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GENERAL CONCEPTS IN
TRANSPORTATION LAW
Contract of Transportation
There is contract of transportation where a person
obligates himself to transport persons or property
from one place to another for a consideration.
The contract may therefore involve carriage of
passengers or carriage of goods.
The person who obligates himself to transport the
goods or passengers may be a common carrier or a
private carrier.
Parties in a contract of carriage
Passenger – one who travels in a public conveyance
by virtue of contract, express or implied, with the
carrier as to the payment of fare or that which is
accepted as an equivalent thereof (Nueca v. Manila
Railroad Co., G.R. 31731-R, Jan. 30, 1968)
Common Carrier – one that holds itself out as ready
to engage in the transportation of goods for hire as a
public employment and not as a casual occupation.
(De Guzman v. CA, G.R. L-47822, Dec. 22, 1988)
Baliwag Transit v. CA,
G.R. 80447, Jan. 31, 1989
Facts:
The parents of George, who is already of legal age
filed a case against Baliwag for breach of contract
alleging that because of the negligent manner by its
driver, George was thrown off the bus as a result of
which the latter sustained multiple serious physical
injuries.
His parents was seeking reimbursement of their
medical expenses and other incidental expenses
incurred by them due to hospitalization of George.
While the case was pending, George signed a waiver
of claim in favor of Baliwag’s insurer, Fortune
Insurance.
Ruling: Since the suit is one for breach of contract of carriage, the
release of claims executed by George, as the injured party,
discharging Fortune Insurance and Baliwag from any and all liability
is valid.
Significantly, the contact of carriage was actually between George,
as the paying passenger, and Baliwag, as the common carrier. x – x
– x – x Since the contract may be violated only by the parties
thereto, as against each other, in an action upon that contract, the
real parties in interest, either as plaintiff or as defendant, must be
parties to said contract.
In the absence of any contract of carriage between Baliwag and
George’s parents, the latter are not real parties in interest in an
action for breach of that contract.
Parties in Carriage of Goods
Shipper – is the person who delivers the goods to the
carrier for transportation. He is the person who pays the
consideration or on whose behalf payment is made.
Consignee – is the person to whom the goods are to be
delivered. The consignee may be the shipper himself or
a third person who is not actually party to the contract.
Carrier (Ibid)
Everett Steamship Corp. v. CA
G.R. 122494, Oct. 8, 1998
Facts:
Hernandez Trading imported three crates of bus
spare parts from Japan. The crates were shipped on
board "ADELFAEVERETTE," a vessel owned by
petitioner's principal, Everett Orient Lines.
Upon arrival at the port of Manila, it was discovered
that one of the crates was missing. The loss was
confirmed and admitted by Everett.
However, Everett offered to pay only One Hundred
Thousand (Y100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of
lading which limits the liability of petitioner.
Hernandez rejected.
The trial found in favor of Hernandez. On appeal,
Everett argued that consent of the consignee to the
terms and conditions of the bill of lading is necessary
to make such stipulations binding upon it .
Ruling:
When Hernandez formally claimed reimbursement for
the missing goods from Everett and subsequently filed a
case against the it based on the very same bill of lading,
it accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court
to enforce it.
However, the liability of the carrier under the limited
liability clause stands, which is limited to One Hundred
Thousand (Y100,000.00) Yen.
Perfection of Contract involving
Carriage In General
If contract to carry, i.e. an agreement to carry the
passenger at some future date, perfection takes
place upon mere consent since such contract is
consensual in nature.
If contract of carriage, which is a real contract,
perfection takes place when the carrier is actually
used and the latter has assumed its obligation as a
carrier.
Specific Perfections of Contract of
Carriage: AIRCRAFT
If contract to carry, there is perfection even if no
tickets have been issued provided there was meeting
of minds with respect to the subject matter and the
consideration.
If contract of carriage, there is perfection if it was
established that the passenger had CHECKED IN at
the departure counter, passed through customs and
immigration, boarded the shuttle bus and proceeded
to the ramp of the aircraft.
Specific Perfections of Contract of
Carriage: BUSES, JEEPNEYS, STREET CARS
Once the bus or jeepney stops, it is in effect making
a continuous offer to the passengers. Hence, it is the
duty of the driver to stop their conveyances for a
reasonable length of time in order to afford
passengers an opportunity to board and enter.
If passenger is injured upon boarding, liability based
on contract of carriage already attaches to the
common carrier since the passenger was deemed to
be accepting the offer when he attempted to board.
The contract is perfected from that precise moment.
Specific Perfections of Contract of
Carriage: TRAINS
Perfection takes place when a person, with bona fide
intention to use the facilities of the carrier and
possessing sufficient fare with which to pay for his
passage, has presented himself to the carrier for
transportation in the place and manner that he will
be transported.
Where a person has already purchased a LRT token
and while waiting on the platform designated for
boarding fell thereon and hit by the train, he was
deemed a passenger.
British Airways v. CA,
G.R. 92288, Feb. 9, 1993
Facts:
On two occasions, private respondent recruitment
agency was not able to send its workers to Saudi
Arabia despite the fact that its principal there had
already purchased pre-paid tickets because
petitioner’s computers broke down.
Private respondent thereafter filed a case on breach
vehicle.
Ancillary Activity Immaterial
Art. 1732 makes no distinction between one whose
principal business activity is carrying of persons or
goods or both, and one who does such carrying only
as an ancillary, nor does it make distinctions between
one who offers the service to the ‘general public’ or a
narrow segment of the general population.
