TRANSPORTATION LAW

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1. AM Trucking, a small company, operates two trucks for hire on selective basis.
It caters to only a few customers, and its trucks do not make regular or schedule trips. It
does not even have a certificate of public convenience. On one occasion, Reynaldo
contracted AM to transport, for a fee, 100 sacks of rice from Manila to Tarlac. However,
AM failed to deliver the cargo, because its truck was hijacked when the driver stopped in
Bulacan to visit his girlfriend. May Reynaldo hold AM liable as a common carrier?
Explain. (5 points)

Yes, Reynaldo may hold AM Trucking liable as a common carrier.

Under the law, AM Trucking that caters to only a few customers, and which do not make
regular or scheduled trips and does not even have a certificate of public convenience
makes no distinction between one whose principal business activity is the carrying of
persons or goods or both and anyone who does such carrying only as an ancillary activity,
the law avoids making any distinctions between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis and the law refrains from making a distinction
between a carrier offering its services to the general public and one who offers services or
solicits business only from a narrow segment of the general population.
Hence, Reynaldo may hold AM Trucking liable as a common carrier.

2. Guanzon agreed to transport 305 tons of scrap iron from Mariveles, Bataan to
Manila for Tumambing on board to lighter “Batman.” Tumambing delivered the scrap
iron to the captain of the lighter “Batman,” for loading which begun on the same day.
When half of the scrap iron has been loaded, the Acting Mayor of Mariveles,
accompanied by three policemen, ordered the captain of the lighter and his crew to dump
the scrap iron into the sea, which the latter did.

(a) were the goods already in the custody of the carrier while being loaded?

Yes, the goods were already in the custody of the carrier while being loaded.
Under the law, after the scraps were delivered and receive by the common carrier,
loading already commenced. By the said act of delivery, the scraps were unconditionally
placed in the possession and control of the common carrier, the contract of carriage was
deemed perfected and the fact that part of the shipment had not been loaded on board the
lighter did not impair the said contract of transportation as goods remained in custody and
control of the carrier, while it is still unloaded.
Hence, the goods were already on the custody of the common carrier.

(b) Was the act of the Acting Mayor the “order or act of competent public authority?”

Yes, the act of the Acting Mayor is an act of competent authority because the
order and seizure of the goods were done under legal process and said authority have the
power to issue such order.

(c) Was the carrier exempted from liability? (5 points)

No, the carrier is not exempted from liability.

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Under the law, the carrier is presumed to have been at fault or to have acted negligently
because the carrier has extraordinary responsibility for the loss, destruction, or
deterioration of the goods under their custody and control.
Hence, the carrier is liable for its loss.

3. The bill of lading provides that Php500 per package is the maximum liability
of the common carrier in the absence of a higher valuation of the goods as indicated in
the bill of lading. In case the package shipped is lost, may the carrier be made liable for
the actual value thereof in excess of Php500? (5 points)

No, the carrier may not be liable for the actual value thereof in excess of
Php500.
Under the law, limitation of liability in the absence of declaration of higher value is
allowed.
In this case, it was provided in the bill of lading that Php500 is the maximum liability of
the common carrier in the absence of higher valuation of the goods. Common carrier's
liability is limited to the goods appearing in the bill of lading, unless shipper or owner
declares higher value is binding.
Hence, carrier may not be liable in excess of P500 unless there is a declaration of higher
value by the shipper or owner.

4. Archipelago Lines, Inc., a carrier, accepted for shipment from Iloilo to Manila a
cargo consisting of 800 sacks of rice, knowing that some sacks had big holes and others
had their openings just loosely tied with strings. Due to spillage of the rice during the trip,
there was shortage in the rice delivered by the carrier to the consignee. When sued,
Archipelago Lines, Inc. interposed the defense that the carrier is not liable because the
spillage was due to the defective condition of the sacks. As a judge, how would you rule
on the liability of the carrier? Reasons. (5 points)

As a judge, I will rule that Archipelago Lines, Inc., the carrier, is liable for the
shortage in the rice delivered to the consignee
Under the law, carrier who, knowing the fact of improper packing of the goods upon
ordinary observation, still accepts the goods notwithstanding such condition is not
relieved of liability for loss resulting therefrom.
In this case, Archipelago Lines, Inc., is liable for loss of the goods due to spillage of the
rice because it accepted the cargo knowing that some sacks had big holes and others had
their openings just loosely tied with strings.
Hence, the common carrier is not relieved of liability for loss or injury therefrom.

