Transportation Laws Finals Reviewer - Judge Noli T.

Diaz

CARRIAGE BY THE GOODS BY SEA ACT year prescriptive period to file a claim. (Cua vs. Wallem
Philippines Shipping)
3. Coverage of the one-year prescriptive period under
Carrier COGSA includes the insurer of the goods. The intention
It includes the owner or the charterer who enters into a of the 1 year prescriptive period is to prevent fraudulent
contract of carriage with shipper. claims. (Filipino Merchant’s Insurance vs. Hon.
Alejandro)
Contract of Carriage 4. Under Sec.3(6) of COGSA, only the carrier’s liability is
Those covered by a bill of lading or any similar document of extinguished if no suit is brought within one year. The
title, insofar as such document relates to the carriage of liability o the insurer is not extinguished because the
goods by the sea. insurer’s liability is not based on the contract of carriage
but on the contract of insurance. (Mayor Steel Pipe Corp
Carriers are deemed to warrant the impliedly the vs, CA)
seaworthiness of the ship. To be seaworthy: 5. An amended complaint filed beyond the prescriptive
a. Must be adequately equipped for voyage; and period under Sec. 3(6) against the party impleaded for
b. Manned with sufficient number of competent officers and thee first time is barred by prescription the filing of the
crew. (Sec. 3) amended complain does not retroact to the dat of the
Failure of a common carrier to maintain, the vessel involved filing of the original complaint. (Wallem PH Shipping vs,
in its contract is a clear breach of duty as prescribed in Art. S.R. Farms Inc)
1755. 6. The prescriptive period of one year will not apply to
damages caused to the shipper’s goods in the general
The public must of necessity to rely on the care and skills of sense. In this case, the goods had been misdelivered
common carriers in the vigilance over the goods. Passenger because it arrived the place of destination on “off-
and shipper of goods is under no obligation to conduct an season” due to the delay only half of the value was paid.
inspection of the ship and its crew, the carrier being obliged It was not under the meaning of “loss” or “damage.” The
by the law to warrant its seaworthiness. potential liability falls under Art. 1144 of the Civil Code
which provides for a period of ten years. (Mitsui O.S.K.
Bill of lading Lines vs. CA)
- prima facie evidence of the receipt by the carrier of the
goods.
- If embodied in the bill of lading issued to the shipper,
carrier shall be at liberty: PUBLIC SERVICE
• to surrender in whole or in part all or any of his rights
and immunities or;
• to increase any of his responsibilities and liabilities. Public Utility
- A business or service engaged in regularly supplying the
The removal of the goods shall be a prima facie evidence of public with some commodity or service of public
the delivery by the carrier. UNLESS: consequences such as electricity, gas, water,
a. Notice of loss or damage and general nature of such loss transportation, telephone, or telegraph service.
or damage was given in writing; - Implies public use and service.
b. Given the carrier or his agent; and - Privately owned and operated businesses whose service
c. It was given at the port of discharge or at any time of the are essential to the general public.
removal of the goods into the custody of the person
entitled to the delivery thereof. Public Service
If the loss or damage is not apparent, notice must be given Includes every person who own, operates, manages or
within three days. controls for hire or compensation, and done for general
business purposes, any common carrier either for freight or
Prescriptive Period passenger.
The carrier is discharged from liability for loss or damage to
the cargo unless the suit is brought within one year after the Certificate of Public Convenience
delivery of the goods or the date when the goods should An authorization granted by thee LTFRB for the operation of
have been delivered. If notice of loss or damage is not given, land transportation services for public use as required by
it shall not affect the right of the shipper to bring suit within law.
the period prescribed. [Sec. 3(6)] Requisites:
a. Citizen of the PH or a corporation with atleast 60% of its
Cases: stock or pad up capital belong entirely to Filipino citizens;
1. Written extrajudicial demand by the creditor does not toll b. Applicant must be financially capable of undertaking the
the running of the prescriptive period. (Dole vs. Maritime service and the responsibilities in the operation;
Company of the Philippines) c. Must prove that it will promote public interest in a proper
2. One-year prescriptive period under COGSA suspended and suitable manner.
by express agreement of the parties. Jurisprudence Basic convenience is the primary consideration for which a
recognized the validity of an agreement between the CPC is issued.
carriers and the shipper/consignee extending the one-

