Transportation Law notes

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Transporation Law Notes | Kate Kimberly Delos Santos

1 CHAPTER 1

GENERAL CONCEPTS

I. DEFINITION AND CONCEPTS A. Contract of Transportation

There is a contract of transportation where a person obligates himself to transport persons or property from one place to another for consideration.

B. Parties

a. Carriage of Passengers

The parties in a contract of carriage of passengers are the common carrier and the passenger. Passenger – is one who travels in a public conveyance by virtue of a contract, express or implied, with the carrier as to the payment of fare or that which is accepted as an equivalent thereof. b. Carriage of Goods

When the contract is for the carriage of goods, the parties are the shipper and carrier. Shipper – is the person who delivers the goods to the carrier for transportation. He pays the consideration or on whose behalf payment is made.

Consignee – is the person to whom the goods are to be delivered. He may be the shipper himself or may be a third person who is not actually a party to the contract.

Nevertheless, there are instances when the third party consignee is bound by the agreement between the shipper and the carrier.

C. Perfection

There are two types of contracts of carriage of passengers:

1. Contract to Carry – an agreement to carry the passenger at some future time. This contract is consensual and is therefore perfected by mere consent.

2. Contract of Carriage or of Common Carriage Itself – considered as the real contract for not until the facilities of the carrier are actually used can the carrier be said to have already assumed the obligation of the carriage.

a. Aircraft

There is a perfected contract to carry passengers even if no tickets have been issued to said

passengers so long as there was already a meeting of minds with respect to the subject matter and the consideration.

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2 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. b. Buses, Jeepneys, and Street Cars

With respect to buses, jeepneys, or street cars, the Supreme Court explained in one case that once a public utility bus (or jeepney) stops, it is in effect making a continuous offer to bus riders. Hence, it is the duty of the drivers to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from sudden starting up of the carrier. It follows that the passenger is deemed to be accepting the offer if he is already attempting to board the conveyances and the contract of

carriage is perfected from that point. c. Trains

A person who wants to board a train in a railway station must purchase a ticket and must present himself at the proper place and in a proper manner to be transported. If he does not do so, he will not be considered a passenger.

II. CARRIER

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

The concept of “common carrier” under 1732 may be seen to coincide neatly with the notion of “public service” under the Public Service Act.

a. Tests

1. He must be engaged in the business of carrying goods for others as a public employment xxxx not as a casual occupation;

2. He must undertake to carry goods of the kind to which his business is confined;

3. He must undertake to carry goods of the kind to kind to which his business is conducted and over his established roads; and

4. The transportation must be for hire. b. Characteristics

The concept of common carriers contemplated under the Public Service Act results in the application of the following rules or principles:

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3 III. DISTINGUISHED FROM PRIVATE CARRIER

The distinction between a “common or public carrier” and a private or special carrier lies in the character of the business, such that if the undertaking is a single transaction, not a part of a general business or occupation, althougn involving the carriage of the goods for a fee, the person or

corporation offering such service is a private carrier.

While a common carrier is bound to exercise extraordinary diligence, a private carrier owes only diligence of a good father of a father of a family.

Moreover, while a common carrier cannot stipulate that it is exempt from liability for negligence of its agents or employees, a private carrier may validly enter into such stipulation.

IV. DISTINGUISHED FROM TOWAGE, ARRASTRE AND STEVEDORING In towage, one vessel is hired to bring another vessel to another place.

On the other hand, the functions of arrastre operator usually include: to receive, handle, care for, and deliver all merchandise; to record or check all merchandise; and to furnish light, and water services and other incidental services.

The function of stevedores involve the loading and unloading of coastwise vessels calling at the port. V. GOVERNING LAWS

Article 1766 of the Civil Code expresses: “In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.” Article 1753: “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.”

IV. NATURE OF BUSINESS

Common carriers are public utilities. As such, they are impressed with public interest and concern.

V. REGISTERED OWNER RULE AND KABIT SYSTEM a. Registration Laws

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4 Registration of motor vehicles is now government by Republic Act 4136 otherwise known as “The

Land Transportation and Traffic Code” b. Registered Owner Rule

The rule in this jurisdiction is that the person who is the registered owner of a vehicle is liable for any damage caused by the negligent operation of the vehicle although the same was already sold or conveyed to another person at the time of the accident.

The registered owner is liable to the injured party subject to his right or recourse against the transferee or the buyer.

c. Kabit System

The “registered owner” rule is applicable whenever the persons involved are engaged in what is known as the “kabit system.”

The Kabit System is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings.

a. Pari Delicto Rule

Both parties are at fault. Having entered into an illegal contract, neither party cannot invoke the same as against each other either to enforce their illegal agreement or to invoke the same to escape liability. Both parties cannot seek relief from the courts, and each must bear the consequences of his acts. b. Aircraft and Vessels

Kabit System may also be applied to vessels and aircrafts that are covered by the certificates of convenience and necessity.

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5 I. OBLIGATIONS OF THE CARRIER

a. Duty to Accept

A common carrier that is granted a certificate of public convenience is duty bound to accept passengers or cargo without any discrimination.

The instances when the carrier may validly refuse to accept goods include:

When the goods sought to be transported are dangerous objects, or substances including dynamites and other explosives;

The goods are unfit for transportation; Acceptance would result in overloading;

The goods are considered contrabands or illegal goods; Goods are injurious to health;

Goods will be exposed to untoward danger like flood, capture by enemies and the like; Goods like livestock will be exposed to diseases;

Strike; and

Failure to tender goods on time. b. Duty to Deliver the Goods a. Time of Delivery

Article 358 of the 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.”

b. Consequences of Delay

Article 1747 of the Civil Code: “If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier‟s liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.

In cases of delay on account of the fault of the shipper, the consignee may leave the goods transported in the hands of the carrier, informing him thereof in writing before the arrival of the same at the point of destination.

Right of Passengers in Case of Delay is specifically provided in Article 698 of the Code of

Commerce: “In case a voyage already begun should be interrupted, the passenger shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively.

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6 Memorandum Circular No. 112 issued by Maritime Industry Authority provides: “In case the vessel

is not able to depart on time and the delay is unreasonable, the passenger may opt to have his/her ticket immediately refunded without any refund service fee….”

c. Where and to Whom Delivered a. Place

The goods should be delivered to the consignee in the place agreed upon by the parties. If the specific place or warehouse is designated in the bill of lading, the goods must be delivered in such place. b. Consignee

The goods should be delivered to the consignee or any other person to whom the bill of lading was validly transferred or negotiated.

