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for a fixed price.
b. To designate the goods carried.
Common carriers: One that holds itself out as ready to engage in the
3. Air
casual occupation.
(PAL v. Mendoza)
for hire.
transportation by agreeing to deliver the things or new , or to present
Not bound to carry for any Bound to carry for all who offer
his own person ir those of another/other in the case of transportation of
reason, unless it enters into a such goods as it is accustomed
passengers.
1. Common
subject to regulation as a
common carrier.
2. Private
Required to exercise
consignee may be the same person.
(National Steel Corporation v. CA) further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and
7, while the extraordinary diligence for the safety of the
A trucking company which is an exclusive contractor and hauler of
another company rendering or offering its services to no other individual
or entity, cannot be considered a common carrier. (FGU Insurance v.
passengers is further set forth in Articles 1755 and 1756.
GP Sarmiento)
extraordinary diligence.
1. Must be engaged in the business of carrying goods for others Reason for requiring extraordinary diligence: The nature of the
as a public employment, and must hold himself out as ready business and the exigencies of public policy demand that they observe
to engage in the transportation of goods for persons, such diligence. Such is impressed with a special public duty, subject to
generally as a business, and not as a casual occupation. the control and regulation of the state (through the Pubic Service
2. Must undertake to carry goods of the kind to which his Commission). The public relies on the care and skill of common
business is confined. carriers, and are forced to trust the utmost diligence and foresight of
3.
4.
Must undertake to carry by methods by which his business is
conducted, and over his established roads.
The transportation must be for hire.
common carriers. (Code Commission)
business carried on by the carrier.
quantity or extent of the business transacted. (Bascos v Arada)
should by motor vehicle. (FPIC v. CA)
unscheduled. (Loadstar Shipping v. CA)
4. Public convenience.
unreasonable discrimination.)
purposes, any common carrier (Calvo v. UCPB General Insurance)
entered into by the parties. (PAL v. Mendoza)
Art. 1733. Common carriers, from the nature of their business and
governing common carriers. That liability arises the
moment a person or firm acts as a common carrier,
without regard to whether or not such carrier has also
for reasons of public policy, are bound to observe extraordinary complied with the requirements of the applicable
diligence in the vigilance over the goods and for the safety of the regulatory statute and implementing regulations and has
Starr Weigand 2012
Transportation Law|Ampil
been granted a certificate of public convenience or other
-3-
required by law.
only required to exercise ordinary diligence. When a carrier fails to establish any caso fortuito, the presumption by
law of fault or negligence on the part of the carrier applies. (Eastern
Even common carriers are not made absolute insurers against all
risks of travel and of transport of goods, and are not held liable for
acts or events which cannot be foreseen or are inevitable, provided that
Shipping Lines v. CA)
From the nature of their business and for reasons of public policy,
they shall have complied with the rigorous standard of extraordinary common carriers are bound to observe extraordinary diligence in the
diligence. (De Guzman v. CA)
(5) Order or act of competent public authority.
operator, it must be added. (Bankers v. CA)
itself)
extraordinary diligence as required in Article 1733.
carriers with their patrons is contractual in nature.
acquiliana. responsibility, if there was no negligence on the part of the shipper.
Accident due to defects of carrier is no caso fortuito so as to exempt
Because of the extraordinary diligence required of common
carriers, they are given wide discretion in the selection and
supervision of persons to handle goods. But, due diligence in
him from liability.
required of it. cause.
b) Common carrier exercised due diligence in preventing or
A common carrier, both from the nature of its business and for insistent
reasons of public policy is burdened by law with the duty of exercising
extraordinary diligence not only in ensuring the safety of passengers by
minimizing the loss, before during and after the act.
exempted from liability. (Arada v. CA)
Presumption of negligence
BUT, Common carrier must exercise due diligence to prevent or
minimize loss.
If the fact of improper packing is known to the carrier or his servants, or
If the goods are proved to have been lost, destroyed or deteriorated, apparent upon ordinary observation, but it accepts the goods
the common carrier is presumed to have been at fault or to have acted notwithstanding such condition, it is not relieved of liability for loss or
negligently, unless they prove that they have observed the
extraordinary diligence required by law.
injury resulting therefrom. (Southern Lines v. CA)
irresistible threat, violence or force. (De Guzman v CA) of the principal without being guilty of negligence, deceit or fraud,
cannot be responsible for the failure of the principal to accomplish the
Elements of force majeure: (Philippine American General Insurance
Co., Inc. v. MGG Marine Services, Inc.)
a) the cause of the unforeseen and unexpected occurrence, or the
object of the agency. (Samar Mining Co., Inc. v. Nordeutscher Lloyd)
the creditor.
injury will defeat the defense of force majeure. (Gatchalian v. Delim)
May the shipper hold the employee of the common carrier liable?
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, without prejudice to the
No. The action is based on a contract which binds only the parties to it,
and the employee is not such party. thus, no action may be had against
provisions of Article 1738." (Eastern Shipping v. CA)
the latter.
without prejudice to the provisions of Article 1738.
When carriers responsibility begins: From the time the goods are
goods.
the possession of the carrier, and the carrier is to receive them.
By the act of delivery to the common carrier and upon receipt of the
goods have arrived at their destination is in the nature of a condition
precedent to the owners right to enforce recovery, that he must show in
the first instance that he has complied with the condition, or that the
goods for transportation, the contract of carriage was deemed circumstances were such that to have complied with it would have
perfected. Pursuant to Art. 1736 of the Code, the extraordinary required him to do an unreasonable thing. The weight of authority,
diligence of the common carrier would cease only upon delivery, actual however, sustains the view that such a stipulation is more in the nature
or constructive, by the carrier to the consignee, or to the person who of a limitation upon the owners right to recovery, and that the burn of
has the right to receive them. (Ganzon v. CA) proof is according on the carrier to show that the limitation was
reasonable and in proper form or within the time stated. (Southern
The liability of the carrier as common carrier begins with the actual
delivery of the goods for transportation, and not merely with the formal
execution of a receipt or bill of lading; the issuance of a bill of lading is
Lines v. CA)
carrier. (Compania Maritima v. Insurance Company)
goods. Delivery need not be actual, and may be constructive.
damages. (Philamgen v. CA)
the goods begins from the time they are placed unconditionally upon Demurrage A charge which is permitted and recognized to afford
the hands of the carrier and lasts until its delivery, whether actual or compensation to the carrier for additional service and to obtain prompt
constructive. (Servando v. Philippine Steam)
of the carrier.
the carrier. (Regional Container v. Netherlands Insurance)
over the goods. goods tendered for shipment and to exercise due care in the handling
and stowing, including such methods as their nature requires. If the
which however, shall be equitably reduced. (Compania Maritima v. CA)
careful owner of similar goods would exercise.
demurrage charges. (Magellan Manufacturing v. CA) carriers warehouse. It ceases when the consignee has been advised of
the arrival of the goods, and he has had reasonable time to remove
Duty of Arrastre Operator: The legal relationship between the
consignee and the arrastre operator is similar to that of a depositor and
warehouseman. It is the duty of the arrastre to take good care of the
them or dispose of them.
Art. 1739. In order that the common carrier may be exempted from
goods that are in its custody and to the deliver the goods in its custody responsibility, the natural disaster must have been the proximate
and to deliver them in good condition to the consignee, such and only cause of the loss. However, the common carrier must
responsibility also devolves upon the carrier. (Firemans Fund exercise due diligence to prevent or minimize loss before, during
Insurance v. MetroPort Services)
cargoes for its clients. (Mindanao terminal v. Phoenix Assurance) Art. 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible,
Art. 1737. The common carrier's duty to observe extraordinary
diligence over the goods remains in full force and effect even
when they are temporarily unloaded or stored in transit, unless the
provided said public authority had power to issue the order.
transitu.
extraordinary diligence shall be valid, provided it be:
responsibility of the common carrier. (1) In writing, signed by the shipper or owner;
Exception: When the shipper or owner has made use of the right of (2) Supported by a valuable consideration other than the service
stoppage in transitu.
(3) Reasonable, just and not contrary to public policy.
stops their progress and resumes possession of them, while they are in Kinds of stipulation limiting liability: (H.E. Heacock Co. v.
the course of transit form him to the purchaser, and not yet actually Macondray & Co.)
delivered to the latter.
2.
One exempting the carrier from any and all liability for loss or
damage occasioned by its own negligence.
One providing for an unqualified limitation of such liability to
1. When buyer is/becomes insolvent an agreed valuation.
2. Unpaid seller has parted with possession of the goods 3. One limiting the liability of the carrier to an agreed valuation,
3. Prior to actual delivery to buyer. unless the shipper declares a higher value and pays a higher
- Unpaid seller may resume possession of the goods at rate of freight.
any time, and he will become entitled to the same right The 1st and 2nd kinds are invalid for being contrary to public policy, but
as is he had not parted with the goods.
Responsibility of carrier when right is exercised: Extraordinary
responsibility of to carrier ceases. The carrier holds the goods in the
rd
the 3 is valid and enforceable.
concept of a bailee or warehouseman and is liable only as such. The being transported at the owners risk unless the loss or damage is
contravene public policy. (Servando v. Philippine Steam)
3.
The stipulation is supported by a valuable consideration other
than the service rendered by the common carrier; and
The stipulation is reasonable, just and not contrary to public
to carry the goods unless the former agreed to such stipulation.
private carrier.)
Art. 1747. If the common carrier, without just cause, delays the
of money is valid provided such stipulations are transportation of the goods or changes the stipulated or usual
a) reasonable and just under the circumstance and route, the contract limiting the common carrier's liability cannot be
b) has been fairly and freely agreed upon. (St. Paul Fire v. Macondray availed of in case of the loss, destruction, or deterioration of the
& Co.)
Services v. IAC) 2. Common carrier changes the stipulated or usual route.
In both cases, the delay or the change of route must be without just
Basic is the rule, long since enshrined as a statutory provision, that a
stipulation limiting the liability of the carrier to the value of the goods
appearing in the bill of the carrier to the value of the goods appearing in
cause.
is binding. (Citadel Lines v. CA)
the requisite extraordinary diligence.
1. A stipulation limiting the carriers liability to the value of the Art. 1748. An agreement limiting the common carrier's liability for
2.
goods appearing in the bill, unless the shipper or owner
declares a greater value, is valid and binding.
The insurer who pay the insured on his claim for damage is
delay on account of strikes or riots is valid.
3.
insurer cannot collect from the carrier more than what the
insured can collect from the carrier.
The obligation of the carrier to pay the damages begins form
shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the
the date it fails to deliver the shipment in good condition to owner or shipper for the loss, destruction, or deterioration of the
the consignee.
circumstances, and has been fairly and freely agreed upon.
presumed that the stipulations of the bill were, in the absence of fraud, Art. 1751. The fact that the common carrier has no competitor
concealment or improper conduct, known to the shipper, and he is along the line or route, or a part thereof, to which the contract
generally bound by his acceptance whether he reads the bill or not. refers shall be taken into consideration on the question of whether
However, this ruling applies only if such contracts will not create an or not a stipulation limiting the common carrier's liability is
absurd situation. If the questioned provision in the subject bill of lading
has the effect of practically leaving the date of arrival of the subject
shipment on the sole determination and will of the carrier, such may not
reasonable, just and in consonance with public policy.
be upheld. (Maersk Line v. CA)
and not against public policy.
stipulation in favor of the consignee who is bound by it. He Art. 1752. Even when there is an agreement limiting the liability of
accepts the same by demanding delivery. the common carrier in the vigilance over the goods, the common
carrier is disputably presumed to have been negligent in case of
Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or
their loss, destruction or deterioration.
Art. 1753. The law of the country to which the goods are to be
shipper; transported shall govern the liability of the common carrier for
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the
their loss, destruction or deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the
prudence in the vigilance over the movables transported; passenger's baggage which is not in his personal custody or in
(5) That the common carrier shall not be responsible for the acts that of his employee. As to other baggage, the rules in Articles
or omission of his or its employees; 1998 and 2000 to 2003 concerning the responsibility of hotel-
(6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violence or force, is dispensed with or diminished;
keepers shall be applicable.
destruction, or deterioration of goods on account of the defective
But they are not responsible for force majeure.
unless it is done with the use of arms or through irresistible force.
Common carriers are not responsible for the loss of the baggage in the
appointed for stopping, he should not do any act to increase the peril of
such person; if in violation of this duty, the motorman in charge of a car
prematurely accelerates speed while the intending passenger is in the
personal custody of the passenger or its employees when the loss is act of boarding the car, with the result that he slips and gets his foot
due to the acts of the passengers, his family, servants, or visitors, or if crushed under the wheel of the moving car, the company is civilly liable
the loss arises from the character of the baggage.
to 2001 is suppressed or diminished is void. suffered by boarding passengers resulting from the sudden starting up
or jerking of their conveyances while they are doing so. (Dangwa
Liability for baggage not in the custody of the passengers: The
common carrier is required to observe extraordinary diligence.
Transport v. CA)
Any injury that the suffered by the passenger is right away attributable
presumed negligent, unless it observed extraordinary diligence in the
vigilance over the goods or the loss was due to the causes under Art.
to the fault or negligence of the carrier.
1734.
passenger suffers injuries. (Roque v. Buan)
not declared and charges thereon not paid, as long as it accepted them In an action based on a contract of carriage, the court need not make
for transportation.
all the circumstances.
diligence as prescribed in Articles 1733 and 1755.
Civil Code. (Dangwa, supra.)
carrier for the safety of its passengers and their belongings. This Gross negligence amounting to bad faith in case of breach of contract
includes firing an employee due to the threat he poses to the lives of of carriage shall warrant the award of moral damages. The same
the passengers. (PAL v. NLRC) negligent acts may be the basis in finding a person liable under a quasi-
delict and a breach of contract of carriage if the breach, independent of
A common carrier is obliged to transport its passengers to their
destinations with the utmost diligence of very cautious persons.
the contract, is an actionable wrong. (Fabre Jr. v. CA)
(Sulpicio Lines v. CA) How presumption of negligence is overcome: It must be shown that
the carrier had observed the required extraordinary diligence, which
accident was caused by a fortuitous event.
contributing to the injuries of its passengers. (Bachelor Express v. CA)
entering into the said contract, it binds itself to carry the passengers Last clear chance rule not applicable to contracts of carriage: The
safely as far as human care and foresight can provide, using the utmost principle about the last clear chance would call for application in a suit
diligence of a very cautious person, with a due regard for all the between the owners and drivers of the two colliding vehicles. It does
circumstances. - Common carriers should teach their drivers not to not apply when the passenger demands responsibility from the carrier
overload their vehicles, not to exceed safe and legal speed limits, and
to know the correct measures to take when a tire blows up thus insuring
to enforce its contractual obligation. (Anuran v. Bruno)
the safety of passengers at all times. (Juntilla v. Fontanar)
A common carrier, through its driver, and its registered owner, has the
The last clear chance doctrine is not applicable when the passenger
demands responsibility from the carrier to enforce its contractual
obligations. It is only applicable in a suit between owners and drivers of
express obligation to carry the passengers safely as far as human care vehicles. The presumption that the vehicle which bumped the rear of
and foresight can provide, using the utmost diligence of very cautious another is guilty only applies in a situation where the rear vehicle is
persons, with a due regard for all the circumstances, and to observe following the other vehicle. This is because the rear vehicle is the one
extraordinary diligence in the discharge of its duty. The death of the in control of the situation as it has the opportunity to observe the vehicle
wife of the petitioner in the course of transporting her to her destination
gave rise to the presumption of negligence of the carrier. To overcome
the presumption, respondents have to show that they observed
in front of it. (Philippine Rabbit v. IAC)
Ildefonso Callejas) is imperatively demanded by the precariousness of human life and by
the consideration that every person must in every way be safeguarded
Requisites of caso fortuito:
1.
2.
The event must be independent of the human will
The occurrence must render it impossible for the obligor to
against all injury. (Isaac v. A.L. Ammen Transportation Co., Inc.)
thereof. (Pilapil v. CA)
(4) the carrier is not an insurer against all risks of travel.
Article 1733 is not as unbending as the lower court has held, for it
Events which cannot be foreseen and which, having been foreseen are reasonably qualifies the extraordinary diligence required of common
inevitable an event that takes place by accident and could not have carriers for the safety of the passengers transported by them to be
been foreseen, like destruction of houses, unexpected fire, shipwreck, "according to all the circumstances of each case." In fact, Article 1755
violence of robbers, etc. A carrier of passengers is not an absolute repeats this same qualification: "A common carrier is bound to carry the
insurer against the risks of travel from which the passenger may protect passengers safely as far as human care and foresight can provide,
himself by exercising ordinary care and diligence. (Lasam v. Smith)
all the circumstances." (Nocum v. Laguna Tayabas Bus)
though foreseen, was inevitable. This requires that the following Art. 1757. The responsibility of a common carrier for the safety of
requirements be present: (a) the cause of the breach is independent of passengers as required in Articles 1733 and 1755 cannot be
the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the dispensed with or lessened by stipulation, by the posting of
event is such as to render it impossible for the debtor to fulfill his
obligation in a normal manner, and (d) the debtor did not take part in
causing the injury to the
notices, by statements on tickets, or otherwise.
creditor. (Calalas v. CA)
not for wilful acts or gross negligence.
it has to be the sole and only cause. (PAL v. CA)
If the event could have been foreseen and is avoidable, then it is not
The reduction of fare does not justify any limitation of the
common carrier's liability.
caso fortuito so as to exempt the common carrier from liability. (Fortune Ticket given to a passenger is a written contract: The ticket itself is
Express v. CA)
and ineffective. (Japan Airlines v. CA) Dispensing with or limiting liability:
Exception: Gratuitous Carriage
carrier.
stop it as a bus may be stopped. (Brinas v. People)
The rule is settled that a driver in abandoning his proper lane for the
Reduction of fare: Does not justify any limitation of the common purpose of overtaking another vehicle in an ordinary situation has the
carriers liability. The law requires no less that a gratuitous carriage of a duty to see to it that the road is clear and not to proceed if he cannot do
passenger to justify the carriers limited liability.
carried gratuitously, even when the fare is reduced.
direction comes into view. (Mallari v. CA)
danger and injury by increasing the hazards of travel.
(Articles 1755 and 1756, new Civil Code). (Lara v. Valencia)
Art. 1759. Common carriers are liable for the death of or injuries to
passengers, is the result of the former's confiding in the servant's hands
the performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with the
passengers through the negligence or willful acts of the former's utmost care prescribed by law; and
employees, although such employees may have acted beyond the (3) as between the carrier and the passenger, the former must bear the
scope of their authority or in violation of the orders of the risk of wrongful acts or negligence of the carrier's employees against
common carriers.
This liability of the common carriers does not cease upon proof
passengers, since it, and not the passengers, has power to select and
remove them. (Maranan v. Perez)
that they exercised all the diligence of a good father of a family in The rationale of the carrier's liability is the fact that the passenger has
the selection and supervision of their employees.
servant. (Cangco v. Manila Railroad) the safety of his passengers, should nevertheless be held to answer for
the flaws of his equipment if such flaws were at all discoverable. (Ibib,
Art. 1760. The common carrier's responsibility prescribed in the
preceding article cannot be eliminated or limited by stipulation, by
MR to first case)
the posting of notices, by statements on the tickets or otherwise. Where the cause of a tire blow-out is known and attributed to the
common carrier, the blow-out cannot be considered caso fortuito. (La
Liability for negligence or willful acts of employees: Common
carrier cannot escape liability by interposing the defense that the
Mallorca and Pampanga Bus Co. v. De Jesus, et al.)
