LAW ON TRANSPORTATION AND PUBLIC UTILITIES
transportation of goods for hire as a public employment
Contract of Transportation person obligates himself to
transport persons or property from one place to another for a
consideration.
2 KINDS:
1. CARRIAGE OF PASSENGERS
Parties: common carrier & passenger (carried gratuitously or
not)
Passenger one who travels in a public conveyance by virtue of
contract, express or implied, with the carrier as to the payment
of fare or that which is accepted as an equivalent thereof
Perfection:
2 types of contracts of carriage of PASSENGERS:
> contract to carry (agreement to carry the passenger at
some future date) consensual contract and perfected by mere
consent
* AIRCRAFT perfected even without issuance of ticket as long
as there was already meeting of minds with respect to the
subject matter and consideration
> Contract of Carriage
real contract; not until the facilities of the carrier are actually
used can the carrier be said to have assumed the obligation of
the carrier; perfected by actual use.
* AIRCRAFT perfected if it was established that the passenger
had checked in at the departure counter, passed through
customs and immigration, boarded the shuttle bus and
proceeded to the ramp of the aircraft and baggage already
loaded to the aircraft.
* Public Utility Bus or Jeepneys or Street Cars once it stops it is
in effect making a continuous offer to riders; perfected when
passenger is already attempting to board the vehicle
* TRAINS perfected when a person:
a. purchased a ticket/ possess sufficient fare with which
to pay for his passage
b. presented himself at the proper place and in a
proper manner to be transported
c. has a bona fide intention to use facilities of the
carrier
2. CARRIAGE OF GOODS
Parties: shipper & carrier
Shipper the person who delivers the goods to the carrier for
transportation; pays the consideration or on whose behalf
payment is made
Consignee person to whom the goods are to be delivered. May
be the shipper himself or a third person who is not actually a
party to the contract
Perfection:
> contract to carry goods consensual
> contract of carriage - act of delivery of goods ( goods are
unconditionally placed in the possession and control of the
carrier and upon their receipt by the carrier for transportation)
CARRIER:
Common carriers (CC) (1732)
persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation,
offering their services to the public. (NOT the means of
transportation)
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one that holds itself out as ready to engage in the
and not as a casual occupation.
Tests for determining WON a party is a common carrier
of goods:
1. He must be engaged in the business of carrying goods
for others as a public employment, and must hold
himself out as ready to engage in the transportation of
goods for persons generally as a business and not as a
casual occupation.
2. He must undertake to carry good of the kind to which
his business is confined.
3. He must undertake to carry by the method by which his
business is conducted and over his established roads.
4. Transportation must be for hire.
Characteristics of Common carriers (CC):
no distinction between one whose principal business is
the transportation of persons/goods and one who does
such as an ancillary business (sideline)
no distinction between regular or scheduled basis and
one offering such service on an occasional, episodic or
unscheduled business
still a CC even if services offered to a limited clientele
(between the general public and a narrow segment of
the general population)
Still considered a CC even if he did not secure a
Certificate of Public Convenience
No distinction as to the means of transporting, as long
as it is by land, water or air
The Civil Code does not provide that the transportation
should be by motor vehicle
Still a CC even if he has no fixed and publicly know
route, maintains no terminals, and issues no tickets
pipeline operators are CCs not necessarily motor
vehicles (Case: First Philippine Industrial Corp. vs. CA)
Case: Jose Mendoza vs. Philippine Airlines Inc
- The test of whether one is a common carrier by air is
whether he holds out that he will carry for hire, so long
as he has room, goods of everyone bringing goods to
him for carriage, not whether he is carrying as a public
employment or whether he carries to a fixed place
CHARTER PARTY:
- Contract by which an entire ship or some
principal part thereof is let by the owner to another
person for a specified time or use.
Q: What is the effect of charter party?
A: It may transform a common carrier into a private carrier.
However, it must be a bareboat or demise charter where the
charterer mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated
2 types:
1. Contract of Affreightment
- involves the use of shipping space on vessels
leased by the owner in part or as a whole, to
carry goods for another
- CC = observe extraordinary diligence; in case
of loss, deterioration or destruction of goods of
goods, CCs are presumed to be at fault or
have acted negligently
- 2 types
i. Time charter: vessel is leased to the
charterer for a fixed period of time
ii. Voyage charter: ship is leased for a
single voyage
 2. Charter by demise/ Bareboat Charter
- whole vessel is let to the charterer with a
transfer to him of its entire command and
possession and consequent control over its
navigation including the master and the crew
who are his servants.
- charter includes both vessel and crewCC
becomes private carrier (PC) insofar as that
particular voyage is concerned
- if it is already a PC- ordinary diligence in the
carriage of goods will suffice
- PC = undertaking is a single transaction, not a
part of the general business or occupation,
although involving the carriage of goods for a
fee; NO presumption of negligence applies
whosoever alleges damage to or deterioration
of the goods carried has the burden of proving
that the cause was the negligence of the
carrier.
Distinction between Common Carriers and Private Carriers
COMMON CARRIER PRIVATE CARRIER
Extraordinary diligence in the Ordinary diligence in the
vigilance over the goods they carriage of goods will suffice
carry
In case of loss, destruction, or No such presumption applies
deterioration of goods, they to private carriers, for
are presumed to have been at whosoever alleges damage to
fault or to have acted or deterioration n of the goods
negligently; burden of proving carried has the onus of
otherwise rests on them proving that the cause was the
negligence of the carrier
Cannot stipulate that it is May validly enter into such
exempt from liability for the stipulation
negligence of its agents or
employees
Factors to be considered whether a carrier is common/private:
Law applicable
o Common Civil Code
o Private contract
Diligence required
o Common extraordinary diligence
o Private diligence of a good father of a family
Burden of proof in relation to negligence
o Common the carrier
o Private on the party having a claim against
the carrier
Case: Planters Products, Inc. vs. CA
- It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in
the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew
that a common carrier becomes private
True Test of Common Carrier Is the carriage of passengers or
goods, provided it has space, for all who opt to avail themselves
of its transportation service for a fee
Generally, private carriage is undertaken by spcial agreement
and the carrier does not hold hiself out to carry goods for the
general public
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours
International
- By definition, a contract of carriage is one whereby a
certain person or association of persons obligate
themselves to transport person, thing or new from one
place to another for a fixed price
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- It is obvious from the above definition that respondent
is not an entity engaged in the business of transporting
either passengers or goods and is therefore, neither a
private nor a common carrier. Its covenant with its
customers is simply to make travel arrangements in
their behalf.
- It is in this sense that the contract between the parties
in this case was an ordinary one for services and not
one of carriage; it is thus not bound under the law to
observe extraordinary diligence in the performance of
its obligation.