Therefore, a party who ‘back-hauled’ goods for other
merchants from Manila to Pangasinan, even when
such activity was only periodical or occasional and
was not its principal line of business would be
subject to the responsibilities and obligations of a
common carrier. [See De Guzman v. CA, G.R. L-47822, Dec. 22,
1988]
Limited Clientele Not a Defense
Facts:
Petitioner entered into a contract with SMC for the
transfer of paper and kraft board from the port area
to SMC’s warehouse.
Held:
She is still a common carrier although she does not
indiscriminately hold her services out to the public
but offers the same to select parties with whom she
may contract in the conduct of her business. [Virgines
Calvo v. UCPB General Insurance Co., G.R. 148496, Mar. 19, 2002]
Facts:
Respondent shipping company transported the 75,000
bags of cement to Petitioner in its barge. The bags of
cement perished after its barge sank while being towed
by a tug boat.
Held:
Respondent is a common carrier because it was engaged
in the business of carrying goods for others for a fee. The
regularity of its activities in the area indicates more than
just a casual activity on its part. Neither can the concept
of a common carrier change merely because individual
contracts are executed or entered into with the patrons
of the carrier. [Phil. American General Insurance Co., et al. v. PKS Shipping
Co., G.R. 149038, Apr. 9, 2003]
No fixed route, No terminal, No
Ticket issued also not a Defense
Facts:
Petitioner is involved in the business of carrying
goods through its barges. It has no fixed and publicly
known route, maintains no terminals, and issues no
tickets.
Held:
Petitioner is still a common carrier because its
principal business is that of lighterage and drayage
and it offers its barges to the public for carrying or
transporting by water for compensation. [Asia Lighterage
and Shipping, Inc. v. CA, G.R. 147246, Aug. 19, 2003]
Drayage service is usually provided by a national
trucking/shipping company or an International shipment brokerage
firm in addition to the transportation of the freight to and from the
exhibit site. Drayage service provides for:
- Completing inbound carrier's receiving documents;
- Unloading and delivery of the goods to your booth/stand
space from the receiving dock;
- Storing of empty cartons/crates and extra products at a
on/near-site warehouse;
- Pickup of the goods from your booth/stand space to the
receiving dock and loading back into the carrier; or
- Completing outbound carrier's shipping documents.
Means used in transporting not material [First
Philippine Industrial Corp. v. CA, G.R. 147246, Aug. 19, 2003]
Issue:
Are pipeline operators common carriers as to subject
them to business taxes on common carriers?
Held:
Yes. The Code makes no distinction as to the means
of transporting, as long as it is by land, water or air. It
does not provide that the transportation of the
passengers or goods should be by motor vehicle. In
fact, in the US, oil pipe line operators are considered
common carriers. Also under the Petroleum Act of
the Philippines (RA 387).
Effect when Common Carrier enters
into a charter party
If only by contract of affreightment, whether voyage
or time charter, it remains a common carrier.
If by bareboat or demise charter, a common carrier is
transformed into a private carrier.
Planters Products Inc. v. CA,
G.R. 101503, Sept. 15, 1993
It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as
the particular voyage covering the charter-party is
concerned.
Indubitably, a shipowner in a time or voyage charter
retains possession and control of the ship, although
her holds may, for the moment, be the property of
the charterer.
Common Carrier v. Private Carrier
(National Steel Corp. v. CA, supra)
2. On "through streets" or
boulevards, clear of traffic, 40 km. per hour 30 km. per hour
with no " blind corners”,
when so designated.
3. On city and municipal
streets, with light traffic, 30 km. per hour 30 km. per hour
when not designated
“through streets”
4. Through crowded streets,
approaching intersections at 20 km. per hour 20 km. per hour
"blind corners," passing school
zones, passing other vehicles
which are stationery, or for
similar dangerous circumstance
Exceptions to Rate Speed
A physician or his driver when the former responds
to emergency calls;
The driver of a hospital ambulance on the way to and
from the place of accident or other emergency;
Any driver bringing a wounded or sick person for
emergency treatment to a hospital, clinic, or any
other similar place;
The driver of a motor vehicle belonging to the Armed
Forces while in use for official purposes in times of
riot, insurrection or invasion;
The driver of a vehicle, when he or his passengers are
in pursuit of a criminal;
A law-enforcement officer who is trying to overtake a
violator of traffic laws; and
The driver officially operating a motor vehicle of any
fire department, provided that exemption shall not
be construed to allow useless or unnecessary fast
driving of drivers aforementioned.
Section 36. Speed limits uniform throughout the Philippines.
- No provincial, city or municipal authority shall enact or
enforce any ordinance or resolution specifying
maximum allowable speeds other than those provided in
this Act.
Correct Driving
Pass to the right when meeting persons or vehicles
coming toward him.
Pass left when overtaking persons or vehicles going the
same direction.
Conduct to the right of the center of the intersection of
the highway when turning left.
Applicable every person operating a motor vehicle or an
animal-drawn vehicle.