Article 369 of the Code of Commerce provides: “If the consignee cannot be found at the residence indicated in the bill of lading, or if he refuses to pay the transportation charges and expenses, or if he refuses to receive the goods, the municipal judge, where there is none of the first instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the effects of delivery without prejudice to third parties with a better right.

c. Delay to Transport Passengers

The basic rule that applies to carriage of goods shall also apply to carriage of passengers. d. Duty to Exercise Extraordinary Diligence

The goods should be delivered in the same condition that they were received and to transport passengers without encountering any harm or loss. In the exercise of this obligation, the common carrier is obligated to exercise extraordinary diligence.

Article 1755 of the Civil Code explains extraordinary 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 person, with due regard for all circumstances.

a. Presumption of Negligence

In case of loss of effects or cargo or passengers or death or injuries to passengers, the common carrier is presumed to be at fault or have acted negligently unless he had observed extraordinary diligence in the vigilance thereof.

b. Duration of Duty

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7 lasts from the time the goods are unconditionally placed in the possession of, and received by the

carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them….”

With respect to carriage of passengers by trains, the extraordinary diligence commences the moment the person who purchases the ticket presents himself at the proper place and in a proper manner to be transported with a bona fide intent to ride the coach.

With respect to carriage of passengers by sea, the duty of the carrier commences as soon as the person with bona fide intention of taking passage places himself in the care of the carrier or its employees and is accepted as passenger.

Motor vehicles like passenger jeepneys and buses are duty bound to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter. The rule is that once a public utility bus or jeepney stops, it is making a continuous offer to bus riders.

e. Defenses of Common Carriers

The defenses that can be raised by common carriers for the loss, destruction, deterioration of the goods are:

(1) Flood, storm, earthquake, lightning and other natural disaster and calamity; (2) Acts of the public enemy at war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the packing of the goods in the packing or in the containers; (5) Order or act of the competent authority;

(6) Exercise of extraordinary diligence.

Fortuitous Event

A fortuitous event is an event that is unforeseen, but if foreseen, is inevitable. Requisites:

(1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will.

(2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid.

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8 (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a

normal manner.

(4) The obligor (debtor) must be free from any participation in or the aggravation of the injury resulting to the creditor.

Fortuitous event, to be a valid defense, must be established to be the proximate case of the loss. (Art. 1739)

Invalid Defenses: 1. Fire

2. Hijacking

3. Mechanical Defects 4. Other Invalid Defenses a) Explosion

b) Worms and Rats c) Water Damage d) Barratry Public Enemy

The term „public enemy,‟ in its general acceptation presupposes the existence of an actual state of war, and refers to the government of a foreign nation at war with the country to which the carrier belongs xxxx

Improper Packing

It is also the rule that if the carrier accepts the goods knowing the fact of improper packing of the goods upon ordinary observation or notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom.

Order of Public Authority

Article 1743: If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.

f. Defenses in Carriage of Passengers

The primary defense of the carrier in transporting passengers is exercise of extraordinary diligence. Thus, even if there is a fortuitous event, the carrier must also present proof of exercise of

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9 a. Employees

Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former‟s employees although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. b. Other Passengers and Third Persons

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or strangers, if the common carrier‟s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

g. Passenger‟s Baggages

Baggage that are checked in or delivered to the carrier are governed by the rules discussed above requiring extraordinary diligence.

II. OBLIGATIONS OF SHIPPER, CONSIGNEE AND PASSENGER a. Negligence of Shipper or Passenger

Contributory negligence on the part of the passenger is not a defense that will excuse the carrier from liability. It will only mitigate such liability. However, the negligence of the shipper or the passenger may be the proximate and only cause of the loss, in which case, the carrier should not be made liable. In Article 1761 of Civil Code provides: “The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Thus, the carrier may be able to prove that the only cause of the loss of the goods is any of the following acts of the shipper:

(1) Failure of the shipper to disclose the nature of the goods; (2) Improper marking or direction as to destination; and (3) Improper loading when he assumes that responsibility. Doctrine of avoidable consequences

Even if the carrier is responsible for the loss or injury, the passenger is also required to lessen the damage or injury.

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10 Doctrine of Last Clear Chance

A negligent defendant is held liable to a negligent plaintiff, if he, aware of the plaintiff‟s peril, or according to some authorities, should have been aware of it in the reasonable exercise of due care, had in fact an opportunity later than that of the plaintiff to avoid an accident.

The Supreme Court reiterated the rule that passengers must take such risks incident to the mode of travel.

b. Freight

When private property is used for public purpose and is affected with public interest, it ceases to be juris privati only and becomes subject to regulation.

The shipper may pay the necessary freight before or at the time he deliver the goods to the carrier for shipment. However, the parties may also stipulate that the freight will be paid by the consignee at the point of the destination.

In the absence of any agreement, the consignee who is supposed to pay must do so within twenty-four (24) hours from the time of delivery.

With respect to carriage of goods by sea, the tickets are purchased in advance from ticket outlets or booking offices. Carriers are not supposed to allow passengers without tickets.

The carrier shall collect/inspect passenger‟s ticket within one (1) hour from the vessel‟s departure so as not to disrupt passengers who are either sleeping or resting.

If the consignor or the consignee failed to pay the consideration for the transportation of the goods, this special right shall 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.

Demurrage

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.

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11 CHAPTER 3

EXTRAORDINARY DILIGENCE

I. RATIONALE

Article 1755 of the Civil Code explains extraordinary 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 person, with due regard for all circumstances.”

The Code Commission explained why extraordinary diligence must be complied with the performance of the functions of a common carrier: “This high standard of care is imperatively demanded by the preciousness of human life and by the consideration that every person must be in every way be safeguarded against all injury.”

II. HOW DUTY IS COMPLIED WITH

There is no hard and fast rule in the exercise of extraordinary diligence. The law does not prescribe formula. Thus, the Supreme Court explained in one case that “it is sufficient to reiterate that the source of a common carrier's legal liability is the contract of carriage, and by entering into said contract, it binds 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 a due regard for all the circumstances. A. Duty to Third Persons

The duty to exercise extraordinary diligence is primarily owed to the passengers and the goods that are being transported.