5. M. Dizon Trucking (DIZON) entered into a hauling contract with Fairgoods

Corporation (FAIRGOODS) whereby the former bound itself to haul the latter’s 2,000
sacks of soya bean meal from Manila Port Area to Calamba, Laguna. To carry out
faithfully its obligation DIZON subcontracted with Enrico Reyes the delivery of 400
sacks of the soya bean meal. Aside from the driver, three male employees of Reyes rode
on the truck with the cargo. While the truck was on its way to Laguna two strangers
suddenly stopped the truck and hijacked the cargo. Investigation by the police disclosed
that one of the hijackers was armed with a bladed weapon while the other was unarmed.
For failure to deliver the 400 sacks, FAIRGOODS sued Dizon for damages. DIZON in
turn set up a third-party complaint against Reyes which the latter resisted on the ground
that the loss was due to force majeure. Did the hijacking constitute force majeure to
exculpate Reyes from any liability to DIZON? Discuss fully. (10 points)

No. Under the law, hijacking cannot be considered force majeure to exculpate
Reyes from any liability to Dizon.
In this case, only one of the two hijackers was armed with a bladed weapon. As against
the 4 male employees of Reyes, 2 hijackers, with only one of them being armed with a
bladed weapon, cannot be considered force majeure. The hijackers did not act with grave
or irresistible threat, violence of force.
Hence, the hijacking in this case cannot be considered force majeure.

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 6. Juan was a passenger of a taxicab owned by ABC Company when he was killed
and stabbed by the driver. Sued for damages by the wife of Juan, ABC Company
claimed that it is not liable as a common carrier because such death was:

a) caused by the driver beyond the scope of his duty or authority? (5 points)

The contention of ABC Company that it is not liable as a common carrier because
such death was caused by the driver beyond the scope of his duty or authority is
untenable.
Under the law, 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.
In this case, the passenger was killed by the driver of a taxicab owned by ABC Company
which is the employer. The ABC Company is liable through the negligence or willful acts
of the driver being its employee although the driver acted beyond the scope of its duty or
authority.
Hence, ABC Company is liable and can be sued for damages.

b) the company exercised due diligence in the selection and supervision of their
employees? (5 points). Decide on the merits.

The contention of ABC Company that it is not liable because it exercised due
diligence in the selection and supervision of their employees is untenable.
Under the law, diligence in the selection and supervision of employees cannot be
interposed by the common carrier to prevent damages because the liability of the carriers
arises from the breach of the contract of carriage.
In this case, ABC Company cannot used the defense of diligence in the selection and
supervision of their employees because the liability of common carrier does not ceased
upon proof that they exercised due diligence in the selection and supervision of their
employees.
Hence, the ABC Company can be held liable.

7. Coca Cola Bottlers loaded on board MV Asilda, a vessel owned and operated
by Felman, 7,500 cases of 1 liter Coca Cola bottles to be transported from Zamboanga
City to Cebu City. The vessel left Zamboanga in fine weather but it sank the following
morning, bringing down her entire cargo. It turned out that the vessel was top-heavy as
2,500 cases of Coca Cola Bottles were improperly stowed on deck. The inordinate
loading of cargo on deck resulted in the decrease of the vessels metacentric height thus
making it unstable. After the loss, Felman abandoned all its rights, interest and ownership
over the vessel for the purpose of limiting and extinguishing its liability under Article 587
of the Code of Commerce. Did the abandonment of the vessel relieve Felman of its
liability? (10 points)

No, the abandonment of the vessel did not relieve Felman of its liability.
Under the law, the liability of ship owners is limited to the amount of interest in said
vessel such that where vessel is entirely lost, the obligation is extinguished.
In this case, the vessel was not entirely lost and the injury or damage is due to the fault of
the ship owner's fault for not making sure that the ship is seaworthy when it loaded the
cargo. The abandonment of Felman of all its rights, interest and ownership cannot be
used to limit and extinguish its liability.
Hence, abandonment of the vessel will not relieve Felman of its liability.

8. MV ENZO loaded its passengers and cargoes at the island of Dumaguete City
bound for Manila. The captain of the MV ENZO later found out that the vessel was
suffering from engine failure and loss of propeller and as a result of which the vessel
capsized and sank with all of its cargoes. The trial court rendered decision in favor of

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plaintiffs ordering the owners of MV ENZO to pay the value of the cargoes, other
expenses, attorney’s fees and costs of suit.

a) As counsel for MV ENZO, how would you defend your client and what
grounds would you invoke? (5 points)
b) As counsel for the plaintiffs how would you prosecute the case and what
ground would you rely on? (5 points)

9. MV Karen loaded 10 tons of copper bound for the Philippines from Osaka,
Japan and while the same is on high seas, it collided with the vessel MV Enzo which
departed from Japan and bound for Singapore. As a result of such collision, both vessels
became useless and MV Karen was totally wrecked, though it is the captain who survived
the catastrophe.

a) In this particular instance, what is the obligation imposed by law upon the
captain of the vessel? (5 points)

The obligation imposed by law upon the captain of the vessel is to

file a maritime protest.
Under the law, in a case of maritime collision, the passenger or other
persons interested who may be on board the vessel or who were in a
condition who can make known their wishes or the captain himself.
In this case, it is the captain of MV Karen who survived the catastrophe of
the collision and the fact that a maritime protest is necessary when there is
a collision gives the captain the obligation to file the maritime protest in
this particular instance.
Hence, the captain of the vessel is obligated to file a maritime protest.