Exceptions:
Different course of action is required in the interest of
Class 1 – Explosives
Class 2 – Gases: Compressed, liquefied or dissolved
under pressure
Class 3 – Inflammable Liquids
Class 4 – Inflammable Solids or Substances: a)
Inflammable Solid; b) Inflammable Solids, or Substances
liable to spontaneous combustion; and c) Inflammable
Solids, or Substances which in contact with waters emit
inflammable gases;
Class 5 – a) Oxidizing Substances; b) Organic
Peroxide
Class 6 - a) Poisonous (toxic) substances; b)
Infectious Substances
Class 7 – Radioactive Substances
Class 8 – Corrosives
Class 9 – Miscellaneous Dangerous Substances
MARINA Memorandum Circular
No. 147
Rules on carriage of vehicles, animals, forest
products, fish and aquatic products, minerals and
mineral products & toxic and hazardous materials on
board vessels:
Master to accept only if these are covered by
necessary clearance from appropriate agencies;
Non-compliance will subject the shipowner and
master administrative penalties without prejudice to
criminal or civil suits
2. Carrier’s Duty to Deliver The
Goods
General Rule:
Carrier is not an insurer against delay in
transportation of goods.
Exception:
When there is agreement as to the time of delivery
When delay is deemed reasonable
Ordinary Goods – 2 months [Maersk Line v. CA, May
17, 1993]
Perishable Goods – 2 to 3 days [Dissenting: Tan
Chiong Sian v. Inchausti, GR 6092, Mar. 8, 1912]
Rules on Delay on Overland
Transportation (Code of Commerce)
Art. 358, Code of Commerce:
If there is no period fixed for the delivery of the
goods the carrier shall be bound to forward them in
the first shipment of the same or similar goods which
he may make to the point of delivery; and should he
not do so, the damages caused by the delay should be
for his account.
Delay When Period Is Fixed
Art. 370. If a period has been fixed for the delivery of the
goods, it must be made within such time, and, for failure
to do so, the carrier shall pay the indemnity stipulated in
the bill of lading, neither the shipper nor the consignee
being entitled to anything else. If no indemnity has been
stipulated and the delay exceeds the time fixed in the BL,
the carrier shall be liable for the damages which the
delay may have caused.
Procedure in Abandonment by
Consignee In Case of Delay (Type 2)
Art. 371. In case of delay through the fault of the
carrier referred to in the preceding articles, the
consignee may leave the goods transported in the
hands of the former, advising him thereof in writing
before their arrival at the point of destination.
When this abandonment takes place, the carrier shall
pay the full value of the goods as if they had been
lost or mislaid.
If the abandonment is not made, the indemnification
for the losses and damages by reason of the delay
cannot exceed the current price which the goods
transported would have had on the day and at the
place in which they should have been delivered; this
same rule is to be observed in all other cases in which
this indemnity may be due.
FIVE TYPES OF ABANDONMENT
UNDER MERCANTILE LAW
WHEN DAMAGE IS SO GREAT [Art. 365, Code of
Commerce]
WHEN GOODS ARRIVE BEYOND THE DATE
AGREED ON [Art. 371, Code of Commerce]
ABANDONMENT BY SHIPOWNER WHEN
LIABILITY EXCEEDS VALUE OF VESSEL [Art. 578,
Code of Commerce]
DAMAGE TO GOODS IN LIQUID FORM [Sec. 687,
Code of Commerce]
CONSTRUCTIVE LOSS UNDER THE INSURANCE
CODE [Sec. 138, Insurance Code of the Phil.]
1st Type: WHEN DAMAGE IS SO
GREAT
Where the shipper ships goods and goods arrive in
damaged condition and damage is so great that
shipper may not use goods for the purpose for which
they have been shipped, the shipper may exercise
right of abandonment.
NOTICE TO THE CARRIER IS SUFFICIENT –
consent of carrier is not necessary and once perfected,
the ownership over damaged goods passes to the
carrier and carrier must pay the shipper market value
of goods at point of destination.
2nd Type: WHEN GOODS ARRIVE
BEYOND DATE AGREE ON
Under this set-up, shipper and carrier agreed in
advance that cargo must arrive on a certain date.
The date has passed but the cargo has not yet arrived
due to carrier’s fault.
Shipper/consignee may exercise the right of
abandonment by NOTIFYING the carrier.
Once carrier has been notified, ownership over the
goods undelivered passes to carrier.
But carrier must pay shipper market value of the
goods at the point of destination.
3rd Type: ABANDONMENT BY
SHIPOWNER WHEN LIABILITY
EXCEEDS VALUE OF VESSEL
Reflects the hypothecary nature of maritime
transactions.
Instances when vessel carries goods and goods are
damaged.
Liability of the carrier over the damage goods exceeds
the value of the vessel.
Shipowner of ship agent may exercise right of
abandonment by simply NOTIFYING TO THE
SHIPPER.
Liability of the shipowner is now limited to the value of
the vessel.
4th Type: DAMAGE TO GOODS IN
LIQUID FORM
Charterers and shippers may abandon the
merchandise damaged if cargo should consist of
liquids;
The contents have leaked out;
What remains in the container is but ¼ of its content;
The cause was on account of inherent defect or
fortuitous event.
5th Type: CONSTRUCTIVE LOSS
UNDER THE INSURANCE CODE
Shipowner’s right of abandonment for constructive loss;
Takes place when vessel suffers damage in excess of ¾ of
its insured value;
Notice to Insurer from the insured is sufficient;
Thereafter, ownership over the damaged vessel passes to
the insurer; and
Insurer must pay insured as if it were an ACTUAL
LOSS.
Characteristics of Abandonment
It is unilateral right;
It is perfected by mere notice;
Once perfected, ownership over damaged goods
passes to carrier; and
Carrier must pay the shipper market value of goods
at the point of destination
Bar, Mercantile Law [1979]
Problem:
A, in Manila, shipped on board a vessel of B, chairs to
be used in the moviehouse of consignee C in Cebu.