However, it was ruled in one case that the duty even extends to the members of the crew or complement operating the carrier.

Additionally, there is authority for the view that extraordinary diligence is owed not only to

passengers or shippers but also to third persons as well. Thus, the Supreme Court ruled in Kapalaran Bus Lines v. Coronado: “... The passengers and owners of cargo carried by common carrier, they are not only persons that the law seeks to benefit. For if common carriers carefully observed the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help but

simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways.”

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12 III. EFFECT OF STIPULATION

A. Goods

The parties cannot stipulate that the carrier will not exercise any diligence in the custody of goods. Neither can it be stipulated that the goods are at the shipper's risk. However, the law allows a

stipulation whereby the carrier will exercise a degree of diligence less than extraordinary with respect to goods.

B. Passenger

There can be no stipulation lessening the utmost diligence that is owed to passengers. The responsibility to observe extraordinary diligence cannot be dispensed with or lessened through stipulation or posting of notices Art. 1757 of the Civil Code).

a. Gratuitous passenger

When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for willful acts or gross negligence. The reduction of fare does not justify any limitation of the common carrier's liability (Art. 1758 of the Civil Code).

The provision implies that the same degree of diligence is required even if the passenger is carried gratuitously.

In Lara v. Valencia however, the view expressed by the Supreme Court is to the effect that the diligence owed to accommodation passenger is only ordinary diligence. The defendant in the said case was not a common carrier. It was a private carrier who accommodated the deceased passenger.

IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA A. Seaworthiness

a. Warranty of seaworthiness of ship

The first step that must be undertaken by the common carrier in complying with the duty to exercise extraordinary diligence in transporting goods or passengers by sea or any other body of water is to make the vessel seaworthy. Seaworthiness of the vessel is a rule found in the carriage of Goods by Sea Act, Sec.3.(1).

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13 b. No duty to inquire

It follows that because the implied warranty of seaworthiness, shippers of the goods, when transacting with common carriers, are not expected to inquire into the vessels seaworthiness, genuineness of its licenses, and compliance with all maritime laws.

By the same token, passengers cannot be expected to inquire every time they board a common carrier, whether the carrier possesses the necessary papers or that all the carrier's employees are qualified. Such a practice would be an absurdity.

c. Meaning of Seaworthiness

The concept of seaworthiness was explained by the Supreme Court: “ (1) Generally, seaworthiness is that strength, durability and engineering skill made a part of a ship's construction and continued maintenance, together with a competent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonably be expected or encountered during her voyage without loss or damage to her particular cargo.”

(1) Fitness of the vessel itself

It is necessary that the vessel can be expected to meet the normal hazards of the journey. (2) The ship must be “cargoworthy”

Even if vessel was properly maintained and is free from defect, the carrier must not accept goods that cannot properly be transported in the ship.

(3) The vessel must be adequately equipped and properly manned

The ship must be manned with sufficient number of competent officers and crew. (4) Adequate equipment

With respect to vessels that carries passengers, the Maritime Industry Authority prescribes rules which provide for indispensable equipment and facilities.

B. Overloading

Duty to exercise due diligence likewise includes the duty to take passengers or cargoes that are within the carrying capacity of the vessel.

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14 C. Proper Storage

The vessel may be suitable for the cargo but this is not enough because the cargo must also be properly stored.

D. Negligence of Captain and Crew a. Rules on passenger safety

Memorandum Circular No. 12 issued by MARINA provides that “have the right to be treated by the carrier and its employees with kindness, respect, courtesy and due consideration. They entitled to be protected against personal conduct, injurious language, indignities and abuses from the said carrier and its employees.”

E. Deviation and Transshipment a. Deviation

Art. 359 of the Code of Commerce:

“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 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.”

b. Transshipment

Transshipment of freight without legal excuse is a violation of the contract and an infringement of the right of the shipper, and subjects the carrier to liability if the freight is lost even by a cause otherwise excepted.

Transshipment, in maritime law, is defined as “the act of taking cargo out of one ship and loading it in another,” or “the transfer of goods from vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached.”

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15 V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND

A. Condition of vehicle

Common carriers that offer transportation by land are similarly required to make sure that the vehicles that they are using are in good order or condition.

B. Traffic Rules

The carrier fails to exercise extraordinary diligence if it will not comply with basic traffic rules. C. Duty to Inspect

There is no unbending duty to inspect each and every package or baggage that is being brought inside the bus or jeepney. The carrier is duty bound to conduct such inspection depending on the

circumstances.

A carrier is ordinarily not liable for injuries to passengers from fires or explosions caused by articles brought into its conveyances by other passengers, in the absence of any evidence that the carrier, through its employees, was aware of the nature of the article or had any reason to anticipate danger therefrom.

It should be noted that in overland transportation, the common carrier is not bound nor empowered to make an examination on the contents of packages or bags particularly those handcarried by

passengers.

VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR

Like vessels, aircrafts that are used by common carriers must also be fit to transport goods and passengers. The aircraft must be in such a condition that it must be able to withstand the rigors of the flight. The law that governs the Civil Aeronautic Board calls this “airworthiness.”

Republic Act 779 defines airworthiness means that “an aircraft, its engines, propellers, and other components and accessories, are of proper design and construction, and are safe for air navigation purposes, such design and construction being consistent with accepted engineering practice and in accordance with aerodynamic laws and aircraft science.”

Extraordinary diligence likewise requires the carrier provide competent and well trained crew. The carrier is likewise deemed to have failed to exercise extraordinary diligence if the plane did not take the designated route and the tragic crash could have been avoided had it taken said designated route.

It is the duty of airlines to strictly require their personnel to be more accommodating towards customers, passengers and the general public.

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16 A. Inspection

An airline company is duty bound to inspect each and every cargo that is brought into the aircraft (Sec. 8 of RA 6235).

CHAPTER 4

BILL OF LADING AND OTHER FORMALITIES

I. CONCEPTS

A bill of lading or a ticket is not necessary for the perfection of a contract of carriage. Thus, the obligation of the carrier to exercise extraordinary diligence in transporting the goods or passengers is present even if no bill of lading or ticket was issued by the carrier.