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND
STEVEDORING
Towage
- A vessel is hired to bring another vessel to another
place
- e.g. a tugboat may be hired by CC to bring the vessel
to a port (operator of tugboat not CC)
- in maritime law: towing for the mere purpose of
expediting her voyage without reference to any
circumstances of danger
Arrastre
- Arrastre operators functions has nothing to do with
the trade and business of navigation nor to the use or
operation of vessels
- Services are not maritime
- Functions of arrastre operator:
o Receive, handle, care for, and deliver all
merchandise imported and exported, upon or
passing over Government-owned wharves and
piers in the port
o Record or check all merchandise which may
be delivered to said port ant shipside
o Furnish light, and water services and other
incidental service in order to undertake its
arrastre service
- Such service is in face, no different from those of a
depositary or warehouseman
Stevedoring
- involves the loading and unloading of coastwise
vessels calling at the port.
>>> Common carriers are public utilities, impressed with public
interest and concern subject to regulation by the state.
GOVERNING LAWS
- read summary of rules on page 40 of book
Article 1766 (Civil Code). In all matters not regulated
by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and
by special laws.
NATURE OF BUSINESS
- Common Carriers exercise a sort of public office
- Consequently, common carriers are subject to
regulation by the State
REGISTERED OWNER RULE/REGISTRATION LAWS
- Governed by the Land Transportation and
Traffic Code and administered by the Land
Transportation Office
- The registered owner of a vehicle is liable fro
any damage caused by the negligent operation of the
vehicle although the same was already sold or
conveyed to another person at the time of the
accident.
- The registered owner is liable to the injured
party subject to his right of recourse against the
transferee or the buyer
 - Applicable in case of lease
- Registered owner not liable if vehicle was
Grounds for Valid Refusal to Accept Goods
taken form him without his knowledge and consent.
- GR: common carriers cannot lawfully decline
to accept a particular class of goods
Q: what is the purpose of such law?
- EXC: it appears that for some sufficient reason
A: The main aim of motor vehicle registration is to identify the
the discrimination against the traffic in such goods is
owner so that if any accident happens, or that any damage or
reasonable and necessary:
injury is caused by the vehicle on the public highways,
i. dangerous objects or substances
responsibility therefor can be fixed on a definite individual the
including dynamites and other explosives
registered owner.
ii. goods are unfit for transportation
iii. acceptance would result in
KABIT SYSTEM
overloading
- The registered owner rule is applicable to
iv. contrabands or illegal goods
people involved on a kabit system
v. goods injurious to health
- arrangement whereby a person who has been
vi. goods will be exposed to untoward
granted a certificate of public convenience allows other
danger like flood, capture by enemies and the
persons who own motor vehicles to operate them under his
like
license, sometimes for a fee or percentage of the earnings
vii. goods like livestock will be exposed
--- contrary to public policy (thus VOID and INEXISTENT)
to diseases
- parties to the kabit system cannot invoke
viii. strike
the same as against each other either to enforce their
ix. failure to tender goods on time
illegal agreement or to invoke the same to escape liability
--- pari delicto rule
Case: Fisher v. Yangco
- having entered into an illegal contract, neither
- factors in determining reasonable
can seek relief from the courts and each must bear the
discrimination include:
consequences of his acts
i. suitability to the vessel for the
- also applicable to aircrafts and vessels basic
transportation of such products;
rule that no person can operate a common carrier without
ii. reasonable possibility of danger or
securing a certificate of public convenience and necessity.
disaster resulting from their transportation in the
form and under the conditions in which they are
offered for carriage; and
iii. the general nature of the business
Case: Dizon vs. Octavio
done by the carrier.
- the primary factors considered in the granting of a
certificate of public convenience for the business of
(1) Hazardous and Dangerous Substances
public transportation is the financial capacity of the
- Carrier not properly equipped to transport dangerous
holder of the license, so that liabilities arising from
chemicals or explosives may validly refuse to accept
accidents may be duly compensated
the same for transport.
- Thus, for the safety of passengers and the public who
- Those which are not authorized by the Maritime
may have been wronged and deceived through the
Industry Authority to carry such goods may also validly
baneful kabit system, the registered owner of the
refuse the same for transport.
vehicle is not allowed to prove that another person has
- There must be a Special Permit to Carry from the
become the owner so that he may be thereby relived of
MARINA. (accept only if the said cargoes are covered by
responsibility
the necessary clearance from appropriate government
agencies)
CHAPTER 2
OBLIGATIONS OF THE PARTIES
(2) Unfit for Transport
- Carriers may refuse to accept goods that are unfit for
I. Obligations of the carrier
transportation
- These goods may by nature be unfit for transportation
A. DUTY TO ACCEPT
or are unfit because of improper packaging or defect in
- A common carrier granted a certificate of
their containers.
public convenience is duty bound to accept passengers
- However, carriers may accept the goods and limit its
or cargo without any discrimination.
liability by stipulation.
- It is illegal for domestic ship operators to
refuse to accept or carry passengers or cargo without
If by reason of well-founded suspicion of falsity in the
just cause. (Section 16, RA 9295)
declaration as to the contents of the package carrier should
decide to examine and investigate it in the presence of
Note: In air transportation, passengers with confirmed tickets
witnesses, with the shipper and consignee in attendance. If
who were not allowed to board are provided with denied
declaration of shipper is true, expenses occasioned by the
boarding compensation and priority boarding rules.
examination and of repacking the packages shall be for the
No compensation for refusal if it is because of:
account of the carrier
1. government requisition of the space
2. substitution of equipment of lesser capacity when
Even if the cause of the loss, destruction or deterioration of the
required by operational and or safety and/or other
goods should be caused by the character of the goods, or the
causes beyond the control of the carrier, and
faulty nature of the packing or of the containers, the common
3. if arrangements have been made for the passenger to
carrier must exercise due diligence to forestall or lessen the
take another flight in a comparable air transportation
loss.
which will arrive not later than three hours after the
time of flight on which the confirmed space is held is
B. DUTY TO DELIVER THE GOODS
supposed to arrive. (Civil Aeronautics Board Economic
Time of Delivery
Regulation)

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 - Where a carrier has made an express contract, the goods
must be delivered within a specified time otherwise he is
liable for any delay (indemnity for damages).
- In the absence of any agreement, goods must be delivered
at its destination within a reasonable time (depending on
the attending circumstances, nature of the goods; expected
date of arrival in the BOL may be considered).
- In the absence of a special contract, a carrier is NOT an
insurer against delay in transportation of goods
Consequences/Effects of Delay
- Excusable delays in carriage suspend, but do not generally
terminate, the contract of carriage; when the cause is
removed, the master must proceed with the voyage and
make delivery.
- During the detention or delay, vessel continues to be liable
as a common carrier, not a warehouseman, and remains
duty bound to exercise extraordinary diligence.
