Transpo Part II

CODE OF COMMERCE OF THE PHILIPPINES COMMERCIAL CONTRACTS FOR TRANSPORTATION ARTICLE 349 – Commercial contract of transportation by land or water • Has articles of commerce • Engaged in public transpo ARTICLE 350 – Bill of Lading • Receipt • Evidence of contract of carriage • Absence thereof does not negate CC but is best evidence of existence of CC ARTICLE 353 – The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material error in the drafting. After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with the exception of that provided for in Article 366. In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. ARTICLE 354 – absence of a bill of lading, disputes shall be determined by the legal proofs which the parties may present in support of their respective claims ARTICLE 355 – The responsibility of the carrier shall commence from the moment he receives the merchandise, personally or through a person charged for the purpose, at the place indicated for receiving them. ARTICLE 356 – Carriers may refuse packages which appear unfit for transportation but if the shipment is insisted upon, the company shall transport them, being exempt from all responsibility if its objections, is made to appear in the bill of lading.

ARTICLE 357 – If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or consignee in attendance. If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who shall prepare a memorandum of the result of the investigation, for such purposes as may be proper. If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper. ARTICLE 358 – If there is no period fixed for the delivery of the goods the carrier shall be bound to forward them in the first shipment of the same or similar goods which he may make point where he must deliver them; and should he not do so, the damages caused by the delay should be for his account. ARTICLE 359 – If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this cause, he shall be liable for all the losses which the goods he transports may suffer from any other cause, beside paying the sum which may have been stipulated for such case. When on account of said cause of force majeure, the carrier had to take another route which produced an increase in transportation charges; he shall be reimbursed for such increase upon formal proof thereof. ARTICLE 360 – The shipper, without changing the place where the delivery is to be made, may change the consignment of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee the bill of lading signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract appears. The expenses with this change of consignment occasions shall be for the account of the shipper.

ARTICLE 361 • GR: merchandise shouldered by shipper • proof of accident is the burden of carrier

ARTICLE 369 • Deposit to court equals delivery to party (consignment) • Liability discontinue to attach

ARTICLE 362 • Liable for Art. 361 if arose through negligence or failure to take necessary precaution

ARTICLE 370 • Period for delivery fixed, must be made on time, otherwise carrier is liable for delay • Liquidated damages • Damages caused by delay

ARTICLE 363 • Outside of the cases mentioned in the second paragraph of Article 361, carrier obliged to ship the goods in the same condition in which they were received ARTICLE 364 • Diminution of value of goods, damages should also be equitably reduced ARTICLE 365 • Rendered useless for sale and consumption, consignee not bound to receive them and have them in the hands of the carrier, demanding their value at the current price on that day. ARTICLE 366 – Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 367 • Doubts or disputes with respect to conditions of goods, it shall be examined by an expert ARTICLE 368 • Deliver without delay or obstruction otherwise carrier is liable. • If receiver refuses to receive, receiver is liable

ARTICLE 371 • Abandonment – carrier pay full value as if they are already lost ARTICLE 372 • Value of lost goods paid according to bill of lading ARTICLE 373 • Carrier who makes the delivery shall assume the obligations of those who preceded him in the conveyance, reserving his right to proceed against the latter if he was not the party directly responsible for the fault which gave rise to the claim of the shipper or consignee. • Acquire all the actions and rights of those who preceded him in the conveyance. • The shipper and the consignee shall have an immediate right of action against the carrier who executed the transportation contract, or against the other carriers who may have received the goods transported without reservation. • The reservation made by the latter shall not relieve them from the responsibilities which they may have incurred by their own acts. ARTICLE 374 • In case of delay in this payment, carrier may demand the judicial sale of the goods transported in an amount necessary to cover the cost of transportation and the expenses incurred.

ARTICLE 375 • The goods transported shall be bound to answer for the cost of transportation and for the expenses and fees incurred for them during their conveyance and until the moment of their delivery.

•

Prescribe eight days after the delivery has been made, and once prescribed, the carrier shall have no other action than that corresponding to him as an ordinary creditor.

ARTICLE 376 • Preference of the carrier to the payment of what is owed him shall not be cut off by the bankruptcy of the latter, provided it is claimed within the eight days ARTICLE 377 • Carrier liable for all the consequences which may arise from his failure to comply with the formalities prescribed by the laws and • If the carrier has acted by virtue of a formal order of the shipper or consignee of the merchandise, both shall become responsible ARTICLE 379 • Provisions in Articles 349 and following shall be understood as equally applicable to those who, although they do not personally effect the transportation of the merchandise, contract to do so through others, either as contractors for a particular and definite operation, or as agents for transportations and conveyances. • In either case they shall be subrogated in the place of the carriers themselves, with respect to the obligations and responsibility of the latter, as well as with regard to their rights. MARITIME COMMERCE (Arts. 573-869) IMPORTANT CONCEPTS: 1. Merchant vessel 2. Maritime lien and Preference of Credit 3. Doctrine of limited liability 4. Causes of revocation of voyage 5. Participants in maritime commerce 6. Charter party 7. Loans on bottomry and respondentia 8. Accidents in maritime commerce MARITIME/ADMIRALTY LAW  It is the system of laws which particularly relates to the affairs and business of the sea, to ships, their crews and navigation, and to maritime conveyance of persons and property.  Maritime laws apply only to maritime trade and sea voyages.  Arrastre service is not maritime in character. It refers to a contract

for the unloading of goods from a vessel. CHARACTERISTICS OF MARITIME TRANSACTION 1. Real - similar to transactions over real property with respect to effectively against third persons which is done through registration. The evidence of real nature is shown by: 1) The limitation of the liability of the agents to the actual value of the vessel and the freight money; and 2) The right to retain the cargo and embargo and detention of the vessel (Luzon Stevedoring Corp v. CA, 156 SCRA 169);