Additionally, Sections 25 and 26 of the Electronic Commerce Act (RA No. 8792) allow data messages or electronic documents to be used in lieu of transport documents in writing or paper documents.

A. Definition

Bill of Lading – is 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.

B. Kinds

A bill of lading may be either: (1) negotiable or non-negotiable,

(2) clean bill of lading or foul bill of lading, (3) “on board bill” or “received for shipment bill”, (4) spent bill of lading,

(5) through bill of lading, (6) custody bill of lading, or (7) port bill of lading.

a. Clean bill of lading and foul bill of lading

A clean bill of lading is one which does not contain any notation indicating any defect in the goods. A foul bill of lading is one that contains such notation.

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17 b. Spent bill of lading

Where the goods are already delivered by the carrier, the carrier is supposed to have retrieved the covering bill of lading that he issued for the goods. If the goods were already delivered but the bill of lading was not returned, the bill of lading is called “spent bill of lading.”

c. Through bill of lading

A “through bill of lading” is one issued by a carrier who is obliged to use the facilities of other carriers as well as his own facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which bill of lading is honored by the second and other interested carriers who do not issue their own bill of lading.

d. On board bill v. received for shipment bill

An on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is to carry the goods, whereas a received for shipment bill of lading is one in which it is stated that the goods have been received with or without specifying the vessel by which the goods are to be shipped.

e. Custody bill of lading

In this type of bill of lading, the goods are already received by the carrier but the vessel indicated therein has not yet arrived in the port.

f. Port bill of lading

In a port bill of lading, the vessel indicated in the bill of lading that will transport the goods is already in the port.

II. NATURE OF BILL OF LADING

It is a long standing jurisprudential rule that a bill of lading operates both: (1) as a receipt and (2) as a contract. A third characteristic may be added – (3) it is a document of title.

It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated.

As a contract, it stipulates the rights and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not

contrary to law, morals, good customs, public order, and public policy. III. WHEN EFFECTIVE

A bill of lading usually becomes effective upon its delivery to and acceptance by the shipper. It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper

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18 conduct, known to the shipper, and he is generally bound by his acceptance whether he reads the bill

or not.

The holding in most jurisdictions has been that a shipper who receives a bill of lading without objection after an opportunity to inspect it is presumed to have accepted it as correctly stating the contract and to have assented to its terms.

IV. BILL OF LADING AS CONTRACT

The three-fold nature of a bill of lading is obviously applicable only to carriage of goods. However, the nature of bill of lading as a contract applies to tickets issued to passengers.

A. Contract of Adhesion

Bills of lading, as well as tickets, constitute a class of contracts of adhesion. Hence, they are normally construed liberally in favor of the passenger or shipper who adhered to such bill of lading or ticket. Contracts of adhesion are contracts wherein almost all the provisions of which have been drafted only by one party. The only participation of the other party is the signing of his signature or his 'adhesion' thereto. Examples are: insurance contracts, bills of lading, contracts of make of lots on the installment plan.

Under which contracts, the passenger/shippers cannot change terms and they are thus made to adhere thereto on the “take it or leave it” basis. Thus, certain guidelines in the determination of their validity and enforceability have been formulated in order that justice and fair play characterize the

relationship of the contracting parties.

Consequently, the parties, whether the carrier or shipper, cannot escape liability by adverting to the bill of lading as a contract of adhesion, if the bill of lading has no ambiguities or obscurities.

B. Parol Evidence Rule

A bill of lading is covered by the parol evidence rule. Under the parol evidence rule, the terms of a contract are rendered conclusive upon the parties, and evidence aliunde is not admissible to vary or contradict a complete and enforceable agreement embodied in a document, subject to well defined exceptions.

As an exception to the parol evidence rule is one which is a mistake of fact mutual to the parties. However, in order that parol evidence may be admitted, said mistake must be put in issue by the pleadings, such that if not raised inceptively in the complaint or in the answer, as the case may be, a party cannot later on be permitted to introduce parol evidence thereon.

Parol evidence cannot be admitted where the mistake adverted to was supposedly committed by one party only and was raised by the former rather belatedly.

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C. Bill of Lading as Evidence

Bill of lading is the legal evidence of the contract.

All the essential elements of a valid contract are present in a bill of lading or ticket, i.e. consent, cause or consideration and object.

D. Bill of Lading as Actionable Document

When a shipper enforces contractual obligation under the contract of carriage as stated in the bill of lading, such bill of lading can be categorized as an actionable document under the Rules of Court. Hence, the bill of lading must be properly pleaded either as causes of action or defenses; the

genuineness and due execution of which are deemed admitted unless specifically denied under oath by the adverse party.

E. Basic Stipulations

The stipulations that must be stated in the bill of lading are provided for in the Code of Commerce.

F. Prohibited and Limiting Stipulations a. Civil Code

Three kinds of limiting stipulations have often been made in bill of lading:

1. exempting the carrier from any and all liability for loss or damage occasioned by its own negligence

2. providing for an unqualified limitation of such liability of the carrier to an agreed valuation

3. limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight

The first and second kinds of stipulations are invalid. The third is valid and enforceable. (1) Purpose

The purpose of the limiting stipulation in the Bill of Lading is to protect the common carrier. Such stipulation obliges the shipper/consignee to notify the common carrier of the amount that the latter may be liable for in case of loss of the goods. The common carrier can then take appropriate measures--- getting insurance, if needed, to cover or protect itself.

(2) Stipulation reducing diligence

The parties cannot stipulate so as to totally exempt the carrier from exercising any degree of

diligence; and the parties cannot stipulate that the common carrier shall exercise diligence less than the diligence of a good father of a family.

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20 However, the parties may stipulate that diligence to be exercised by the common carrier in the

carriage of goods be less than the extraordinary diligence provided that the following requisites are complied with:

1. that the stipulation be in writing signed by both parties

2. that the stipulation be supported by a valuable consideration other than the service rendered by the common carrier, and

3. that the stipulation be reasonable, just and not contrary to law

However, no such stipulation is allowed for carriage of passengers. The responsibility of a common carrier to exercise utmost diligence for the safety of the passengers cannot be dispensed with or lessened by stipulation or statement on tickets or otherwise (Art. 1757 of the Civil Code).

A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon (Art. 1750 of the Civil Code).