No date for delivery or indemnity for delay was
stipulated. The chairs, however, were not claimed
promptly by C and were shipped by mistake back to
Manila, where it was discovered and re-shipped to
Cebu. By the time the chairs arrived, the date of
inauguration of the moviehouse passed by and it had
to be postponed. C brings an action for damages
against B claiming loss of profits during the
Christmas season when he expected the moviehouse
to be opened. Decide the case with reason
Suggested Answer:
C may sue B for the loss of his profits provided that
Facts:
M/V Tandag sank after a crack from her auxiliary
Held:
For a bus company, due diligence in selection of
employees is not satisfied by finding that the applicant
possessed a professional driver’s license. The employer
should also examine the applicant for his qualifications,
experience and record of service.
Due diligence in supervision, on the other hand, requires
the formulation of rules and regulations for the guidance
of employees and issuance of proper instructions as well
as actual implementation and monitoring of consistent
compliance with the rules.
CARRIER ALSO LIABLE FOR ACTS OF
STRANGERS AND OTHER
PASSENGERS
Facts:
Respondent Concepcion loaded his construction
equipment aboard MV Cebu to Cagayan de Oro City.
Upon arrival, one of his cargoes, a payloader fell on
the pier while being unloaded and damaged. He
claimed for replacement of the unit. Petitioner denied
the claim contending that Respondent furnished it
with inaccurate weight of his equipment. The excess
weight caused the crane cables to snap.
Held:
While the act of private respondent in furnishing
petitioner with an inaccurate weight of the payloader
cannot successfully be used as an excuse by petitioner to
avoid liability, said act constitute a contributory
circumstance to the damage which mitigates the liability
of petitioner.
We find equitable the conclusion of the CA reducing the
recoverable amount of damages by 20% or 1/5 of the
value of the payloader.
CANGCO v. MANILA RAILROAD CO., G.R.
12191, Oct. 14, 1918
Facts:
Cangco was clerk of Manila Railroad with a monthly
wage of P25. In going to his workplace daily, he rode
on the trains to from his town of San Mateo, Rizal.
One day while returning home and while the train
was slowing down alighted from his coach but one of
feet came in contact with a sack of watermelon
causing him to fell violently on the platform. He
sustained serious injuries.
Held:
The test by which to determine whether the passenger
has been guilty of negligence in attempting to alight
from a moving railway train, is that of ordinary
reasonable care.
It is to be considered whether an ordinarily prudent
person, of the age, sex and condition of the passenger,
would have acted as the passenger acted under the
circumstances disclosed by the evidence.
This care has been defined to be, not the care which may
or should be used by the prudent man generally, but the
care which a man of ordinary prudence would use
under similar circumstance, to avoid injury.
Or, if we prefer to adopt the mode of exposition used by
this court in Picart v. Smith (37 Phil. 809), we may say
that the test is this: Was there anything in the
circumstances surrounding the plaintiff at the time he
alighted from the train which would have admonished a
person of average prudence that to get off the train
under the conditions then existing was dangerous?
If so, the plaintiff should have desisted from alighting;
and his failure so to desist was contributory negligence.
Our conclusion is that the conduct of the plaintiff in
undertaking to alight while the train was yet slightly
under way was not characterized by imprudence and
that therefore he was not guilty of contributory
negligence.
Plaintiff was earning P25 a month. His expectancy of life,
according to the standard mortality tables, is
approximately 33-years.
We are of the opinion that a fair compensation for the
damage suffered by him for his permanent disability is
the sum of P2,500, and that he is also entitled to recover
of defendant the additional sum of P790.25 for medical
attention, etc.
Note: Net Earning Capacity = Life Expectancy [2/3 x 80
less the age of the plaintiff] x Gross Annual Income
less Living Expenses [computed @ 50% of Gross
Annual Income]
DEL PRADO v. MANILA ELECTRIC
CO., G.R. 29462, Mar. 7, 1929
Facts:
Manila Electric operated a street in Manila for
conveyance of passengers. While still moving,
plaintiff ran across the street to catch the car, his
approach being made from the left. The car was of
the kind having entrance and exit at either end, and
the movement of plaintiff was so timed that he
arrived at the front entrance of the car at the moment
when the car was passing.
Upon approaching the car, plaintiff raised his hand
as an indication to the motorman of his desire to
board. In response, the latter eased up a little,
without stopping.
Upon this the plaintiff seized, with his left hand, the
front perpendicular handpost, at the same time placing
his left foot upon the platform.
However, before the plaintiff’s position had become
secure, and even before his raised right foot had reached
the platform, the motorman applied power which
caused plaintiff’s foot to slip. He fell to the ground and
his right foot crushed by the moving car.
Held:
Although the motorman was not bound to stop to let the
plaintiff on, it was his duty to do no act that would have
the effect of increasing the plaintiff’s peril while he was
attempting to board the car. The premature acceleration
of the car was a breach of this duty.
As to contributory negligence of plaintiff, it should be
treated as a mitigating circumstance.
It is obvious that the plaintiff’s negligence in attempting
to board the moving car was not the proximate cause of
the injury. The direct and proximate cause was the act of
appellant’s motorman in putting on the power
prematurely.
DUTY TO PAY FREIGHT
Rates charged by vessels for hire is now deregulated
(R.A. 9295).
However, on overland transportation, deregulated
rates are applied only to aircon buses.
Person to pay: The shipper or the consignee if carrier
and shipper stipulates in the BL.