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Existing operators must be given an opportunity to offer proof who owns motor vehicles to operate under such franchise for
and oppose the application. This principle, however, is free.
subject to justifiable exceptions. If it was shown that the old
operator: A certificate of public convenience is a special privilege by
a. has not placed in the service all the units of the grantees thereof cannot countenanced. The kabit system
equipment that it had been authorized to operate; or has been identified as one of the root causes of the
b. when the old operator has violated or not complied prevalence of graft and corruption in the government
with the important condition in its certificate. (Halili transportation services.
vs. Cruz)
Principle of in pari delicto
Certificate of Public Convenience and Certificate of Public No action arises, in equity or at law, for an illegal contract.
Convenience and Necessity, distinguished. No affirmative relief of any kind will bee given to one against
No more distinction. (PAL vs. Civil Aeronautics Board) the other.

Q: Is a certificate of public convenience going to be issued to Registered Owner Rule

a second operator when a first operator is already operating If the property covered by a franchise is transferred or leased
a sufficient, adequate, and satisfactory service? to another without obtaining the requisite approval, the
A: So long as the first licensee keeps and performs the transfer is not binding on the Public Service Commission,
terms and conditions of its license and complies with the and the grantee continued to be responsible under the
reasonable rules and regulations, it should have more vested franchise in relation to the operation of the vehicle, such as
right and preferential right over a person who seeks to damaged or injury to third parties due to collision. (Public
acquire another and a later license over the same route. The Service Act)
first licensee is protected on his investment and otherwise
would be subject to ruinous competition. Cases:
1. The Civil Aeronautics Board is expressly authorized by
Q: How was the power of Commission granted? RA No. 776 to issue a temporary permit or Certificate of
A:The Congress has granted certain administrative agencies Public Convenience and Necessity. Legislative franchise
the power to grant licenses for, or authorize the operation of is not a prerequisite for the issuance of the permit before
certain public utilities. Franchise may be delivered indirectly each and every public utility my operate. (PAL vs. Civil
from the state through a duly designated agency. The Aeronautics Board)
franchise granted constitute as though the grant had been 2. A certificate of public convenience may be granted to a
made by the Legislature. new operator without giving the old operator an
opportunity to improve its equipment and service. (Halili
Prior Applicant Rule vs. Cruz)
Where there are various applicants for a public utility over 3. Although not outrightly penalized, kabit system is
the same territory, all conditions being equal, priority in the recognized as being contrary to public policy and
filing of the application for a certificate of public convenience therefore void and inexistent under Art. 1409. The court
becomes an important factor in the granting or refusal of the will not aid either party to enforce an illegal contract. (Lita
certificate. Enterprises vs. Second Civil Cases Division)
4. In a kabit system, the new owner of the vehicle has a
Old Operator Rule legal personality to bring action despite the fact that he is
Before permitting a new operator to invade the territory of not the registered owner the certificate of public
another already established with a certificate of public convenience for damages caused on his passenger
convenience, thereby entering into competition with it, the jeepney, as well as his business. It would be the height of
prior operator must bee given an opportunity to extend its inequity to deny him his right. (Abelardo Lim vs. CA)
service in order to meet the public. 5. The registered owner or operator of record is the one
liable for damages caused by a vehicle regardless of any
Third Operator Rule alleged sale or lease made thereon, and as such is
Where two operators are more than serving the public, there directly and primarily responsible for the consequences
is no reason to permit a third operator to engage in incident to its operation. (MYC- Agro vs. Purificacio
competition with them. However, if later on the Camerino)
circumstances would change requiring the operation of new 6. There being no prior BOT approval in the transfer of the
units or extending existing facilities, the third operator rule property, transferee only held the property as agents.
would be subject to the prior applicant rule. However, this does not deprive the transferee of the right
to recover from the registered owner any damages,
Protection of investment rule which may have been incurred by the former since the
It is one of the primary purposes of the Public Service Law to transfer, or lease is valid and binding upon the parties. (Y.
protect and conserve the investments , which have already Transit vs. NLRC)
been made for that purpose by public service operation. 7. Actual owner of passenger jeep liable solidarily with the
registered owner in a civil action based on quasi-delict.
Kabit System The registered owner or operator has the right to be
It is an arrangement whereby a person who has been indemnified by the real or actual owner of the amount
granted a certificate of convenience allows another person that he may be required to pay as damage for the injury
caused. (Jereos vs. CA)