Article 1740 (NCC). If common carrier negligently delays in
transporting the goods, a natural disaster shall not free it from
responsibility.
Article 1747 (NCC). If common carrier delays , without just
cause, in transporting the goods or changes the stipulated or
usual route, the contract limiting its liability cannot be availed of
in case of the loss, destruction, or deterioration of the goods.
Note: read page 72 of book for other provisions.
(1) Abandonment
- In case of delay through the fault of the carrier, the
consignee may refuse to accept the goods or may
leave the goods in the hands of the carrier. It must be
communicated to the carrier in writing.
- This right must be exercised between the time of delay
and before the arrival of the goods at its destination.
- The carrier must pay the full value of the goods as if
they had been lost or mislaid.
Note: If abandonment is not made, indemnification for the
losses and damages by reason of the delay cannot exceed the
current price which the goods would have on the day and at the
place they are to be delivered.
The value of the goods which the carrier must pay in case of
loss or misplacement shall be that what is declared in the bill of
lading.
Consignee must not defer the payment of the expenses and
transportation charges of the goods otherwise carrier may
demand the judicial sale of the goods.
Case: Magellan Mfg. Marketing Corp. vs. CA
- Abandonment may also be made by virtue
stipulation or agreement between parties
(2) Rights of Passengers in Case of Delay
- As to the rights and duties of the parties strictly arising
out of delay, the Civil Code is silent. However, the Code
of Commerce provides for such a situation:
ARTICLE 698. In case a voyage already begun should be
interrupted, the passengers shall be obliged to pay the fare in
proportion to the distance covered, without right to recover for
losses and damages if the interruption is due to fortuitous
event of force majeure, but with a right to indemnity if the
interruption should have been caused by the captain
exclusively. If the interruption should be caused by the
disability of the vessel and a passenger should agree to await
the repairs, he may not be required to pay any increased price
APRIL LYNN L. URSAL Page 4
of passage, but his living expenses during the stay shall be for
his own account.
Note: the carrier is liable for any loss or damage, including any
pecuniary loss or loss of profit, which the passenger may have
suffered by reason thereof.
In case the vessel is not able to depart on time and the delay is
unreasonable, the passenger may opt to have his/her ticket
immediately refunded without any refund service fee from the
authorized issuing/ticketing office.
Where and to Whom Delivered
a. Place Goods should be delivered to the consignee in
the place agreed upon by the parties.
The shipper may change the consignment of the goods provided
that at the time of ordering the change of the consignee the bill
of lading signed by the carrier be returned to him, in exchange
for another wherein the novation of the contract appears. The
expenses occasioned by the change shall be for the account of
the shipper.
b. Consignee Delivery must generally be made to the
owner or consignee or to someone lawfully authorized
by him to receive the goods for his account or to the
holder of the negotiable instrument.
c. Delay to Transport Passengers A carrier is duty bound
to transport the passenger with reasonable dispatch
Effects of delayed and unfinished voyage in inter-island
vessels:
vessel cannot continue or complete her voyage for any
cause carrier is under obligation to transport the
passenger to his/her destination at the expense of the
carrier including free meals and lodging before the
passenger is transported to his/her destination; the
passenger may opt to have his/her ticket refunded in
full if the cause of the unfinished voyage is due to the
negligence of the carrier or to an amount that will
suffice to defray transportation cost at the shortest
possible route if the cause of the unfinished voyage is
fortuitous event.
vessel is delayed in arrival at the port of destination
free meals during mealtime
delay in departure at the point of origin due to carriers
negligence; fortuitous event - free meals during
mealtime; carrier not obliged to serve free meals
carrier is not obliged to inform passengers of sailing
schedule of the vessel
C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE
- Goods should be delivered in the same condition that
they were received and to transport the passengers
without encountering any harm or loss.
- Read page 79-80 for provisions
of
ARTICLE 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons,
with a due regard for all the circumstances. (Civil Code)
- Presumption of Negligence
- Two conditions for the birth of the presumption of
negligence:
1. there exists a contract between the passenger or the
shipper and the common carrier
2. the loss, deterioration, injury or death took place during
the existence of the contract
Doctrine of Proximate Cause there is presumption of
negligence
 If the goods are lost, destroyed or deteriorated, common carriers
are presumed to have acted negligently, unless they prove that
they observed extraordinary diligence. In case of death of or
injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence.
- Duration of Duty:
(1) Carriage of Goods
- Due diligence should be exercised the moment the
goods are delivered to the carrier.
- Goods are deemed delivered to the carrier when
the goods are ready for and have been placed in
the exclusive possession, custody and control of
the carrier for the purpose of their immediate
transportation and the carrier has accepted them
ARTICLE 1736. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed
in the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person
who has a right to receive them
ARTICLE 1737. The common carriers 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 shipper or owner has made use of the right of
stoppage in transitu. (common carrier becomes a
warehouseman ordinary diligence)
ARTICLE 1738. The extraordinary liability of the common
carrier continues to be operative even during the time the goods
are stored in a warehouse of the carrier at the place if
destination, until the consignee has been advised of the arrival
of the goods and has had reasonable opportunity thereafter to
remove them or otherwise dispose of them.
(2) Carriage of Passengers
By trains the extraordinary responsibility of common carrier
commences the moment the person who purchases the ticket
(or a token or card) from the carrier presents himself at the or closed list)
proper place and in a proper manner to be transported with a
bona fide intent to ride the coach.
* Mere purchase of a ticket does not of itself create the relation
of carrier and passenger but it is an element in the inception of
the relation.
* A proper person who enters upon the carriers premises
(station, ticketing office, or waiting room) with the intention of
becoming a passenger will ordinarily be viewed as assuming the
status of a passenger.
* One who goes to the railroad station to inquire as to the
possibility of securing passage on a freight train, which he
knows, by the rules of the company, is not allowed to carry
passengers, and to secure passage thereon if possible, is not
entitled to the rights of a passenger but is a mere trespasser.
* One who rides upon any part of the vehicle or conveyance
which is unsuitable or dangerous, or which he knows is not
intended for passengers, is not presumed to be a passenger.
* One who secures free passage by fraud or stealth is precluded
from recovery for injuries sustained through the negligence of
the carrier, for he has not assumed the status of a passenger.
* A person riding on a freight train, on a drivers pass or similar
arrangement, to look after livestock being transported and as
APRIL LYNN L. URSAL Page 5
incident to such transportation is, generally regarded as a
passenger for hire.
Motor vehicles like jeepneys and buses are duty bound to
stop their conveyances for a reasonable length of time in order
to afford passengers an opportunity to board and enter, and
they are liable for injuries suffered by boarding passengers
resulting from the sudden starting up or jerking of their
conveyances while they do so. Once a public utility bus or
jeepney stops, it is making a continuous offer to bus riders.