Time to pay: NCC is silent but Art. 374 provides for
24-hr period to pay the freight.
CARRIER’S LIEN
If consignee fails to pay the freight within the period
prescribed, the carrier may exercise it lien in
accordance with Art. 375 of the Code of Commerce.
Art. 375: The goods transported shall be especially
bound to answer for the cost of transportation and
for the expenses and fees incurred for them during
their conveyance and until the moment of delivery.
This special right shall PRESCRIBED EIGHT (8)
DAYS AFTER THE DELIVERY HAS BEEN MADE,
and once prescribed, the carrier shall have no other
action that that corresponding to him as an ordinary
creditor.
DEMMURRAGE
In its strict sense, it is the compensation provided for
in the contract of affreightment for the detention of
the vessel beyond the time agreed on for loading and
unloading. It is essentially a claim for damages for
failure to accept delivery.
In its broad sense, every improper detention of a
vessel may be considered demurrage.
Liability for demurrage, viewed in its strict sense, exists
only when expressly stipulated in the contract.
In its broader sense, damages in the nature of demurrage
are recoverable for a breach of the implied obligation to
load or unload the cargo with reasonable dispatch, but
only by the party to whom the duty is owed and only
against one who is a party to the shipping contract.
Notice of arrival of the vessel or conveyance, or their
placement for purposes of unloading is CONDITION
PRECEDENT to the right to collect demurrage charges.
Chapter 3
EXTRAORDINARY DILIGENCE
RATIONALE IN THE REQUIREMENT
OF UTMOST DILIGENCE
A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons,
with due regard for all circumstances.
This extraordinary diligence required of common
carriers is calculated to protect the passengers from
the tragic mishaps that frequently occur in
connection with rapid modern transportation.
This high standard of care is imperatively demanded
by the preciousness of human life and by the
consideration that every person must in every way be
safeguarded against all injury. [Report of the Code
Commission, pp. 35-36]
HOW DUTY IS COMPLIED WITH
Source of common carrier’s legal liability is contract
of carriage binding itself to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of a very cautious person,
with due regard for all the circumstances.
It is not enough to exercise ordinary diligence; what
is required is extraordinary diligence.
There is, however no fixed definition on what
extraordinary diligence means. In most cases,
exercise of extraordinary diligence are given meaning
by way of illustrative examples.
EXTRAORDINARY DILIGENGE
APPLICALBE TO THIRD PERSONS
Provisions on:
Emergency exits
Lifevests or Lifejackets
BILL OF LADING
CONCEPT OF BL
A bill of lading, like a passage ticket, is not necessary
for the perfection of a contract of carriage.
Art. 354, Code of Commerce: In the 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, according to the general
provisions established in this Code for commercial
transaction.
Note: If involving common carrier, disputes without
BL is governed by the Civil Code. In respect to
electronic commerce, it is governed by R.A. 8792 of
the Electronic Commerce Act.
BILL OF LADING DEFINED
A written acknowledgment, signed by the master of
a vessel or other authorized agent of the carrier, that
he has received the described goods from the
shipper, to be transported on the expressed terms to
the described place of destination, and to be
delivered there to the designated consignee or
parties. [70 Am Jur 2d 924]
KINDS OF BILLS OF LADING
Negotiable or Non-negotiable Bill of Lading
Clean Bill of Lading or Foul Bill of Lading
On-board Bill or Received-For-Shipment Bill of
Lading
Spent Bill of Lading
Through Bill of Lading
Custody Bill of Lading
Port Bill of Lading
Negotiable or Non-negotiable Bill of
Lading
When delivered to the Order or to bear, negotiable.
Otherwise, non-negotiable.
Clean Bill of Lading or Foul Bill of
Lading
When it does not contain any notation indicating any
defect in the goods – Clean BL
Otherwise, it is Foul BL
On-board Bill or Received-For-
Shipment Bill of Lading
On-board BL is one in which it is stated that the
goods have been received on board the vessel which
is to carry the goods
Received for shipment BL is one which it is stated
that the goods have been received for shipment with
or without specifying the vessel by which the goods
are to be shipped.
Custody Bill of Lading
One which states that the goods are already received
by the carrier but the vessel indicated therein has not
yet arrived at port.
Port Bill of Lading
One which state that the vessel indicated in the BL
that will transport the goods is already in the port.
NATURE OF BILL OF LADING
It operates both as:
1. A receipt for the goods shipped; and
2. A contract to transport and deliver the goods as
stipulated therein. Being a contract, it is the law
between the parties who are bound by its terms and
conditions sol longs as they are not contrary to law,
morals, good customs, public order and public
policy.
It is also a document of title.
DOCUMENT OF TITLE
Includes any bill of lading, dock warrant, ‘quedan’, or
warehouse receipt or order for the delivery of goods,
or any other document used in the ordinary course of
business in the sale or transfer of goods, as proof of
the possession or control of the goods, or authorizing
or purporting to authorize the possessor of the
document to transfer or receive either by
endorsement or by delivery, goods represented by
such document. [Art. 1636, NCC]
EFFICACY OF BL
Upon delivery to and acceptance by the shipper.
It is presumed that the stipulations of the BL were
known to the shipper, in the absence of fraud,
concealment or improper conduct, and he generally
bound by his acceptance whether he reads the bill or
not.
A shipper who receives a BL without objection after
an opportunity to inspect it, and permits the carrier
to act on it by proceeding with the shipment is
presumed to have accepted it as correct and assented
to its terms.