2. Hypothecary - the liability of the owner of the value of the vessel is limited to the vessel itself (Doctrine of Limited Liability).  The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which stands as the guaranty for their settlement. (Aboitiz Shipping Corp. vs. General Accident Fire and Life Assurance Corp. 217 SCRA 359). MERCHANT VESSEL  Vessel engaged in maritime commerce, whether foreign or otherwise.  Constitutes property which may be acquired and transferred by any of the means recognized by law. They shall continue to be considered as personal property. (Arts. 573, 585)  They are susceptible to maritime liens such as for the repair, equipping and provisioning of the vessel in the preparation of a voyage, as well as mortgage liabilities, in satisfaction of which a vessel may be validly arrested and sold. MARITIME LIEN o It constitutes a present right of property in the ship, a jus in re, to be afterward enforced in admiralty by process in rem. (PNB vs. CA, 337 SCRA 381) o If the maritime lien arose prior to the recording of a preferred mortgage, it shall have priority over the said mortgage lien. (PNB vs. CA, 337 SCRA 381) o Effect of sale: All pre-existing claims in the vessel are terminated. They will then be satisfied from the proceeds of the sale subject to the order of preference. DOCTRINE OF LIMITED LIABILITY

(HYPOTHECARY RULE) Cases where applicable: 1. Art. 587 – civil liability for indemnities to third persons 2. Art. 590 – indemnities from negligent acts of the captain (not the shipowner or ship agent) 3. Art. 837 – collision 4. Art. 643 – liability for wages of the captain and the crew and for advances made by the ship agent if the vessel is lost by shipwreck or capture GENERAL RULE: The liability of shipowner and ship agent is limited to the amount of interest in said vessel such that where vessel is entirely lost, the obligation is extinguished. (Luzon Stevedoring v. Escano, 156 SCRA 169) The interest extends to: 1) the vessel itself; 2) equipments; 3) freightage; and 4) insurance proceeds. (Chua v. IAC, 166 SCRA 183) EXCEPTIONS: 1. Claims under Workmen’s Compensation (Abueg vs. San Diego 77 Phil 730); 2. Injury or damage due to shipowner or to the concurring negligence of the shipowner and the captain; 3. The vessel is insured (Vasquez vs. CA 138 SCRA 553). 4. Expenses for repair on vessel completed before loss; 5. In case there is no total loss and the vessel is not abandoned; 6. Collision between two negligent vessels; Abandonment of the vessel is necessary to limit the liability of the shipowner. The only instance were abandonment is dispensed with is when the vessel is entirely lost (Luzon Stevedoring vs. CA 156 SCRA 169). RIGHT OF SHIPOWNER OR SHIP AGENT TO ABANDON VESSEL  Instances: 1. In case of civil liability from indemnities to third persons (Art. 587); 2. In case of leakage of at least ¾ of the contents of a cargo containing liquids (Art. 687); and 3. In case of constructive loss of the vessel (Sec. 138, Insurance Code).

CAUSES OF REVOCATION OF VOYAGE 1. War or interdiction of commerce; 2. Blockade; 3. Prohibition to receive cargo at destination; 4. Embargo; 5. Inability of the vessel to navigate. (Art. 640) Terms: 1. Interdiction of commerce – A governmental prohibition of commercial intercourse intended to bring about an entire cessation for the time being of all trade whatever. 2. Blockade – A sort of circumvallation of a place by which all foreign connection and correspondence is, as far as human power can effect it, to be cut off. 3. Embargo – A proclamation or order of a state, usually issued in time of war or threatened hostilities, prohibiting the departure of ships or goods from some or all the ports of such state until further order. PARTICIPANTS IN MARITIME COMMERCE A. Shipowners and ship agents B. Captains and masters of the vessel C. Officers and crew of the vessel D. Supercargoes E. Pilot A. SHIPOWNERS AND SHIP AGENTS Shipowner (proprietario)  Person who has possession, control and management of the vessel and the consequent right to direct her navigation and receive freight earned and paid, while his possession continues. Ship agent (naviero)  Person entrusted with provisioning and representing the vessel in the port in which it may be found; also includes the shipowner.  Not a mere agent under civil law; he is solidarily liable with the ship owner.  Powers and functions: 1. Capacity to trade; 2. Discharge duties of the captain, subject to Art.609; 3. Contract in the name of the owners with respect to repairs, details of equipment, armament, provisions of food and fuel, and freight of the vessel, and all that relate to the requirements of navigation;

4. Order a new voyage, make a new charter or insure the vessel after obtaining authorization from the shipowner or if granted in certificate of appointment. Civil Liabilities of the Shipowner And Ship Agent 1. All contracts of the captain, whether authorized or not, to repair, equip and provision the vessel; (Art. 586) 2. Loss and damage to the goods loaded on the vessel without prejudice to their right to free themselves from liability by abandoning the vessel to the creditors. (Art. 587) Duty of Ship Agent to Discharge the Captain and Members of the Crew  If the seamen contract is not for a definite period or voyage, he may discharge them at his discretion. (Art. 603)  If for a definite period, he may not discharge them until after the fulfillment of their contracts, except on the following grounds: a. Insubordination in serious matters; b. Robbery; c. Theft; d. Habitual drunkenness; e. Damage caused to the vessel or to its cargo through malice or manifest or proven negligence. (Art. 605) B. CAPTAINS AND MASTERS  They are the chiefs or commanders of ships.  The terms have the same meaning, but are particularly used in accordance with the size of the vessel governed and the scope of transportation, i.e., large and overseas, and small and coastwise, respectively.  Nature of position (3-fold character): 1. General agent of the shipowner; 2. Technical director of the vessel; 3. Representative of the government of the country under whose flag he navigates.  Qualifications: 1. Filipino citizen; 2. Legal capacity to contract; 3. Must have passed the required physical and mental examinations required for licensing him as such. (Art. 609)  Inherent powers: 1. Appoint crew in the absence of ship agent;