Case: Dangwa Transportation Company vs. CA
- When the bus is not in motion there is no necessity for a
person who wants to ride the same to signal his intention
to board. A public utility bus, once it stops, is in effect
making a continuous offer to bus riders
- The premature acceleration of the bus in this case was a
breach of such duty
Case: La Mallorca vs. CA
- Duty to exercise utmost diligence with respect to
passengers will not ordinarily terminate until the
passenger has, after reaching his destination, safely
alighted from the carriers conveyance or had a
reasonable opportunity to leave the carriers premises.
And what is reasonable time or a reasonable delay within
this rule is to be determined from all the circumstances.
Case: Aboitiz Shipping Corporation vs. CA
- Same ruling with La Mallorca vs. CA
- That reasonableness of time should be made to depend
on the attending circumstances of the case, such as the
kind of common carrier, the nature of its business, the
customs of the place, and so forth, and therefore
precludes a consideration of the time element per se
without taking into account such other factors
- The primary factor to be considered is the existence of a
reasonable cause as will justify the presence of the victim
on or near the petitioners vessel. We believe there exists
such a justifiable cause (baggage were left)
DEFENSES OF COMMON CARRIERS
Article 1734 (No other defense may be raised: exclusive
1. Flood, storm, earthquake, lightning, or other natural
disaster or calamity
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packing or in
the containers
5. Order or act of competent public authority
6. Exercise of extraordinary diligence
Fortuitous Event to be a valid defense must be established to
be the proximate cause of the loss
Note: Since common carrier is presumed is to be negligent, it
has been observed that the DOCTRINE of PROXIMATE CAUSE is
INAPPLICABLE to a contract of carriage. The injured passenger or
owner of goods need not prove causation to establish his case.
The absence of causal connection is only a matter of defense.
Requisites of Fortuitous Event:
1. The cause of the unforeseen and the unexpected
occurrence, or of the failure of the debtor to comply with
his obligation, must be independent of the human will
2. It must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen, it
must be impossible to avoid
3. The occurrence must be such as to render it impossible
for the debtor to fulfill his obligation in a normal manner
 4. The obligor (debtor) must be free from any participation
in or the aggravation of the injury resulting to the creditor
In order for the common carrier to be exempted from
responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or deterioration
of the goods.
Fire not considered as a natural calamity or disaster
Fire caused by lightning a natural calamity
Hijacking does not fall under the categories of exempting
causes; the common carrier is presumed to be at fault or to
have acted negligently unless there is a proof of extraordinary
diligence on its part
Mechanical defects damage or injury resulting from
mechanical defects is not a damage or injury that was caused
by fortuitous event; carrier is liable to its passengers for
damages caused by mechanical defects of the conveyance
(breakage of a faulty drag-link spring, fracture of the vehicles
right steering knuckle, defective breaks)
- One of the reason why carrier is made liable despite
the presence of mechanical defect is the absence of
privity between the passenger and the manufacturer
Case: Juntilla v. Fontanar
- Tire-blowouts was not considered as fortuitous event
although it was alleged that the tires were in good
condition; no evidence was presented to show that the
evidence were due to adverse road conditions the carrier
must prove all angles.
- The explosion could have been caused by too much air
pressure injected into the tires and the fact that the jeepney
was overloaded and speeding at the time of the accident.
OTHER INVALID DEFENSES
1. Damage to cargo due to EXPLOSION of another cargo
not attributable to peril of the seas or accidents of
navigation.
2. Damage by WORMS and RATS resulting to damage to
cargoes cant be cited as an excuse by the carrier.
3. Damage by WATER through a port which had been
left open or insufficiently fastened on sailing.
4. Carrier cannot escape liabilities to third persons if
damage was caused by BARRATRY where the master
or crew of the ship committed unlawful acts contrary to
their duties includes theft and fraudulently running
the ship ashore.
Cases:
1. Problem: A carrier bus on its way to its destination
encountered an engine failure, thus, it has to be
repaired for 2 days. And while in the repair shop, a
typhoon came resulting to the spoilage of cargoes.
Answer: A typhoon although a natural disaster, is not a
valid defense if it is shown that it was not the only
cause of the loss. Especially when the facts indicate
that the typhoon was foreseeable and could have been
detected through the exercise of reasonable care.
Cargoes should have been secured while the bus was
being repaired for 2 days.
2. Problem: A passenger told the driver that he has
valuable items in his bag which was placed under his
feet and he asked the driver (to which he is seated
near) to watch for the bag while he is asleep.
APRIL LYNN L. URSAL Page 6
(a) There have been incidents of throwing of stones at
passing vehicles in the North Express Way. While
the bus was traversing the super highway, a stone
hurled from the overpass and hit the passenger
resulting to injuries. Can the passenger hold the
bus liable for damages?
Answer: Yes. The incident was foreseeable due the
prior incidents of stone hurling. The bus should
have exercised utmost diligence and employed
adequate precautionary measures to secure safety
of passengers since the incident was foreseeable. .
HOWEVER, if the stone throwing was entirely
unforeseeable and the carrier exercised the utmost
diligence, then, the bus cant be held liable.
Nonetheless, the burden of proof is on the carrier
to prove such exercise of diligence. It is up to the
carrier to overthrow the presumption of
negligence.
If the passenger decides to file a case, al the
passenger has to do is to prove that she was a
passenger of the bus and that she suffered injuries
while on board the bus.
(b) Supposing that there were armed men who staged
a hold-up while the bus was speeding along the
highway. One of them stole the passengers bag
and wallet while pointing a gun him. Is the bus
liable?
Answer: No. Hand-carried luggages are governed
by necessary deposit. Besides, theft with use of
arms or through irresistible force is a force majeure
which exempts carriers from liability.
3. Hi-jacking cannot exculpate the carrier from liability if it
is shown that the employees of the carrier were not
overwhelmed by the hijackers and that there was no
showing of irresistible force. Since, there were 4
employers while there were only 2 hijackers and only
one of them was armed with bladed weapon.
ON THE OTHER HAND, a hijacking by 3 armed men is
an event which is considered to be beyond the control
of the carrier. Thus, the carrier may be adjudged from
liability if it can be proven that the hijacking was
unforeseeable.
Case: Philippine American General Insurance Co. vs. MCG
- Even in cases where a natural disaster is the proximate
and only cause of the loss, a common carrier is still
required to exercise due diligence to prevent or
minimize loss before, during and after the occurrence
of the natural disaster, for it to be exempt from liability
under the law for the loss of the goods
Case: Pilapil vs. CA
- Facts: a bystander alongside national highway hurled a
stone at the left side of the bus, hitting petition above
his left eye which resulted to partial loss of the left
eyes vision
- SC: A common carrier does not give its consent to
become an insurer of any and all risks to passengers
and goods. It merely undertakes to perform certain
duties to the public as the law imposes, and holds itself
liable for any breach thereof.