Moreover, Art. 1749 of the Civil Code provides that a stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater, is binding.

b. Carriage of Goods by Sea Act (COGSA)

COGSA applies suppletorily to the Civil Code if the goods are to be shipped from a foreign port to the Philippines. Under COGSA, the liability of the carrier is US$500 per package in the absence of a shipper's declaration of a higher value in the bill of lading.

Each carton is considered a package, or that would be considered package shipped in a container supplied by the carrier.

V. BILL OF LADING AS RECEIPT

The issuance of a bill of lading carries the presumption that the goods were delivered to the carrier issuing the bill, for immediate shipment.

VI. BILL OF LADING AS DOCUMENT OF TITLE

The Bill of Lading, until complete delivery of the cargo has been made on someone rightfully claiming under it, remains in force as a symbol, and carries with it not only the full ownership of the goods, but also all rights created by the contract of carriage between the shipper and the ship owner. Art. 1507 of the Civil Code states: “A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document is negotiable document of title.”

How negotiated?

(a) bearer document;

(b) order document – a document which states that the goods are to be delivered to the order of a person name therein.

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21 Effect of Negotiation: Art. 1513 of the Civil Code provides:

“A person to whom a negotiable document of title has been duly negotiated acquires thereby: (1) Such title to the goods xxx;

(2) The direct obligation of the bailee issuing the document to hold possession of the goods for him xxx

CHAPTER 5

ACTIONS AND DAMAGES IN CASE OF BREACH

I. DISTINCTIONS

Passengers and shippers who suffered damages because of the breach of the contractual obligation of the carrier may sue the latter for damages. The source of obligation is culpa contractual. This source of obligation is separate and distinct from quasi-delict under Art. 2176 of the Civil Code.

II. CONCURRENT CAUSES OF ACTION

The same act that breaches the contract may also be tort. Hence, a negligent act that breaches the contract may give rise to a liability based on contract and quasi-delict under Art. 2176 of the Civil Code.

In fact, with respect to the employee of the carrier, civil liability may be based on quasi-delict as well as on criminal liability under Art. 100 of the Revised Penal Code.

Hence, the cause of action of a passenger or shipper against the common carrier can be culpa

contractual or culpa aquiliana while the basis on the part of the driver is either culpa delictual or culpa aquiliana.

A. Solidary Liability

In case the negligence of the carrier's driver and a third person concurs, the liabilities of the parties – carrier and his driver, third person – is joint and several.

e.g. While docking the vessel, “Taurus”, the master, through negligence, damaged the wharf and the merchandise loaded on the deck. The owner of the wharf and the owner of the merchandise sued the owner of the vessel and master of the vessel for the damage.

What is the basis of the liability of the owner of the vessel with respect to the damage of the wharf? The shipowner may be made liable based on quasi-delict under Art. 2176 of the Civil Code with respect to the damage of the wharf. The master of the vessel caused damage to the wharf through negligence without any preexisting contractual relations between the parties.

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22 With respect to the damage to the merchandise?

The shipowner may be liable for breach of contract for the damage to the merchandise. The carrier has an obligation safely to their destination. The carrier failed to do so because of the negligence of his employees.

III. NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD A. Overland Transportation of Goods and Coastwise Shipping

a. When to file a claim with carrier

A condition precedent for an action against the carrier in overland transportation is the filing of claim with the carrier within the period prescribed under Art. 366 of the Code of Commerce. Non-filing of the claim bars recovery. Before an action can properly be commenced all the essential elements of the cause of action must be in existence, that is, the cause of action must be complete.

Under Art. 366 of the Code of Commerce, an action for damages is barred if the goods arrived in damaged condition and no claim is filed by the shipper within the following period:

(1) immediately if damage is apparent; or

(2) within twenty four (24) hours from delivery if damage is not apparent.

The period does not begin to run until the consignee has received possession of the merchandise that he may exercise over it the ordinary control pertinent to ownership.

1) Effect of stipulation

The period prescribed in Art. 366 of the Code of Commerce may be subject to modification by agreement of the parties. The parties may stipulate in the bill of lading a period that is different from the period provided by Art. 366.

b. Extinctive Prescription

There being no special rules with respect to the contract of carriage, the general rule under the Civil Code, the extinctive period is six (6) years if there is no written contract and ten (10) years if there is a written contract.

B. International Carriage of Goods by Sea

A claim must be filed with the carrier within the following period:

1) if the damage is apparent the claim should be filed immediately upon discharge of the goods; or (2) within three

(3) days from delivery if damage is not apparent. Nevertheless, it has been settled that the filing of claim is not condition precedent. Sec. 3 of the Carriage of Goods by Sea Act provides that “such fact shall not affect or prejudice the right of the shipper to bring suit.”

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23 The shipper can still bring an action to recover said loss or damage within one (1) year after the

delivery of goods.

a. Prescription

The action for damages under COGSA must be filed within a period of one (1) year from discharge of the goods. In other words, the prescriptive period of one (1) year commences from discharge. The period is not suspended by an extra-judicial demand. Art. 1155 of the Civil Code cannot be applied because matters affecting transportation of goods by sea should be decided in as short a time as possible.

If the damage sustained by the cargo is not apparent, notice should be given within three (3) days to the carrier, and action for damages should be filed within one (1) year from date of delivery.

The period does not apply to misdelivery. The applicable rule is the Civil Code provisions on prescriptive period, including Art. 1155 thereof. The goods are not actually lost or damaged. The applicable period is 10 years.

The rule applies in collision cases. However, the one (1) year period starts not from the date of collision but when the goods should have been delivered, had the cargoes been saved.

1) Insurance

The insurer who is exercising its right of subrogation is also bound by the one (1) year prescriptive period. However, it does not apply to the claim against the insurer for the insurance proceeds. The claim against the insurer is based on contract that expires in ten (10) years.

IV. RECOVERABLE DAMAGES

Damages – is the pecuniary compensation, recompense, or satisfaction for injury sustained.

Other definition: Damages is pecuniary consequences which the law imposes for the breach of some duty or violation of some rights.

The Code Commission saw that the old civil code had “but few general principles on the measure of damages.”