A BL accepted without dissent raises the
presumption that all the terms therein were brought
to the knowledge of the shipper and agreed to by
him, and in the absence of fraud or mistake, he is
estopped from thereafter denying that he assented to
such terms.
BL AS CONTRACT OF ADHESION
BLs, like tickets constitute a class of contracts of
adhesion.
Construed liberally in favor of the passenger or
shipper.
But, they are not ENTIRELY prohibited.
One who adheres to the contract is in reality free to
reject it entirely.
If he adheres, he gives his consent.
Receipt of the BL or ticket is tantamount to adherence
to the stipulation embodied therein
Qua Chee Gan v. Law Union and
Rock Insurance Co., 25 SCRA 70
[1968]
Held: The courts cannot ignore that nowadays,
monopolies, cartels and concentration of capital
endowed with overwhelm economic power, manage to
impose upon parties dealing with them cunningly
prepared ‘agreements’ that the weaker party may not
change one with his participation in the ‘agreement’
being reduced to the alternative ‘to take it or leave it’,
labelled since Raymond Sleilles ‘contracts of adherence’
(contracts d’ adhesion) in contrast (of which policies of
insurance and international bill of lading are prime
examples) obviously cap for greater strictness and
vigilance on the part of the court with view to protecting
the weaker party from abuses and imposition, and
prevent their becoming traps of the unwary.
RULE ON PROTECTION OF THE
DISADVANTAGED
Art. 24, NCC: In all contractual property or other
relations, when one of the parties is at the
disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age
and other handicap, the courts must be vigilant for
his protection.
Servando, et al. v. Phil. Steam Navigation
Co., G.R. No. L-36481-2 October 23, 1982
Held:
While it may be true that petitioner had not signed
the plane ticket (Exh. '12'), he is nevertheless bound
by the provisions thereof.
Such provisions have been held to be a 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', in
regards which it has been said that contracts of
adhesion wherein one party imposes a ready made
form of contract on the other, as the plane ticket in
the case at bar, are contracts not entirely prohibited.
The one who adheres to the contract is in reality free
to reject it entirely; if he adheres, he gives his consent.
Magellan Manufacturing Marketing Corp.
v. CA, G.R. 95529, Aug. 22, 1991
Name of consignee
Quantity, quality, number of packages and marks of
the merchandise; and
Freight and primage
For Airwaybill (Art. 3[1], Warsaw Convention on Air
Transport:
Place and date of issue
from deliver
FILING OF ACTION IN
INTERISLAND TRADE
Period to file action if claim is filed but CARRIER
REFUSES TO PAY:
6 years – if no BL
10 years – if there is BL
Note: Filing of the claim under Art. 366, CoC is
CONDITION PRECEDENT for recovery. If no claim
is filed, there will be no recovery, even if an action
therefor is meritorious since the claim is part of the
cause of action
FILING OF CLAIMS IN OVERSEAS
TRADE
If damage is APPARENT – CLAIM SHOULD BE
FILED IMMEDIATELY.
If damage is NOT APPARENT – CLAIM SHOULD
BE FILED WITHIN 3 DAYS.
FILING OF ACTION IN OVERSEAS
TRADE
Facts:
The shipper has insured the merchandise against all
risks with South Sea Surety. During the voyage, the
merchandise were damaged. Insurer opposed claim on
the ground, inter alia, that it was filed more than one (1)
year from discovery of the damage to the merchandise
and therefore barred by the provisions under COGSA.
Held:
The provision applies only to carrier’s liability which is
extinguished if no suit is brought within one year.
The liability of the insurer is not extinguished because
the insurer’s liability is based not on the contract of
carriage but on the contract of insurance.
COGSA governs relationship between carrier and
shipper, the consignee and/or the insurer on the other
hand and defines the obligations of the carrier under the
contract of carriage.
It does not, however, affect the relationship between
shipper and insurer which is governed by Insurance
Code.
MEANING OF DAMAGES
The pecuniary compensation, recompense, or
satisfaction for an injury sustained; or
The pecuniary consequences which the law imposes
for the breach of some duty or violation of some
rights.
DAMAGES RECOVERABLE
Actual Damages (dano emergente)
Unrealized Profits (lucro cesante)
Moral Damages
Nominal Damage
Temperate or Moderate Damages
Liquated Damages
Exemplary or Corrective Damages
Other damages
ACTUAL & COMPENSATORY
DAMAGES
Art. 2205, NCC: Damages may be recovered:
(1) For loss or impairment of earning capacity in
cases of temporary or permanent personal injury;
(2) For injury to the plaintiff’s business standing or
commercial credit.
Amount of damages in case of death: P100,000 per
passenger for overland; P200,000 for marine
transportation.
LOSS OF EARNING CAPACITY
UNDER ART. 2206
Formula:
Net Earning Capacity = Life Expectancy [2/3 x 80 –
age at death] x Gross Annual Income less Necessary
Living Expenses [fixed at 50% of the gross income in
the absence of proof]
MORAL DAMAGES (Art. 2219, Civil
Code)
Include
Physical suffering,
Mental anguish,
Fright,
Serious anxiety,
Besmirched reputation,
Wounded feelings,
Moral shock,
Vessels
Ship or vessel
Ship or Vessel - means any kind, class or type of craft
or artificial contrivance capable of floating in water,
designed to be used, or capable of being used, as a
means of floating in water transport in the domestic
trade for the carriage of passengers or cargo, or both,
utilizing its own motive power or that of another.