- The law does not make the carrier an insurer of the
absolute safety of its passengers
- Article 1763: A common carrier is responsible for
injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of
strangers, if the common carriers employees through
the exercise of the diligence of a good father of a
family could have prevented or stopped the act or
omission
 o Clearly, a tort committed by a stranger which
causes injury to a passenger does not accord
the latter a cause of action against the carrier.
The negligence for which a common carrier is
held responsible is the negligent omission by
the carriers employees to prevent the tort
from being committed when the same could
have been foreseen and prevented by them
Case: Franklin Gacal vs. PAL
- It is therefore not enough that the event should not
have been foreseen or anticipated, as is commonly
believed, but it must be one impossible to foresee or to
avoid.
- The mere difficulty to foresee the happening is not the
impossibility to foresee the same
PUBLIC ENEMY
- Presupposes a state of war and refers to the government of
a foreign nation at war with the country to which the carrier
belongs, though not necessarily with that to which the
owner of the gods owes allegiance.
- Thieves, rioter, and insurrectionists are not included. They
are merely private depredators for whose acts a carrier is
answerable.
- Rebels in insurrection against their own government are
generally not embraced in the definition of public enemy.
However, if the rebels hold a portion of territory, they have
declared their impendence, cast off their allegiance and has
organized armed hostility to the government, and the
authority of the latter is at the time overthrown, such an
uprising may take on the dignity of a civil war, and so
matured and magnified, the parties are belligerent and are
entitled to belligerent rights.
- Depredation by pirates (which are enemy of all civilized
nation) excuses the carrier from liability.
- Common carriers may be exempted from responsibility only
if the act of the public enemy has been the proximate and
only cause of the loss. Moreover, due diligence must be
exercised to prevent or at least minimize the loss
before, during and after the performance of the act
of the public enemy in order that the carrier may be
exempted from liability for the loss, destruction, or
deterioration of the goods.
IMPROPER PACKING
Character of the goods and defects in the packaging or in the
containers are defenses available to the common carrier.
Similarly, the Carriage of Good by Sea Act provides that carrier
shall not liable for:
1. Wastage in bulk or weight or any damages arising form
the inherent defect, quality or vice of goods;
2. Insufficiency of packing;
3. Insufficiency or inadequacy of the marks, or
4. Latent defects no discoverable by due diligence.
However, NCC likewise provides:
Art. 1742. Even if the loss, destruction, or deterioration
of the goods should be caused by the character of the
goods, or the faulty nature of the packing or the
containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
Thus, if the carrier accepted the goods knowing the fact of
improper packing or even if the carrier does not know
but the defect was nonetheless apparent upon ordinary
observation, it is not relived from liability for loss or injury to
goods resulting therefrom.
Cases:
APRIL LYNN L. URSAL Page 7
1. Problem: A carrier knowing that some of a cargo of
sacks of rice had big holes and others had openings
just loosely tied with strings resulting to the spillage of
rice during the trip. Thus, there was shortage in the
delivery of the cargoes. When sued due to the
shortage, the carrier interposed a defense that it was
not liable since the shortage was due to the defective
condition of the sacks. Decide.
Answer: Carrier must still exercise extraordinary
diligence if the fact of improper packing is known to the
carrier or its servants, or apparent upon ordinary
observation. If the carrier accepted the cargo without
protests or exception notwithstanding such condition,
he is not relived of liability for damage resulting
therefrom. Apply Article 1742.
ORDER OF PUBLIC AUTHORITY
Art. 1743. If through the order of public authority the
goods are seized or destroyed, the common carrier is not
responsible, provided said public authority had power to
issue order.
Cases:
1. Carrier was not excused from liability since the order of
an acting mayor was not considered as a valid order of
a public authority. It is required that public authority
who issued the order must be duly authorized to issue
the order.
2. Carriage of Goods by Sea Act provides that carrier
shall not responsible for loss or damage resulting from
arrest or restraint of princes, rulers, or people, or
seizure under legal process and from quarantine
restrictions.
DEFENSES IN CARRIAGE OF PASSENGERS
- Primary defense of carrier is exercise of extraordinary
diligence in transporting passengers. Even if there is a
fortuitous event, the carriers must also present proof of exercise
of extraordinary diligence.
Art. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or willful
acts of the carriers employees, although such
employees may have acted beyond the scope of their
authority or in violation of the orders of the common
carriers.
The liability does not cease even upon proof that they
exercised diligence in the selection and supervision of
their employees.
Art. 1763. Carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of
other passengers or of strangers, if the common
carriers employees through the exercise of the diligence
of a good father of a family could have prevented or
stopped the act or omission.
a. Employees
- Carrier is liable for the acts of its employees. It cant
escape liability by claiming that it exercised due
diligence in supervision and selection of its employees
(unlike in quasi-delicts).
Reasons for the rule:
1. Undertaking of the carrier requires that its passenger
that full measure of protection afforded by the exercise
of high degree of care prescribed by law, inter alia from
violence and insults at the hands of strangers and other
passengers, but above all, from the acts of the carriers
own servants.
 2. The liability of the carrier for the servants violation of
duty to performance of his contract to safely transport
the passenger, delegating therewith the duty of
protecting the passenger with utmost care prescribed
by law.
3. As between the carrier and the passenger, the former
must bear the risk of wrongful acts or negligence of the
carriers employees against passenger, since it, and not
the passenger, has the power to select and remove
them.
Rationale: On the other hand, if the ship owner derives
profits from the results of the choice of the captain and
the crew, when the choice turns out successful, it is
also just that he should suffer the consequences of an
unsuccessful appointment, by application of the rule of
natural law contained in the partidas --- that he who
enjoys the benefits derived from a thing must likewise
suffer the losses that ensue therefrom
- Note: Willful acts of the employees include theft
b. Other Passengers and Third Persons
- With respect to acts of strangers and other passengers
resulting in injury to a passenger, the availability of
such defense is also subject to the exercise of a carrier
of due diligence to prevent or stop the act or omission.
- Negligence of the carrier need not be the sole cause of
the damage or injury to the passenger or the goods.
The carrier would still be liable even if the contractual
breach concurs with the negligent act or omission of
another person.
Remember: the negligence of the other river in a collision is
NOT a prejudicial question to an action against the carriers
company.
Article 1759. Common carriers are liable for the death of or
injuries to passenger through the negligence or willful acts of
the formers employees, although such employees may have
acted beyond the scope of their authority or in violation of the
orders of the common carriers.