A. Extent of Recovery

The extent of recovery in case of contractual breach is expressly provided for in Art. 2201 of the New Civil Code. Applying the provisions to a contract of carriage, the carrier in good faith is liable only to pay for the damages that are the natural and probable consequence of the breach of obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. However, if the carrier is in bad faith or gross negligence, the carrier is liable for all damages, whether the same can be foreseen or not.

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24 It should be noted, however that the carrier who may be compelled to pay damages for the loss or

damage to the goods or passengers has the right of recourse against the employee who committed the negligent, willful or fraudulent act.

B. Kinds of Damages

a. Actual or compensatory damages

Art. 2199 of the Civil Code provides that”except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Two kinds of actual or compensatory damages:

(a) the loss of what the person already possesses (dano emergente)

(b) the failure to receive as a benefit that would have pertained to him (lucro cesante)

In case of a person's death caused by a crime or quasi-delict, under Art.2206 of the Civil Code, the plaintiff is entitled to at least three thousand pesos (P3,000.00). In addition:

(a) loss of the earning capacity of the deceased

(b) support to the recipient whom the deceased was obliged to giveaccording to the provisions of Art. 291 of the Civil Code

(c) moral damages for mental anguish of the spouse, legitimate and illegitimate descendants and ascendants of the deceased by reason of the death of the deceased

1) Loss of earning capacity

The amount of loss of earning capacity that should be awarded is:

Net Earning Capacity = Life Expectancy x (Gross Annual Income less Necessary Living expenses) Life expectancy is computed by applying the formula: 2/3 x 80 – age at death (adopted in the American Expectancy Table of Mortality)

2) Attorney's Fees 3)Interests

b. Moral damages

The Civil Code provides that moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Moral damages may be recovered if they are the proximate result of the defendant's wrongful act or ommission.

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25 c. Nominal damages

It is adjudicated to vindicate the right of the plaintiff.

d. Temperate or moderate damages

It may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot be provided with certainty.

e. Liquidated damages

It is that is agreed upon by the parties to a contract, to be paid in case of breach thereof. f. exemplary or corrective damages

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Transporation Law Notes | Kate Kimberly Delos Santos 26 PART II MARITIME LAW CHAPTER 6 GENERAL CONCEPTS

I. MARITIME LAW: DEFINED

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 marine conveyance of persons and property.

This system of laws includes Book III of the Code of Commerce entitled Maritime Commerce Act, Act No. 2616 otherwise known as the “Salvage Law,” Commonwealth Act No. 65 otherwise known as the “Carriage of Goods by Sea Act,” Presidential Decree No. 1521 known as the “Ship Mortgage Decree of 19978” and other special laws relating to maritime commerce.

However, the primary law on maritime commerce is still the New Civil Code provisions on common carriers.

II. REAL AND HYPOTHECARY NATURE A. Naturale and Rationale

The real and hypothecary nature of maritime laws means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as the guaranty for their settlement. The liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance.

Philippine maritime law is of Anglo-American extraction, and is governed by adherence to both international maritime conventions.

This is highlighted by the following excerpts on the limited liability of vessel owners and/or agents: “Section 183. The liability of the owner of any vessel xxx for any embezzlement, loss or destruction by any person or any property xxx or for any loss, damage xxx without the privity or knowledge of such owner or owners shall not exceed the amount or value of the interest of such owner in such vessel xxx.” (US federal Limitation of Liability Act).

B. Statutory Provisions

The statutory provisions that provide for the limited liability rule are Arts. 587, 590, 643 and 837 of the Code of Commerce

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27 · Art. 587: “The ship agent shall also be civilly liable for the indemnities in favor of third persons

xxx but he may exempt himself therefrom by abandoning the vessel with all her equipments xxx.” · Art. 590: “The co-owners of the vessel shall be civilly liable in the proportion of their contributions xxx for the results of the acts of the captain xxx.

Each co-owner may exempt himself from this liability by the abandonment xxx.”

Art. 643: “If the vessel and her cargo should be totally lost by reason of capture or wreck, all rights shall be extinguished xxx

Art. 837: “The civil liability incurred by the shipowners in the case prescribed in this section, shall be understood as limited to the value of the vessel with all her appurtenances and freight earned during the voyage.”

C. Coverage

Art. 837 applies the principle of limited liability in cases of collision. While Arts. 587 and 590 embody the universal principle of limited liability in all cases.

However, taken together, Arts. 837, 587, and 590 cover only: (1) liability to third persons,

(2) acts of the captain, and (3) collisions.

D. Exceptions

Exceptions to the limited liability rule:

(a) where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain

(b) where the vessel is insured

(c) in workmen's compensation claim a. Negligence

The limited liability rule applies if the captain or the crew caused the damage or injury.

However, if the failure to maintain in the seaworthiness of the vessel can be ascribed to the shipowner alone or the shipowner concurrently with the captain, then the limited liability principle cannot be invoked.

b. Insurance

The limited liability rule does not apply to insurance claims. The Supreme Court explained that the total loss of a vessel does not extinguish the liability of the carrier's insurer. Its insurance answers for the damages that a shipowner or agent, may be held liable for by reason of the death of its

passengers.”

c. Worker's compensation

The Supreme Court held that the limited liability rule have no room in the application of the Worker's Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers and employees. Such compensation has nothing to do with the provisions of the Code of Commerce. It is an item in the cost of production which must be included in the budget of any well-managed

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28 industry.

E. Abandonment

Abandonment of the vessel, its appurtenances and the freightage is an indispensable requirement before the shipowner or shipagent can enjoy the benefits of the limited liability principle. If the carrier does not want to abandon the vessel, then he is still liable even beyond the value of the vessel. The only instance where such abandonment is dispensed with is when the vessel was entirely lost. In such case, the obligation is thereby extinguished.

Procedure for Enforcement

The Supreme Court stated that “more to the point, the rights of parties to claim against an agent or owner of a vessel may be compared to those of creditors against an insolvent corporation whose assets are not enough to satisfy the totality of claims as against it... Creditors must limit their recovery to what is left in the name of the corporation.”

III. PROTESTS

Protest is the written statement by the master of a vessel or any authorized officer, attested by proper officer or a notary, to the effect that damages has been suffered by the ship.