[R.A. 9295]
Tucker v. Alexandroff [183 U.S. 424,
438, 22 S.Ct. 195, 201, 46 L.Ed. 264]
Documentary requirements:
Letter of Intent & Duly accomplished application
form;
Duly notarized mortgage contract;
BIR; and
Original copy of CO and CVR.
Inability to navigate.
Note: If the lack of fuel or provision is not due to lack of
foresight, or the fear of pirates is well-founded or the
inability to navigate is not attributable to fault of
captain or crew, then these arrivals under stress
becomes particular average of the vessel. Shippers
must wait.
No damage needs to be paid to the shippers. But if
due to bad faith, the damages must be paid to
shippers for delay and the vessel bears the loss.
Improper Arribada
If lack of provisions should rise from the failure to
take the necessary provisions for the voyage
according to usage and customs, or if they should
have been rendered useless or lost through bad
stowage or negligence in their care.
If the risk of enemies, privateers, or pirates should
not have been well-known, manifest, and based on
positive and provable facts.
If the defect of the vessel should have arisen from
the fact that it was not repaired, rigged equipped,
and prepared in a manner suitable for the voyage, or
from some erroneous order of the captain.
When malice, negligence, want of foresight, or lack
of skill on the part of the captain exists in the act
causing the damage.
Expenses. [Art. 820, Code of Commerce]
Shipwreck (Agrounding)
The demolition or shattering of a vessel caused by
her driving ashore or on rocks and shoals in the
midseas, or by the violence of winds and waves in
tempests.
Rules on Shipwrecks (Arts. 840-845)
Losses/deterioration due to shipwreck or stranding to
the account of the owners & ship owner.
If caused by malice, negligence, or lack of skill of the
captain or because vessel put to sea was
insufficiently repaired and equipped: Shippers can
demand indemnity from the captain.
The goods saved from the wreck to be specially
bound for the payment of the expenses of the
respective salvage.
If several vessels sail under convoy, and any of them
should be wrecked, the cargo saved will be
distributed among the rest in proportion to the
amount which each one is able to take.
If any captain should refuse, without sufficient cause,
to receive what may correspond to him, the captain
of the wrecked vessel to enter a marine protest
against him.
If it is not possible to transfer to the other vessels
the entire cargo of the vessel wrecked, the goods of
the highest value and smallest volume to be saved
first. Designation to be made by the captain with
concurrence of his officers.
The captain taking on-board the goods saved from
the wreck to continue his course to the port of
destination and upon arrival he should deposit the
goods for disposal to their owners.
In case the captain changes his course, and if he can
unload them at the port of which they were
consigned, he may make said port if the shippers or
supercargoes present and the officers and
passengers of the vessel consent thereto. But he is
not required to do so even if he has the consent
during time of war or when the port is difficult and
dangerous to make.
The owners of the cargo to defray all the expenses of
this arrival and the payment of the freightage.
If cannot be, proceed to judicial sale complying with
the formalities and on publicity.
Chapter 14
Salvage
Definition and Philosophy of Salvage
Salvage is a service which one person renders to the
owner of a ship or goods, by his own labor,
preserving the goods or the ship which the owner or
those entrusted with the care of them have either
abandoned in distress at sea, or are unable to protect
and secure.
Salvage Law provides for the compulsory reward to
those who brave the perils of the sea to save the
cargo or vessel in order to encourage such services.
Whether the owner of the property save likes it or
not, he must give a reward. The maximum amount is
50% of the value of the property save.
Kinds of Salvage Services
Voluntary – compensation is dependent on the
success.
Under contract for a per diem or per horam wage,
payable at all event.
Under contract for compensation payable only in case
of success.
Requisites For Salvage Reward
Valid object of salvage.
Such object must be exposed to marine peril.
Must be rendered voluntarily.
Must be successful.
Derelict
A vessel or cargo badly damaged and abandoned by
the crew to the mercy of the sea.
Mere abandonment does not make such vessel or
cargo res nullius.
Proper procedure must be followed by the salvors to
be entitled of the reward.
Procedure In Derelict
If vessel is abandoned, salvor must tow her to the
nearest port where it will be delivered to the
municipal treasurer or collector of customs who will
advertise the fact of salvage.
If owner of salvaged vessel or cargo appears, he may
take possession of vessel or cargo and pay the
reward amount not exceeding 50% of the value of
the vessel.
Reward is determined by considering:
- the value of the property save; zeal employed;
danger posed to the salvors; number of persons who
took part; services render; and expenses incurred.
If no claim for the vessel is made within 3 months
after publication, the municipal treasurer to sell the
property salvaged at public auction. The reward and
expenses will be deducted from the proceeds. The
balance to be deposited with the treasury.
If no one claims for the balance after 3 years, ½ will
go to the salvors and the other half to the
government.
If one vessel saves another:
- ½ to the ship owner of the saving vessel.
- ¼ to the captain
- ¼ to the crew
Honorio Barrios v. Go Thong & Co.,
G.R. L-17192, March 30, 1963
Facts: Go Thong is the owner of a vessel plying the
route from Mindanao to Cebu. The engine of his
vessel conked out while she was in the middle of the
sea. The captain radioed the owner and was advised
that a sister ship was on its way to tow the vessel.
The sea at the time was calm. The radio message
was picked up by another vessel which thereafter
proceeded to the stranded vessel of Go Thong. The
captain agreed that the vessel be towed. The owner
of the towing vessel knew the owner of the stranded
vessel. He waived charges of towing. But the captain
and the crew the responding vessel complained of
their respective ¼ shares in the reward.