2. Command the crew and direct the vessel to its port of destination; 3. Impose correctional punishment on those who, while on board vessel, fail to comply with his orders or are wanting in discipline; 4. Make contracts for the charter of vessel in the absence of ship agent. 5. Supply, equip, and provision the vessel; and 6. Order repair of vessel to enable it to continue its voyage. (Art. 610)  Sources of funds to comply with the inherent powers of the captain (in successive order): 1. From the consignee of the vessel; 2. From the consignee of the cargo; 3. By drawing on the ship agent; 4. By a loan on bottomry; 5. By sale of part of the cargo. (Art. 611)  Duties: 1. Bring on board the proper certificate and documents and a copy of the Code of Commerce; 2. Keep a Log Book, Accounting Book and Freight Book; 3. Examine the ship before the voyage; 4. Stay on board during the loading and unloading of the cargo; 5. Be on deck while leaving or entering the port; 6. Protest arrivals under stress and in case of shipwreck; 7. Follow instructions of and render an accounting to the ship agent; 8. Leave the vessel last in case of wreck; 9. Hold in custody properties left by deceased passengers and crew members; 10. Comply with the requirements of customs, health, etc. at the port of arrival; 11. Observe rules to avoid collision; 12. Demand a pilot while entering or leaving a port. (Art. 612)  A ship’s captain must be accorded a reasonable measure of discretionary authority to decide what the safety of the ship and of its crew and cargo specifically requires on a stipulated ocean voyage (InterOrient Maritime Enterprises Inc. vs. CA).  No liability for the following: 1. Damages caused to the vessel or to the cargo by force majeure;

2. Obligations contracted for the repair, equipment, and provisioning of the vessel unless he has expressly bound himself personally or has signed a bill of exchange or promissory note in his name. (Art. 620) Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the Captain towards Passengers and Cargoes 1. Damages to vessel and to cargo due to lack of skill and negligence; 2. Thefts and robberies of the crew; 3. Losses and fines for violation of laws; 4. Damages due to mutinies; 5. Damages due to misuse of power; 6. For deviations; 7. For arrivals under stress; 8. Damages due to non-observance of marine regulations. (Art. 618) C. OFFICERS AND CREW 1. Sailing Mate/First Mate 2. Second Mate 3. Engineers 4. Crew  No liability under the following circumstances: 1. If, before beginning voyage, captain attempts to change it, or a naval war with the power to which the vessel was destined occurs; 2. If a disease breaks out and be officially declared an epidemic in the port of destination; 3. If the vessel should change owner or captain. (Art. 647) Sailing Mate/First Mate  Second chief of the vessel who takes the place of the captain in case of absence, sickness, or death and shall assume all of his duties, powers and responsibilities. (Art. 627)  Duties: 1. Provide himself with maps and charts with astronomical tables necessary for the discharge of his duties; 2. Keep the Binnacle Book; 3. Change the course of the voyage on consultation with the captain and the officers of the boat, following the decision of the captain in case of disagreement; 4. Responsible for all the damages caused to the vessel and the cargo by reason of his negligence. (Arts. 628 - 631)

Second Mate  Takes command of the vessel in case of the inability or disqualification of the captain and the sailing mate, assuming in such case their powers and responsibilities.  Third in command  Duties: 1. Preserve the hull and rigging of the vessel; 2. Arrange well the cargo; 3. Discipline the crew; 4. Assign work to crew members; 5. Inventory the rigging and equipment of the vessel, if laid up. (Art. 632) Engineers  Officers of the vessel but have no authority except in matters referring to the motor apparatus. When two or more are hired, one of them shall be the chief engineer.  Duties: 1. In charge of the motor apparatus, spare parts, and other instruments pertaining to the engines; 2. Keep the engines and boilers in good condition; 3. Not to change or repair the engine without authority of the captain; 4. Inform the captain of any damage to the motor apparatus; 5. Keep an Engine Book; 6. Supervise all personnel maintaining the engine. (Art. 632) Crew  The aggregate of seamen who man a ship, or the ship’s company.  Hired by the ship agent, where he is present and in his absence, the captain hires them, preferring Filipinos, and in their absence, he may take in foreigners, but not exceeding 1/5 of the crew. (Art. 634) Classes of Seaman’s Contracts 1. By the voyage; 2. By the month; and 3. By share of profits or freightage. Just Causes for the Discharge of Seaman While Contract Subsists 1. Perpetration of a crime; 2. Repeated insubordination, want of discipline;

3. 4. 5. 6.

Repeated incapacity and negligence; Habitual drunkenness; Physical incapacity; Desertion. (Art. 637)

Rules in case of Death of a Seaman  The seaman’s heirs are entitled to payment as follows: 1. If death is natural: a. compensation up to time of death if engaged on wage b. if by voyage - half of amount if death occurs on voyage out; and full, if on voyage in c. if by shares - none, if before departure; full, if after departure 2. if death is due to defense of vessel - full payment; 3. if captured in defense of vessel - full payment; 4. if captured due to carelessness - wages up to the date of the capture. (Art. 645) Complement of the Vessel  All persons on board, from the captain to the cabin boy, necessary for the management, maneuvers, and service, thus including the crew, the sailing mates, engineers, stokers and other employees on board not having specific designations.  Does not include the passengers or the persons whom the vessel is transporting. D. SUPERCARGOES  Persons who discharges administrative duties assigned to him by ship agent or shippers, keeping an account and record of transaction as required in the accounting book of the captain. (Art. 649) E. PILOT  A person duly qualified, and licensed, to conduct a vessel into or out of ports, or in certain waters.  The term generally connotes a person taken on board at a particular place for the purpose of conducting a ship through a river, road or channel, or from a port.  Master pro hac vice for the time being in the command and navigation of the ship.  While in exercising his functions a pilot is in sole command of the ship and supersedes the master for the time being in the command and navigation of the ship, the master does not surrender his vessel to the pilot and the pilot is not the master. There are occasions when the