The relation of carrier and passenger does not cease at the moment
passenger dies or is injured, the presumption is that the common the passenger alights from the carriers vehicle at a place selected by
carrier is at fault or that it acted negligently. (Landignin v. Pangasinan the carrier at the point of destination, but continues until the passenger
Transportaion Co.) has had a reasonable time and opportunity to leave the carriers
premises. And what is reasonable time or a reasonable delay within
A passenger is entitled to recover damages from a carrier for an injury
resulting from a defect in an appliance purchased from a manufacturer,
whenever it appears that the defect would have been discovered by the
this rule is to be determined from the circumstances. (Ibid.)
The relation of carrier and passenger continues until the passenger has
carrier if it had exercised the degree of care which under the been landed at the port of destination and has left the vessel owners
circumstances was incumbent upon it, with regard to inspection and dock or premises. The relationship will not ordinarily terminate until the
application of the necessary tests. (Juntilla, supra.)
too much air pressure and the like. (Yobido v. CA)
The rationale of the carrier's liability is the fact that the passenger has
reasonable time to see after his baggage and prepare for his departure.
The reasonableness of time should be made to depend on the
attending circumstances of the case, such as the kind of common
neither choice nor control over the carrier in the selection and use of carrier, the nature of its business, the customs of the place, and so for,
the equipment and appliances in use by the carrier. Having, no privity and therefore precludes a consideration of the time element per se
whatever with the manufacturer or vendor of the defective equipment, without taking into account such other factors. The primary factor to be
the passenger has no remedy against him, while the carrier usually considered is the existence of a reasonable cause as will justify the
has. It is but logical, therefore, that the carrier, while not an insurer of presence of the victim on or near the carrier. (Aboitiz Shipping
the safety of his passengers, should nevertheless be held to answer for
the flaws of his equipment if such flaws were at all discoverable.
Corporation v. Court of Appeals)
(Batangas Trans. v. Caguimbal)
required of it.
While a passenger is entitled to protection from personal violence by Art. 1761. The passenger must observe the diligence of a good
the carrier or its agents or employees, since the contract of
transportation obligates the carrier to transport a passenger safely to
his destination, the responsibility of the carrier extends only to those
father of a family to avoid injury to himself.
killing was not done in the line duty. (Gillaco v. Manila Railroad)
erroneous and said claimants are ignorant or illiterate.
basically not one-sided.
clear and unequivocal terms which leave no doubt as to the intention of Diligence required of the passenger: Diligence of a good father of a
a person to give up a right or benefit which legally pertains to him. A
waiver may not casually be attributed to a person when the terms
thereof do not explicitly and clearly evidence an intent to abandon a
family to avoid injury to himself. Not extraordinary diligence.
supra.) employee could have prevented the injury through the exercise of the
diligence of a good father of a family. (See Manila Railroad v.
had a reasonable time and opportunity to leave the carriers premises.
other passengers or strangers.
caused by the breach of contract by a common carrier.
Article 1764 of the Civil Code, expressly makes Article 2206 applicable
effect even when they are
temporarily unloaded or
stored in transit unless the
on the premises within a
reasonable time after leaving
the conveyance are to be
"to the death of a passenger caused by the breach of contract by a shipper or owner has made deemed passengers, and
common carrier." Accordingly, a common carrier is liable for actual or use of the right of stoppage in what is a reasonable time or
compensatory damages under Article 2206 in relation to Article 1764 of
transitu. (Art. 1737)
a reasonable delay within
the Civil Code for deaths of its passengers caused by the breach of the
contract of transportation. (Sulpicio Lines v. CA)
Art. 1765. The Public Service Commission may, on its own motion
! It continues to be
operative even during the
time the goods are stored in a
this rule is to be determined
from all the circumstances,
and includes a reasonable
or on petition of any interested party, after due hearing, cancel the warehouse of the carrier at time to see after his baggage
certificate of public convenience granted to any common carrier the place of destination until and prepare for his
that repeatedly fails to comply with his or its duty to observe the consignee has bee departure. (La Mallorca v.
extraordinary diligence as prescribed in this Section.
Art. 1766. In all matters not regulated by this Code, the rights and
advised of the arrival of the
goods and has had
CA, 17 SCRA 739 ; Abiotiz
Shipping Corporation v. CA,
reasonable opportunity 179 SCRA 95)
obligations of common carriers shall be governed by the Code of
Commerce and by special laws. thereafter to remove them or
otherwise dispose of them.
(Art. 1738)
! It is the duty of common
carriers of passengers to
stop their conveyances a
Presumption of negligence
Delay in delivery, loss, Death or injury to the
destruction, or deterioration passengers
of the goods
Duration of liability
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Art.1735 Civil Code
Art.1755 Civil Code
Valid stipulations
1. O r d i n a r y
1. E x e r c i s e of
contract fixing the sum to be
recovered by the owner or
shipper for the loss,
circumstance: extraordinary destruction or deterioration of
Exercise of diligence (Art. the goods, if it is reasonable
extraordinary 1756)
and just under the
diligence (Art. 2. Caso fortuito
circumstances and has been
1735)
fairly and freely agreed upon.
2. S p e c i a l (Art. 1750)
circumstances:
3. Limited liability for delay:
a. Flood, storm, An agreement limiting the
earthquake, common carriers liability for
li g hting , o r delay on account of strikes or
other natural riots (Art. 1748)
disaster or 4. Stipulation limiting liability
calamity to the value of the goods
(plus force appearing in the bill of lading,
majeure)
unless the shipper or owner
b. A c t o f t h e declares a greater value. (Art.
public enemy
in war,
w h e t h e r
1749)
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Exemplary damages punitive or corrective damages, to serve as an
example to the public, which actually punishes the attitude of the
1. That the goods are
transported at the risk of
Dispensing with or lessening
the extraordinary
person who caused the damage.
2.
the owner or shipper;
That carrier will not be
liable for any loss,
responsibility of a common
carrier for the safety of
passengers imposed by law
Xxx
3.
goods;
That the carrier need
tickets or otherwise. (Art.
1757)
referred to as actual or compensatory damages.
Limit on the award for damages: In no instance shall the judge grant
damages more than what had been proved in court.
2)
Duly proved; and
Proved with reasonable degree of certainty.
Code, is limited to the kinds of damages specified in Art. 2200.
of carriage. (R Transport v. Pante)
CA)
Under Article 2206 of the Civil Code, the amount of damages for death
town fiesta. There was delay, thus it did not arrive during the town
fiesta, causing loss of profits for the cinema owner. The loss of profits
was said to have not been foreseeable at the time the parties entered
caused by a crime or quasi-delict shall be at least three thousand into the contract, but was the natural consequence of the delay in the
pesos, even though there may have been mitigating circumstances. In delivery of the film. This was not foreseeable because, on the part of
addition: The defendant shall be liable for the loss of the earning the carrier, it did not know what the can of film was for, thus, it had no
capacity of the deceased, and the indemnity shall be paid to the heirs of knowledge that if it did not deliver it at a particular time, loss of profits
the latter. Loss of pension is also lost income to be paid by the carrier. would be incurred by the other party. if it were appraised of all the
(De Caliston v. CA) details, then the loss of profits would have been foreseeable, and it
could have been ordered to pay for such. Foreseeability must be on the
Nominal damages cannot co-exist with actual damages. (Armovit v. CA)
obligee failed to obtain. (1106)
Under Art. 2201, the damages for which the obligor in good faith is
2) Lucrum cessans this refers to the expected profits which liable shall be those that are the natural and probable consequences
were not realized by reason of the act of the offender or tortfeasor.
LTB)
reasonably foreseen at the time the obligation was constituted.
attributed to the non-performance of the obligation. (1107a)
Lee)
The amount recoverable is not loss of the entire earnings but rather
There are two important considerations which must be borne in loss of that portion of the earnings which the beneficiary would have
mind in the application of the above-quoted legal provision: received. In other words, only net earnings not gross earnings are to
First, distinguish debtor in good faith from debtor in bad faith. be considered. The determination of such actual damages resulting
Debtor in good faith - liable only for the damages which are the natural from death due to breach of contract of carriage depends, mainly on 2
and probable consequences of the breach of the obligation, and which factors:
the parties have foreseen or could have reasonably foreseen at the 1. The number of years on the basis of which the damages shall
time the obligation was constituted. be computed; and
Debtor in bad faith - liable for all damages which may be reasonable 2. The rate at which the losses sustained should be fixed.(Villa
attributed to the non-performance of the obligation without regard to
whether such damages could be foreseen or not; and
Rey Transit v. CA)
The amount recoverable by the heirs of a victim of tort is not loss of the
Second, damages are only those which represent the loss entire earnings, but rather the loss of that portion of the earnings which
suffered and the profits which the obligee failed to obtain. In the beneficiary would have received. In other words, only net earnings,
(Davila v. PAL) - Defendant acted upon advice of counsel in cases where
exemplary damages are to be awarded, such as under Art. 2230, 2231
xxx
Art. 2203. The party suffering loss or injury must exercise the
and 2232
-
loss.
Defendant has done his best to lessen the plaintiffs injury or
resulting from the act or omission in question. - In cases where exemplary damages are to be awarded such
as in Art. 2232
Mitigating damages - article 2203 -
loss.
Defendant has done his best to lessen the plaintiffs injury or
Duty to Mitigate
avoidable it must also be reasonable.
Efforts to mitigate the loss must be REASONABLE.
offending party.
family really means the judge. temporary or permanent personal injury;
(2) For injury to the plaintiff's business standing or commercial
Corollary to the first principle, if one incurs expenses to mitigate the
loss, expenses are recoverable, even if the resulting loss would have
been less if the expenses have not been incurred. Ex. additional
credit.
if mitigation is not undertaken.
For Crimes, quasi-delicts and breach of contract of carriage:
loss, thus you cannot recover for avoided loss.
taken into account, and is thus based on circumstances.
mentioned together with quasi-delicts.
Xxx
But, certain actual damages are not recoverable. Under the law, independently of its financial capacity, the common
carrier, if liable, must be made to pay the minimum amount provided in
Art. 2206. But if its financial ability is such that ut can pay a greater
Non-recoverable damages: amount of indemnity as demanded by the circumstances of the case,
1) Avoidable loss then certainly it should be made to pay more than PhP3,000. Its
2) Not properly pleaded in the complaint or inadequately proven financial standing is material to ascertain the amount of damages as
3) Remote damages, not caused by defendant's act or indemnity for death, and thus, is material in a case for damages for
negligence, and is not proximate cause. breach of contract resulting in death of a passenger. (PANTRANCO v.
4) Damnum absque injuria, there is damage, but there is no legal
injury. Defendant's act or omission is lawful, there is no liability for
damages, even if there be injury to the claimant.
Legaspi)
According to Art. 2206, par. 1, the defendant shall be liable for the loss
5) Self-inflicted damages/injury. of earning capacity of the deceased and indemnity shall be paid to the
6) Speculative damages, based on mere conjecture or surmises, heirs of the latter. This Article, while referring to damages for death
and not duly substantiated. caused by crime of delict, is expressly made applicable by Art. 1764 to
7) In breach of contract in good faith, actual damages not actually the death of a passenger caused by the breach of contract by a
foreseen by both parties, not just one. common carrier. (Davila v. PAL)
Article 2206 of the Civil Code of the Philippines provides that only
!
deaths caused by a crime as quasi delict are entitled to actual and
compensatory damages without the need of proof of the said damages.
Instances of Grounds for Mitigation of Damages:
1) For contracts:
The amount of damages for death caused by a crime or quasi delict
shall be at least Three Thousand Pesos, even though there may have
- Violation of terms of the contract by the plaintiff himself been mitigating circumstances. Deducing alone from said provision,
Starr Weigand 2012
Transportation Law|Ampil
- 16 -
one can conclude that damages arising from culpa contractual are not
compensable without proof of special damages sustained by the heirs Exceptions: An existing corporation with reputation to protect is
of the victim. (Sulpicio v. CA and Tabuquilde)
jurisprudence. (Sulpicio v. CA)
2. If its complaint is for libel or any other form of defamation.
xxx
Art. 2207. If the plaintiff's property has been insured, and he has
!
injury. the discretion of the court, nevertheless, it is still essential that the
claimant should satisfactorily prove the factual basis of the moral
xxx
following instances:
(1) That the plaintiff himself has contravened the terms of the
impose a penalty on the wrongdoer. The same principle applies to
exemplary damages. They are not intended to enrich a complainant at
the expense of a defendant. They are awarded only to enable the
contract; injured party to obtain means, diversion or amusement that will serve to
(2) That the plaintiff has derived some benefit as a result of the alleviate the moral suffering he has undergone, by reason of the
contract;
(3) In cases where exemplary damages are to be awarded, that
defendant acted upon the advice of counsel;
the
defendants culpable action.
Art. 2219 of the civil code enumerates the instances when moral
(4) That the loss would have resulted in any event; damages may be recovered. Plaintiffs claim for moral damages not
(5) That since the filing of the action, the defendant has done his falling under any one of them, the same cannot be granted. Moral
best to lessen the plaintiff's loss or injury. damages cannot also be collected on account of breach of contract if
there is no proof that defendant did not act fraudulently or in bad faith in
Any circumstance which mitigates the injury sustained by breach
of contract must be considered in measuring the damages.
Damages arising from the plaintiffs breach of the contract on which he
connection therewith. (Carriaga v. LTB)
liability under the terms of his contract.
Exceptions:
Proof of pecuniary loss is required in actual or compensatory damages. 1) Where the mishap results in the death of the passenger;
They must be alleged and proved, and must not be presumed. But, 2) Where it is proved that the carrier was guilty of fraud or bad
insofar as the other damages are concerned, no proof of pecuniary faith, even if death does not result (Fores v Miranda).
loss is required. HOWEVER, there is a long line of decisions that for Fraud, malice or bad faith must be proved, and mere carelessness of
the court to be able to use its discretion in determining the amounts of the driver does not per se constitute or justify an inference of malice or
said damages, it is essential that there should be a clear showing of
the facts giving rise to such damage as may be inferred from Art. 2217.
bad faith on the carriers part.
With respect to the award of moral damages, the general rule is that
Art. 2217. Moral damages include physical suffering, mental said damages are not recoverable in culpa contractual except when the
anguish, fright, serious anxiety, besmirched reputation, wounded presence of bad faith was proven. However, in breach of contract of
feelings, moral shock, social humiliation, and similar injury. carriage, moral damages may be recovered when it results in the death
Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant's
of a passenger. (Sulpicio Lines, Supra.)
wrongful act for omission.
only if the defendant acted fraudulently or in bad faith. (PAL v. Miano)
juridical person. Where the defendant airline is not shown to have acted fraudulently or
in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of obligation which the parties had
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Transportation Law|Ampil
foreseen or could have foreseen at the time the contract was made.
This being the case, it cannot contemplate moral and exemplary
Under Art. 2220, in cases of breach of contract (including one of
- 17 -
damages. (Tan v. Northwest Airlines)
With respect to the award of moral damages, the general rule is that
transportation or carriage), either fraud or bad faith, that is wanton and
deliberately injurious conduct on the part of the carrier is necessary to
justify an award for moral damages. If the carrier fails to cover the side
said damages are not recoverable in culpa contractual except when the of the bus, it was foreseeable that passengers might fall out of it during
presence of bad faith was proven. In breach of contract of carriage, the transport. Failing to cover the side of the bus was clearly bad faith
moral damages may be recovered when it results in the death of a on their part (for failing to ensure the safety of passengers), thus
passenger. (Sulpicio v. CA and Tabuquilde)
allowing for moral damages to be awarded. (LTB v. Cornista)
Gross negligence amount to bad faith and it will justify the award of
Requisites for award of moral damages: moral damages in cases of breach of contract of carriage. (Armovit v
1) There must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant;
2) There must be a culpable act or omission factually
CA)
stated in Art. 2219 of the Civil Code (or Art. 2220).
is irrelevant to their evaluation. (PANTRANCO v. Legaspi) particularly as to their convenience, amount to bad faith which entitles
the passenger to an award for moral damages. (Trans World v. CA;
The well-entrenched principle is that the grant of moral damages
depends upon the discretion of the court based on the circumstances of
Alitalia Airways v. CA)
each case.16 This discretion is limited by the principle that the "amount
awarded should not be palpably and scandalously excessive" as to
indicate that it was the result of prejudice or corruption on the part of
xxx
each case must be governed by its own peculiar facts. (Singson v. CA)
which resulted in the injury or death). (Fores v. Miranda)
2) Penalty as a deterrent
unconscionable.
heirs who are entitled to such are the spouse, legitimate and illegitimate Effect of partial performance: If there was partial performance of the
descendants and ascendants of the deceased, as provided in Art. 2206, contract, the total amount of the liquidated damages agreed upon
and such does not include collaterals (brothers, sisters, nephews, cannot be enforced. They are presumed to be only for total breach of
nieces. (Supicio v. Curso) contract. Hence, there can be a corresponding reduction of the
liquidated damages. Example: If out of 500 TV sets agreed to be
What constitutes bad faith?
liquidated damages is proper.
contract of carriage may only be recoverable in instances where the Art. 2229. Exemplary or corrective damages are imposed, by way
mishap results in the death of a passenger, or where the carrier is guilty of example or correction for the public good, in addition to the
of fraud or bad faith, there are situations where the negligence of the
carrier is so gross and reckless as to virtually amount to bad faith, in
which case, the passenger likewise becomes entitled to recover moral
moral, temperate, liquidated or compensatory damages.
damages. (Singson v. CA) vindictive damages, exemplary or corrective damages are intended to
deleterious actions.
by any one. those ends, of special importance in an archipelagic state like the
Philippines, is the safe and reliable carriage of people and goods by
Exemplary damages are imposed as a corrective measure when the
guilty party has acted in a wanton, fraudulent, reckless, oppressive or
sea. (Sulpicio Lines, Supra.)
malevolent manner.
When can an employer be liable for exemplary damages for the acts of
2232 of the Civil Code of the Philippines provides that, in contracts and
quasi-contracts the court may award exemplary damages if the
defendant acted in a "wanton, fraudulent, reckless, oppressive or
his employees? As a rule, an employer may not be held liable for malevolent manner." Moreover, under Article 2208 of the same Code,
exemplary damages for the negligence of his employees.
exemplary damages are awarded." (LTB v. Diasanta)
damages may be awarded, as follows:
claimant.
Second: The claimant must first establish his right to moral, temperate,
specifically alleged, since such depends on whether actual
damages should be awarded. (Marchan, supra.)
liquidated or compensatory damages.
Third: The wrongful act must be accompanied by bad faith, and the
To justify an award of exemplary damages, the common carrier must be
in bad faith in breaching the contract of carriage. (China Airlines v. IAC)
award would be allowed only if the guilty party acted in a wanton, Owners of common carriers cannot be held liable for exemplary
fraudulent, reckless, oppressive or malevolent manner.
When the plaintiffs prayed for such other relief and remedies as may be
damages unless it is shown that it authorized or ratified the drivers
reckless driving which resulted in the breach of the contract of carriage.