Issue: Was there salavage or towage?
Held: There was no salvage because there was no
marine peril at the time. There was no danger for the
stranded ship. The sea was calm and a sister ship
was nearby. Hence, no reward is due. Also, there is
no need for compensation for the towage because of
the waiver of the towing vessel.
Chapter 15
COGSA
History of COGSA
Originally passed by Congess of the US on April 16,
1936 as Public Act No. 521.
Adopted by the Phil Commonwealth on October 22,
1936 as Commonwealth Act No. 65.
When the New Civil Code took effect on August 30,
1950, it became the primary law on carriage of goods
by sea.
Art. 1753, NCC: The law of the country to which the
goods are to be transported shall govern the liability
of the common carrier for their loss, destruction or
deterioration.
COGSA remains suppletory law for international trade
Chapter 16
Public Service Laws
Meaning and Concept of Public Utility
A business or service engaged in regularly supplying
the public with some commodity or service of public
consequence such as electricity, gas, water,
transportation, telephone or telegraph service.
[National Power Corporation v. Court of Appeals, G.R.
No. 112702, September 26, 1997]
In a very real sense, a public utility is engaged in
public service-- providing basic commodities and
services indispensable to the interest of the general
public. [Republic v. Meralco, G.R. No. 141314, April
9, 2003]
When, therefore, one devotes his property to a use in
which the public has an interest, he, in effect grants
to the public 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.
[Kilusang Mayo Uno Labor Center v. Hon. Jesus B.
Garcia Jr., G.R. No. 115381, December 23, 1994
citing Pantranco v. Public Service Commission, 70
Phil.221]
Constitutional Provisions
Public utilities – must be owned by Filipino citizen or
60% owned by Filipino citizens. [Art. XII, Sec. 11]
Mass media – must 100% Filipino.
Government take-over: In times of national
emergency, when the public interest so requires, the
State may, during the emergency and under
reasonable terms, temporarily take over or direct the
operation of any privately owned public utility or
business affected with public interests. [Art. XII, Sec.
17]
Operation of vital industries: The State, may, in the
interest of national welfare or defense, establish and
operate vital industries and upon payment of just
compensation, transfer to public ownership utilities
and other private enterprises to be operated by the
government. [Art. XII, Sec. 18]
Prohibition against monopolies: The State shall
regulate or prohibit monopolies when the public
interest so requires; no combination in restraint of
trade or unfair competition shall be allowed. [Art. XII,
Sec. 19]
Public Service
Includes every person who may own, operate,
manage, or control in the Philippines for hire or
compensation, with general or limited clientele,
whether permanent, occasional or accidental, and
done for general business purposes, any common
carrier, railroad, street railway, fraction railway,
subway motor vehicle, steamboat, or steamship line
ferries, and water craft, shipyard, ice plant, electric
light, heat and power or any other public utility. [Sec.
13(b), Act. 146]
PAL V. CAB, 270 SCRA 538
Held: The terms ‘convenience and necessity’ if used
together is a statute, are usually held not to be
separable, but are construed together. Both words
modify each other and must be construed together.
The word ‘necessity’ is so connected, not as an
additional requirement but to modify and qualify
what might otherwise be taken as the strict
significance of the word necessity.
Public convenience and necessity exists when the
proposed facility will meet a reasonable want of the
public and supply a need which the existing facilities
do not adequately afford.
It does not mean or require an actual physical
necessity or an indispensable thing.
The use of the word ‘necessity’, in conjunction with
‘public convenience’ 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 issuance of the same.
It is the law which determines the requisite for the
issuance of such certification, and not the title
indicating the certificates.
Public Utilities
Public utilities are privately owned and operated
businesses whose services are essential to the
general public. They are enterprises which specially
cater to the needs of the public and conduce to their
comfort and convenience. As such, public utility
services are impressed with public interest and
concern. The same is true with respect to the
business of common carrier which holds such a
peculiar relation to the public interest that there is
superinduced upon it the right of public regulation
when private properties are affected with public
interest, hence, they cease to be juris privati only.
When, therefore, one devotes his property to a use in
which the public has an interest, he, in effect grants
to the public 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.
[Kilusang Mayo Uno Labor Center v. Hon. Jesus B.
Garcia Jr., G.R. No. 115381, December 23, 1994
citing Pantranco v. Public Service Commission, 70
Phil.221]
Difference Between Operation of a
Public Utility and Ownership of Facilities
While the Constitution in no uncertain terms requires
a franchise for the operation of a public utility, it does
not require a franchise before one can own the
facilities needed to operate a public utility so long as
it does not operate them to serve the public.
In law, there is clear distinction between the
operation of a public utility and the ownership of the
facilities and equipment used to serve the public.
[Ibid]
Telecommunications
Radio Industry
Broadcasting
Broadcast is an undertaking the object of which is to
transmit over-the-air commercial radio or television
messages for reception of a broad audience in a
geographic area.
Cable Television Operations (E.O.
436, Sept. 9, 1997)
Classified as mass media
Essential components:
Reception facilities which extract the broadcast signal
from the air, or microwave transmission.
Input equipment, which converts and amplifies the
signal received; and
Distribution system, which consists of feeder or trunk
lines originating from the input equipment; smaller
distribution cables which carry the signal to the
immediate vicinity of the subscriber; and drop lines
which carry the signal into the subscriber’s premises.
Electronic Commerce Act
Internet and Value Added-Services