master may and should interfere and even displace the pilot, as when the pilot is obviously incompetent or intoxicated (Far Eastern Shipping Company vs. CA).  Compulsory Pilotage – States possessing harbors have enacted laws or promulgated rules requiring vessels approaching their ports to take on board pilots licensed under the local laws. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p. 518) Liablity of Pilot GENERAL RULE: On compulsory pilotage grounds, the Harbor Pilot is responsible for damage to a vessel or to life or property due to his negligence. EXCEPT: 1. Accident caused by force majeure or natural calamity provided the pilot exercised prudence and extra diligence to prevent or minimize damages. 2. Countermand or overrule by the master of the vessel in which case the registered owner of the vessel is liable. (Sec.11, Art.III PPA Admin Order 03-85) SPECIAL CONTRACTS OF MARITIME COMMERCE 1. Charter party 2. Bill of lading 3. Contract of transportation of passengers on sea voyages 4. Loan on bottomry 5. Loan on respondentia 6. Marine insurance CHARTER PARTY  A contract by virtue of which the owner or agent binds himself to transport merchandise or persons for a fixed price.  A contract by which an entire ship, or some principal part thereof is let/leased by the owner to another person for a specified time or use. (Planters Products, Inc. vs. CA, 226 SCRA 476)  Parties: 1. Ship owner or ship agent 2. Charterer  Classes: 1. Bareboat or demise – The charterer provides crew, food and fuel. The charterer is liable as if he were the owner, except when the cause arises from the unworthiness of the vessel. The shipowner leases to the charterer the whole vessel, transferring to the latter the entire

command, possession and consequent control over the vessel’s navigation, including the master and the crew, who thereby become the charter’s servants. It transforms a common carrier into a private carrier.  The charterer becomes the owner of the vessel pro hac vice, just for that one particular purpose only. Because the charterer is treated as owner pro hac vice, the charterer assumes the customary rights and liabilities of the shipowner to third persons and is held liable for the expense of the voyage and the wages of the seamen. 2. Contract of Affreightment – A contract whereby the owner of the vessel leases part or all of its space to haul goods for others.  The shipowner retains the possession, command and navigation of the ship, the charterer merely having use of the space in the vessel in return for his payment of the charter hired.  Kinds: a. Time charter – vessel is chartered for a fixed period of time or duration of voyage. b. Voyage or trip charter – the vessel is leased for one or series of voyages usually for purposes of transporting goods for charterer. LEASE If for a definite period, lessee cannot give up the lease by paying a portion of the amount agreed upon.

CHARTER PARTY Charterer may rescind charter party by paying half of the freightage agreed upon.

If the leased property is sold to one who knows of the existence of the lease, the new owner must respect the lease.

The new owner is not compelled to respect the charter party so long as he can load the vessel with his own cargo. (Art. 689)

Civil law concept

Commercial law concept

CHARTER PARTY An entire or complete contract. Consensual contract

BILL OF LADING More like a private receipt which the captain gives to accredit goods received from persons Real contract

BAREBOAT OR DEMISE CHARTER Charterer becomes liable to

CONTRACT OF AFFREIGHTMENT (TIME OR VOYAGE CHARTER) Owner remains liable as carrier and

others caused by its negligence Charterer regarded as owner pro hac vice for the voyage Owner of vessel relinquishes possession, command and navigation to charterer

must answer for any breach of duty Charterer is not regarded as owner.

Common carrier is converted to private carrier.

Common carrier is not converted to a private carrier.

The vessel owner retains possession, command and navigation of the ship

PERSONS WHO MAY MAKE A CHARTER 1. Owner or owners of the vessel, either in whole or in majority part, who have legal control and possession of the vessel 2. Charterer may subcharter entire vessel to 3rd person only if not prohibited in original charter. (Art.679) 3. Ship agent if authorized by the owner/s or given such power in the certificate of appointment. (Art.598) 4. Captain in the absence of the ship agent or consignee and only if he acts in accordance with the instructions of the agent or owner and protects the latter’s interests. (Art.609) REQUISITES OF A VALID CHARTER PARTY 1. Consent of the contracting parties 2. Existing vessel which should be placed at the disposition of the shipper 3. Freight 4. Compliance with Art. 652 of the Code of Commerce Terms: 1. Primage - bonus to be paid to the captain after the successful voyage. 2. Demurrage – the sum fixed in the charter party as a remuneration to the owner of the ship for the detention of his vessel beyond the number of days allowed by the charter party for loading or unloading or for sailing. 3. Deadfreight – the amount paid by or recoverable from a charterer of a ship for the portion of the ship’s capacity the latter contracted for but failed to occupy. 4. Lay Days - days allowed to charter parties for loading and unloading the cargo. 5. Extra Lay Days – days which follow after the lay days have elapsed.

USUAL FORMS OF CONSUMMATING CONTRACTS 1. C.I.F. – cost, insurance and freight; 2. F.O.B. - free on board; 3. F.A.S. - free alongside ship; and 4. C. & F. - cost and freight.

2.

TRANSSHIPMENT OF GOODS  The act of taking cargo out of one ship and loading it in another, or the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached, or the transfer for further transportation from one ship or conveyance to another.  It is not dependent on the ownership of the transporting ships or in the change of carriers, but rather on the fact of actual physical transfer of cargo from one vessel to another.  If done without legal excuse, however competent and safe the vessel into which the transfer is made, is a violation of contract and infringement of right of shipper and subjects carrier to liability if freight is lost event by cause otherwise excepted. (Magellan Manufacturing vs. CA, 201 SCRA 102)

3.

LOAN ON BOTTOMRY AND RESPONDENTIA  A real, unilateral, aleatory contract, by virtue of which one person lends to another a certain amount of money or goods on things exposed to maritime risks, which amount, with its earnings, is to be returned if the things are safely transported, and which is lost if the latter are lost. LOAN ON BOTTOMRY

LOAN ON RESPONDENTIA

Definition Loan made by shipowner or Loan taken on security of the cargo ship agent guaranteed by laden on a vessel, and repayable vessel itself and repayable upon safe arrival of cargo at upon arrival of vessel at destination. (Art. 719) destination. (Art. 719) Who may contract Shipowner or ship agent. Only the owner of the cargo. Outside of the residence of the owners - the captain. 1.

Common elements: Exposure of security to marine peril;

1. 2.

1. 2. 3. 4. 5. 6. 7.