It should be the driver who is to be made liable for such damages. It is
availed of under the premises, in effect, the court was called upon to difficult to conceive how the defendant in a breach of contract case
exercise and use its discretion to decide whether the imposition of could be held to have acted in a wanton, fraudulent, reckless,
punitive or exemplary damages can be impose, even if not expressly oppressive or violent manner within the meaning of Article 2232 for
prayed for or pleaded in the complaint. (Marchan v. Mendoza)
be awarded at its discretion. (PAL v. CA)
reckless, oppressive, or malevolent manner.
fraudulent, reckless, oppressive or malevolent manner. (Davila, Supra)
The award of moral and exemplary damages in the aggregate may not
cases is personal to the employees actually in charge of the vehicles,
and it is they who should be made to pay this kind of damages by way
of example or correction, unless by the demonstrated tolerance or
be the usual way of awarding such damages. However, there can be no approval of the owners they themselves can be held at fault and their
question that the entitlement to moral damages having been fault is of the character described in Article 2232 of the Civil Code.
established, exemplary damages may be awarded. And exemplary Otherwise there would be practically no difference between their liability
damages may be awarded even though not so expressly pleaded in the for exemplary damages and their liability for compensatory damages,
complaint or proved. (PAL v. CA) which needs no proof of their negligence since the suit is predicated on
breach of contract and due diligence on their part does not constitute a
With respect to the award of exemplary damages, Article 2232 of the
Civil Code of the Philippines gives the Court the discretion to grant said
damages in breach of contract when the defendant acted in a wanton,
defense. (Munsayac v. De Lara; Sarkies Tours v. IAC)
fraudulent and reckless manner. (Sulpicio v. Tabuquilde) reckless driving of the driver of the vehicle was attributed to be reckless
behavior of the common carrier, making the latter liable for exemplary
damages. But, the court did say that award of exemplary damages is
whenever an employees negligence causes damage or injury to Convention for the Unification of Certain Rules for International
another, there instantly arises a presumption that the employer failed to
exercise the due diligence of a good father of the family in the selection
Carriage by Air (Montreal, 28 May 1999)
one based on breach of contract.
Art. 2234. While the amount of the exemplary damages need not
"Warsaw Convention", and other related instruments to the
harmonization of private international air law;
be proved, the plaintiff must show that he is entitled to moral, RECOGNIZING the need to modernize and consolidate the Warsaw
temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages
should be awarded. In case liquidated damages have been agreed
Convention and related instruments;
not for the stipulation for liquidated damages. passengers, baggage and cargo in accordance with
objectives of the Convention on International Civil
the principles and
Aviation, done at
Art. 2235. A stipulation whereby exemplary damages are
renounced in advance shall be null and void.
Chicago on 7 December 1944;
malevolent manner.
upon in the contract. deemed, for the purposes of this Convention, to be one undivided
carriage if it has been regarded by the parties as a single
same State.
subject to the terms contained therein.
items
1. This Convention applies to carriage performed by the State or
conditions laid down in Article 1.
administrations.
the Carriage of Passengers, Baggage and Cargo 4. If, at the request of the consignor, the carrier makes out the air
waybill, the carrier shall be deemed, subject to proof to the
Article 3 - Passengers and baggage
1. In respect of carriage of passengers, an individual or collective
document of carriage shall be delivered containing:
contrary, to have done so on behalf of the consignor.
at least one such stopping place.
of the information so preserved.
identification tag for each piece of checked baggage.
or loss of, or damage to, baggage, and for delay.
on behalf of the consignor is also the agent of the carrier.
paragraphs shall not affect the existence or the validity of the 2. The consignor shall indemnify the carrier against all damage
contract of carriage, which shall, nonetheless, be subject to the suffered by it, or by any other person to whom the carrier is liable,
rules of this Convention including those relating to limitation of by reason of the irregularity, incorrectness or incompleteness of
liability.
Article 4 - Cargo
the particulars and statements furnished by the consignor or on
its behalf.
1. In respect of the carriage of cargo, an air waybill shall be 3. Subject to the provisions of paragraphs 1 and 2 of this Article,
delivered.
contained in the record preserved by such other means.
4.
resulting therefrom.
original parts.
2. The first part shall be marked "for the carrier"; it shall be signed
calling for it to be delivered at the place of destination or in the
course of the journey to a person other than the consignee
originally designated, or by requiring it to be returned to the
by the consignor. The second part shall be marked "for the airport of departure. The consignor must not exercise this right of
consignee"; it shall be signed by the consignor and by the carrier. disposition in such a way as to prejudice the carrier or other
exercise of this right.
the carrier must so inform the consignor forthwith.
3. If the carrier carries out the instructions of the consignor for the
checked baggage was in the charge of the carrier. However, the
carrier is not liable if and to the extent that the damage resulted
from the inherent defect, quality or vice of the baggage. In the
disposition of the cargo without requiring the production of the case of unchecked baggage, including personal items, the carrier
part of the air waybill or the cargo receipt delivered to the latter, is liable if the damage resulted from its fault or that of its servants
the carrier will be liable, without prejudice to its right of recovery
from the consignor, for any damage which may be caused thereby
to any person who is lawfully in possession of that part of the air
or agents.
waybill or the cargo receipt.
disposition.
baggage.
1. Except when the consignor has exercised its right under Article Article 18 - Damage to cargo
12, the consignee is entitled, on arrival of the cargo at the place of 1. The carrier is liable for damage sustained in the event of the
destination, to require the carrier to deliver the cargo to it, on destruction or loss of or damage to, cargo upon condition only
payment of the charges due and on complying with the conditions that the event which caused the damage so sustained took place
of carriage.
notice to the consignee as soon as the cargo arrives.
3. If the carrier admits the loss of the cargo, or if the cargo has not
that the destruction, or loss of, or damage to, the cargo resulted
from one or more of the following:
(a) inherent defect, quality or vice of that cargo;
arrived at the expiration of seven days after the date on which it (b) defective packing of that cargo performed by a
ought to have arrived, the consignee is entitled to enforce against person other than the carrier or its servants or agents;
the carrier the rights which flow from the contract of carriage. (c) an act of war or an armed conflict;
(d) an act of public authority carried out in connection
Article 14 - Enforcement of the rights of consignor and consignee
The consignor and the consignee can respectively enforce all the
rights given to them by Articles 12 and 13, each in its own name,
with the entry, exit or transit of the cargo.
contract of carriage.
charge of the carrier.
4. The period of the carriage by air does not extend to any carriage
Article 15 - Relations of consignor and consignee or mutual by land, by sea or by inland waterway performed outside an
relations of third parties airport. If, however, such carriage takes place in the performance
1. Articles 12, 13 and 14 do not affect either the relations of the of a contract for carriage by air, for the purpose of loading,
consignor and the consignee with each other or the mutual delivery or transhipment, any damage is presumed, subject to
relations of third parties whose rights are derived either from the proof to the contrary, to have been the result of an event which
consignor or from the consignee.
express provision in the air waybill or the cargo receipt. agreement between the parties to be carriage by air, such carriage
by another mode of transport is deemed to be within the period of
Article 16 - Formalities of customs, police or other public
authorities
1. The consignor must furnish such information and such
carriage by air.
Article 19 - Delay
documents as are necessary to meet the formalities of customs, The carrier is liable for damage occasioned by delay in the
police and any other public authorities before the cargo can be carriage by air of passengers, baggage or cargo. Nevertheless, the
delivered to the consignee. The consignor is liable to the carrier carrier shall not be liable for damage occasioned by delay if it
for any damage occasioned by the absence, insufficiency or proves that it and its servants and agents took all measures that
irregularity of any such information or documents, unless the could reasonably be required to avoid the damage or that it was
damage is due to the fault of the carrier, its servants or agents.
Article 20 - Exoneration
correctness or sufficiency of such information or documents. If the carrier proves that the damage was caused or contributed to
Chapter III - Liability of the Carrier and Extent of Compensation for by the negligence or other wrongful act or omission of the person
Damage claiming compensation, or the person from whom he or she
Article 17 - Death and injury of passengers - damage to baggage derives his or her rights, the carrier shall be wholly or partly
1. The carrier is liable for damage sustained in case of death or exonerated from its liability to the claimant to the extent that such
bodily injury of a passenger upon condition only that the accident negligence or wrongful act or omission caused or contributed to
which caused the death or injury took place on board the aircraft the damage. When by reason of death or injury of a passenger
or in the course of any of the operations of embarking or compensation is claimed by a person other than the passenger,
disembarking. the carrier shall likewise be wholly or partly exonerated from its
liability to the extent that it proves that the damage was caused or
in this Convention, including paragraph 1 of Article 21.
commencement of the action, if that is later.
1. For damages arising under paragraph 1 of Article 17 not Article 23 - Conversion of monetary units
exceeding 100,000 Special Drawing Rights for each passenger, the 1. The sums mentioned in terms of Special Drawing Right in this
carrier shall not be able to exclude or limit its liability.
other wrongful act or omission of a third party.
passenger is limited to 4,150 Special Drawing Rights.
destination.
consignor's actual interest in delivery at destination.
in determining the limit of liability.
or agent was acting within the scope of its employment. average of the annual rates of increase or decrease in the
Consumer Price Indices of the States whose currencies comprise
6. The limits prescribed in Article 21 and in this Article shall not
prevent the court from awarding, in accordance with its own law,
in addition, the whole or part of the court costs and of the other
the Special Drawing Right mentioned in paragraph 1 of Article 23.
the damages awarded, excluding court costs and other expenses such revision shall become effective six months after its
register their disapproval, the revision shall not become effective 1. Receipt by the person entitled to delivery of checked baggage
and the Depositary shall refer the matter to a meeting of the States or cargo without complaint is prima facie evidence that the same
Parties. The Depositary shall immediately notify all States Parties has been delivered in good condition and in accordance with the
of the coming into force of any revision. document of carriage or with the record preserved by the other
means referred to in paragraph 2 of Article 3 and paragraph 2 of
3. Notwithstanding paragraph 1 of this Article, the procedure
referred to in paragraph 2 of this Article shall be applied at any
time provided that one-third of the States Parties express a desire
Article 4.
following the date of the reviews under the present paragraph.
Convention or to no limits of liability whatsoever.
subject to the provisions of this Convention.
Convention.
destination.
carrier.
commercial agreement.
In the carriage of passengers, baggage and cargo, any action for 3. For the purposes of paragraph 2,
damages, however founded, whether under this Convention or in (a) "commercial agreement" means an agreement, other
contract or in tort or otherwise, can only be brought subject to the than an agency agreement, made between carriers and relating to
conditions and such limits of liability as are set out in this the provision of their joint services for carriage of passengers by
Convention without prejudice to the question as to who are the air;
persons who have the right to bring suit and what are their (b) "principal and permanent residence" means the one
respective rights. In any such action, punitive, exemplary or any fixed and permanent abode of the passenger at the time of the
other non-compensatory damages shall not be recoverable.
determining factor in this regard.
1. If an action is brought against a servant or agent of the carrier 4. Questions of procedure shall be governed by the law of the
arising out of damage to which the Convention relates, such
servant or agent, if they prove that they acted within the scope of
their employment, shall be entitled to avail themselves of the
court seized of the case.
Article 34 - Arbitration
conditions and limits of liability which the carrier itself is entitled 1. Subject to the provisions of this Article, the parties to the
to invoke under this Convention. contract of carriage for cargo may stipulate that any dispute
relating to the liability of the carrier under this Convention shall be
2. The aggregate of the amounts recoverable from the carrier, its
servants and agents, in that case, shall not exceed the said limits.
settled by arbitration. Such agreement shall be in writing.
knowledge that damage would probably result.
of this Convention.
therewith shall be null and void.
stopped. and agents acting within the scope of their employment shall, in
relation to the carriage performed by the actual carrier, be deemed
2. The method of calculating that period shall be determined by
the law of the court seized of the case.
to be also those of the contracting carrier.
performed under its supervision.
liability for the whole journey.
or consignee.
right of recourse against any other person.
invoked in accordance with this Convention.
carriage by air.
absence of proof to the contrary.
actual carrier has its domicile or its principal place of business.
subject to the provisions of this Chapter.
themselves, including any right of recourse or indemnification.
as to jurisdiction, shall be null and void.
Article 50 - Insurance
Parties of:
(a) each signature of this Convention and date thereof;
(b) each deposit of an instrument of ratification,
States Parties shall require their carriers to maintain adequate acceptance, approval or accession and date thereof;
insurance covering their liability under this Convention. A carrier (c) the date of entry into force of this Convention;
may be required by the State Party into which it operates to (d) the date of the coming into force of any revision of
furnish evidence that it maintains adequate insurance covering its the limits of liability established under this Convention;
liability under this Convention.
Article 54 - Denunciation
The provisions of Articles 3 to 5, 7 and 8 relating to the 1. Any State Party may denounce this Convention by written
documentation of carriage shall not apply in the case of carriage notification to the Depositary.
performed in extraordinary circumstances outside the normal 2. Denunciation shall take effect one hundred and eighty days
scope of a carrier's business.
Depositary.
The expression "days" when used in this Convention means Article 55 - Relationship with other Warsaw Convention
calendar days, not working days.
instruments
This Convention shall prevail over any rules which apply to
Chapter VII - Final Clauses
Article 53 - Signature, ratification and entry into force
1. This Convention shall be open for signature in Montreal on 28
international carriage by air:
of this Article.
Economic Integration Organisation.
it. 2. within the territory of any single State Party to this Convention
by virtue of that State being Party to one or more of the
4. Any State or Regional Economic Integration Organisation which
does not sign this Convention may accept, approve or accede to it
instruments referred to in sub-paragraphs (a) to (e) above.
at any time. Article 56 - States with more than one system of law
1. If a State has two or more territorial units in which different
systems of law are applicable in relation to matters dealt with in
declaration at any time.
applies.
that State.
contract by the air carriers.
PAL v. CA
Article 57 - Reservations Petitioner contends that under the Warsaw Convention, its liability, if
No reservation may be made to this Convention except that a any, cannot exceed US $20.00 based on weight as private respondent
State Party may at any time declare by a notification addressed to Co did not declare the contents of his baggage nor pay traditional
the Depositary that this Convention shall not apply to: charges before the flight. We find no merit in that contention. The
(a) international carriage by air performed and operated liability of the common carrier for the loss, destruction or deterioration of
directly by that State Party for non-commercial purposes in goods transported from a foreign country to the Philippines is governed
respect to its functions and duties as a sovereign State; and/or primarily by the New Civil Code. In all matters not regulated by said
(b) the carriage of persons, cargo and baggage for its Code, the rights and obligations of common carriers shall be governed
military authorities on aircraft registered in or leased by that State by the Code of Commerce and by Special Laws. Since the passenger's
Party, the whole capacity of which has been reserved by or on destination in this case was the Philippines, Philippine law governs the
behalf of such authorities.
Luna v. CA
Civil Aviation Organization, and certified copies thereof shall be The Warsaw Convention does not operate as an exclusive
transmitted by the Depositary to all States Parties to this Convention, enumeration of the instances for declaring an airline liable for breach of
as well as to all States Parties to the Warsaw Convention, The Hague contract of carriage or as an absolute limit of the extent of that liability.
Protocol, the Guadalajara Convention, the Guatemala City Protocol and The application of the Convention must not therefore be construed to
the Montreal Protocols.
KLM v. CA
preclude the operation of the Civil Code and other pertinent laws.
Hence, petitioners' alleged failure to file a claim with the common
carrier as mandated by the provisions of the Warsaw Convention
Article 30 of the Warsaw providing that in case of transportation to be should not be a ground for the summary dismissal of their complaints
performed by various successive carriers, the passenger can take since private respondent may still be held liable for breach of other
action only against the carrier who performed the transportation during relevant laws which may provide a different period or procedure for
which the accident or the delay occurred presupposes the occurrence filing a claim. Considering that petitioners indeed filed a claim which
of either an accident or delay in the course of the air strip, and does not private respondent admitted having received on 21 June, 1989, their
apply if the damage is caused by the willful misconduct on the part of demand may have very well been filed within the period prescribed by
the carrier's employee or agent acting within the scope of his
employment.
Where the passage tickets provide that the carriage to be performed
those applicable laws.
Mapa v. CA
thereunder by several successive carriers "is to be regarded as a single The Warsaw Convention does not apply. The transportation involved
operation," the carrier which issued the tickets for the entire trip in effect in this case does not fall under the definition of international
guaranteed to the passenger that the latter shall have sure space in the transportation under the said Convention. There are then two
various carriers which would ferry him through the various segments of categories of international transportation, (1) that where the place of
the trip, and the ticket-issuing carrier assumes full responsibility for the departure and the place of destination are situated within the territories
entire trip and shall be held accountable for the breach of that guaranty of two High Contracting Parties regardless of whether or not there be a
whether the breach occurred in its own lines or in those of the other break in the transportation or a transshipment; and (2) that where the
carriers.
foreseen such an eventuality when it accepted the luggages for transit. Mapa, on the one hand, and TWA, on the other, within the first category
departures not served with aircrafts of one or the other.
PAL v. CA
petitioner airline itself.
exclude or limit his liability.
established.
liability.
obligation, including moral and exemplary damages.
United Airlines v. Uy
authorities, such tariff being binding on the passenger regardless of the
passengers lack of knowledge thereof or assent thereto.
Respondent is suing on 2 causes of action: (a) the shabby and American Airlines v. CA, Salas and Mendoza
humiliating treatment he received from petitioner's employees at the The contract of carriage entered into by the private respondent with
San Francisco Airport which caused him extreme embarrassment and Singapore Airlines, and subsequently with the petitioner, to transport
social humiliation; and, (b) the slashing of his luggage and the loss of him to nine cities in different countries is a contract of international
his personal effects amounting to US $5,310.00. While his second transportation and the provisions of the Convention automatically apply.
cause of action an action for damages arising from theft or damage The contract of carriage between the private respondent and
to property or goods is well within the bounds of the Warsaw Singapore Airlines although performed by different carriers under a
Convention, his first cause of action an action for damages arising series of airline tickets, including that issued by the petitioner,
from the misconduct of the airline employees and the violation of constitutes a single operation. Members of the IATA are under a
respondent's rights as passenger clearly is not. general pool partnership agreement wherein they act as agent of each
Insofar as the first cause of action is concerned, respondent's failure other in the issuance of the tickets to contracted passengers to boost
to file his complaint within the 2-year limitation of the Warsaw ticket sales worldwide and at the same time provide passengers easy
Convention does not bar his action since petitioner airline may still be access to airlines which are otherwise inaccessible in some parts of the
held liable for breach of other provisions of the Civil Code which world.
prescribe a different period or procedure for instituting the action, The number of tickets issued does not detract from the oneness of the
specifically, Art. 1146 thereof which prescribes 4 years for filing an contract of carriage as long as the parties regard the contract as a
action based on torts. single operation. The evident purpose underlying this Article is to
As for respondent's second cause of action, indeed the travaux promote international air travel by facilitating the procurement of a
preparatories of the Warsaw Convention reveal that the delegates series of contracts of air transportation through a single principal and
thereto intended the 2-year limitation incorporated in Art. 29 as an obligating different airlines to be bound by one contract of
before the trial court.
cross-claim is proper against PAL filed by CAL.
aforesaid condition precedent.
on the part of a carrier for damages occasioned by delay in the when the place of departure and the place of destination in a contract of
the action for damages before liability)
You allege these matters in your Motion to Dismiss
1. the court where the carrier is domiciled;
your:
If your Motion to Dismiss is denied, you may allege them in
2. the court where the carrier has its principal place of business; o petition for certiorari c/o Rule 65
o trial as a defense
3. the court where the carrier has an establishment by which the
contract has been made; or
Mere delay is not equivalent to willful misconduct
4. the court of the place of destination.
CODE OF COMMERCE OF THE PHILIPPINES
have jurisdiction over the case filed by the petitioner. importance, and even transport of persons can be considered
commercial, provided that the carrier is a merchant or habitually
engaged in transportation work for the public. A contract of
ANNOTATIONS by JORGE R. COQUIA: (2000)
The Philippines adhered to the Convention on November 9, 1950 and
entered into force in the country on February 7, 1957
transportation be air is regarded as commercial (Mendoza v. PAL).
3.