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8. The registered owner of a certificate of public Limited Liability Rule

convenience is liable to the public for the injuries and - The direct liability is moderated and limited by the ship
damages suffered by third persons cause by the agent’s or ship owner’s right of abandonment of the vessel
operation of said vehicle even though the same had been and earned freight.
transferred to a third person. (B.A. Finance vs. CA) - Their liability is merely co-extensive with his interest in the
vessel. Thus, “no vessel, no liability.”
- The total extinguishment of the vessel extinguishes
maritime liens.
VESSELS - Also known as “real and hypothecary liability.”
Exceptions:
a. Where death or injury to the passenger is due to the
Vessel fault of the ship owner or to the concurring
A personal property that can be acquired by any modes of negligence of the ship owner and the ship captain.
acquiring a property. The sale may be consummated while b. Where the vessel is insured;
on voyage or or after arrival at the port of destination. In c. In workmen’s compensation claims.
order to be binding against third person:
a. In writing; and Fortuitous Event
b. Recorded in the registry of vessels. To constitute a caso fortuito that would exempt a person from
responsibility, it is necessary that:
When mercantile code speaks of vessels, it refers a. Event is independent of human will;
exclusively and solely to merchant vessel. The importance of b. Occurrence must render impossible for the debtor to
distinction lies on the applicable law that will apply on the fulfill the obligation in a normal manner; and
right and obligation of the parties. If it is a merchant vessel, c. The obligor must be free from participation in, or in
Code of Commerce applies. If ordinary vessel, the Civil Code the aggravating of the injury to the creditor.
will apply. It must have been impossible to foresee or if it could be
foreseen must have been impossible to avoid.
Two test to determine if contract is within admiralty and
maritime jurisdiction of the court: Captain/Master of the ship
1. English Rule The commander of a merchant vessel, who is the chief
- Follows the locational test wherein maritime and charge of her government and navigation and the command
admiralty jurisdiction is exercised only on contracts of the crew, as well as the general care and control of the
made upon the sea and to bee executed thereon. vessel and cargo.
2. American Rule Three distinct roles:
- Follows the subject matter test wherein it depend on 1. General agent of the ship owner
the nature and subject matter of the contract. It was - He has the authority to enter into contracts, sign bills of
applied by the Court in International Harvester vs. lading, carry goods aboard and deal with the freight
Aragon. earned.
2. Commander and technical director of the vessel
- Most important role; it has to do with the operation and
preservation of the vessel during its voyage and
PERSONS WHO TAKE PART IN MARITIME protection of the passenger and its crew.
COMMERCE SHIPOWNERS AND SHIP AGENTS 3. Representative of the country under whose flags he
navigates.

Persons who take part in maritime commerce Two laws in maritime:

• ship owner 1. UNCLOS
- For territory and jurisdiction
• ship agent
• master of the ship 2. Safety of the Life of the Seas (SOLAS)
- Rules in case of evacuations in a sinking ship:
• officers/crew
• super cargoes • Women and child first policy.
• navigators. • Ship captain must be the last to evacuate.

Ship Agent Cases:

The person entrusted with the provisioning of the vessel, or 1. Liability of the shipowner extends to the value of the
who represents her in the port in which she may be found. vessel and insurance proceeds thereon. Despite the total
loss of the vessel, its insurance answers for the damages
Liability of the ship owner and ship agent that the shipowner or owner may be held liable by any
The ship owner and ands ship agent shall be civilly and reason of the death of its passengers. (Vasquez vs. CA)
directly liable in favor of third persons for the acts of the 2. A shipowner may be held liable for the injuries to
captain in the care of the goods transported, as well as the passengers notwithstanding the exclusively real and
safety of the passengers and for the obligations contracted. hypothecary nature of the maritime law if fault can be
attributed to the shipowner. (Negros Navigation vs. CA)

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SPECIAL CONTRACTS OF MARITIME COMMERCE

Bill of lading
Constitutes a contract of adhesion. Not entirely prohibited.
Charter-Party The one who adheres to the contract is in reality can reject it
A contract by which an entire ship or some principal part entirely or give his consent freely. Two functions:
thereof, is let by the owner to another person for a specified a. Receipt for the goods shipped;
time or use. It must be drawn in duplicate and signed by the b. Contract between thee shipper, carrier, and the
contracting parties. consignee to undertake specific responsibilities and
obligations.