Obligation of the debtor conditioned only upon safe arrival of the security at the point of destination. Forms: Public instrument Policy signed by the contracting parties and the broker taking part therein Private instrument (Art. 720) Contents: Kind, name and registry of the vessel; Name, surname and domicile of the captain; Names, surnames and domiciles of the borrower and the lender; Amount of the loan and the premium stipulated; Time for repayment; Goods pledged to secure repayment; Voyage during which the risk is run (Art.721)

BOTTOMRY/ RESPONDENTIA

ORDINARY LOAN (MUTUUM)

Not subject to Usury Law

Subject to Usury Law

Liability of the borrower is contingent on the safe arrival of the vessel or cargo at destination

Not subject to any contingency (absolute liability)

The last lender is a preferred creditor

The first lender is a preferred creditor

WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED AS SIMPLE LOAN 1. Lender loaned an amount larger than the value of the object due to fraudulent means employed by the borrower. (ART.726) 2. Full amount of the loan is not used for the cargo or given on the goods if all of them could not have been loaded, the balance will be considered a simple loan. (ART.727) 3. If the effects on which the money is taken is not subjected to any risk. (ART.729) Note: Under existing laws, the parties to a loan, whether ordinary or maritime, may agree on any rate of interest. (CB Circular 905)

MARINE INSURANCE

LOAN ON BOTTOMRY OR RESPONDENTIA

Indemnity is paid after the loss has occurred

Indemnity is paid in advance by way of a loan

In case of loss of the vessel due to a risk insured against, the obligation of the insurer becomes absolute

In case of loss of the vessel due to a marine peril, the obligation of the borrower to pay is extinguished

Consensual contract

Real contract

Hypothecary Nature of Bottomry/ Respondentia GENERAL RULE: The obligation of the borrower to pay the loan is extinguished if the goods given as security are absolutely lost by reason of an accident of the sea, during the voyage designated, and if it is proven that the goods were on board. EXCEPTIONS: 1. Loss due to inherent defect; 2. Loss due to the barratry on the part of the captain; 3. Loss due to the fault or malice of the borrower; 4. The vessel was engaged in contraband; and 5. The cargo loaded on the vessel be different in from that agreed upon. Concurrence of Marine Insurance and Loan on Bottomry/Respondentia 1. The insurable interest of the owner of a ship hypothecated by bottomry is only the excess of the value over the amount secured by bottomry. (Sec. 101, Insurance Code) 2. The value of what may be saved in case of shipwreck shall be divided between the lender and the insurer in proportion to the interest of each one. (Art. 735) Note: If a vessel is hypothecated by bottomry only the excess is insurable, since a loan on bottomry partakes of the nature likewise of an insurance coverage to the extent of the loan accommodation. The same rule would apply to the hypothecation of the cargo by respondentia.

(Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.) ACCIDENTS IN MARITIME COMMERCE 1. Averages 2. Arrival Under Stress 3. Collision 4. Shipwreck AVERAGE  An extraordinary or accidental expense incurred during the voyage in order to preserve the cargo, vessel or both, and all damages or deterioration suffered by the vessel from departure to the port of destination, and to the cargo from the port of loading to the port of consignment. (Art. 806)  The person whose property has been saved must contribute to reimburse the damage caused or expense incurred if the situation constitutes general average.  Classes: 1. Particular or Simple Average 2. Gross or General Average  Where both vessel and cargo are saved, it is general average; where only the vessel or only the cargo is saved, it is particular average.  Expenses incurred to refloat a vessel, which accidentally ran aground, in order to continue its voyage, do not constitute general average. Not only is there absence of a marine peril, common safety factor, and deliberateness. It is the safety of the property, and not the voyage, which constitutes the true foundation of general average. (A. Magsaysay, Inc. vs. Agan, G.R.No. L-6393, Jan. 31, 1955) PARTICULAR OR SIMPLE GROSS OR GENERAL Definition Damages or expenses caused Damages or expenses to the vessel or cargo that did deliberately caused in order not inure to the common to save the vessel, its cargo benefit, and borne by or both from real and known respective owners. (Art. 809) risk. (Art. 811) Requisites 1. common danger; 2. deliberate sacrifice; 3. success; 4. proper formalities and

legal steps. Liability The owner of the goods which All the persons having an gave rise to the expense or interest in the vessel and the suffered the damage shall bear cargo therein at the time of this average. (Art. 810) the occurrence of the average shall contribute to satisfy this average. (Art. 812)  The insurers (Art.859) and lenders on bottomry and respondentia shall likewise contribute. (Art.732). Number of interests involved Only one interest involved Several interests involved Share in the damage or expense 100% share In proportion to the value of the owner’s property saved Right to recover No reimbursement There may be reimbursement Kinds (not exclusive) Art. 809 Art. 811 Procedure for recovery 1. Assembly and deliberation 2. Resolution of the captain 3. Entry of the resolution in the logbook 4. Detailed minutes 5. Delivery of the minutes to the maritime judicial authority of the first port, within 24 hours from arrival, 6. Ratification by captain under oath. (Arts. 813814) GOODS NOT COVERED BY GENERAL AVERAGE EVEN IF SACRIFICED 1. Goods carried on deck. (ART.855) 2. Goods not recorded in the books or records of the vessel. (ART.855 (2))

3. Fuel for the vessel if there is more than sufficient fuel for the voyage. (Rule IX, York-Antwerp Rule) Jettison  Act of throwing cargo overboard in order to lighten the vessel.  Order of goods to be cast overboard: 1. Those which are on the deck, preferring the heaviest one with the least utility and value; 2. Those which are below the upper deck, beginning with the one with greatest weight and smallest value. (Art. 815)  Jettisoned goods are not res nullius nor deemed “abandoned” within the meaning of civil law so as to be the object of occupation by salvage. (Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.)  In order that the jettisoned goods may be included in the gross or general average, the existence of the cargo on board should be proven by means of the bill of lading. (Art. 816) York-Antwerp (Y-A) Rules on Determining Liability for Averages With Regard To Deck Cargo 1. Deck cargo is allowed only in domestic/coastwise/inter-island shipping, and is prohibited in international/overseas/foreign shipping. 2. If deck cargo is loaded with the consent of the shipper on overseas trade, it must always contribute to general average, but should the same be jettisoned, it would not be entitled to reimbursement because there is violation of the Y-A Rules. 3. If deck cargo is loaded with the consent of the shipper on coastwise shipping, it must always contribute to general average and if jettisoned would be entitled to reimbursement.  Reason: In domestic shipping, voyages are usually short and the seas are generally not rough. In overseas shipping, the vessel is exposed for many days to perils of the sea. DOMESTIC Deck cargo is allowed