PASSENGERS BAGGAGES
- The term baggage has been defined to include whatever
articles a passenger usually takes with him for his own
personal use, comfort and convenience
- Rules that are applicable to goods that are being shipped
are also applicable to baggage delivered to the custody of
the carrier. Arts. 1733. 1734 and 1736 of Civil Code are
applicable.
- However, if the luggage was hand-carried, Arts. 1998,
2000-2003 shall apply.
Distinction: W/N the baggage is in the personal custody of the
passenger.
if yes, hand carried baggage
if no, checked-in baggage
Art. 1998. The deposit of effects made by the travellers
in hotels or inns shall also be regarded as necessary. The
keepers of hotels or inns shall be responsible for them as
depositaries, provided that notice was given to them, or
to their employees, of the effects brought by the guests
and that, on the part of the latter, they take the
precautions which said hotel-keepers or their substitutes
advised relative to the care and vigilance of their effects.
(1783)
APRIL LYNN L. URSAL Page 8
Art. 2000. The responsibility referred to in the two
preceding articles shall include the loss of, or injury to
the personal property of the guests caused by the
servants or employees of the keepers of hotels or inns as
well as strangers; but not that which may proceed from
any force majeure. The fact that travellers are
constrained to rely on the vigilance of the keeper of the
hotels or inns shall be considered in determining the
degree of care required of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered
the hotel is not deemed force majeure, unless it is done
with the use of arms or through an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for
compensation if the loss is due to the acts of the guest,
his family, servants or visitors, or if the loss arises from
the character of the things brought into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself from
responsibility by posting notices to the effect that he is
not liable for the articles brought by the guest. Any
stipulation between the hotel-keeper and the guest
whereby the responsibility of the former as set forth in
articles 1998 to 2001 is suppressed or diminished shall
be void. (n)
Cases:
1. Despite the fact that the carrier gave notice that it shall
not be liable for baggage brought in by passengers, the
carrier is still liable for lost hand-carried luggage since
it is governed by rules on necessary deposits. Under
Art. 20000, the responsibility of the depositary includes
the loss of property of the guest caused by strangers
but not that which may proceed from force majeure.
Moreover, article 2001 considers theft as force majeure
if it is done with use of arms or through irresistible
force.
2. Even if the passenger did not declare his baggage nor
pay its charges contrary to the regulations of the bus
company, the carrier is still liable in case of loss of the
baggage. Since, it has the duty to exercise
extraordinary diligence over the baggage that was
turned over to the carrier or placed in the baggage
compartment of the bus. The non-payment of the
charges is immaterial as long as the baggage was
received by the carrier for transportation.
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and
PASSENGER
A. NEGLIGENCE OF SHIPPER OR PASSENGER
- The obligation to exercise due diligence is not limited to
the carrier. The shipper is obliged to exercise due
diligence in avoiding damage or injury.
- Nevertheless, contributory negligence on the part of
the shipper/ passenger would only mitigate the
carriers liability; it is not a total excuse.
- However, if the negligence of the shipper/ passenger is
the proximate and only cause of the loss, then, the
carrier shall not be liable. The carrier may overcome
the presumption of negligence and may be able to
prove that it exercised extraordinary diligence in
handling the goods or in transporting the passenger.
The carrier may be able to prove that the only cause of the
loss of the goods is any of the following:
1. Failure of the shipper to disclose the nature of the
goods;
2. Improper marking or direction as to the destination;
 3. Improper loading when he assumes such responsibility.
The shipper must likewise see to it that the goods are
properly packed; otherwise, liability of the carrier may
either be mitigated or barred depending on the
circumstances.
Art. 1741. If the shipper or owner merely contributed
to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Art. 1761. The passenger must observe the diligence of a
good father of a family to avoid injury to himself.
Art. 1762. The contributory negligence of the passenger
does not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the negligence
of the common carrier, but the amount of damages shall
be equitably reduced.
a. Last Clear Chance
A negligent carrier is liable to a negligent passenger in placing
himself in peril, if the carrier was aware of the passengers peril,
or should have been aware of it in the reasonable exercise of
due care, had in fact an opportunity later than that of the
passenger to avoid an accident.
Last clear chance applies in a suit between the owners and
drivers of colliding vehicles. It does not arise where a passenger
demands responsibility from the carrier to enforce its
contractual obligations. For it would be inequitable to exempt
the negligent driver of the carrier and its owner on the ground
that the other driver was likewise guilty of negligence.
b. Assumption of Risk
Passengers must take such risks incident to the mode of travel.
Carriers are not insurers of the lives of their passengers. Thus, in
air travel, adverse weather conditions or extreme climatic
changes are some of the perils involved in air travel, the
consequence of which the passenger must assume or expect.
However, there is no assumption of risk in a case wherein a
passenger boarded a carrier that was filled to capacity. The act
of the passenger in taking the extension chair does not amount
to implied assumption of risk.
Note: there is also no assumption of risk by the mere fact that
the carrier posted notices against such liability
Problem: Although, there is a sign in the bus that says: do not
talk to the driver while the bus is in motion, otherwise, the
company would not assume responsibility for any accident:.
Nonetheless, the passengers dared the driver to race with
another bus, as the bus speeds up in the attempt to overtake
the other bus, it failed to slow down. As a result, the bus turns
turtle causing the death and injuries to passengers. Is the bus
company liable?
Answer: Yes. The bus company is obligated to exercise utmost
diligence in carrying passengers. This liability cannot be
eliminated or limited by simply posting notices. The passenger
cannot be said to have assumed the risk of being injured when
he urged the driver to accept the dare. At most, the passengers
can only be said to be guilty of contributory negligence which
would mitigate the liability of the driver, since the proximate
cause of the accident was the drivers willful and reckless act in
running the race with the other bus.
APRIL LYNN L. URSAL Page 9
Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.
- Where a carriers employee is confronted with a sudden
emergency, the fact that he is obliged to act quickly
and without a chance for deliberation must be taken
into account, and he is not led to the same degree of
care that he would otherwise be required to exercise in
the absence of such emergency but must exercise only
such care as any ordinary prudent person would
exercise under like circumstances and conditions, and
the failure on his part to exercise the best judgment the
case renders possible does no establish lack of care
and skill on his part which renders the company liable.
Case: Compania Maritima vs. CA and Vicente Concepcion
- While the act of private respondent in furnishing
petitioner with an inaccurate with of the payloader
cannot successfully be used as an excuse by petitioner
to avoid liability to the damage thus caused, said act
constitutes a CONTRIBUTORY CIRCUMSTANCE to the
damage caused on the payloader, which mitigates the
liability for damages of petitioner in accordance with
Article 1741.
Case: Philippine National Railways vs. CA
- While petitioner failed to exercise extraordinary
diligence as required by law, it appears that the
deceased was chargeable with contributory negligence.