The name, surname and residence of the carrier.
the arrival at the destination, or from the date on which the aircraft
ought to have arrived, or from the date on which the transportation
5. The cost of transportation.
stopped.
The passenger who takes several carriers shall be deemed to be one
6. The date on which shipment is made.
8.
The place of delivery to the carrier.
consignor or consignee.
there should be any agreement on this matter.
Nature of BoL:
If none: Warsaw Convention does not apply 1. Each bill is a contract in itself and the parties are bound by its
2. Jurisdiction terms.
a. Residence of carrier 2. A bill is also a receipt
b. Where carrier has his principal place of business 3. It is a symbol of the goods covered by it. they are
c. Where he has an establishment by which the contract has documents of title (may be negotiated if negotiable)
been made
document.
the bill of lading.
person specified therein.
Types:
support of their respective claims, according to the general
provisions established in this Code for commercial contracts.
Clean Bill of Lading One which does not indicate any defect in the The Bill itself is not essential to the contract so long as the requisites
goods. of a contract are present (Consent, object and consideration). It is
merely evidence of such contract. As evidence of the contract, may not
Foul Bill of Lading One which contains and annotation thereon
indicating that the goods covered by it are in a bad condition.
be varied or altered.
delivered by the carrier without surrendering the Bill. imposed in the contract by the agreement of the parties themselves. If
there is no bill, disputes will be governed by the rules laid down by
Through Bill of Lading Issued by a carrier who is obliged to use the
facilities of other carriers as well as his own facilities to transport the
Article 354.
goods.
On Boar Bill of Lading States that the goods have been received on
As a receipt may be varied or altered or explained.
After the contract of transportation has been complied with, the bill shall
board the vessels which are to carry the goods. be returned to the issuing carrier in exchange for the goods. But, if it
cannot be returned due to its loss or any other cause, a receipt for the
Received-for-shipment Bill of Lading States that the goods have
been received for shipment with or without specifying the vessles on
goods must be provided by the shipper or consignee.
which they are to be shipped. Return of bill: obligations and actions of the parties against each other
are considered cancelled, except where a receipt for claims of the
Custody Bill of Lading Issued by the carrier to whom the goods
have been delivered for shipment but he steamer indicated thereon
which is to carry the goods has not yet reached the port where the
parties are made at the time of the giving of the bill or the receipt.
goods are held for shipment. from the moment he receives the merchandise, personally or
through a person charged for the purpose, at the place indicated
Port Bill of Lading Issued by the carrier to whom the goods have
been delivered and the steamer indicated in the bill by which the goods
are to shipped are already in the port where the goods are held for
for receiving them.
shipment.
reference to in the bill of lading which he delivers to the shipper.
considered necessary for their easy identification.
of any other cause, he must give the latter a receipt for the goods liable for injuries caused by such vehicle even if he has already sold or
ARTICLE 360. The shipper, without changing the place where the
responsible for damages that may arise from consequences incident to delivery is to be made, may change the consignment of the goods
its operation, or caused to any of the passengers therein. The live-in which he delivered to the carrier, provided that at the time of
partner of the owner has nothing to do with the vehicle. (Juaniza v. ordering the change of consignee the bill of lading signed by the
Jose) carrier, if one has been issued, be returned to him, in exchange for
If the lesse of the vehicle is a mere dummy corporation of the
registered owner, the latter is still liable for the accident even if due
to the fault of the said lessor. (MYC Agro v. Vda. De Caldo)
another wherein the novation of the contract appears.
stipulated.
packages if unfit for transportation. But ordinarily, may not refuse a As a consequence, all the losses and deteriorations which the
particular class of good to the prejudice of the traffic in those goods. goods may suffer during the transportation by reason of fortuitous
event, force majeure, or the inherent nature and defect of the
Falsity in the declaration of the contents: If there is a well founded
belief or suspicion of falsity in the declaration as to the contents of the
goods, shall be for the account and risk of the shipper.
package, he may examine it in the manner laid down in Art. 357.
at the risk and venture of the shipper means that the shipper
goods the carrier shall be bound to forward them in the first will suffer losses and deteriorations resulting from fortuitous events,
shipment of the same or similar goods which he may make point force majeure, or inherent nature and defects of the goods. It does not
where he must deliver them; and should he not do so, the mean that the carrier is free from liability for losses and deteriorations
damages caused by the delay should be for his account.
Time for delivery when no period fixed: Carrier bound to forward the
arising from his negligence or fault which is presumed.
delay.
When period fixed for delivery: Deliver the goods within the time
through his negligence or by reason of his having failed to take
the precautions which usage has established among careful
persons, unless the shipper has committed fraud in the bill of
fixed, failure to do so, the carrier will pay for indemnity provided in the lading, representing the goods to be of a kind or quality different
BoL. Under the Civil Code, damages also paid if carrier refuses to pay
for the indemnity provided.
from what they really were.
the delay may be caused.
Other effects of delay: Natural disaster will not free carrier from
nature or by reason of unavoidable accident, there being no time
for their owners to dispose of them, the carrier may proceed to
sell them, placing them for this purpose at the disposal of the
responsibility. Contract limiting liability (if delay without just cause and judicial authority or of the officials designated by special
negligent) cannot be availed of.
goods at the time they should have been delivered.
probandi shifted to the shipper to show negligence.
If goods run the risk of being lost due to their nature or unavoidable
Tender before suit: Consignee cannot refuse to receive the goods and accident carrier may sell the goods, placing them at the disposal of
sue for conversion. Remedy left is an action for damages due to the
delay.
the judicial authority or officials designated by special provisions of law.
have been stipulated for such case.
time at which their delivery should have been made.
proof thereof. Duty to deliver goods: Carrier to deliver the goods and also to deliver
them in the condition in which according to the BoL they were found at
Change of Route without just cause: Carrier liable for losses, due to
the change, and for other causes, and limiting liability not available. If
the time they were received, without damage or impairment.
they may not be independently used.
assert his right constitutes estoppel by laches.
value.
constitute such difference in value.
that day.
conveniently making use of them in this form.
The same rule shall be applied to merchandise in bales or None provided; Civil Code One year from the date of
packages, separating those parcels which appear sound.
admitted only at the time of receipt.
were delivered.
which may be caused thereby.
1. ascertainable only by opening of the packages; or To whom delivery is to be made: To the consignee. If to the order of
2.
- claim made within 24 hourse after receipt.
from the outside part of the packages.
consignee, BoL must be presented, if not, carrier liable for misdelivery.
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If no abandonment indemnity not to exceed the current price which
Misdelivery Non-delivery
the goods had on the day when to be delivered.
countermand the shipment terminates: when the consignee or What may be abandoned
legitimate holder of the bill of lading appears with such bill of lading
before the carrier and makes himself a party to the contract.
Vessel Goods shipped
stoppage in transitu sellers right prevails
prejudice to third parties with a better right.
Liability for failure to look for consignee: Carrier liable for the
Effects
unable to find the consignee.
third parties with a better right.
ARTICLE 370. If a period has been fixed for the delivery of the
must pay the insured as if
there was actual total loss
the goods at the point of
destination.
of the vessel.
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. ARTICLE 372. The value of the goods which the carrier must pay
If no indemnity has been stipulated and the delay exceeds the time in cases if loss or misplacement shall be determined in
fixed in the bill of lading, the carrier shall be liable for the damages accordance with that declared in the bill of lading, the shipper not
which the delay may have caused.
in writing before their arrival at the point of destination.
When this abandonment takes place, the carrier shall pay the full
liability shall be subordinated to the provisions of the laws of
concession with respect to the property, and to what this Code
established as to the manner and form of effecting seizures and
value of the goods as if they had been lost or mislaid.
Shippers Lien Security for the payment of the value of the goods
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
which the carrier must pay in cases of loss or misplacement.
may be due.
delivery. actions and rights of those who preceded him in the conveyance.
The shipper and the consignee shall have an immediate right of
How: communicating the abandonment to the carrier in writing. action against the carrier who executed the transportation
contract, or against the other carriers who may have received the
If there is abandonment full price or value of goods paid. goods transported without reservation.
Starr Weigand 2012
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However, the reservation made by the latter shall not relieve them
from the responsibilities which they may have incurred by their
BOOK THREE MARITIME COMMERCE
- 34 -
own acts.
transportation and the expenses incurred.
title duly recorded.
to answer for the cost of transportation and for the expenses and In the absence of any of these requisites, continuous possession
fees incurred for them during their conveyance and until the for ten years shall be necessary in order to acquire ownership.
moment of their delivery. A captain may not acquire by prescription the vessel of which he
This special right shall prescribe eight days after the delivery has
been made, and once prescribed, the carrier shall have no other
is in command.
action than that corresponding to him as an ordinary creditor.
days mentioned in the preceding article.
special laws
contract of transportation. Purpose of registration: necessary and indispensable in order that
the purchasers rights may be maintained against a claim filed by a
Effect of Bankruptcy: Bankruptcy of the consignee shall not cut off the
preference of the carrier, provided that the claim is made within 30 days
third person
from the date of delivery. It is not now necessary for a chattel mortgage of a vessel to be noted in
the registry of the register of deeds
Purpose of lien and time limit: lien in favor of the shipper. It is essential that a record of documents affecting the title to a vessel
be entered in the office of the collector of customs at a port of entry,
ARTICLE 377. The carrier shall be liable for all the consequences
which may arise from his failure to comply with the formalities
prescribed by the laws and regulations of the public
now in the Philippine Coast Guard
merchandise, both shall become responsible.
merchandise laden on it and its owner. (yu Con v. Ipil)
Art 835 does not apply to small boats engaged in river and
Liability for non-compliance with government rules: carrier liable, bay traffic. This articles apply to merchant vessels. When the
even if non-compliance was due to order of shipper or consignee. He is mercantile codes speak of vessels, they refer solely and exclusively to
exempted when the failure to comply was due to error by the falsehood merchant ships, as they do not include war ships furthermore, they
on the part of the shipper in the declaration of the merchandise.
following for the respective bills of lading.
the latter, as well as with regard to their rights. and other similar matters.
registry up to the date of the sale.
stipulated in either case.
be concerned.
ARTICLE 579. After the damage to the vessel and the impossibility
averages suffered for which the vessel is liable, provided that
either appear in a judicial or arbitration decision.
of her being repaired, in order to continue the voyage had been Bottomry - A contract, in maritime law, by which money is borrowed for
shown, its sale at public auction shall be ordered, subject to the a specified term by the owner of a ship for its use, equipment, or repair
following rules: for which the ship is pledged as collateral. If the ship is lost in the
1. The hull of the vessel, its rigging, engines, stores, and other specified voyage or during the limited time, the lender will lose his or
articles shall be appraised, after making an inventory, said her money according to the provisions of the contract.
proceedings to be brought to the notice of the persons who may - A contract by which a ship or its freight is pledged as security for a
wish to take part in the auction. loan, which is to be repaid only in the event that the ship survives a
2. The order or decree ordering the auction to be held shall be
posted in the usual places, an announcement thereof to be
inserted in the Official Gazette and in two of the newspapers of the
specific risk, voyage, or period.
ARTICLE 582. After the bill of the judicial sale at public auction
3. These announcements shall be repeated every ten days, and has been executed and inscribed in the registry of vessels, all the
their publication shall be made to appear in the records. other liabilities of the vessel in favor of the creditors shall be
4. The auction shall be held on the day fixed, with the formalities considered extinguished.
prescribed in the common law for judicial sales. But if the sale should have been voluntary and should have been
5. If the sale should take place while the vessel is in a foreign made while the vessel was on a voyage, the creditors shall
country, the special provisions governing such cases shall be preserve their rights against the vessel until it returns to the port
observed. of her registry, and three months after the inscription of the sale in
the registry of vessel or the arrival.
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ARTICLE 583. If while on a voyage the captain should find it 2. Loss and damage to the goods loaded on the vessel without
necessary to contract one or more of the obligations mentioned in prejudice to their right to free themselves from liability by abandoning
subdivisions 8 and 9 of Article 580, he shall apply to the judge or
court if he is in Philippine territory, and otherwise to the consul of
the Republic of the Philippines, should there be one, and, in his
the vessel to the creditors. (Art. 587)
unseaworthiness.
liable for the credits prejudiced on his account.
considered as personal property.
TITLE TWO
addition, Article 618 states that the captain shall be civilly liable to the
ship agent and the ship agent shall be liable to third persons who may
have made the contracts with the former (a) for all damages suffered by
PERSONS WHO TAKE PART IN MARITIME COMMERCE the vessel and its cargo by reason of want of skill or negligence on his
SECTION ONE - SHIPOWNERS AND SHIP AGENTS part; if a misdemeanor/crime has been committed he shall be liable in
accordance with the Penal Code; (b) for all thefts and robberies
ARTICLE 586. The shipowner and the ship agent shall be civilly
liable for the acts of the captain and for the obligations contracted
by the latter to repair, equip, and provision the vessel, provided
committed by the crew. (Switzerland General Insurance v. Ramirez)
benefit of the same.
be found.
E. Pilot
earned and paid, while his possession continues.
(Yu Biao v. Osorio)
certificate of appointment.
repair, equip and provision the vessel; (Art. 586)
insurer of his interest in the thing insured
ARTICLE 587. The ship agent shall also be civilly liable for the
2. Art. 590 indemnities from negligent acts of the captain (not
the shipowner or ship agent)
3. Art. 837 collision
indemnities in favor of third persons which may arise from the 4. Art. 643 liability for wages of the captain and the crew and
conduct of the captain in the care of the goods which he loaded for advances made by the ship agent if the vessel is lost by shipwreck
on the vessel; but he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freight it
or capture
may have earned during the voyage. GENERAL RULE: The liability of shipowner and ship agent is limited to
the amount of interest in said vessel such that where vessel is entirely
Otherwise known as the limited liability rule in maritime law
Applies to passengers.
instead. (Yu Con v. Ipil)
In case of constructive loss of the vessel (Sec. 138,
Insurance Code).
with his interest in the vessel such that a total loss thereof results in its
extinction and none of the exceptions to the rule on limited liability
RIGHT OF ABANDONMENT
being present, the liability of the owners for the loss of the cargo of
copra must be deemed to have been extinguished. There is no showing
that the vessel was insured in this case.
SHIPOWNER OR SHIP
CONSIGNEE
In relation to the CIVIL CODE and COMMON CARRIERS, the SC AGENT
explained that the presumption of negligence in case of loss,
destruction or deterioration still applies. However, the liability is limited What may be abandoned
by Art 587. Since the Civil Code contains no provisions regulating
liability of ship owners or agents in the event of total loss or destruction
of the vessel, it is the provisions of the Code of Commerce, more Vessel Goods shipped
particularly Article 587, that govern in this case. [note: remember, the
issue of w/n a CC is liable is different to the extent of its liability, in this
case there was NO finding of negligence on the part of the ship owner Instances
OR its employees/agents]. (Chua Yek v. IAC)
The term "ship agent" as used is broad enough to include the ship 1. In case of civil liability 1. Partial non-delivery,
owner. This direct liability is moderated and limited by the ship agent's from indemnities to third where the goods are
or ship owner's right of abandonment of the vessel and earned freight. persons (Art. 587);
useless without the
This is the universal principle of limited liability under maritime law. The 2. Sec. 138, Insurance others (Art. 363);
most fundamental effect of abandonment is the cessation of the Code;
2. Goods are rendered
responsibility of the ship agent/owner. 3. In case of leakage of useless for sale or
The rationale: The real and hypothecary nature of the liability of the
at least of the contents consumption for the
ship owner or agent in the Maritime Law, Code of Commerce, had its
origin in the prevailing conditions of the maritime trade and sea of a cargo containing purposes for which they
voyages during the medieval ages, attended by innumerable hazards liquids (Art. 687)
are properly destined
and perils. To offset against these adverse conditions and to encourage (Art. 365); and
ship building and maritime commerce, it was necessary to confine the 3. In case of delay
liability of the owner or agent arising from the operation of a ship to the through the fault of the
vessel, equipment, and freight, or insurance, if any, so that if the ship carrier (Art. 371).
owner or agent abandoned the ship, equipment, and freight, his liability
was extinguished. Also, Article 1766 of the Civil Code provides: In all
matters not regulated by this Code, the rights and obligations of
Effects
Where the shipowner fails to overcome the presumption of
- 38 -
destination.
The term "ship agent" as used in Art 587 is broad enough to
as proved in trial. (Aboitiz v. CA)
The tort in question is not a civil tort under the Civil Code but a maritime
include the ship owner. Pursuant to said provision, therefore, tort resulting in a collision at sea, governed by Articles 826-939 of the
both the ship owner and ship agent are civilly and directly liable for Code of Commerce. In case of collision between two vessels imputable
the indemnities in favor of third persons, which may arise from the to both of them, each vessel shall suffer her own damage and both
conduct of the captain in the care of goods transported, as well as shall be solidarily liable for the damages occasioned to their cargoes.
for the safety of passengers.
However, under the same Article (Art 587), this direct liability is
The shipowner is directly and primarily responsible in tort resulting in a
collision at sea, and it may not escape liability on the ground that it
exercised due diligence in the selection and supervision of the
moderated and limited by the ship agent's or ship owner's right of vessels's officer and crew. This direct responsibility is recognized in
abandonment of the vessel and earned freight. This expresses the Article 618 of the Code of Commerce under which the captain shall be
universal principle of limited liability under maritime law. The most civilly liable to the ship agent, and the latter is the one liable to third
fundamental effect of abandonment is the cessation of the persons. To admit the defense of due diligence of a bonus paterfamilias
responsibility of the ship agent/owner. In other words, the ship (in the selection and vigilance of the officers and crew) would render
owner's or agent's liability is merely co-extensive with his interest nugatory the solidary liability established by Article 827 of the Code of
in the vessel such that a total loss thereof results in its extinction. Commerce for the greater protection of injured parties. The owner of a
"No vessel, no liability" expresses in a nutshell the limited liability vessel who had caused the same to sail without licensed officers is
rule. The total destruction of the vessel extinguishes maritime liens liable for the injuries caused by the collision over and beyond the value
ARTICLE 588. Neither the shipowner nor the ship agent shall be
of negligence on the part of the shipowner. (Aboitiz v. General Accident liable for the obligations contracted by the captain, if the latter
Fire) exceeds the powers and privileges pertaining to him by reason of
In cases involving the limited liability of shipowners, the initial his position or conferred upon him by the former.
burden of proof of negligence or unseaworthiness rests on the Nevertheless, if the amounts claimed were invested for the benefit
claimants. However, once the vessel owner or any party asserts the of the vessel, the responsibility therefor shall devolve upon its
right to limit its liability, the burden of proof as to lack of privity or
knowledge on its part with respect to the matter of negligence or
unseaworthiness is shifted to it. (Monarch Incurance v. CA)
owner or agent.
Ship agent one appointed to manage and operate the vessels of the
The rule is to the effect that the right of abandonment of shipowner, bound to provisions and victual them, and to render
vessels, as a legal limitation of a shipowner's liability, does not apply to reports on the operations of the vessels, authorized to appoint
cases where the injury or average was occasioned by the shipowner's
own fault. Art. 587 speaks only of situations where the fault or
negligence is committed solely by the captain. Where the shipowner is
subagents remaining responsible to the shipowner.
(Philamgen v. CA)
other individuals who have been drawn into the venture as shippers
CA)
vessel such that a total loss thereof results in its extinction.
the insurance thereon. Despite the total loss of the vessel therefore, its The total destruction of the vessel extinguishes a maritime lien, as there
insurance answers for the damages that a shipowner or agent may be
held liable for by reason of the death of its passengers. (Vasquez v. CA)
is no other any res to which it can attach.