INTERNATIONAL Deck cargo is not allowed

With shipper’s consent General average Particular average Without shipper’s consent Captain is liable Captain is liable ARRIVAL UNDER STRESS (ARRIBADA)

 The arrival of a vessel at the nearest and most convenient port instead of the port of destination, if during the voyage the vessel cannot continue the trip to the port of destination. When lawful

The inability to continue voyage is due to lack of provisions, wellfounded fear of seizure, privateers, pirates, or accidents of the sea disabling it to navigate. (Art. 819)

When unlawful

1. Lack of provisions due to negligence to carry according to usage and customs; 2. Risk of enemy not well known or manifest 3. Defect of vessel due to improper repair; and 4. Malice, negligence, lack of foresight or skill of captain. (Art. 820)

Who expenses:

bears

The shipowner or ship agent is liable in case of unlawful arrival under stress. But they shall not be liable for the damages caused by reason of a lawful arrival. (Art. 821)

 It is the duty of the captain to continue the voyage without delay after the cause of the arrival under stress has ceased failing in such duty renders him liable. However, in case the cause has been risk of enemies, there must first be an assembly before departure. (Art. 825)  Steps: 1. Captain should determine during the voyage if there is well founded fear of seizure, privateers and other valid grounds; 2. Captain shall assemble the officers and summon the persons interested in the cargo who may attend the meeting but without a right to vote; 3. The officers shall determine and agree if there is well-founded reason after examining the circumstances. The captain shall have the deciding vote; 4. The agreement shall be drafted and the proper minutes shall be signed and entered in the log book; 5. Objections and protests shall likewise be entered in the minutes.

COLLISION  Impact of two vessels both of which are moving. Allision  Impact between a moving vessel and a stationary one. Nautical Rules to Determine Negligence 1. When two vessels are about to enter a port, the farther one must allow the nearer to enter first; if they collide, the fault is presumed to be imputable to the one who arrived later, unless it can be proved that there was no fault on its part. 2. When two vessels meet, the smaller should give the right of way to the larger one. 3. A vessel leaving port should leave the way clear for another which may be entering the same port. 4. The vessel which leaves later is presumed to have collided against one which has left earlier. 5. There is a presumption against the vessel which sets sail in the night. 6. There is a presumption against the vessel with spread sails which collides with another which is at anchor and cannot move, even when the crew of the latter has received word to lift anchor, when there was not sufficient time to do so or there was fear of a greater damage or other legitimate reason. 7. There is a presumption against an improperly moored vessel. 8. There is a presumption against a vessel which has no buoys to indicate the location of its anchors to prevent damage to vessels which may approach it. 9. Vessels must have “proper look-outs” or persons trained as such and who have no other duty aside therefrom. (Smith Bell v. CA) Nautical Rules as to Sailing Vessel and Steamship 1. Where a steamship and a sailing vessel are approaching each other from opposite directions, or on intersecting lines, the steamship from the moment the sailing vessel is seen, shall watch with the highest diligence her course and movements so as to be able to adopt such timely means of precaution as will necessarily prevent the two boats from coming in contact. 2. The sailing vessel is required to keep her course unless the circumstances require otherwise.

Zones of Time in the Collision of Vessels 1. First zone – all time up to the moment when risk of collision begins. No rule is as yet applicable for none is necessary. 2. Second zone – time between moment when risk of collision begins and moment it becomes a practical certainty. It is in this period where conduct of the vessels is primordial. It is in this zone that vessels must strictly observe nautical rules, unless a departure therefrom becomes necessary to avoid imminent danger. 3. Third zone – time when collision is certain and time of impact. An error in this zone would no longer be legally consequential.  Error in Extremis - sudden movement made by a faultless vessel during the third zone of collision with another vessel which is at fault during the 2nd zone. Even if such sudden movement is wrong, no responsibility will fall on said faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632) Cases Covered By Collision and Allision 1. One vessel at fault  Vessel at fault is liable for damage caused to innocent vessel as well as damages suffered by the owners of cargo of both vessels. (Art. 826) 2. Both vessels at fault  Each vessel must bear its own loss, but the shippers of both vessels may go against the shipowners who will be solidarily liable. (Art. 827) 3. Vessel at fault not known  Each vessel must bear its own loss, but the shippers of both vessels may go against the shipowners who will be solidarily liable. (Art. 828)  Doctrine of Inscrutable Fault – In case of collision where it cannot be determined which between the two vessels was at fault, both vessels bear their respective damage, but both should be solidarily liable for damage to the cargo of both vessels. 4. Third vessel at fault  The third vessel will be liable for losses and damages. (Art. 831) 5. Fortuitous event/force majeure  No liability. Each bears its own loss. (Art. 830)  The doctrine of res ipsa loquitur applies in case a moving vessel