b) What are the instances when a marine protest is necessary? (5 points)

Under the law marine protest is necessary under the following

instances:
1. Arrival under stress;
2. Shipwreck;
3. If the vessel has gone through a hurricane or where the captain
believes that the cargo has suffered damages or averages; and
4. Maritime collision

10. MV Icko while on the high seas suffered bodily defects on its hull resulting in
imbalance of the vessel on its starboard. Because of such dilemma, the captain of the
vessel immediately decided to jettison some of the cargoes loaded therein, particularly
the motor vehicles laden on the starboard since they are the heaviest among the cargoes.

a) Upon arrival on its port of destination, the consignee of the motor vehicles
questioned the act of the captain as untenable? Decide. (5 points)
b) What is the concept and requisites of general average? (5 points)

Gross or General Average refers to the damage or expenses deliberately caused in

order to save the vessel, its cargo or both from real and known risk. All the persons
having an interest in the vessel and the cargo therein at the time of the occurrence of the
average shall contribute to satisfy this average.

The requisites of general average are the following:

1. Common danger present;
2. Arising from accidents of sea, disposition of authority;
3. Peril imminent and ascertained;
4. Part of vessel or cargo deliberately sacrificed;
5. Intended to save vessel or cargo or both;

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 6. Successful saving of vessel or cargo and;
7. Proper legal steps and authority taken.

11. MV Karen loaded 10 tons of copper bound to Manila, Philippines from Osaka,
Japan and while the same was already on Philippine Territorial waters, it suffered engine
failure, thus transferring its cargoes with the vessel MV Enzo which departed from the
Port of Cebu and bound for the Port of Manila also. As a result of such transshipment
there was delay in the arrival of the goods to its destination. Juan, a cargo owner, filed a
claim for damages under the COGSA law. Pedro, likewise a cargo owner, filed a claim
for damages under Article 366 of the Code of Commerce rationalizing that the
transshipment made the marine transportation domestic. Carlo, also a cargo owner, on the
other hand filed a civil case for breach of contract. Decide their claims. (10 points)

12. Northwest Airlines is a foreign corporation with principal office in the USA
and licensed to do business in the Philippines. Plaintiff is a minor and a resident of the
Philippines. Plaintiff purchased from Northwest a round-trip ticket in San Francisco USA
for his flight from San Francisco to Manila via Tokyo and back. No date was specified
for his return to San Franciso. On December 19, 1986, plaintiff checked in at the
Northwest counter in San Franciso for his scheduled departure to Manila. Despite
previous confirmations he was informed that he had no reservation for his flight from
Tokyo to Manila. He therefore had to be wait-listed. Plaintiff sued Northwest in Makati
but the latter filed a motion to dismiss for lack of jurisdiction. Northwest contended that
the Philippines was not a domicile nor was this its principal place of business. Neither
was the plaintiff’s ticket issued in this country nor was his ultimate destination Manila
but San Francisco in the United States. The court dismissed the case. Was the dismissal
correct? (10 points)

Yes, the dismissal of the case is correct.

Under the law, the place of destination, within the meaning of the Warsaw Convention, is
determined by the terms of the contract of carriage or, specifically in this case, the ticket
between the passenger and the carrier.
In this case, petitioner’s ticket shows that his ultimate destination is San Francisco
although the date of the return flight was left open, the contract of carriage between the
parties indicates that Northwest Airlines was bound to transport the petitioner to San
Francisco from manila. Manila should therefore be considered merely an agreed stopping
place and not the destination.
Hence the dismissal is correct.

BONUS:

13. What do you mean by loans on bottomry and respondentia? Give differences
as to definition, who may contract, common elements, and forms. (5 points)

Loan on bottomry means that loan made by shipowner or ship agent guaranteed
by vessel itself and repayable upon arrival of vessel at destination while in loan on
respondentia, it is a loan taken on security of the cargo laden on a vessel, and repayable
upon safe arrival of cargo at destination. In bottomry, the one who can contract is the
shipowner or ship agent. Outside of the residence of the owners captain while in
respondentia, only the owner of the cargo can contract. The common elements of
bottomry and respondentia is the exposure of security to maritime peril. Both need not be
in writing but interest shall not be due unless expressly stipulated in writing.

14. What is International Transportation as defined under the Warsaw

Convention. Illustrate (5 points)

International transportation refers to any transportation in which the place of

departure and the place of destination are situated either within the territories of two High
Contracting Parties regardless of whether or not there be a break in the transportation or
transshipment, or within the territory of a single High Contracting Party, if there is an
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agreed stopping place within a territory subject to the sovereignty, mandate or authority
of another power, even though that power is not a party to the Convention.