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This partnership shall be governed by the resolutions of the ARTICLE 597. The ship agent shall designate and come to terms
majority of the members. with the captain, and shall contract in the name of the owners,
If the part owners should not be more than two, the disagreement who shall be bound in all that refer to repairs, details of
of views, if any, shall be decided by the vote of the member having equipment, armament, provisions of food and fuel, and freight of
the largest interest. If the interests are equal, it should be decided the vessel, and, in general, in all that relate to the requirements of
by lot.
The person having the smallest share in the ownership shall have
navigation.
ARTICLE 598. The ship agent may not order a new voyage, or
one vote; and proportionately the other part owners as many make contracts for a new charter, or insure the vessel, without the
votes as they have parts equal to the smallest one.
may have in the vessel, without interfering with the navigation.
subsidiarily liable for the solvency of the insurer.
to him.
vessel, necessary for navigation.
the persons who voted for the resolution.
repair, equipment, and provisioning of the vessel in the port of ARTICLE 601. Should there be any profits, the co-owners may
departure shall bind the minority, unless the minority members demand of the managing agent the amount corresponding to their
renounce their interests, which must be acquired by the other co- interests by means of an executory action ("accion ejecutiva"),
owners, after a judicial appraisement of the value of the portion or without any other requisite than the acknowledgment of the
portions assigned.
The resolutions of the majority relating to the dissolution of the
partnership and sale of the vessel shall also be binding on the
signatures on the instrument approving the account.
ARTICLE 602. The ship agent shall indemnify the captain for all
minority. the expenses he may have incurred with funds of his own or of
The sale of the vessel must be made at public auction, subject to
the provisions of the law of civil procedure, unless the co-owners
unanimously agree otherwise, saying always the right of
others, for the benefit of the vessel.
ARTICLE 603. Before the vessel sets out to sea the ship agent may
repurchase and redemption provided for in Article 575.
interests, the matter shall be decided by lot.
will of the members.
ARTICLE 595. The ship agent, whether he is at the same time the
fulfillment of their contracts, except on the following grounds:
a.
b.
Insubordination in serious matters;
Robbery;
owner of the vessel, or a manager for an owner or for an c. Theft;
association of co-owners, must have the capacity to trade and d. Habitual drunkenness;
must be recorded in the merchant's registry of the province. e. Damage caused to the vessel or to its cargo through malice
The ship agent shall represent the ownership of the vessel, and
may, in his own name and in such capacity, take judicial and
or manifest or proven negligence. (Art. 605)
extrajudicial steps in matters relating to commerce.
ARTICLE 596. The ship agent may discharge the duties of captain
ARTICLE 604. If the captain or any other member of the crew
should be discharged during the voyage, they shall receive their
salary until they return to the port where the contract was made,
of the vessel, subject in every case to the provision of Article 609. unless there should be just cause for the discharge, all in
If two or more co-owners apply for the position of captain, the
disagreement shall be decided by a vote of the members; and if
the vote should result in a tie, it shall be decided in favor of the co-
accordance with Article 636 and following of this Code.
be a tie, the matter shall be decided by lot. contracts, except by reason of insubordination in serious matters,
robbery, theft, habitual drunkenness, or damage caused to the
negligence.
may not be discharged unless the ship agent returns to him the 1. Bring on board the proper certificate and documents and a
amount of his interest therein, which, in the absence of agreement copy of the Code of Commerce;
between the parties, shall be appraised by experts appointed in 2. Keep a Log Book, Accounting Book and Freight Book;
the manner established in the law of civil procedure.
has been instituted, the latter is found to be insolvent.
12. Demand a pilot while entering or leaving a port. (Art. 612)
SECTION TWO - CAPTAINS AND MASTERS OF VESSELS discretionary authority to decide what the safety of the ship and of its
crew and cargo specifically requires on a stipulated ocean voyage
ARTICLE 609. Captains, masters or patrons of vessels must be
Filipinos, have legal capacity to contract in accordance with this
code, and prove the skill, capacity, and qualifications necessary to
(Inter-Orient Maritime Enterprises Inc. vs. CA).
of the position. provisioning of the vessel unless he has expressly bound himself
personally or has signed a bill of exchange or promissory note in his
If the owner of a vessel desires to be the captain thereof, without
having the legal qualifications therefor, he shall limit himself to the
financial administration of the vessel, and shall intrust the
name. (Art. 620)
said ordinances and regulations.
respectively. 7.
8.
For arrivals under stress;
Damages due to non-observance of marine regulations. (Art.
Nature of position (3-fold character):
1.
2.
General agent of the shipowner;
Technical director of the vessel;
618)
whose flag he navigates.
Qualifications:
command of a vessel. 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
1. Filipino citizen; representative of the country under whose flag he navigates. In his role
2. Legal capacity to contract; as general agent of the shipowner, the captain has authority to sign bills
3. Must have passed the required physical and mental of lading, carry goods aboard and deal with the freight earned, agree
examinations required for licensing him as such. (Art. 609)
Inherent powers:
upon rates and decide whether to take cargo. The ship captain, as
agent of the shipowner, has legal authority to enter into contracts with
respect to the vessel and the trading of the vessel, subject to applicable
1. Appoint crew in the absence of ship agent; limitations established by statute, contract or instructions and
2. Command the crew and direct the vessel to its port of regulations of the shipowner. To the captain is committed the
destination; governance, care and management of the vessel. Clearly, the captain is
3. Impose correctional punishment on those who, while on vested with both management and fiduciary functions. A ship's captain
board vessel, fail to comply with his orders or are wanting in discipline; must be accorded a reasonable measure of discretionary authority to
4. Make contracts for the charter of vessel in the absence of decide what the safety of the ship and of its crew and cargo specifically
ship agent. requires on a stipulated ocean voyage. The captain has control of all
5. Supply, equip, and provision the vessel; and departments of service in the vessel, and reasonable discretion as to its
6. Order repair of vessel to enable it to continue its voyage. (Art. navigation. It is the right and duty of the captain, in the exercise of
610)
2. From the consignee of the cargo; merchantman, the master must be left free to exercise his own best
marine casualty occurs, in such instructions. (Inter-Orient v. NLRC) continue and finish its voyage; but if he should arrive at a point
where there is a consignee of the vessel, he shall act in
When jettison of cargo occurs it is the duty of the captain to effect the
adjustment, liquidation, and distribution of the general average; and his
omission to take these steps constitutes an actionable dereliction of
concurrence with the latter.
(Standard Oil v. Castelo)
of Article 583, and with the provisions of the law of civil procedure.
"Yotai Maru." (Smith Bell v. CA)
and equipped, purchasing all that may be necessary for the unloading, and the freightage they give. In this same book he shall
5. To remain constantly on board the vessel with the crew while Captain Master
the cargo is being taken on board and to carefully watch the
stowage thereof; not to consent to the loading of any merchandise
General agent of shipowner Found in smaller boats
or matter of a dangerous character, such as inflammable or
Technical director
explosive substances, without the precautions which are
Representative of the flag of the
recommended for their packing, handling and isolation; not to
government
permit the carriage on deck of any cargo which by reason of its
Found in ocean vessels
arrangement, volume, or weight makes the work of the sailors
difficult, and which might endanger the safety of the vessel; and if,
on account of the nature of the merchandise, the special character
PILOT
of the shipment, and principally the favorable season in which it is A person duly qualified, and licensed, to conduct a vessel into or out of
undertaken, merchandise may be carried on deck, he must hear ports, or in certain waters.
the opinion of the officers of the vessel and have the consent of The term generally connotes a person taken on board at a particular
the shippers and of the ship agent. place for the purpose of conducting a ship through a river, road or
6. To demand a pilot at the expense of the vessel whenever channel, or from a port.
required by the navigation, and principally when he has to enter a Master pro hac vice for the time being in the command and navigation
port, canal, or river, or has to take a roadstead or anchoring place
with which neither he nor the officers and crew are acquainted.
7. To be on deck on reaching land and to take command on
of the ship.
Liablity of Pilot
before the local authority. GENERAL RULE: On compulsory pilotage grounds, the Harbor Pilot is
9. To take the necessary steps before the competent authority in responsible for damage to a vessel or to life or property due to his
order to record in the certificate of the vessel in the registry of negligence.
vessels the obligations which he may contract in accordance with EXCEPT:
Article 583. 1. Accident caused by force majeure or natural calamity provided the
10. To place under good care and custody all the papers and pilot exercised prudence and extra diligence to prevent or minimize
belongings of any members of the crew who might die on the damages.
vessel, drawing up a detailed inventory, in the presence of 2. Countermand or overrule by the master of the vessel in which case
passengers, or, in their absence, of members of the crew as the registered owner of the vessel is liable. (Sec.11, Art.III PPA Admin
witnesses.
11. To conduct himself according to the rules and precepts
contained in the instructions of the ship agent, being liable for all
Order 03-85)
anything else, the books and papers, and then the articles of most
from the dangers of navigation. (Far Eastern v. CA)
borne by him exclusively.
regard to its deposit, preservation and custody.
penalties which may be proper.
of his duties.
agent.
agent or the shippers. ARTICLE 618. The captain shall be civilly liable to the ship agent,
and the latter to the third persons who may have made contracts
privateer- warships
from liability.
ARTICLE 619. The captain shall be liable for the cargo from the
mate, and shall deliver to the captain the original record of the time it is delivered to him at the dock or afloat alongside the at the
proceedings, stamped and folioed, with a memorandum of the port of loading, until he delivers it on the shore or on the
folios, which he must rubricate, in order that it may be presented discharging wharf at the port of unloading, unless the contrary
to the judge or court of the port of destination.
The statement of the captain shall be accepted if it is in
accordance with those of the crew and passengers; if they
has been expressly agreed upon.
ARTICLE 620. The captain shall not be liable for the damages
disagree, the latter shall be accepted, always saying proof to the caused to the vessel or to the cargo by force majeure; but he shall
contrary.
perform the other formalities required by the regulations of the
exchange or promissory note in his name. make the proper protest, signed by him and by one other officer,
in the log book, and shall obey the captain, who alone shall be
ARTICLE 631. The sailing mate shall be responsible for all the
rigging or tackle of the vessel, or pledges or sells merchandise or damages caused to the vessel and the cargo by reason of his
provisions outside of the cases and without the formalities negligence or want of skill without prejudice to the criminal
prescribed in this Code, shall be liable for the principal, interests, liability which may arise, if a felony or misdemeanor has been
and costs, and shall indemnify for the damages he may cause.
He who commits fraud in his accounts shall pay the amount
defrauded and shall be subject to the provisions of the Penal
committed.
Code.
3. If the vessel should change owner or captain. (Art. 647)
ARTICLE 627. The sailing mate, as the second chief of the vessel,
4. To assign to each sailor the work he is to do on board, in
accordance with the instruction received and to see that it is
promptly and accurately carried out.
and unless the agent orders otherwise, shall take the place of the 5. To take charge under inventory of the rigging and all the
captain in cases of absence, sickness, or death, and shall then equipment of the vessel, if it should be laid up, unless the ship
assume all his powers, duties, and responsibilities.
the cargo by reason of his negligence. (Arts. 628 - 631) instruments and tools pertaining thereto, the fuel, the lubricating
material and, finally, whatever is entrusted to an engineer on
board a vessel.
ARTICLE 628. The sailing mate must provide himself with charts 3. He shall keep the engines and boilers in good condition and
of the seas in which he will navigate with the astronomical tables state of cleanliness, and shall order what may be proper in order
and instruments for observation which are in use and which are that they may always be ready to work with regularity, being liable
necessary for the discharge of his duties, being liable for the for the accidents or damages which his negligence or want of skill
accidents which may arise by reason of his omission in this may cause to the motor apparatus, to the vessel and to the cargo,
regard.
the voyage. the motor apparatus, and shall advise him whenever it may be
necessary to stop the engines for some time, or when any other
remember this for the bar: Binnacle Book
ARTICLE 630. In order to change the course and to take the one
incident occurs in his department of which the captain should be
immediately informed, besides frequently advising him of the
consumption of fuel and lubricating material.
most convenient for a good voyage of the vessel, the sailing mate 6. He shall keep a book or registry called the "engine book," in
shall come to an agreement with the captain. If the latter should which shall be entered all the date referring to the work of the
object, the sailing mate shall state to him the proper observations engines, such as, for example, the number of furnaces heated, the
in the presence of the other officers of the sea. If the captain vacuum in the condenser, the temperature, the degree of
stated, taking the information from the Binnacle Book.
ARTICLE 633. The second mate shall take command of the vessel
for one vessel should sign for another one, the second contract
shall be void, and the captain may choose between forcing him to
fulfill the service to which he first bound himself, or at his expense
in case of the inability or disqualification of the captain and the to look for a person to substitute him.
sailing mate, assuming in such case their powers and Furthermore, he shall lose the wages earned on his first contract,
responsibility.
Second Mate
to the benefit of the vessel for which he had signed.
A captain who, knowing that a seaman is in the service of another
vessel, should have made a new agreement with him without
Takes command of the vessel in case of the inability or disqualification having required of him the permission referred to in the preceding
of the captain and the sailing mate, assuming in such case their powers paragraphs, shall be subsidiarily responsible to the captain of the
and responsibilities. vessel to which the seaman first belonged, for that part of the
F Third in command indemnity, referred to in the third paragraph of this article, which
F Duties:
1.
2.
Preserve the hull and rigging of the vessel;
Arrange well the cargo;
the seaman may not be able to pay.
Crew
3. Discipline the crew; The aggregate of seamen who man a ship, or the ships company.
4. Assign work to crew members; Hired by the ship agent, where he is present and in his absence, the
5. Inventory the rigging and equipment of the vessel, if laid up. captain hires them, preferring Filipinos, and in their absence, he may
(Art. 632)
Engineers
take in foreigners, but not exceeding 1/5 of the crew. (Art. 634)
6.
Keep an Engine Book;
Supervise all personnel maintaining the engine. (Art. 632)
6. Desertion. (Art. 637)
ARTICLE 643. If the vessel and her cargo should be totally lost, by
Code which concern them, stating in said document that they reason of capture or wreck, all rights shall be extinguished, both
were read. as regards the crew to demand any wages whatsoever, and as
If the book contains the requisites prescribed in Article 612, and regards the ship agent to recover the advances made.
there should not appear any signs of alterations in its entries, it If a portion of the vessel or of the cargo, or of both, should be
shall be admitted as evidence in questions which may arise saved, the crew engaged on wages, including the captain, shall
between the captain and the crew with respect to the agreements retain their rights on the salvage, so far as they go, on the
contained therein and the amounts paid on account of the same. remainder of the vessel as well as on the amount of the freightage
Every member of the crew may demand of the captain a copy, of the cargo saved; but sailors who are engaged on shares shall
signed by the latter, of the agreement and of the liquidation of his not have any right whatsoever on the salvage of the hull, but only
wages, as they appear in the book.
vessel may not rescind his contract or fail to comply therewith
accomplish the salvage.] [repealed by Salvage Law]
ARTICLE 644. A seaman who falls sick shall not lose his right to
conclusion thereof, the captain may not abandon any member of
his crew on land or on sea, unless, by reason of some crime, his
imprisonment and delivery to the competent authority in the first
wages during the voyage, unless the sickness is the result of his
own fault. At any rate, the costs of the attendance and cure shall
be defrayed from the common funds, in the form of a loan. If the
port touched should be proper, a matter obligatory for the captain.
ARTICLE 638. If, after the crew has been engaged, the voyage is
sickness should come from an injury received in the service or revoked by the will of the ship agent or of the charterers before or
defense of the vessel, the seaman shall be attended and cured at after the vessel has put to sea, or if the vessel is for the same
the expense of the common funds deducting, before anything reason given a destination different from that fixed in the
else, from the proceeds of the freightage the cost of the agreement with the crew, the latter shall be indemnified on
attendance and cure.
ARTICLE 645. If a seaman should die during the voyage, his heirs
account of the rescission of the contract, according to the cases
follows:
1. If the revocation of the voyage should be decided upon before
will be given the wages earned and not received according to his the departure of the vessel from the port, each sailor engaged
contract and the cause of his death, namely shall be given one month's salary, besides what may be due him,
If he died a natural death and was engaged on wages, that which in accordance with his contract, for the services rendered to the
may have been earned up to the date of his death shall be paid. vessel up to the date of the revocation.
If the contract was for a fixed sum for the whole voyage, half the 2. If the agreement should have been for a fixed amount for the
amount earned shall be paid if the seamen died on the voyage out, whole voyage, that which may be due for said month and days
and the whole amount if he died on the return voyage. shall be determined in proportion to the approximate number of
And if the contract was on shares and death occurred after the days the voyage should have lasted, in the judgment of experts, in
voyage was begun, the heirs shall be paid the entire portion due the manner established in the law of Civil Procedure; and if the
the seaman; but if the latter died before the departure of the vessel proposed voyage should be of such short duration that it is
from the port, the heirs shall not be entitled to claim anything. calculated at approximately one month, the indemnity shall be
If death occurred in the defense of the vessel, the seaman shall be fixed for fifteen days, discounting in all cases the sums advanced.
considered as living, and his heirs shall be paid, at the end of the 3. If the revocation should take place after the vessel has put to
voyage, the full amount of wages or the integral part of the profits sea, the seamen engaged for a fixed amount for the voyage shall
which may be due him as to others of his class. receive in full the salary which may have been offered them as if
In the same manner, the seaman captured while defending the the voyage had terminated; and those engaged by the month shall
vessel shall be considered present so as to enjoy the same receive the amount corresponding to the time they might have
benefits as the rest; but should he have been captured on account been on board and to the time they may require to arrive at the
of carelessness or other accident not related to the service, he port of destination, the captain being obliged, furthermore, to pay
shall only receive the wages due up to the day of his capture. the seamen in both cases, the passage to the said port or to the
port of sailing of the vessel, as may be convenient for them.
Shares refers to interest in the freight
passengers or the persons whom the vessel is transporting.
return voyage to the port where he enlisted.
ARTICLE 640. The following shall be just causes for the revocation
2. Repeated insubordination, want of discipline, or non-fulfillment of the voyage.
of the service. 1. A declaration of war or interdiction of commerce with the power
3. Repeated incapacity and negligence in the fulfillment of the to whose territory the vessel was bound.
service he should render. 2. The blockade of the port of its destination, or the breaking out
4. Habitual drunkenness. of an epidemic after the agreement.
5. Any occurrence which incapacitates the seaman to perform the 3. The prohibition to receive in said port the goods which make up
work entrusted to him, with the exception of that provided in the cargo of the vessel.
Article 644. 4. The detention or embargo of the same by order of the
6. Desertion. government, or for any other reason independent of the will of the
ship agent.
The captain may, however, before getting out on a voyage and
without giving any reason, refuse to permit a seaman whom he
may have engaged to go on board, and leave him on land, in
5. The inability of the vessel to navigate.
ARTICLE 641. If, after a voyage has been begun, any of the first
which case he will be obliged to pay him his wages as if he had three causes mentioned in the foregoing article should occur, the
rendered services. sailors shall be paid at the port which the captain may deem
This indemnity shall be paid from the funds of the vessel if the advisable to make for the benefit of the vessel and cargo,
captain should have acted for reasons of prudence and in the according to the time they may have served thereon; but if the
interest of the safety and good services of the farmer. Should this vessel is to continue its voyage, the captain and the crew may
not be the case, it shall be paid by the captain personally. mutually demand the enforcement of the contract.
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In case of the occurrence of the fourth cause, the crew shall Neither shall they be permitted to invest in the return trip more
continue to be paid half wages, if the agreement is by month; but than the profits from the ventures, unless there is an express
if the detention should exceed three months, the contract shall be
rescinded and the crew shall be paid what they should have
earned according to the contract if the voyage had been
authorization from the principals.
upon.