strikes a stationary object, such as a bridge post, dock, or navigational aid. (Far Eastern Shipping v. CA, Luzon Stevedoring vs. CA)  Even if the cause of action against the common carrier is based on quasi-delict, the defense of due diligence in the selection and supervision of employees is unavailing in case of a maritime tort resulting in collision. It is not a civil tort governed by the Civil Code but a maritime one governed by Arts. 826-839 of the Code of Commerce. (Manila Steamship vs. Insa Abdulhaman)  Doctrine of Last Clear Chance and Rule on Contributory Negligence cannot be applied in collision cases because of Art.827 of the Code of Commerce. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed.) MARITIME PROTEST  Condition precedent or prerequisite to recovery of damages arising from collisions and other maritime accidents.  It is a written statement made under oath by the captain of a vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or damaged, with respect to the circumstances attending such occurrence, for the purpose of recovering losses and damages.  Excuses for not filing protest: 1) where the interested person is not on board the vessel; and 2) on collision time, need not be protested. (Art. 836)  Cases applicable: 1. Collision (Art. 835); 2. Arrival under stress (Art. 612(8)); 3. Shipwrecks (Arts. 612(15), 843); 4. Where the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages (Art. 624).  Who makes: Captain  When made: within 24 hours from the time the collision took place.  Before whom made: competent authority at the point of collision or at the first port of arrival, if in the Philippines and to the Philippine consul, if the collision took place abroad. (Art. 835) SHIPWRECK  It is the loss of the vessel at sea as a consequence of its grounding, or running against an object in sea or on the coast. It occurs when the vessel sustains injuries due to a marine peril rendering her incapable of navigation.

 If the wreck was due to malice, negligence or lack of skill of the captain, the owner of the vessel may demand indemnity from said captain. (Art. 841)  The rules on collision or allision, as may be pertinent, can equally apply to shipwrecks.

Prudential Guarantee)  The matter of quantity, description and conditions of the cargo inside the container is the sole responsibility of the shipper, unless there is stipulation to the contrary. (US Lines vs. Comm. Of Customs, Reyma Brokerage v. Phil. Home Assurance)

SPECIAL CONCEPTS ARRASTRE SERVICE  A contract for the unloading of goods from a vessel.  Applicability: Overseas trade only. (Commercial Law Review, C. Villanueva, 2004 ed.)  Significance: When a person brings in cargo from abroad, he cannot unload and deliver the cargo by himself. The unloading must be done by the arrastre operator, which will then deliver the cargo to the importer. (Commercial Law Review, C. Villanueva, 2004 ed.)  Nature of business: It is a public utility, discharging functions which are heavily invested with public interest.  Liability: 1. Similar to a warehouseman (Lua Kian v. Manila Railroad) 2. Similar to a common carrier (Northern Motors v. Prince Line) 3. Solidary liability with the common carrier

Note: In order to attribute to the carrier any damage to the shipment that may be found, inspection of the goods should be done at pier-side. (Bankers vs. CA)

Note: In order that the arrastre operator may be held liable, the consignee must prove that the damage was due to the negligence and while the goods are in the custody of the arrastre operator. (Hartford Fire Insurance v. E. Razon, Inc.) STEVEDORING SERVICE  The carriage of goods from the warehouse or pier to the holds of the vessel. (Chief of Staff vs. CIR)  As understood in the port business, the term consists of the handling of cargo from the hold of the ship to the dock, in case of pier-side unloading; or to a barge, in case of unloading at sea. (Anglo-Fil Trading Corp. vs. Lazaro)  The loading on the ship of outgoing cargo is also part of stevedoring work. (Ibid.) CONTAINERIZATION/ “SAID-TO-CONTAIN”/ “SHIPPER’S LOAD AND COUNT” SYSTEM  System whereby the shipper loads his cargoes in a specially designed container, seals the container and delivers it to the carrier for transportation. The carrier does not participate in the counting of the merchandise for loading into the container, the actual loading, and the sealing of the container. (US Lines v. Comm. Of Customs, ICTSI v.

III. CARRIAGE OF GOODS BY SEA ACT/COGSA (C.A. No. 65) APPLICABILITY  The transportation must be: 1. Water/maritime transportation; 2. for the carriage of goods; and 3. overseas/international/foreign (from foreign port to Philippine port).  It can be applied in domestic sea transportation if agreed upon by the parties. (Clause paramount or paramount clause) IMPORTANT FEATURES: 1. Amount of carrier’s liability 2. Notice of damage 3. Prescriptive period AMOUNT OF CARRIER’S LIABILITY  Under the Sec. 4(5), the liability limit is set at $500 per package or customary freight unit unless the nature and value of such goods is declared by the shipper. This is deemed incorporated in the bill of lading even if not mentioned in it. (Eastern Shipping vs. IAC, 150 SCRA 463)  Note that Art. 1749, NCC applies to domestic/inter-island/coastwise trade. NOTICE OF DAMAGE (SEC. 3(6))  Rules: a. Patent damage: shipper should file a claim with the carrier immediately upon delivery b. Latent damage: shipper should file a claim with the carrier within three days from delivery. Note: The filing of a notice of claim is not a condition precedent.

PRESCRIPTIVE PERIOD  Action for loss or damage to the cargo should be brought within one year after: a. Delivery of the goods (delivered but damaged goods); or b. The date when the goods should have been delivered (non-delivery). (Sec. 3[6])  “Loss or Damage” as applied to the COGSA contemplates a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered. Thus, it is inapplicable in case of misdelivery or conversion. (Ang vs. American Steamship Agencies Inc.) and damage arising from delay or late delivery (Mitsui O.S.K. Lines Ltd. vs. CA). In such instance the, Civil Code rules on prescription shall apply.  The one-year prescriptive period is suspended by: 1. The express agreement of the parties (Universal Shipping Lines, Inc. vs. IAC, 188 SCRA 170) 2. The filing of an action in court until it is dismissed. (Stevens & Co. vs. Nordeutscher Lloyd, 6 SCRA 180)  The one-year period shall run from delivery of the last package and is not suspended by extrajudicial demand. (Dole Phils.,Inc. vs. Maritime Co.,148 SCRA 118)  The one-year period shall run from delivery to the arrastre operator and not to the consignee. (Union Carbide Phils, Inc. vs. Manila Railroad Co.,SCRA 359)  The insurer exercising its right of subrogation is bound by the oneyear prescriptive period. However, it does not apply to the claim against the insurer for the insurance proceeds. (Fil. Merchants Ins. Co. vs. Alejandro; Mayer Steel Pipe Corp. vs. CA) IV. WARSAW CONVENTION OF 1929 (WC) PURPOSE: To protect the emerging air transportation industry and to secure the uniformity of recovery by the passengers. APPLICABILITY  The transportation must be: 1. International transportation;