- Since he opted to sit on the open platform between the
coaches of the train, he should have held tightly and
tenaciously on the upright metal bar found at the side
of said platform to avoid falling off from the speeding
train
B. FREIGHT
a. Amount to be Paid
The regulation of rates is founded upon the valid exercise of the
Police Power of the state in order to protect the public from
arbitrary and excessive rates while maintaining the efficiency
and quality of services rendered. The fixing of just and
reasonable rates involves a balancing of investor and the
consumer interest.
Although the consideration that should be paid to the carrier is
still subject to the agreement between parties, what can be
agreed upon should not be beyond the maximum amount fixed
by appropriate government agency.
b. Who will pay
Although either of the shipper or the consignor may pay the
freight before or at time the goods are delivered to the carrier
for shipment, nonetheless, it is the consignor (whom the
contract of carriage is made) who is primarily liable for the
payment of freight whether or not he is the owner of the goods.
The obligation to pay is implied from the mere fact that the
consignor has placed the goods with the carrier for the purpose
of transportation.
c. Time to pay
Code of Commerce provides that in the absence of any
agreement, the consignee who is supposed to pay must do so
within 24-hours from the time of delivery.
Article 374. The consignees to whom the shipment was
made may not defer the payment of the expenses and
transportation charges of the goods they receive after the lapse
of twenty-four hours following their delivery; and in case of
delay in this payment, the carrier may demand the judicial sale
of the goods transported in an amount necessary to cover the
cost of transportation and the expenses incurred.
(1) Carriage of Passengers by Sea
With respect to carriage of goods by sea, the tickets are
purchased in advance. Carriers are not supposed to allow
passengers without tickets --- the carrier is bound to observe a
No Ticket, No Boarding Policy. The carrier shall collect/ inspect
the passengers ticket within one hour from vessels departure
as not to disrupt resting or sleeping passengers.
If the vessel is not able to depart on time and the delay is
unreasonable, the passenger may opt to have his/ her ticket
refunded without refund service fee.
Delayed voyage means late departure of the vessel from its
port of origin and/ or late arrival of the vessel to its port of
destination. Unreasonable delay means the period of time that
has lapsed without just cause and is solely attributable to the
carrier which has prejudiced the transportation of the passenger
and/ or cargoes to their port of destination.
A passenger who failed to board the vessel can refund or
revalidate the ticket subject to surcharges. Revalidation means
the accreditation of the ticket that is not used and intended to
be used for another voyage.
(2) Carriers Lien
If consignor or the consignee fails to pay the consideration for
the transportation of goods, the carrier may exercise his lien in
accordance with Art. 375 of Code of Commerce:
ARTICLE 375. The goods transported shall be especially bound
to answer for the cost of transportation and for the expenses
and fees incurred for them during their conveyance and until the
moment of their delivery.
This special right shall prescribe eight days after the delivery
has been made, and once prescribed, the carrier shall have no
other action than that corresponding to him as an ordinary
creditor.
DEMURRAGE
Demurrage is the compensation provided for the contract of
affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading. It is the claim for damages
for failure to accept delivery. In broad sense, very improper
detention of a vessel may be considered a demurrage.
Technically, liability for demurrage exists only when expressly
stipulated in the contract.
Using the term in broader sense, damages in the nature of
demurrage are recoverable for a breach of the implied obligation
to load or unload the cargo with reasonable dispatch, but only
by the party to whom the duty is owed and only against on who
is a party to the shipping contract. Notice of arrival of vessels or
conveyances, or their placement for purposes of unloading is
often a condition precedent to the right to collect demurrage
charges.
CHAPTER 3
EXTRAORDINARY DILIGENCE
I. RATIONALE
A common carrier is bound to carry the passengers
safely as far a human care and foresight provide, using the
utmost diligence of very cautious persons, with due regard for
all circumstances.
Extraordinary diligence: Calculated to protect the
passengers from the tragic mishaps that frequently occur in
connection with rapid modern transportation.
APRIL LYNN L. URSAL Page 10
II. HOW DUTY IS COMPLIED WITH
- There is no hard and fast rule in the exercise of
extraordinary diligence
- Common carrier binds itself to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of a very cautious person,
with due regard for all the circumstances.
- The duty even extends to the members of the crew or
complement operating the carrier
Case: Kapalaran Bus Lines vs. Coronado
- If common carriers carefully observed the statutory
standard of extraordinary diligence in respect of their
own passengers, they cannot help but simultaneously
benefit pedestrians and the owners and passengers of
other vehicles who are equally entitled to the safe and
convenient use of our roads and highways
A reasonable man or a good father of a family in the position of
the carrier must exercise extraordinary diligence in the
performance of his contractual obligation.
- Generally, what should be determines is whether or not
a reasonable man, exercising extraordinary diligence,
could have foreseen and prevented the damage or loss
that occurred.
III. EFFECT OF STIPULATION
A. GOODS
- The parties cannot stipulate that the carrier will NOT
exercise ANY diligence in the custody of goods
- The law allows a stipulation whereby the carrier will
exercise a degree of diligence which is less than
extraordinary with respect to goods.
Art. 1744. A stipulation between the common carrier
and the shipper owner limiting the liability of the
former for the loss, destruction, or deterioration of the
goods to a degree less than extraordinary diligence
shall be valid, provided it be:
1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration other than
the service rendered by the common carrier (Note:
Typically fare/freight); and
3. Reasonable, just and contrary to public policy.
B. PASSENGERS
- There can be no stipulation lessening the utmost
diligence that is owed to passengers.
Art. 1757. The responsibility of a common carrier for
the safety of passengers as required in Arts. 1733 and
1755 cannot be dispensed with or lessened by
stipulation, by the posting of notices, by statements on
tickets, or otherwise. (Note: Absolute; extraordinary at
all times.)
Gratuitous passenger A stipulation limiting the common
carriers liability for negligence is valid, but not for willful acts of
gross negligence. The reduction of fare does not justify any
limitation.
Case: Lara vs. Valencia
- Diligence owed to accommodation passengers is only
ordinary diligence
- However, this case is not controlling with respect to
common carriers because the defendant in the said
case was not a common carrier
IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
A. SEAWORTHINESS
a. Warranty of Seaworthiness of Ship
- This is the first step that should be undertaken
- Extraordinary diligence requires that the ship
which will transport the passengers and goods is
seaworthy.
- Seaworthiness of the vessel is impliedly
warranted.
- The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence
to make the ship seaworthy.
b. No duty to inquire
- Because of the implied warranty of seaworthiness,
shippers of goods, when transacting with common
carriers, are not expected to inquire into the
vessels seaworthiness, genuineness of its licenses
and compliance with all maritime laws. Passengers
cannot be expected to inquire everytime they
board a common carrier, whether the carrier
possesses the necessary papers or that all the
carriers employees are qualified.