Protest is required under the Code of Commerce in the following cases: (a) when the vessel makes an arrival under stress

(b) where the vessel is shipwrecked

(c) where the vessel has gone through a huricane or the captain believes that the cargo has suffered damages or averages

(d) maritime collisions

IV. ADMIRALTY JURISDICTION

The Regional Trail Court has jurisdiction in all actions in admiralty and maritime jurisdiction where the demand or claim exceeds P300,000 or, in Metro Manila, where such demand or claim exceeds P400,000. (Sec. 19(3) of BP Blg. 129.

It means that all other cases where the amount of the demand or claim is less than the jurisdictional amount in the Regional Trail Court, the jurisdiction are with the metropolitan Trial Court, Municipal Trial Court or Municipal Circuit Trial Court as the case may be.

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Transporation Law Notes | Kate Kimberly Delos Santos 29 CHAPTER 7 VESSELS I. GENERAL CONCEPTS A. Definitions

A Vessel or watercraft is defined under Presidential Decree No. 474 as “any barge, lighter, bulk carrier, passenger ship freighter, tanker, container ship, fishing boats, or other artificial contrivance utilizing any source of motive power, designed, used or capable of being used as a means of

transportation operating either as a common contract carrier, including fishing vessels covered under Presidential decree No. 43, except: (i) those owned and/or operated by the Armed Forces of the Philippines and by foreign governments for military purposes, and (ii) bancas, sailboats and other waterbone contrivance of less than three gross tons capacity and not motorized.”

B. Construction, Equipment and Manning

The construction, equipment and manning of vessels are subject to the rules issued by the Maritime Industry Authority. This rule is consistent with the provisions of Code of Commerce particularly Art. 574.

C. Personal Property

Vessels are personal property under Art. 416 of the Civil Code. The same rule can be found in Art. 585 of the Code of Commerce.

II. OWNERSHIP A. Acquisition

Vessels may be acquired or transferred by any means recognized by law. Thus, vessels may be sold, donated, and may even be acquired through prescription.

B. Registration

Vessels are now registered through the Maritime Industry Authority.

It is a long standing rule that the person who is the registered owner of the vessel is presumed to be the owner of the vessel. Moreover, it is likewise a settled rule that the sale or transfer of the vessel is not binding on third persons unless the same is registered.

III. SHIP'S MANIFEST

Vessels are required to carry manifests in coastwise trade as provided in Section 906 of the Tariff and Customs Code. This requirement is likewise imposed on every vessel from foreign port under Section 1005 of the same Code.

A manifest is a declaration of the entire cargo. Hence, the requirement is not complied even if a bill of lading can be presented. A bill of lading is just a declaration of a specific cargo rather than the entire cargo.

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30 IV. MORTGAGE

Mortgage and other encumbrances over vessels are governed by the provisions of presidential Decree 1521, otherwise known as the Ship mortgage Decree of 1978. The same law as well as Section 12 of Executive Order 125 as amended is being implemented with respect to annotation/cancellation of mortgages and transfer of rights and other encumbrances of vessels by Memorandum Circular No. 100 which was issued by MARINA in April 1995.

V. OTHER CODE OF COMMERCE PROVISIONS

The provisions of the Code of Commerce are deemed modified not only by the Civil Code but also by special laws.

VI. SAFETY REGULATIONS

On February 23, 2000, MARINA under Memorandum Circular No. 154 reiterated the rules in line with the continuing thrust of government to foster maritime safety.

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31 CHAPTER 8

PERSONS WHO TAKE PART IN MARITIME COMMERCE

I. SHIPOWNERS AND SHIP AGENTS

The Code of Commerce at times uses the term “naviero” to indicate the person who is liable.

The “naviero” has been construed to include: the shipowner, ship agent and even the charterer who is considered as owner pro hac vice.

Shipowner – is the person who is primarily liable for damages sustained in the operation of the vessel.

Ship agent – is the person entrusted with provisioning of the vessel, or who represents her in the port in which she happens to be.

The Code of Commerce makes the ship agent jointly and severally liable with the owner. The joint and several liability applies both breach of contract and extra-contractual obligation such as tort. The ship agent, even though he is not the owner, is liable in every way to the creditor for losses and damages, without prejudice to his right against the owner, the vessel and its equipment and freight.

A. Part Owners

Art. 586 of the Code of Commerce states that “if two or more persons should be part owners of a merchant vessel, a partnership shall be presumed as established by the co-owners.

Art. 590 of the Code of Commerce states further that “the co-owners of vessel shall be civilly liable in the proportion of their interests in the common fund....”

B. Ship Agent a. Powers.

The ship agent may discharge the duties of captain of the vessel. b. Limitation on Power,

The ship agent may not order a new voyage, or make contracts for a new charter, or insure the vessel, without the authorization of its owner.

c. Duty to Account.

The ship agent managing for an association shall render to his associates an account of the results of each voyage of the vessel.

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32 d. Reimbursement and Liabilities

The co-owners shall pay the expenses in proportion to their interest. In order to enforce the payment, the managing agent shall be entitled to an executory action (“accion ejecutiva”), which shall be instituted by virtue of a resolution of the majority.

The ship agent shall indemniify the captain for all the expenses he may have incurred with funds of his own or of others, for the benefit of the vessel.

e. Discharge of Captain and Crew

The provisions of the Code of Commerce on discharge of the captain of the crew is subject to the provisions of the Labor Code of the Philippines for those who are employed for domestic

transportation or commerce as well as rules promulgated the Philippine Overseas Employment Administration (POEA) for seamen who are hired for overseas employment.

II. CAPTAINS AND MASTERS OF VESSELS A. Concept

The name of captain or master is given according to the kind of vessel the person is in charge of. Captain - as a denomination is applied to those who govern vessels that navigate the high seas or ships of large dimensions and importance, although they be engaged in the coastwise trade. Master – are those who command smaller ships engaged exclusively in the coastwise trade. Nevertheless, for the purposes of maritime commerce, the words “captain” and “master” have the same meaning; both being the chiefs or commanders of ships.

B. Qualifications

Art.609 of the Code of Commerce states that “Captains, masters or patrons of vessels must be Filipinos, have legal capacity to contract in accordance with this code, and prove the skill, and qualifications necessary to command and direct the vessel, as established by marine and navigation laws, ordinances, or regulations...”