2. Air transportation; and 3. Carriage of passengers, baggage or goods.  The WC shall also apply to fortuitous transportation by aircraft performed by an air transportation enterprise.  International transportation - any transportation in which the place of departure and the place of destination are situated either: 1. Within the territories of two High Contracting Parties regardless of whether or not there be a break in the transportation or transshipment, or 2. Within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though that power is not a party to the Convention. (“round trip”, Am. Jur.)  Transportation to be performed by several successive air carriers shall be deemed to be one undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form of a single contract or of a series of contracts, and it shall not lose its international character merely because one contract or a series of contracts is to be performed entirely within a territory subject to the sovereignty, suzerainty, mandate, or authority of the same High Contracting Party. (Art. 1 Sec.3) WHEN INAPPLICABLE 1. When public policy is contradicted; 2. If the requirements under the Convention are not complied with. IMPORTANT CONCEPTS: 1. Transportation documents a. Passenger ticket b. Baggage check c. Air way bill 2. Liability of the carrier for damages a. Death or injury to passengers b. Loss or damage to baggage or goods c. Delay 3. Successive carrier agreement 4. Jurisdiction 5. Combined transportation agreement PASSENGER TICKET Passenger

BAGGAGE CHECK Checked-in

AIR WAYBILL Goods to be

baggage

shipped

LIABILITY OF CARRIER FOR DAMAGES 1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations of embarking or disembarking; (Art. 17) 2. Destruction, loss or damage to any baggage or goods, if it took place during the “transportation by air”; (Art. 18) and  Transportation by air – The period during which the baggage or goods are in the charge of the carrier, whether in an airport or on board an aircraft, or, in case of a landing outside an airport, in any place whatsoever. It includes any transportation by land or water outside an airport if such takes place in the performance of a contract for transportation by air, for the purpose of loading, delivery, or transshipment. 3. Delay in the transportation of passengers, baggage or goods. (Art. 19) Note: The Hague Protocol amended the WC by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely (Art. 20(1)). (Alitalia vs. IAC, 192 SCRA 9) LIMIT OF LIABILITY (Art. 22, as amended by Guatemala Protocol, 1971; Alitalia vs. IAC) 1. Passengers GENERAL RULE: $100,000 per passenger EXCEPTION: Agreement to a higher limit 2. Checked-in baggage GENERAL RULE: $20 per kilogram EXCEPTION: In case of special declaration of value and payment of a supplementary sum by consignor, carrier is liable to not more than the declared sum unless it proves the sum is greater than actual value. 3. Hand-carried baggage  $1000/passenger 4. Goods to be shipped GENERAL RULE: $20 per kilogram EXCEPTION: In case of special declaration of value and payment of a supplementary sum by consignor, carrier is liable to not more than the declared sum unless it proves the sum is greater than actual value.

 An agreement relieving the carrier from liability or fixing a lower limit is null and void. (Art. 23)  Carrier is not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part. (Art. 25)  Thus, the WC does not operate as an exclusive enumeration of the instances of an absolute limit of the extent of liability. It does not preclude the application of the Civil Code and other pertinent local laws. It does not regulate or exclude liability for other breaches of contract by the carrier, or misconduct of its employees, or for some particular or exceptional type of damage. (Alitalia vs. CA)  In PanAm v. IAC, the WC was applied as regards the limitation on the carrier’s liability, there being a simple loss of baggage without any improper conduct on the part of the officials or employees of the airline or other special injury sustained by the passenger.  In KLM Royal v. Tuller, the WC has invariably been held inapplicable, or as not restrictive of the carrier’s liability, where there was satisfactory evidence of malice or bad faith attributable to its officers and employees. (Alitalia vs. IAC) ACTION FOR DAMAGES 1. Notice of claim  A written complaint must me made within: a. 3 days from receipt of baggage b. 7 days from receipt of goods c. In case of delay, 14 days from receipt of baggage/goods  The complaint is a condition precedent. Without the complaint, the action is barred except in case of fraud on the part of the carrier. (Art. 26) 2. Prescriptive period  Action must be filed within 2 years from: a. date of arrival at the destination b. date of expected arrival c. date on which the transportation stopped. (Art. 29)  In United Airlines vs. Uy the two-year prescriptive period was not applied where the airline employed delaying tactics.

RULE IN CASE OF VARIOUS SUCCESSIVE CARRIERS 1. Carriage of passengers GENERAL RULE: Action is filed only against the carrier in which the accident or delay occurred. EXCEPTION: Agreement or contract whereby the first carrier assumed liability for the whole journey. 2. Carriage of baggage or goods a. Passenger or consignor can file an action against the first carrier and the carrier in which the damage occurred b. Passenger or consignee can file an action against the last carrier and the carrier in which the damage occurred.  These carriers are jointly and severally liable. (Art. 30)  A contract of international carriage by air, although performed by different carriers under a series of airline tickets constitutes a single operation. Members of the International Air Transportation Association (IATA) are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide passengers easy access to airlines which are otherwise inaccessible in some parts of the world. (American Airlines vs. CA)  Under a general pool partnership agreement, the ticket-issuing airline is the principal in a contract of carriage while the endorsee-airline is the agent. The obligation of the former remained and did not cease even when the breach occurred not on its own flight but on that of another airline which had undertaken to carry the passengers to one of their destinations. (China Airlines vs. Chiok) JURISDICTION  At the option of the plaintiff, the action for damages may be filed in the: a. Court of domicile of the carrier; b. Court of its principal place of business; c. Court where it has a place of business through which the contract has been made; or d. Court of the place of destination. (Art. 28(1)) NOTE: It is the passenger’s “ultimate destination” not “an agreed stopping place” that determines the country where suit is to be filed.  The forum of action provided in Art. 28(1) is a matter of jurisdiction rather than of venue. (Santos III vs. Northwest; 2A C.J.S.)