In the fifth case, the crew shall have no other right than to collect
the wages earned; but if the disability of the vessel should have
PART I - FORMS AND EFFECTS OF CHARTER PARTIES
liability which may be proper.
ARTICLE 642. If the crew have been engaged on shares, they shall
stipulated, the following circumstances:
1. The kind, name, and tonnage of the vessel.
2. Its flag and port of registry.
not be entitled, by reason of the revocation, delay, or greater 3. The name, surname, and domicile of the captain.
extension of the voyage, to anything but the proportionate part of 4. The name, surname, and domicile of the ship agent, if the latter
the indemnity which way be paid into the common funds of the should make the charter party.
vessel by the persons liable for said occurrences.
ARTICLE 647. The officers and the crew of the vessel shall be free
5. The name, surname, and domicile of the charterer; and if he
states that he is acting by commission, that of the person for
whose account he makes the contract.
from all obligations if they deem it proper, in the following cases: 6. The port of loading and unloading.
1. If, before beginning the voyage, the captain attempts to change 7. The capacity, number of tons or the weight or measurement
it, or a naval war with the power to which the vessel was destined which they respectively bind themselves to load and to transport,
occurs. or whether the charter party is total.
2. If a disease should break out and be officially declared an 8. The freightage to be paid, stating whether it is to be a fixed
epidemic in the port of destination. amount for the voyage or so much per month, or for the space to
3. If the vessel should change owner or captain.
passengers or the persons whom the vessel is transporting.
for all acts which are inseparable from his authority and office.
on the return voyage of the ship, and comes home with it.
required in the accounting book of the captain. (Art. 649)
supercargoes.
they are permitted to do. lay days and extra lay days which may have elapsed in loading
and unloading.
Kinds:
6. Marine insurance
b.
Time charter vessel is chartered for a fixed period of time
or duration of voyage.
Voyage or trip charter the vessel is leased for one or
(1) charter party series of voyages usually for purposes of transporting goods for
a) affreightment charterer leases the space
1. time charter
2. voyage charter
charterer.
b) non-negotiable
ends of justice.
o classes or charter party: Respondent carrier, in the ordinary course of business, operates as a
(1) as to extent of vessel hired common carrier, transporting goods indiscriminately for all persons.
(a) total where the whole of the vessel is When petitioner chartered the vessel M/V "Sun Plum", the ship captain,
chartered or its officers and compliment were under the employ of the shipowner
(b) partial where only a part of the vessel is and therefore continued to be under its direct supervision and control.
chartered; the charterer does not, as a rule, acquire the right to fix the Hardly then can we charge the charterer, a stranger to the crew and to
date when the vessel should depart, unless such right is expressly the ship, with the duty of caring for his cargo when the charterer did not
granted in the contract have any control of the means in doing so. This is evident in the
(2) as to time present case considering that the steering of the ship, the manning of
(a) until a fixed day for a definite number of days the decks, the determination of the course of the voyage and other
or month technical incidents of maritime navigation were all consigned to the
(b) for a voyage either outgoing or return, or officers and crew who were screened, chosen and hired by the
round trip
(3) as to freightage
(a) for a fixed amount for the whole cargo
shipowner. (Planter Products v. CA)
Parties:
(c) for so much per month cargo from one point to another, but the possession, command and
navigation of the vessels remained with Coastwise. Therefore,
Coastwise, by the contract of affreightment, was not converted into a
1. Ship owner or ship agent private carrier, but remained a common carrier. ICoastwise Lighterage
2.
Classes:
Charterer
v. CA)
charters servants. It transforms a common carrier into a private carrier.
The charterer becomes the owner of the vessel pro hac vice, just for
assumed responsibility only for the unloading of the cargo, i.e, after the
goods were already outside the custody of the vessel. In supervising
the unloading of the cargo and issuing Daily Operations Report and
that one particular purpose only. Because the charterer is treated as Statement of Facts indicating and describing the day-to-day discharge
owner pro hac vice, the charterer assumes the customary rights and of the cargo, Maritime acted in representation of the charterer and not
liabilities of the shipowner to third persons and is held liable for the of the vessel. It thus cannot be considered a ship agent. As a mere
expense of the voyage and the wages of the seamen. charterer's agent, it cannot be held solidarily liable with
Transcontinental for the losses/damages to the cargo outside the
2. Contract of Affreightment A contract whereby the owner of the
vessel leases part or all of its space to haul goods for others.
custody of the vessel. (Maritime Agencies v. CA)
and the private respondent. (Litonjua v. CA)
BAREBOAT OR DEMISE CONTRACT OF
An owner who retains possession of the ship, though the hold is the CHARTER AFFREIGHTMENT (TIME OR
property of the charterer, remains liable as carrier and must answer for
VOYAGE CHARTER)
any breach of duty as to the care, loading or unloading of the cargo.
Assuming that in the present case, the charter party is a demise or
bareboat charter, then Philipp Brothers is liable to Puromines, Inc., Charterer becomes liable to others Owner remains liable as
subject to the terms and conditions of the sales contract. On the other caused by its negligence carrier and must answer for
hand, if the contract between respondent and the owner of the vessel any breach of duty
MV "Liliana Dimitrova" was merely that of affreightment, then it cannot
be held liable for the damages caused by the breach of contract of Charterer regarded as owner pro Charterer is not regarded as
carriage, the evidence of which is the bills of lading. (Puromines v. Ca)
extra lay days days which follow after the lay days have elapsed
such carriers.
Development v. IAC)
4. Compliance with Art. 652 of the Code of Commerce
other vessel lets the whole or part of her to a merchant or other person
for the conveyance of goods, on a particular voyage, in consideration of
the payment of freight. A contract of affreightment may be either time
charter, wherein the leased vessel is leased to the charterer for a fixed
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period of time, or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter-party provides for the hire of the
If the vessel has been chartered by one shipper only, and there
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vessel only, either for a determinate period of time or for a single or should appear to be an error or fraud in her capacity, and the
consecutive voyage, the ship owner to supply the ship's store, pay for charterer should not wish to rescind the contract, when he has a
the wages of the master of the crew, and defray the expenses for the right to do so, the freightage shall be reduced in proportion to the
maintenance of the ship. Under a demise or bareboat charter on the cargo which the vessel can not receive, the person from whom the
other hand, the charterer mans the vessel with his own people and vessel is chartered being furthermore obliged to indemnify the
becomes, in effect, the owner for the voyage or service stipulated,
subject to liability for damages caused by negligence. If the charter is a
contract of affreightment, which leaves the general owner in possession
charterer for the losses he may have caused him.
third persons in respect of the ship. (Caltex v. Sulpicio)
cargo from one vessel to another. (Magellan Manufacturing v. CA)
damages.
(Ouano v. CA)
between that stated and her true capacity not being permissible.
put to sea with the cargo which it may have on board.
ARTICLE 671. After three-fifths of the vessel has been loaded, the
without the captain having received any instructions, the cargo
shall be deposited, and it shall be liable for the payment of the
freightage and expenses on its account during the delay, which
person from whom she is chartered may not, without the consent
of the charterers or shippers, substitute the vessel designated in
the charter party by another one, under the penalty of making
shall be paid from the proceeds of the part first sold.
Terms:
himself thereby liable for all the losses and damages occurring Primage - bonus to be paid to the captain after the successful voyage.
during the voyage to the cargo of those who did not consent to Demurrage the sum fixed in the charter party as a remuneration to
the change.
suffered thereby.
ARTICLE 673. The person from whom the vessel is chartered shall
Lay Days - days allowed to charter parties for loading and unloading
the cargo.
Extra Lay Days days which follow after the lay days have elapsed.
be liable for all the losses caused to the charterer by reason of the TRANSSHIPMENT OF GOODS
voluntary delay of the captain in putting to sea, according to the The act of taking cargo out of one ship and loading it in another, or the
rules prescribed, provided he has been requested, notarially or transfer of goods from the vessel stipulated in the contract of
judicially, to put to sea at the proper time.
ARTICLE 675. If the vessel has been chartered to receive the cargo
PART 3 - OBLIGATIONS OF CHARTERERS
ARTICLE 679. The charterer of an entire vessel may sub-charter
the whole or part thereof on such terms as he may consider most
in another port, the captain shall appear before the consignee convenient, the captain not being allowed to refuse to receive on
designated in the charter party; and, should the latter not deliver board the freight delivered by the second charterers, provided that
the cargo to him, he shall inform the charterer and wait his the conditions of the first charter are not change, and that the
instructions, the lay days agreed upon or those allowed by custom price agreed upon is paid in full to the person from whom the
in the port beginning to run in the meantime, unless there is an vessel is chartered, even though the full cargo is not embarked,
express, agreement to the contrary.
Should the captain not receive an answer within the time
necessary therefor, he shall make efforts to find freight; and
with the limitation established in the next article.
ARTICLE 680. A charterer who does not complete the full cargo he
should he not find any after the lay days and extra lay days have bound himself to ship shall pay the freightage of the amount he
elapsed, he shall make a protest and return to the port where the fails to ship, if the captain does not take other freight to complete
charter was made. the load of the vessel, in which case the first charterer shall pay
The charterer shall pay the freightage in full, discounting that
which may have been earned on the merchandise which may have
been carried on the voyage out or on the return trip, if carried for
the difference, should there be any.
round trip, should not be given any cargo on its return.
ARTICLE 676. The captain shall lose the freightage and shall
of the captain, and should thereby give rise to losses, by reason of
confiscation, embargo, detention, or other causes, to the person
from whom the vessel was chartered or to the shippers, the
indemnify the charterers if the latter should prove, even against person giving rise thereto shall be liable with the value of his
the certificate of inspection, if one has been made at the port of shipment and furthermore with his property, for the full indemnity
departure, that the vessel was not in a condition to navigate at the
time of receiving the cargo.
to all those injured through his fault.
damaged caused to the vessel.
the former. account, the charter party shall be respected, and the vendor shall
indemnify the purchaser if the former did not inform him of the
ARTICLE 684. If the charterer, without the occurrence of any of the
cases of force majeure mentioned in the foregoing article, should
wish to unload his merchandise before arriving at the port of
charter pending at the time of making the sale.
ARTICLE 690. The charter party shall be rescinded and all actions
destination, he shall pay the full freightage, the expenses of the arising therefrom shall be extinguished, if, before the vessel puts
arrival made at his request, and the losses and damages caused to sea from the port of departure, any of the following cases
the other shippers, should there be any.
his reason he may cause the other shippers.
ARTICLE 686. After the vessel has been unloaded and the cargo
3. The prohibition to receive at the said port the merchandise
constituting the cargo of the vessel.
4. An indefinite detention, by reason of an embargo of the vessel
placed at the disposal of the consignee, the latter must by order of the government, or for any other reason independent
immediately pay the captain the freightage due and the other of the will of the ship agent.
expenses for which said cargo may be liable. 5. The inability of the vessel to navigate, without fault of the
The primage must be paid in the same proportion and at the same captain or ship agent.
time as the freightage, all the changes and modifications to which
the latter should be subject also governing the former.
The unloading shall be made for the account of the charterer.
the containers but one-fourth part of their contents.
1. If before loading the vessel he should not agree with that stated
in the certificate of tonnage, or if there should be an error in the
statement of the flag under which she sails.
example of temporary cause - storm
freightage in proportion to the distance covered by the vessel.
1191CC
ARTICLE 689. At the request of the person from whom the vessel
is chartered the charter party may be rescinded:
1. If the charterer, at the termination of the extra lay days, does not
place the cargo alongside the vessel. In such case the charterer
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the charter and days terminate interdiction of commencement of the voyage, the captain shall have a right to
paying half of the
freightage;
2. Error in tonnage
without the cargo
being placed
alongside the vessel;
commerce;
2. Blockade;
3. Prohibition to
claim payment of what he may have furnished the passengers.
judge or court shall summarily fix it, after a declaration of experts.
continue the voyage and demand the full passage price.
act of the captain or of the crew.
to carry the goods. (Magellan Manufacturing v. CA)
cargo if improperly delivered through his fault.
ARTICLE 714. If before the vessel puts to sea the captain should
Bills of lading, in modern jurisdiction, are not those issued by masters of die or should cease to hold his position through any cause, the
vessels alone; they now comprehend all forms of transportation, shippers shall have the right to demand of the new captain the
whether by sea or land, and include the receipts for cargo transported. ratification of the first bills of lading, and the latter must do so,
As comprehending all methods of transportation, a bill of lading may be provided that all the copies previously issued be presented or
defined as a written acknowledgment of the receipt of goods and an returned to him, and it should appear from all examination of the
agreement to transport and to deliver them at a specified place to a cargo that they are correct.
person named or on his order. Such instruments are sometimes called The expenses arising from the examination of the cargo shall be
'shipping receipts,' 'forwarders' receipts,' and 'receipts for defrayed by the ship agent, without prejudice to the right of action
transportation'. The designation, however, is not material, and neither is of the latter against the first captain if he ceased to be such
the form of the instrument. If it contains an acknowledgment by the through his own fault. Should said examination not be made, it
carrier of the receipt of goods for transportation, it is, in legal effect, a shall be understood that the new captain accepts the cargo as it
bill of lading. (Mindanao Bus v. CIR)
ARTICLE 707. Four true copies of the original bill of lading shall be
appears from the bills of lading issued.
therein. issued without this proof, are presented, the captain shall apply to
the judge or court, so that he may order the deposit of the
ARTICLE 708. Bills of lading issued to bearer and sent to the
consignee shall be transferable by actual delivery of the
instrument; and those issued to order, by virtue of an
merchandise and their delivery, through him, to the proper person.
remedy where 2 or more bills issued: the captain shall deliver the
indorsement. goods to the holder of the bill which was first issued
In either case, the person to whom the bill of lading is transferred if the reason why the second bill of lading was issued is that the first
shall acquire all the rights and actions of the transferor or indorser one was lost: the captain must bring an action in court i.e., a complaint
with regard to the merchandise mentioned in the same.
ARTICLE 717. The delivery of the bill of lading shall effect the
provisions of this title shall be proof as between all those cancellation of all the provisional receipts of prior date given by
interested in the cargo and between the latter and the insurers, the captain or his subordinates for partial deliveries of the cargo
proof to the contrary being reserved for the latter.
ARTICLE 718. After the cargo has been delivered the bill of lading
erasure can be observed in any of them, those possessed by the which the captain signed, or at least the copy by reason of which
shipper or consignee signed by the captain shall be proof against the delivery is made, shall be returned to him, with the receipt for
the captain or ship agent in favor of the consignee or shipper; and the merchandise mentioned therein.
those possessed by the captain or ship agent signed by the The delay on the part of the consignee shall make him liable for
shipper shall be proof against the shipper or consignee in favor of the damages which such delay may cause the captain.
the captain or ship agent. Requisites for delivery of goods:
(1) the bill of lading covering such goods must be surrendered
(2) the one receiving the goods must issue a receipt for the same
The inclusion of the unmanifested cargoes in the Bill of Lading does not the owner of a ship borrows money for the use, equipment or repair of
satisfy the requirement of the aforequoted sections of the Tariff and the vessel, and for a definite term, and pledges the ship (or the keel
Customs Code. Nowhere in the said section is the presentation of a Bill and bottom of the ship) as a security for its repayment, with maritime or
of Lading required, but only the presentation of a Manifest containing a extraordinary interest on account of the maritime risks to be borne by
true and accurate description of the cargoes. While a manifest is a the lender, it being stipulated that if the ship be lost in the course of the
declaration of the entire cargo, a bill of lading is but a declaration of a specific voyage, or during the limited time, by any of the perils
specific part of the cargo and is a matter of business convenience enumerated in the contract, the lender shall also lose his money
based exclusively on a contract. The object of a manifest is to furnish loan on respondentia made on the goods laden on board the ship,
the customs officers with a list to check against, to inform our revenue and which are to be sold or exchanged in the course of the voyage, the
officers what goods are being brought into the country, and to provide a borrowers personal responsibility being deemed the principal security
safeguard against goods being brought into this country on a vessel for the performance of a contract, which is therefore called
and then smuggled ashore. In short, while a bill of lading is ordinarily respondentia; the lender must be paid his principal and interest, though
merely a convenient commercial instrument designed to protect the
importer or consignee, a manifest of the cargo is absolutely essential to
the ship perishes, provided the goods are saved.
manifest is true and accurate. (Macondray v. Comm. Of Cusotms)
Petitioner admits that it "received the bill of lading immediately after the
vessel at destination. (Art. 719) cargo at destination. (Art. 719)
v. CA)
SECTION TWO - LOANS ON BOTTOMRY AND RESPONDENTIA
ARTICLE 719. A loan in which under any condition whatever, the
BOTTOMRY/ RESPONDENTIA
ORDINARY LOAN (MUTUUM)
repayment of the sum loaned and of the premium stipulated
depends upon the safe arrival in port of the goods on which it is Not subject to Usury Law Subject to Usury Law
made, or of the price they may receive in case of accident, shall be
considered a loan on bottomry or respondentia.
things are safely transported, and which is lost if the latter are lost.
MARINE INSURANCE
LOAN ON BOTTOMRY OR
2. On the rigging.
3. On the equipment, provisions, and fuel.
4. On the engine, if the vessel is a steamer.
RESPONDENTIA 5. On the merchandise loaded.
If the loan in constituted on the hull of the vessel, the rigging,
Indemnity is paid after the loss Indemnity is paid in advance by equipment and other goods, provisions, fuel, steam engines, and
the freightage earned during the voyage on which the loan is
has occurred way of a loan
made shall also be considered as included in the liability for the
loan.
In case of loss of the vessel due In case of loss of the vessel due
If the loan is made on the cargo, all that which constitutes the
to a risk insured against, the to a marine peril, the obligation same shall be subject to the repayment; and if on a particular
obligation of the insurer becomes of the borrower to pay is object of the vessel or of the cargo, only the object concretely and
absolute
Consensual contract
extinguished
Real contract
specifically mentioned shall be liable.
of the crew or on the profits expected.
ARTICLE 728. The loan which the captain takes at the point of
acknowledgment of the signature shall be required.
residence of the owners of the vessel shall only affect that part
Contracts which are not reduced to writing shall not give rise to
thereof which belongs to the captain, if the other owners or their
judicial action.
the indorser.
pro rata.
already be burdened by prior loans
interest of each one. (Art. 735)
incumbent upon him who received the loan.
agreed upon.
(4) shipwrecks
foregoing article.
ARTICLE 733. Should the period during which the lender shall run
The person whose property has been saved must contribute to
reimburse the damage caused or expense incurred if the situation
constitutes general average.
the risk not have been stated in the contract, it shall last, with Classes:
regard to the vessel, engines, rigging, and equipment, from the 1. Particular or Simple Average
moment said vessel puts to sea until she drops anchor in the port
of destination; and with regard to the merchandise, from the time
they are loaded at the shore or wharf of the port of shipment until
2. Gross or General Average
Where both vessel and cargo are saved, it is general average; where
they are unloaded in the port of consignment.
reach.
Article 580. which the port pilot did not anticipate, hence, accidental. General or
gross averages include "all the damages and expenses which are
express agreement to the contrary.
from the captain, the vessel, and the freightage. 5. Delivery of the minutes to the
maritime judicial authority of the
PARTICULAR OR SIMPLE
GROSS OR GENERAL
first port, within 24 hours from
arrival,
6. Ratification by captain under
oath. (Arts. 813-814)
Definition
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As a rule, general or gross averages include all damages and expenses If, on the contrary, the merchandise transferred should be saved
which are deliberately caused in order to save the vessel, its cargo, or and the vessel should be lost, no liability may be demanded of the
both at the same time, from a real and known risk. While the instant
case may technically fall within the purview of the said provision, the
formalities prescribed under Article 813 10 and 814 of the Code of
salvage.