Kinds of Charter-Party Q: When does the bill of lading become binding on

1. Time Charter consignee?
- A contract of affreightment wherein vessel is leased to A: The acceptance of a bill of lading by the shipper and
the charterer for a fixed period of time; owner retains consignee, with full knowledge of its contents, gives rise to
the possession and control thru the master and crew the presumption that the same was perfected and binding.
who remains his employees.
2. Voyage Charter Loan on Bottomry or Respondentia
- A contract of affreightment wherein the ship is leased for a A contract in the nature of mortgage, by which the owner of
single or consecutive voyage; owner also retains the ship borrows money for the vessel and for a definite term
possession. and pledges the ship or goods laden on board as a security
3. Bareboat or demise charter for its repayment, with maritime or extraordinary interest on
- A demise of a vessel wherein the shipowner turns over the risk to be borne by the lender; it being stipulated that if
the possession of his vessel to the charterer, who then the ship lost in the course of the specified voyage, the lender
undertakes to provide crew and supply during the term shall lose his money.
of the voyage. The charterer is considered the owner • Loan on bottomry - security is the vessel
pro hac vice and liable in personam arising out of the • Respondentia - the security is the cargo
operation.
- Generally, the ship owner is not liable unless liability or Cases:
injury results from unseaworthiness or negligence 1. Charter-Party may be oral. A first contract of barging and
which existed prior to the delivery of the vessel to the towage contract was entered into in writing. The Court
demise. sees no reason why the second agreement should not be
recognized simply because it was not in writing. (Market
Transshipment Developers Inc., vs. IAC)
The act of taking the cargo out of one ship and loading it in
another, or the transfer of the goods from the vessel
stipulated in the contract to another vessel before the place
of the destination in the contract has been reached. It is RISKS, DAMAGES, AND ACCIDENTS OF
deemed a violation of the contract unless allowed. MARITIME COMMERCE

Demurrage
The compensation provided for in the contract of Average
affreightment for the detention of the vessel beyond the time It is loss or damage accidentally happening to a vessel or to
agreed on for loading and unloading. Liability for demurrage its cargo during voyage.
exist only when stipulated in the contract. Kinds:
1. Simple or Particular
Laytime - All expenses and damages caused to the vessel or
The days allowed without penalty to charter parties for cargo which have not inured to the common benefit;
loading and unloading the cargo. borne only by the owner of the property which gave
rise to the same.
W W D S H I N C or Weather, Working Days, Sundays, 2. General or gross
and Holidays Included - All damages and expenses which are deliberately
The running of laytime may be subjected to W W D S H I N caused in order to save the vessel, its cargo, or both
C and would cease to run in the event unfavorable weather at the same time, from real and known risk; borne
interfered with the unloading of cargo. the owners of the articles saved.
- Requisites:
F.I.O.S.T. or Freight In and Out Including Stevedoring a. A common danger to which the ship, cargo,
and Trading and crew were all exposed;
The handling, loading, and unloading of thee cargoes are the b. The voluntary sacrifice of a part for the
responsibility of the Charterer. benefit of the whole;
c. An attempt made to avoid the common peril
Primage to which all those interests were exposed
An amount stipulated in the charter party to be paid by the must be to some extent successful.
charterer or shipper as compensation to the captain for his
particular car of the goods.

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Arrival under stress

The arrival of the a vessel at the nearest and most
convenient port upon the instance of the captain, if during
the voyage the vessel cannot continue the trip to the port of
destination on account of:
a. Lack of provisions;
b. Well founded fear of seizure, privateers, or pirates;
or
c. Any accident in the sea disabling it to continue.

Captain shall have the deciding vote and still prevails over
persons interested in the cargo. He may take note of any
objections.

Collisions
The impact of two vessels both of which are moving. It also
includes allision which is the striking of moving vehicle
against one that is stationary.

Presumption of fault
The moving vehicle is presumed to strike the stationary
object. The moving vehicle has thee burden of proving that it
was without fault and did all that reasonable care required.

Shipwrecks
A ship which has received injuries rendering her incapable of
navigation. The loss of the vessel at sea by he swallowing of
the sea.

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