C. Powers and Function

A captain commonly performs three (3) distinct roles: (1) he is a general agent of the shipowner;

(2) he is also commander and technical director of the vessel; and (3) he is a representative of the country under whose flag he navigates

Of these roles, the most important role is being the commander of the vessel--- operation and preservation of the vessel during its voyage and the protection of passengers, crew and cargo. In his role as general agent of the shipowner, the captain has authority to sign bills of lading, carry goods aboard and deals with the freight earned, agree upon rates and decide whether to take cargo. He has legal authority to enter into contracts with respect to the vessel subject to applicable limitations by statute, contract, or instructions and regulations of shipowner.

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33 D. Discretion of Captain or Master

A ship's captainmust be accorded a reasonable measure of discretionary authority to decide what the safety of the ship and of its crew and cargo. The captain is held responsible for such safety, presumed to be knowledgeable as to the specific requirements of seaworthiness and the

particular risks and perils of the voyage he is to embark on.

Indeed, if the ship captain is convinced that the ship owner's or ship agent's instructions will result in imposing unacceptable risks or loss or serious danger to ship or crew, he cannot casually seek absolution from his responsibility, if a marine casualty occurs, in following such

instructions. E. Pilotage

Pilot - in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or out of ports, or in certain waters.

States possessing harbors have enacted laws or promulgated rules requiring vessels approaching their ports to take on board pilots licensed under the local law. This is known as compulsory pilotage.

In this jurisdiction, compulsory pilotage is being implemented in the Port of Manila.

A pilot shall be held responsible for the direction of a vessel from the time he assumes his work as a pilot thereof until he leaves it anchored or berthed safely. However, his responsibility shall cease at the moment the Master neglects or refuses to carry out his order.

a. Master and Pilot

Generally, the pilot supersedes the master for the time being in the command and navigation of the ship, and his orders must be obeyed in all matters connected with her navigation. He becomes the master pro hac vice and should give all directions as to speed, course, stopping and reversing, anchooring, towing and the like.

b. Shipowner and Pilot

In general, a pilot is personally liable for damages caused by his own negligence or default to the owners of the vessel, and to third parties for damages sustained in collision. Such negligence of the pilot in the performance of duty constitutes a maritime tort.

The owners of the vessel are responsible to the injured party for the acts of the pilot. c. Pilot and His Association

The fact that the pilot is a member of an association does not make the association jointly and severally liable. It is because there is no employer-employee relationship.

F. Code of Commerce Provisions on Captains

A shipowner would only be liable for contracts made by the captain (a) when duly authorized or (b) even when authorized, for ship repairs, or for equipping or provisioning the vessel when the proceeds are invested therein.

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34 III. OFFICERS AND CREW OF VESSELS

Art. 648 of the Code of Commerce provides that “the complement of a vessel shall be understood all the persons on board, from the captain to the cabin boy, necessary for the management, maneuvers, and service....”

The officers who are named in the regulation issued by MARINA in connection with safe manning for international trade are: Master, Deck Officer, Chief Engineer, Engineer Officer, Radio Officer, Ratings Man.

Memorandum Circular No. 148 issued by MARINA for domestic trade specifies the following officers: Officer, Master, Chief Mate, Deck Officer, Chief Engineer Officer, Second Engineer Officer, Engineer Officer, Medical Practitioner, Radio Officer, Paramedic, Major Patron, Minor Patron, Boat Captain, Marine Diesel Mechanic,Electrician, Ratings Man.

A. Regulation of Merchant Marine Profession

The practice of marine profession is now governed by special laws and pertinent rules issued by MARINA and the Board of Marine Deck Officers and Board of Marine Engineer Officers. In particular, the “Philippine Merchant Marine Officers Act of 1998” was passed in order to regulate Merchant Marine Profession in the Philippines.

The law declares that “it is the policy of the State to promote and insure the safety of life and property at sea, protect and serve the marine environment and ecology...”

B. Minimum Safe Manning

It is not enough that the officers manning the merchant vessel have all the qualifications imposed by the Philippine Merchant Marine Officers Act and other special laws or regulations. It is also required that there is sufficient number of officers and crew that are serving in the vessel.

No foreign officers shall be allowed on board unless approved by the administration. C. Security of Tenure

Every worker in the Philippines has a constitutionally protected right to security of tenure.

Consequently, an employee cannot be dismissed without just or lawful cause and without affording the employee with due process.

The Labor Code provisions apply to officers and crew of merchant vessels engaged in domestic trade or coastwise shipping.

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35 CHAPTER 9

CHARTER PARTIES

I. DEFINITION AND CONCEPT

Charter Party – a contract whereby an entire ship, or some principal part of the said ship, is let by the owner thereof to a merchant or other person for a specified time or use for the conveyance of goods, inconsideration of the payment of freight.

The charter contract is often to as a form of “mercantile lease” for it involves a charterer who desires to lease a ship or vessel owned by another for transport of his or her goods for commercial purposes. II. DIFFERENT KINDS OF CHARTER PARTIES

(1) The Bareboat or Demise Charter; and (2) Contract of Affreightment

A. Bareboat Charter

In a bareboat or demise charter, the shipowner leases to the charterer the whole vessel. The charterer becomes the owner “pro hac vice” of the vessel since he mans the vessel with his own set of master and crew, effectively becoming the owner for the voyage or service stipulated, subject however to any liability for damages arising from negligence.

Moreover, the bareboat charterer assumes the customary rights and liabilities of the shipowner in relation to third persons who may have dealt with him or with the vessel.

B. Contract of Affreightment

The contract of Affreightment is subdivided into: (1) Time Charter, and

(2) Voyage Charter

Time Charter – the vessel is leased to the charterer for a fixed period of time. Voyage Charter – the vessel is leased for a single or particular voyage.

In the contract of affreightment, the charterer hires the vessel only, either for a determinate period of a time or for a single or consecutive voyage, with the shipowner providing for the provisions of the ship, the wages of the master and crew, and the expenses and maintenance of the vessel.

III. EFFECT OF CHARTER ON CHARACTER OF CARRIER

Generally, the character of the common carrier as such is not affected by the charter party if the same is a contract of affreightment. The rights and responsibilities of ownership still rested on the owner, and the charterer was thereby freed from any liabiltiy to third persons in respect of the vessel.

IV. PERSONS WHO MAY MAKE CHARTER

The owner or owners of the vessel, either in whole or in majoority part, who have legal control and possession of the vessel, may validly enter into charter parties with a charterer.