(Phil. Home Assurance v. CA)
voyage. (Rule IX, York-Antwerp Rule)
common carrier. (American Home Assurance v. CA)
ARTICLE 810. The owner of the goods which gave rise to the
certain measures necessary, they may be executed under his
responsibility, without prejudice to the right of the shippers to
proceed against the captain before the competent judge or court,
expense or suffered the damage shall bear the simple or particular if they can prove that he acted with malice, lack of skill, or
averages.
ARTICLE 815. The captain shall direct the jettison, and shall order
7. The damage caused to the vessel which had to be opened, the goods cast overboard in the following order:
scuttled or broken in order to save the cargo. 1. Those which are on deck, beginning with those which
8. The expenses for the treatment and subsistence of the embarrass the maneuver or damage of the vessel, preferring, if
members of the crew who may have been wounded or crippled in possible, the heaviest ones with the least utility and value.
defending or saying the vessel. 2. Those which are below the upper deck, always beginning with
9. The wages of any member of the crew held as hostage by those of the greatest weight and smallest value, to the amount and
enemies, privateers, or pirates, and the necessary expenses which
he may incur in his imprisonment, until he is returned to the
vessel or to his domicile, should he prefer it.
number absolutely indispensable.
Jettison
10. The wages and victuals of the crew of a vessel chartered by Act of throwing cargo overboard in order to lighten the vessel.
the month, during the time that it is embargoed or detained by Order of goods to be cast overboard:
force majeure or by order of the government, or in order to repair 1. Those which are on the deck, preferring the heaviest one
the damage caused for the common benefit. with the least utility and value;
11. The depreciation resulting in the value of the goods sold at 2. Those which are below the upper deck, beginning with the
arrival under stress in order to repair the vessel by reason of
gross average.
one with greatest weight and smallest value. (Art. 815)
12. The expenses of the liquidation of the average.
distributed between the vessel and cargo from which it came. by means of the bill of lading. (Art. 816)
in the gross average and the owners thereof be entitled to The inability to 1. Lack of The shipowner or ship
indemnity, it shall be necessary insofar as the cargo is concerned continue voyage is provisions due agent is liable in case
that their existence on board be proven by means of the bill of due to lack of to negligence to of unlawful arrival
lading; and with regard to those belonging to the vessel, by means provisions, well- carry according under stress. But they
of the inventory prepared before the departure in accordance with founded fear of to usage and shall not be liable for
the first paragraph of Article 812.
consider advisable.
Steps:
following cases: 1. Captain should determine during the voyage if there is well
1. If the lack of provisions should arise from the failure to take the founded fear of seizure, privateers and other valid grounds;
necessary provisions for the voyage according to usage and 2. Captain shall assemble the officers and summon the persons
customs, or if they should have been rendered useless or lost interested in the cargo who may attend the meeting but without a right
through bad stowage or negligence in their care. to vote;
2. If the risk of enemies, privateers, or pirates should not have 3. The officers shall determine and agree if there is well-
been well known, manifest, and based on positive and provable founded reason after examining the circumstances. The captain shall
facts. have the deciding vote;
3. If the defect of the vessel should have arisen from the fact that it 4. The agreement shall be drafted and the proper minutes shall
was not repaired, rigged, equipped, and prepared in a manner be signed and entered in the log book;
suitable for the voyage, or from some erroneous order of the 5. Objections and protests shall likewise be entered in the
captain.
4. When malice, negligence, want of foresight, or lack of skill on
minutes.
the part of the captain exists in the act causing the damage.
Otherwise, the ship agent and the captain shall be jointly liable.
(3) by reason of any accident of the sea disabling it to navigate If the unloading should take place for both reasons, the expenses
shall be divided proportionately between the value of the vessel
When lawful When unlawful Who
expenses:
bears
and that of the cargo.
responsible for the same, except in cases of force majeure.
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price the merchandise would have brought if they had arrived in application of doctrine of last clear chance does not apply
good condition at the port of destination.
Article 819, shall precede the departure.
expert appraisal.
cargoes.
Fortuitous event/force majeure
No liability. Each bears its own loss. (Art. 830)
applicable to the use in which it cannot be determined which of The doctrine of res ipsa loquitur applies in case a moving vessel strikes
the two vessels has caused the collision.
ARTICLE 829. In the cases above mentioned the civil action of the
a stationary object, such as a bridge post, dock, or navigational aid.
(Far Eastern Shipping v. CA, Luzon Stevedoring vs. CA)
owner against the person causing the injury as well as the ARTICLE 833. A vessel which, upon being run into, sinks
criminal liabilities, which may be proper, are reserved.
bear its own damages.
be presumed as lost by reason of collision.
ARTICLE 834. If the vessels colliding with each other should have
ARTICLE 831. If a vessel should be forced by a third vessel to pilots on board discharging their duties at the time of the collision,
collide with another, the owner of the third vessel shall indemnify their presence shall not exempt the captains from the liabilities
the losses and damages caused, the captain thereof being civilly they incur, but the latter shall have the right to be indemnified by
liable to said owner.
may incur.
majeure, a vessel which is properly anchored and moored should ARTICLE 835. The action for the recovery of losses and damages
collide with those nearby, causing them damages, the injury arising from collisions cannot be admitted if a protest or
occasioned shall be considered as particular average of the vessel declaration is not presented within twenty-four hours before the
run into. competent authority of the point where the collision took place, or
that of the first port of arrival of the vessel, if in Philippine
COLLISION - Impact of two vessels both of which are moving. territory, and to the consul of the Republic of the Philippines if it
occurred in a foreign country.
Allision - Impact between a moving vessel and a stationary one.
contact
shipowner in maritime tort the first port of arrival, if in the Philippines and to the Philippine consul,
if the collision took place abroad. (Art. 835)
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ARTICLE 836. With respect to damages caused to persons or to this Act shall be construed as repealing any existing provision of the
the cargo, the absence of protest may not prejudice the persons Code of Commerce which is now in force, or as limiting its application."
interested who were not on board or were not in a condition to In case of collision, both the owner and the agent are civilly
make known their wishes.
earned during the voyage.
v. CA)
considered a superfluity. (Ibid.)
thing at sea, or on the coast.
appurtenances should not be sufficient to cover all the liabilities, Burden of liability the captain is liable where: in case of the wreck or
the indemnity due by reason of the death or injury of persons shall stranding is due to the
have preference. (1) malice, negligence, or lack of skill of the captain;
(2) because the vessel put to sea was insufficiently repaired and
Rule of limited liability in case of collisions, the liability of the vessel
owner is limited to the value of the vessel and the freightage earned
during the voyage; consequently, his property, other than such vessel
equipped.
ARTICLE 842. The goods saved from the wreck shall be specially
and freightage earned during the voyage cannot be made to answer for bound for the payment of the expenses of the respective salvage,
his liability arising from collision with other vessels. and the amount thereof must be paid by the owners of the former
before they are delivered to them, and with preference over any
ARTICLE 839. If the collision should take place between Philippine
vessels in foreign waters, or if having taken place in the open
seas, and the vessels should make a foreign port, the Consul of
other obligation if the merchandise should be sold.
and conclusion.
ARTICLE 844. A captain who may have taken on board the goods
the universally accepted doctrine that the shipmaster or captain is saved from the wreck shall continue his course to the port of
merely the representative of the owner who has the actual or destination, and on arrival shall deposit the same, with judicial the
constructive control over the conduct of the voyage. intervention, at the disposal of their legitimate owners.
COGSA, in no uncertain terms, restricts its application "to all contracts In case he changes his course, if he can unload them at the port of
for the carriage of goods by sea to and from Philippine ports in foreign which they were consigned, the captain may make said port if the
trade." Under Section 1 thereof, it is explicitly provided that "nothing in shippers or supercargoes present and the officers and
agreement or by a judicial decision. Note: In order to attribute to the carrier any damage to the shipment
that may be found, inspection of the goods should be done at pier-side.
ARTICLE 845. If on the vessel there should be no person
interested in the cargo who can pay the expenses and freightage
corresponding to the salvage, the competent judge or court may
(Bankers vs. CA)
thereof.
SHIPWRECK
bill of lading describes the cargo as a container simply and it states the
contents of the container either as advised by this shipper or prefaced
by the phrase said to contain. (STC) Clearly then, the matter of
It is the loss of the vessel at sea as a consequence of its grounding, or quantity, description and conditions of the cargo is the sole
running against an object in sea or on the coast. It occurs when the responsibility of the shipper. The carrier, by signifying in the bill of lading
vessel sustains injuries due to a marine peril rendering her incapable of that it is a receipt for the number of packages shown above had
navigation. explicitly admitted that the containerized shipments had actually the
If the wreck was due to malice, negligence or lack of skill of the captain, number of packages declared by the shipper in the bill of lading. This
the owner of the vessel may demand indemnity from said captain. (Art. conclusion is bolstered by the stipulation printed in the bill of lading,
841) unless expressly acknowledged and agreed to. This express
The rules on collision or allision, as may be pertinent, can equally apply acknowledgment of the carrier makes the case at bar an exception to
to shipwrecks. the doctrine enunciated in United States Lines. The rule enunciated in
United States Lines applies to a situation where the carrier of the
SPECIAL CONCEPTS
ARRASTRE SERVICE
containerized cargo simply admits the information furnished by the
shipper with regard to the goods it shipped as reflected in the bill of
lading but not where the carrier of the containerized cargo makes an
A contract for the unloading of goods from a vessel. explicit admission as to the weight, measurement marks, numbers,
Applicability: Overseas trade only. (Commercial Law Review, C. quality contents, and value, etc. In its stead, what governs is the dictum
Villanueva, 2004 ed.) that the bill of lading shall be prima facie evidence of the receipt by the
Significance: When a person brings in cargo from abroad, he cannot carrier of the goods as therein described. As the petitioner prim facie
unload and deliver the cargo by himself. The unloading must be done received all the shipments in the sealed containers, it has the burden to
by the arrastre operator, which will then deliver the cargo to the rebut the conclusion that it received the same without shortage. The
importer. (Commercial Law Review, C. Villanueva, 2004 ed.)
3.
Similar to a common carrier (Northern Motors v. Prince Line)
Solidary liability with the common carrier
CARRIAGE OF GOODS BY SEA ACT/COGSA (C.A. No. 65)
Fire Insurance v. E. Razon, Inc.)
STEVEDORING SERVICE
CONGRESS OF THE UNITED STATES, BE ACCEPTED, AS IT IS
HEREBY ACCEPTED BY THE NATIONAL ASSEMBLY
The carriage of goods from the warehouse or pier to the holds of the Numbered Five hundred and twenty-one, entitled: "Carriage of
vessel. (Chief of Staff vs. CIR)
As understood in the port business, the term consists of the handling of
cargo from the hold of the ship to the dock, in case of pier-side
Goods by Sea Act";
work. (Ibid.)
application.
Approved: October 22,1936.
safe for their reception carriage and preservation.
Be it enacted by the Senate and House of Representatives of the (2) The carrier shall properly and carefully load, handle, stow,
United States of America in Congress assembled, That every bill
of landing or similar document of title which is evidence of a
contract for the carriage of goods by sea to or from ports of the
carry, keep, care for, and discharge the goods carried.
(3) After receiving the goods into his charge the carrier, or the
United States, in foreign trade, shall have effect subject to the master or agent of the carrier, shall, on demand of the shipper,
provisions of the Act. issue to the shipper a bill of lading showing among other things
a) The leading marks necessary for identification of the
TITLE I goods as the same are furnished in writing by the shipper before
the loading of such goods starts, provided such marks are
SECTION 1. When used in this Act
(a) The term "carrier" includes the owner or the charterer who
stamped or otherwise shown clearly upon the goods if uncovered,
or on the cases or coverings in which such goods are contained,
in such a manner as should ordinarily remain legible until the end
enters into a contract of carriage with a shipper.
regulates the relations between a carrier and a holder of the same.
received, or which he has had no reasonable means of checking.
articles of every kind whatsoever, except live animals and cargo (4) Such a bill of lading shall be prima facie evidence of the receipt
which by the contract of carriage is stated as being carried on by the carrier of the goods as therein described in accordance
deck and is so carried.
(d) The term "ship" means any vessel used for the carriage of
with paragraphs (3) (a), (b), and (c) of this section: Provided, That
nothing in this Act shall be construed as repealing or limiting the
application of any part of the Act, as amended, entitled "An Act
goods by sea. relating to bills of lading in interstate and foreign commerce,"
approved August 29, 1916 (U. S. C. title 49, secs. 81-124),
(e) The term "carriage of goods" covers the period from the time
when the goods are loaded on to the time when they are
commonly known as the "Pomerene Bills of Lading Act."
discharged from the ship.
(6) Unless notice of loss or damage and the general nature of such
such foreign country loss or damage be given in writing to the carrier or his agent at the
As to contracts for the carriage of goods by sea from a foreign country port of discharge before or at the time of the removal of the goods
to the Philippines, the Civil Code shall primarily govern under authority into the custody of the person entitled to delivery thereof under
of Article 1766 CC the contract of carriage, such removal shall be prima facie
Where the CC contains no provisions pertinent to the point in evidence of the delivery by the carrier of the goods as described
question, the provisions of the Code of Commerce and special laws, in the bill of lading. If the loss or damage is not apparent, the
such as the COGSA, shall govern notice must be given within three days of the delivery.
Should there by any conflict between the provisions of the Code of Said notice of loss or damage may be endorsed upon the receipt
Commerce and those of said Act, under Section 1 of said Act, the for the goods given by the person taking delivery thereof.
former shall prevail The notice in writing need not be given if the state of the goods
has at the time of their receipt been the subject of joint survey or
Risks
inspection.
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In any event the carrier and the ship shall be discharged from all (m) Wastage in bulk or weight or any other loss or
liability in respect of loss or damage unless suit is brought within damage arising from inherent defect, quality, or vice of the goods;
one year after delivery of the goods or the date when the goods (n) Insufficiency of packing;
should have been delivered: Provided, That if a notice of loss or (o) Insufficiency of inadequacy of marks;
damage, either apparent or concealed, is not given as provided for (p) Latent defects not discoverable by due diligence; and
in this section, that fact shall not affect or prejudice the right of (q) Any other cause arising without the actual fault and
the shipper to bring suit within one year after the delivery of the privity of the carrier and without the fault or neglect of the agents
goods or the date when the goods should have been delivered or servants of the carrier, but the burden of proof shall be on the
In the case of any actual or apprehended loss or damage the person claiming the benefit of this exception to show that neither
carrier and the receiver shall give all reasonable facilities to each the actual fault or privity of the carrier nor the fault or neglect of
other for inspecting and tallying the goods.
(7) After the goods are loaded the bill of lading to be issued by the
the agents or servants of the carrier contributed to the loss or
damage.
carrier, master, or agent of the carrier to the shipper shall, if the (3) The shipper shall not be responsible for loss or damage
shipper so demands, be a "shipped" bill of lading Provided, That if sustained by the carrier or the ship arising from any cause without
the shipper shall have previously taken up any document of title to
such goods, he shall surrender the same as against the issue of
the "shipped" bill of lading, but at the option of the carrier such
the act, fault, or neglect of the shipper, his agents, or servants.
lading.
(5) Neither the carrier nor the ship shall in any event be or become
relieving the carrier or the ship from liability for loss or damage to liable for any loss or damage to or in connection with the
or in connection with the goods, arising from negligence, fault, or transportation of goods in an amount exceeding $600 per package
failure in the duties and obligations provided in this section, or lawful money of the United States, or in case of goods not shipped
lessening such liability otherwise than as provided in this Act, in packages, per customary freight unit, or the equivalent of that
shall be null and void and of no effect. A benefit of insurance in sum in other currency, unless the nature and value of such goods
favor of the carrier, or similar clause, shall be deemed to be a have been declared by the shipper before shipment and inserted
clause relieving the carrier from liability. in the bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be conclusive
Rights and Immunities
SECTION 4. (1) Neither the carrier nor the ship shall be liable for
on the carrier.
and preservation in accordance with the provisions of paragraph
exemption under the section.
(2) Neither the carrier nor the ship shall be responsible for loss or
(6) Goods of an inflammable, explosive, or dangerous nature to
the shipment whereof the carrier, master or agent of the carrier,
has not consented with knowledge of their nature and character,
damage arising or resulting from may at any time before discharge be landed at any place or
(a) Act, neglect, or default of the master, mariner, pilot, or destroyed or rendered innocuous by the carrier without
the servants of the carrier in the navigation or in the management compensation, and the shipper of such goods shall be liable for all
of the ship; damages and expenses directly or indirectly arising out of or
(b) Fire, unless caused by the actual fault or privity of the resulting from such shipment. If any such goods shipped with
carrier; such knowledge and consent shall become a danger to the ship or
(c) Perils, dangers, and accidents of the sea or other cargo, they may in like manner be landed at any place, or
navigable waters; destroyed or rendered innocuous by the carrier without liability on
(d) Act of God; the part of the carrier except to general average, if any.
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or
Surrender of Rights and Immunities and increase of
(l) Saving or attempting to save life or property at sea; part all or any of his rights and immunities or to increase any of
issued to the shipper.
the liability of the owners of seagoing vessels.
parties; but if bills of lading are issued in the case of a ship under SECTION 9. Nothing contained in this Act shall be construed as
charter party, they shall comply with the terms of this Act. Nothing permitting a common carrier by water to discriminate between
in this Act shall be held to prevent the insertion in a bill of lading competing shippers similarly place in time and circumstances,
of any lawful provision regarding general average. either (a) with respect to the right to demand and receive bills of
Special Conditions
SECTION 11. Where under the customs of any trade the weight of
such.
special agreement.
shipper.
SECTION 13. This Act shall apply to all contracts for carriage of
subrogee of the shipper or consignee even if said insurer has not yet goods by sea to or from ports of the United States in foreign trade.
paid the shipper or consignee (Filipino Merchants Ins. Co. v. Alejandro) As used in this Act the term "United States" includes its districts,
cases of misdelivery or conversion not covered prescriptive period is territories, and possessions: Provided, however, That the
10 years for contracts or 4 years for tortious obligations (Ang v. Philippine legislature may by law exclude its application to
American Steamship Agencies) transportation to or from ports of the Philippine Islands. The term
an extrajudicial demand for damages does not toll prescription in the "foreign trade" means the transportation of goods between the
COGSA (DOLE Philippines, Inc. v. Maritime Co. of the Philippines) ports of the United States and ports of foreign countries. Nothing
when period renewed for another year by NCC and CC F. H. in this Act shall be held to apply to contracts for carriage of goods
Stevens & Co. v. Nordeuscher Lloyd) by sea between any port of the United States or its possessions,
shipper, consignee or legal holder of bill may invoke prescriptive and any other port of the United States or its possession:
period from the language of Sec. 3(6), it seems clear that the notice Provided, however, That any bill of lading or similar document of
of loss or damage is required to be filed not necessarily by the shipper title which is evidence of a contract for the carriage of goods by
but also by the consignee or any legal holder of the bill of lading sea between such ports, containing an express statement that it
exception to 1-year prescriptive period: express agreement of the shall be subject to the provisions of this Act, shall be subjected
parties (Universal Shipping Lines, Inc. v. CA) hereto as fully as if subject hereto as fully as if subject hereto by
the express provisions of this Act: Provided, further, That every
bill of lading or similar document of title which is evidence of a
SECTION 7. Nothing contained in this Act shall prevent a carrier or contract for the carriage of goods by sea from ports of the United
a shipper from entering into any agreement, stipulation, condition, States, in foreign trade, shall contain a statement that it shall have
reservation, or exemption as to the responsibility and liability of
the carrier or the ship for the loss or damage to or in connection
with the custody and care and handling of goods prior to the
effect subject to the provisions of this Act.
which the goods are carried by sea.
