characterization of Art 28(1) as a jurisdiction and not a venue provision. 1. the wor wordin ding of Art. 32, w/c indicates tes the places places where where the action action for damages damages “must” “must” be brought, brought, underscores underscores the mandatory mandatory nature of Art 28(1) 2. this this char charac acte teri riza zati tion on is consi consist sten entt w/ one one of  the objectives of the Convention, w/c is to regulate in a unif unifor orm m ma mann nner er the the cond condit itio ions ns of int’ int’ll transportation by air. 3. the the Conven Conventi tion on does doesn’ n’tt contai contain n any prov provis isio ion n prescr prescribi ibing ng rules rules of jurisd jurisdict iction ion other other than than Art 28(1 28(1), ), w/c w/c me mean ans s that that the the phra phrase se “rul “rules es as to  jurisdiction” used in Art 32 must refer only to Art 28(1 28(1). ). In fact fact,, the the last last sente sentenc nce e of Art Art 32 specifically deals w/ the exclusive enumeration in Art 28(1) as “jurisdictions”, w/c as such, cannot be left to the will of the parties regardless of the time when the damage occurred. Where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Juris Jurisdic dictio tion n in the intern internati ationa onall sense sense must must be esta establ blis ishe hed d in acco accord rdan ance ce w/ Art Art 28(1 28(1)) of the the Warsaw Convention, following w/c the jurisdiction of a particular court must be established pursuant to the the appl applic icab able le dome domest stic ic law. law. Only Only after after the the ques questi tion on of whic which h cour courtt has has juri jurisd sdic icti tion on is determined will the issue of venue be taken up. This second question question shall be governed governed by the law of the court to w/c the case is submitted.

UP LAW BAROPS 2007 68 of 71

ONE UP LAW

special thanks to: Office of the College Secretary UP College of Law UP Law Center UP College of Law Library UP Law BarOps 2006 Review Committee

Subject Committee [Election Law]

Information Management Committee

I  Justin Christopher C. Mendoza [head] Benjamin S. Luis . Ma. Carmen L.  Jardeleza Mildred Yovela S. Umali . May Tifanie H. Gerona Christina Eden M. Rondario

I I

Armi Bayot [head] . Chino Baybay [deputy]  Theresa Roldan . Lem Arenas . Mitch Lim  Jen Lee . Keisie Marfil