SECTION 8. The provisions of this Act shall not affect the rights
with that of foreign nations is prejudiced the provisions, or any of
them, of Title I of this Act, or by the laws of any foreign country or
countries relating to the carriage of goods by sea, the President of
and obligations of the carrier under the provisions of the Shipping the United States, may, from time to time, by proclamation,
Act, 1916, or under the provisions of section 4281 to 4289, suspend any or all provisions of Title I of this Act for such periods
less than ten days from the issue of the proclamation.
The one-year period shall run from delivery of the last package and is
provisions of this Act, effective during any period when title I not suspended by extrajudicial demand. (Dole Phils.,Inc. vs. Maritime
hereof, or any part thereof, is suspended, shall be subject to all
provisions of law now or hereafter applicable to that part of Title I
Co.,148 SCRA 118)
which may have thus been suspended. The one-year period shall run from delivery to the arrastre operator and
not to the consignee. (Union Carbide Phils, Inc. vs. Manila Railroad
SECTION 15. This Act shall take effect ninety days after the date of
its approval; but nothing in this Act shall apply during a period not
to exceed one year following its approval to any contract for the
Co.,SCRA 359)
of any such contract as aforesaid.
Alejandro; Mayer Steel Pipe Corp. vs. CA)
Approved, April 16, 1936.
APPLICABILITY
The transportation must be:
Carriage by Air
Carriage by Sea
1.
2.
Water/maritime transportation;
for the carriage of goods; and
Involves international
transportation
May be domestic
Philippine port).
Transportation to and from the
Philippines
Transportation to the Philippines
parties. (Clause paramount or paramount clause)
Applies to both passengers and
goods
Applies to goods only
IMPORTANT FEATURES:
1.
2.
Amount of carriers liability
Notice of damage
Covers loss, damage, delay and
misdelivery
Covers loss or damage only
3. Prescriptive period
Notice of the above is a condition
Notice of loss not necessary
AMOUNT OF CARRIERS LIABILITY
Under the Sec. 4(5), the liability limit is set at $500 per package or
precedent for filing claims
trade.
THE SALVAGE LAW
within three days from delivery. saving a vessel or its cargo from shipwreck, shall be entitled to a
like reward.
Note: The filing of a notice of claim is not a condition precedent.
PRESCRIPTIVE PERIOD
Salvage compensation allowed to persons by whose voluntary
assistance a ship at sea or her cargo or both have been saved in whole
Action for loss or damage to the cargo should be brought within one or in part from impending sea peril, or such property recovered from
year after:
a.
b.
Delivery of the goods (delivered but damaged goods); or
The date when the goods should have been delivered (non-
actual peril or loss, as in cases of shipwreck, derelict or recapture
Two concepts:
delivery). (Sec. 3[6])
American Steamship Agencies Inc.) and damage arising from delay or
actual peril or loss, as in cases of shipwreck, derelict or recapture.
Requisites:
the things saved may be found.
4. Services are successful, total or partial.
Subjects of Salvage:
objection is made to such sale.
c. The advertisement within the thirty days subsequent to the
salvage, in one of the local newspapers or in the nearest
1. Ship itself; newspaper published, of all the details of the disaster, with a
2. Jetsam goods which are cast into the sea, and there sink and statement of the mark and number of the effects requesting all
remain under water;
3. Floatsam or Flotsam goods which float upon the sea when cast
overboard;
interested persons to make their claims.
may be found again by the owners (p.173, Judge Diaz).
to deliver a salvaged vessel or cargo to the Collector of Customs.
Elements of salvage:
subsequent to the publication of the advertisement prescribed in
sub-section (c) of Section five, the things save shall be sold at
public auction, and their proceeds, after deducting the expenses
(1) a marine peril and the proper reward shall be deposited in the insular treasury. If
(2) service voluntarily rendered when not required as an existing duty or three years shall pass without anyone claiming it, one-half of the
from special contract deposit shall be adjudged to him who saved the things, and the
(3) success, in whole or in part, or that services rendered contributed to
such success
other half to the insular government.
sea, or on the coast
Arrival under stress the ship is not lost, and is still able to go to its
b. He who shall have commenced the salvage in spite of
opposition of the captain or his representative; and
c. He who shall have failed to comply with the provisions of
destination, though damaged or injured.
change its nature (Erlanger)
circumstances.
ed. p. 616)
to the provincial treasurer or municipal mayor. salving vessel, it is of capital importance to take into consideration the
use and service of the said vessel as an indispensable instrument for
SECTION 4. After the salvage is accomplished, the owner or his
representative shall have a right to the delivery of the vessel or
things saved, provided that he pays, or gives a bond to secure, the
the salvage, as well as the danger to which it was exposed
SECTION 11. From the proceeds of the sale of the things saved
expenses and the proper reward. shall be deducted, first, the expenses of their custody,
The amount and sufficiency of the bond, in the absence of conservation, advertisement, and auction, as well as whatever
agreement, shall be determined by the Collector of Customs or by taxes or duties they should pay for their entrance; then there shall
which shall not exceed fifty per cent of such amount remaining.
different persons shall have intervened the reward shall be divided Taking passengers from a sinking ship, without rendering any service in
between them in proportion to the services which each one may rescuing the vessel, is not a salvage service, being a duty of humanity
have rendered, and, in case of doubt, in equal parts.
Those who, in order to save persons, shall have been exposed to
the same dangers shall also have a right to participation in the
and not for reward.
reward. general average
Shipwreck is applicable to salvage law because its a derelict
Here, more than 1 person has intervened
One is duty-bound to save persons. This is according to jurisprudence.
value.
Enacted: February 4, 1916
CONTRACT OF TOWAGE
as pay on the principle of quantum meruit or as a remuneration pro
opere et labore, but as a reward given for perilous services, voluntarily
rendered, and as an inducement to mariners to embark in such
A contract whereby one vessel, usually motorized, pulls another, dangerous enterprises to save life and property. The amount should be
whether loaded or not with merchandise, from one place to another, for liberal enough to cover the expenses and to give an extra sum as a
a compensation. It is a contract for services rather than a contract of reward for the services rendered. There is no fixed rule for salvage
carriage. allowance. The allowance rests in the sound discretion of the court or
SALVAGE TOWAGE
judge who hears the case, hears the witnesses testify, and is
acquainted with the environments in golden scales, but should be made
as a reward for meritorious voluntary services, rendered at a time when
danger of loss is imminent and for the purpose of encouraging others in
Governed by special law (Act No. Governed by Civil Code on like services.
2616) contract of lease A salvor, in the view of the maritime law, has an interest in the property;
this is called a lien, but it never goes, in the absence of a contract
Requires success, otherwise no Success is not required expressly made, upon the idea of a debt due by the owner to the salvor
payment for services rendered, but upon the principle that the service creates a
property in the thing saved. He is, to all intents and purposes, a joint
Must be done with the consent of Only the consent of the owner and if the property is lost he must bear his share like the other
the captain/crewmen tugboat owner is needed joint owners.
A derelict is defined as "A ship or her cargo which is abandoned
and deserted at sea by those who were in charge of it, without any
Vessel must be involved in an Vessel need not be involved in
accident an accident hope of recovering it (sine spe recuperandi), or without any
intention of returning to it (sine animo revertendi). If those in
Fees distributed among crewmen Fees belong to the tugboat charge left within the intention of returning, or of procuring
owner assistance, the property is not derelict, but if they quitted the
RULES ON SALVAGE REWARD
property with the intention of finally leaving it, it is derelict, and a
change of their intention and an attempt to return will not change
of their intention and an attempt to return will not change its
1. The reward is fixed by the RTC judge in the absence of nature.
agreement or where the latter is excessive. (Sec. 9) When a vessel is found at sea, deserted, and has been abandoned by
2. The reward should constitute a sufficient compensation for the master and crew without the intention of returning and resuming
the outlay and effort of the salvors and should be liberal enough to offer possession, she is, in the sense of the law, derelict, abandoned, and
an inducement to others to render services in similar emergencies in the finder who take possession with the intention of saving her gains a
the future. right of possession which he can maintain against the true owner. The
3. If sold (no claim being made within 3 months from owner does not, indeed, renounce his right of property. This is not
publication), the proceeds, after deducting expenses and the salvage presumed to be his intention, nor does the finder acquire any such
claim, shall go to the owner; if the latter does not claim it within 3 years, right. But the owner does abandon, temporarily, his right of possession,
50% of the said proceeds shall go to the salvors, who shall divide it which is transferred to the finder who becomes bound to preserve the
equitably, and the other half to the government. (Secs. 11-12) property with good faith and bring it to a place of safety for the owner's
4. If a vessel is the salvor, the reward shall be distributed as use; and he acquires a right to be paid for his services a reasonable
follows: and proper compensation out of the property itself. He is not bound to
a. 50% to the shipowner; part with the possession until it is paid, or the property is taken into the
Starr Weigand 2012
Transportation Law|Ampil
- 70 -
possession of the law preparatory to the amount of salvage being contract for towage is in fact towage, then the crew does not have
legally ascertained. any interest or rights in the remuneration pursuant to the contract.
The evidence proves that the Nippon was in peril; that the captain left in But if the owners of the respective vessels are of a salvage nature,
order to protect his life and the lives of the crew; that the animo the crew of the salvaging ship is entitled to salvage, and can look
revertendi was slight. The argument of the defendant-appellant to the to the salvaged vessel for its share.
effect that the ship was in no danger is a bit out of place in view of the As the vessel-owner, William Lines, Incorporated, had expressly waived
statement of the captain that she would sink with the first gale, coupled its claim for compensation for the towage service rendered to
with the fact that a typhoon was the cause of her stranding. The defendant, it is clear that plaintiff, whose right if at all depends upon and
abandonment of a vessel by all on board, when the vessel is in not separate from the interest of his employer, is not entitled to payment
peril, will justify third parties in taking possession with the bona
fide intention of saving the vessel and its cargo for its owners. The
mental hope of the master and the crew will in no way affect the
for such towage service. (Barrios v. Go Thong)
The services rendered by the launch Triton are more in the nature of
possession nor the right to salvage. salvagerather than towage. A vessel, though not abandoned, may be
The salvage was conducted with skill, diligence and efficiency. Capt. the subject of salvage if at the time the services were rendered there
Robinson, who was the only one of the experts who had had any was a probable, threatening danger of the vessel or its cargo being
experience in handling wet copra, unqualifiedly approved Manila as a damaged. On the date of the occurrence, there was such an imminent
base for operations. Lebreton, a stevedore, testified that he would have danger (there was a typhoon and it was feared that there would be a
gotten some of his materials from Hongkong but that he would have flood and consequently strong current in the river) and that the
freighted the salved cargo to Manila. All other things being equal, the barangay needed assistance in her trip downstream to Aparri.
fact that Hongkong is forty sailing hours from Scarborough Reef while Mere towage service is confined to vessels that have received no
Manila is less than twenty-four sailing hours would make Manila by far injury or damage, and mere towage reward is payable in those
the more logical base. Some of the witnesses contended that other cases only where the vessel receiving the service is in the same
methods should have been used. They testified that "grabs" or "clam condition she would ordinarily be in without having encountered
shells" would have brought better results, but none of these witnesses any damage or accident. If the vessel towed is by this means
had had any experience in unloading wet copra. Capt. Robinson was aided in escaping from a present or prospective danger, the
the only witness called who had had any experience in this class of service will be regarded as one of salvage, and the towage as
work. He testified that the only way all the copra could be gotten out merely an incident. If, on the other hand, the vessel thus assisted
was by sacks or by canvas slings; that "grabs" would be of no use is not encompassed by any actual or probable danger, and the
because of the inability to work with them between decks. The copra employment is simply for the purpose of expediting the voyage,
was in three layers. The top layer was dry, the middle layer was such service is towage and not salvage.
submerged every time the tide rose, and the lower layer was There is no negligence on the part of the patron of the launch with
submerged all of the time. It was manifestly impossible to keep these respect to the rope. It was used exclusively for towing and emergency
layers separate by using "grabs" or "clam shells." The estimates of the purposes. Although it was 2 years old, it was never used very often.
experts with regard to the time necessary to remove the cargo ranged The barangay was not overloaded. The trial court merely confused
from eight to twenty days. The greater portion of the cargo was brought gross tonnage with deadweight. That La Granja did not use the bigger
in by the plaintiffs within fifteen days. The delay after June 5 was due to launch Delfin is not negligence. The said launch was not available at
the difficulty in inducing laborers to work with wet copra. This difficulty that time. The crew was not on board, and Delfin was not suited to
would have arisen with any set of salvors and cannot be attributed to a rescue the barangay which was the in shallow waters.
lack of care or diligence on the part of the plaintiffs. (Erlanger & The patron of the launch was not wanting in the exercise of the degree
Galinger v. Swedish Asiatic)
the crew of the salvaging ship, for the following reasons: If the power than bamboo poles. Also the captain of the Matulin failed to give
skill. While the captain of the Matulin would not have been responsible Certificate of Public Certificate of Public Necessity
for an act of God by which the cascos were lost, it was his duty to Convenience
foresee what the weather was likely to be, and to take such precautions
Issued whenever the Issued upon approval of any
as were necessary to protect his tow. It was not an act of God by which
Commission finds that the franchise or privilege granted by
the cascos were lost; it was the direct result of the failure of the captain
operation of the proposed public any political subdivision of the
of the Matulin to meet the responsibilities which the occasion placed on
service will promote the public Philippines when in the judgment
him. To be exempt from liability because of an act of God the tug must
interests in a proper and suitable of the Commission, such
be free from any previous negligence or misconduct by which that loss
manner, for which a municipal or franchise or privilege will properly
or danger may have been occasioned. For, although the immediate or
legislative franchise is not conserve the public interest
proximate cause of the loss in any given instance may have been what
necessary
is termed an act of God, yet, if the tug unnecessarily exposed the two to
such accident by any culpable act or omission of its own, it is not
excluded. (Limpangco v. Yangco Steamship) A CPC or a CPCN constitutes neither a franchise nor a contract,
confers no property right, and is a mere license or a privilege. The
The law requires that there be a proper notice and hearing before the
public necessity cannot e made to wait, nor sacrificed for private Commissioner can exercise any of the 15 powers enumerated in this
convenience. Certificate of public convenience represent property rights section. (Agbayani)
to the extent that if the rights which any public utility is exercising The power to cancel or revoke a certificate may be exercised by the
pursuant to lawful orders of the Public Utility Commissioner has been Commission even without a formal charge, with the only limitation that
invaded by another public utility, in appropriate cases actions may be the holder of the certificate should be given his day in court. (Perez
maintained by the complainant public utility. (Agbayani)
The primordial consideration in granting franchises or certificates of
citing Collector of Internal Revenue v. Estate of F. P. Buan)
public convenience is public interest. It is a property and has a considerable value and can be the subject of
sale or attachment. (Cogeo-Cubao Operators and Drivers Assn. vs. CA,
PURPOSES:
1. To secure adequate, sustained service for the public at the
least possible cost;
207 SCRA 343, Raymundo vs. Luneta Motor Co.)
4. To prevent ruinous competition.
permanent, occasional or accidental, and done for general business
Under Sec. 20(g) of C.A. No. 146, the sale, etc. may be negotiated and
(8) an order for good cause suspending for a period not to exceed 30 completed before the approval by the proper authority. Its approval is
days any certificate or the exercise of any right or authority issued or not a condition precedent to the validity of the contract. The approval is
granted under this Act by order of the Commission, whenever such step
shall be necessary to avoid serious and irreparable damage or
inconvenience to the public or to private interests
necessary only to protect public interest.
(9) the authorized line of the oppositor are different from those applied The water transport service between Matnog and Allen is not a ferry
for by the applicant, the former cannot be considered to have boat service but a coastwise or interisland shipping service. Before
substantial interest in the application so as to require his personal private respondent may be issued a franchise or CPC for the operation
notification of the hearing of the said service as a common carrier, it must comply with the usual
requirements of filing an application, payment of the fees, publication,
adducing evidence at a hearing and affording the oppositors the
opportunity to be heard, among others, as provided by law. (San Pablo
POWERS REQUIRING PRIOR
NOTICE AND HEARING
POWERS EXERCISABLE
WITHOUT PRIOR NOTICE AND
HEARING
v. Pantranco South Express, Inc.)
The supervening passage of the RA 9295 and the filing by the shipping
company of an application for a new CPC under the new law rendered
1. Issuance of CPC or
1. Investigation any matter
the previous MARINA decision and the old CPC of no consequence,
there was no more justiciable controversy for the CA to decide and no
remedy to grant or deny. Due deference should have been given to the
CPCN;
concerning public service;
exercise by the MARINA of its sound administrative discretion in
2. Fixing of rates, tolls, and 2. Requiring operators to applying its special knowledge, experience and expertise to determine
charges;
furnish safe, adequate, and the technical and intricate factual matters relating to the new CPCs of a
3. Setting up of standards
and classifications;
3.
proper service;
Requiring public services to
shipping corporation. (Sta. Clara Shipping v. San Pablo)
It subordinates the prior applicant rule which gives the first applicant
Medina, 164 SCRA 36)
Commission) oppositor will not obtain sufficient profits to pay a dividend or
reasonable interest upon invested capital. (Perez citing Halili v. Ice and
What is the PRIOR APPLICANT RULE?
Presupposes a situation when two interested persons apply for a
certificate to operate a public utility in the same community over which
Cold Storage Industries)
granted the certificate.
RATE-FIXING POWER
The mere possibility of reduction in the earnings of a business is not
sufficient to prove ruinous competition. It must be shown that the
business would not have sufficient gains to pay a fair rate of interest on
The rate to be fixed must be just, founded upon conditions which are
fair and reasonable to both the owner and the public.
its capital. (Martires Ereno, Supra.)
----------oooOooo---------
the property employed in performing the service; and
2. One which is fair to the public for the service rendered.
done. (Erezo, et al. vs. Jepte 102 Phil 103).
Kabit System:
A system whereby a person who has been granted a certificate of
public convenience allows other persons who own motor vehicles to
operate under such license, for a fee or percentage of such earnings. It
is void and inexistent under Art. 1409, Civil Code.
Effects:
1. The transfer, sale, lease or assignment of the privilege
granted is valid between the contracting parties but not upon the public
or third persons. (Gelisan vs. Alday, 154 SCRA 388)
2. The registered owner is primarily liable for all the
consequences flowing from the operations of the carrier.
? The public has the right to assume that the registered owner is the
actual or lawful owner thereof. It would be very difficult and often
impossible, as a practical matter, for the public to enforce their rights of
action that they may have for injuries inflicted by the vehicle if they
should be required to prove who the actual owner is. (Benedicto vs.
IAC, 187 SCRA 547)
3. The thrust of the law in enjoining the kabit system is to
identify the person upon whom responsibility may be fixed with the end
in view of protecting the riding public (Lim vs. CA 373 SCRA 394).
4. The registered owner cannot recover from the actual owner
and the latter cannot obtain transfer of the vehicle to himself, both being
in pari delicto. (Teja Marketing vs. IAC)
5. For the better protection of the public, both the registered
owner and the actual owner are jointly and severally liable with the
driver. (Zamboanga Transportation Co. vs. CA)
Light & Ice Co., Inc. v. Mun. of Morong, Rizal)