- It is the carrier that carries such burden of proving
that the ship is seaworthy.
- Sufficient evidence must be submitted and the
presentation of certificates of seaworthiness is not
sufficient to overcome the presumption of
negligence.
c. Meaning of Seaworthiness
- A vessel must have such degree of fitness which
an owner who is exercising extraordinary diligence
would require his vessel to have at the
commencement of the voyage, having regard to all
the probable circumstances of it. This includes
fitness of the vessel itself to withstand the rigors of
voyage, fitness of the vessel to store the cargoes
and accommodate passengers to be transported
and that it is adequately equipped and properly
manned.
- Seaworthiness is that strength, durability and
engineering skill made a part of a ships
construction and continued maintenance, together
with a competent and sufficient crew, which would
withstand the vicissitudes and dangers of the
elements which might reasonably be expected or
encountered during her voyage without loss or
damage to her particular cargo
Example: The carrier was able to establish that the ship itself
was seaworthy because the records reveal that the vessel was
dry-docked and inspected by the Phil. Coast Guard before its
first destination.
A warranty of seaworthiness requires that it be properly laden,
and provided with a competent master, a sufficient number of
competent officers and seamen, and the requisite
appurtenances and equipment.
The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to:
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are carried,
fit and safe for their reception, carriage, and
preservation.
The carrier shall properly and carefully load, handle, stow, carry,
keep, care for, and discharge the goods carried.
APRIL LYNN L. URSAL Page 11
Note: Seaworthiness is relative it its construction and its
application depends on the facts of a particular case (ex. Length
and nature of the voyage)
Fitness of the Vessel Itself
- It is necessary that the vessel can be expected to meet
the normal hazards of the journey
- General Test of Seaworthiness: Whether the ship and its
appurtenances are reasonably fit to perform the service
undertaken.
The ship must be cargoworthy
- Even if the vessel was properly maintained and is free
from defect, the carrier must not accept the goods that
cannot properly be transported in the ship
- The ship must be efficiently strong and equipped to
carry the particular kind of cargo which she has
contracted to carry and her cargo must be so loaded
that it is safe for her to proceed on her voyage.
The vessel must be adequately equipped and properly
manned.
- On top of regular maintenance and inspection,
Captains, masters or patrons of vessels must prove the
skill, capacity, and qualifications necessary to
command and direct the vessel.
- If the owner of a vessel desires to be the captain
without having the legal qualifications, he shall limit
himself to the financial administration of the vessel and
shall entrust the navigation to a qualified person.
Note: It is not an excuse that the carrier cannot afford the
salaries of competent and licensed crew or that latter is
unavailable.
Adequate Equipment
- With respect to vessels that carries passengers, the
Maritime Industry Authority prescribes rules which
provide for indispensable equipment and facilities
- ex. Exit doors, life boats, live vests
B. OVERLOADING
- Duty to exercise due diligence likewise includes the
duty to take passengers or cargoes that are within the
carrying capacity of the vessel.
C. PROPER STORAGE
- The vessel itself may be suitable for the cargo but this
is not enough because the cargo must also be properly
stored.
Cargo must generally not be placed on deck. The carrying of
deck cargo raises the presumption of unseaworthiness unless it
can be shown that the deck cargo will not interfere with the
proper management of the ship.
D. NEGLIGENCE OF CAPTAIN AND CREW
- Failure on the part of the carrier to provide competent
captain and crew should be distinguished from the
negligence of the said captain and crew, because the
latter is covered by the Limited Liability Rule (liability of
the shipowner may be limited to the value of the
vessel).
- If the negligence of the captain and crew can be traced
to the fact that they are really incompetent, the Limited
Liability Rule cannot be invoked because the shipowner
may be deemed negligent.
Rules on passenger safety
- Negligence on the part of the captain and crew as well
as the operator includes failure to comply with the
regulation issued by the Maritime Industry Authority
(MARINA) on the safety of the passengers
- Memorandum Circular No. 112 : passengers do not
merely contract for transportation because they have
the right to be treated by the carrier and its employees
with kindness, respect, courtesy and due consideration.
They are entitled to be protected against personal
conduct, injurious language, indignities and abuses
from the said carrier and its employees
- Read Memorandum Circular No. 114: p. 204
Case: Planters Products Inc. vs. CA
- The period during which private respondent was to
observe the degree of diligence required of it as a
public carrier began from the time the cargo was
unconditionally placed in its charge after the vessels
holds were duly inspected and passed scrutiny by the
shipper, up to and until the vessel reached its
destination and its hull was re-examined by the
consignee, but prior to unloading
- A ship owner is liable for damage to the cargo resulting
from improper stowage ONLY when the stowing si done
by stevedores employed by him, and therefore under
his control and supervision, not when the same is done
by the consignee or stevedores under the employ of
the latter
E. DEVIATION AND TRANSSHIPMENT
1. Deviation
- If there is an agreement between the shipper and the
carrier as to the road over which the conveyance is to
be made (subject to the approval by the Maritime
Industry Authority), the carrier may not change the
route, unless it be by reason of force majeure. Without
this cause, he shall be liable for all the losses which the
goods may suffer, aside from paying the sum stipulated
for that case.
- When on account of the force majeure, the carrier had
to take another route which resulted to an increase in
transportation charges, he shall be reimbursed upon
formal proof.
Note: With respect to carriers by sea, the routes are subject to
approval by MARINA and the same cannot generally be changed
without the authorization from said administrative agency
2. Transshipment
- The act of taking cargo out of one ship and loading it
into another; to transfer goods from the vessel
stipulated in the contract of affreightment to another
vessel before the place of destination named in the
contract has been reached.
- Transshipment of freight without legal excuse is a
violation of the contract and subjects the carrier to
liability if the freight is lost even by a cause otherwise
excepted.
Note: there is transshipment whether or not the same person,
firm or entity owns the vessels (what matters is the actual
physical transfer of cargo from one vessel to another)
V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
A. CONDITION OF VEHICLE
- Common carriers that offer transportation by land are
similarly required to make sure that the vehicles that
they are using are in good order and condition.
APRIL LYNN L. URSAL Page 12
Rule on Mechanical Defects If the carriers will replace certain
parts of the motor vehicle, they are duty bound to make sure
that the parts that they are purchasing are not defective. Hence,
it is a long-standing rule that a carrier cannot escape liability by
claiming that the accident that resulted because of a defective
break or tire is due to a fortuitous event. This is true even if it
can be established that the tire that was subject of a blow-out is
brand new. The duty to exercise extraordinary diligence requires
the carrier to purchase and use vehicle parts that are not
defective.
B. TRAFFIC RULES
- The carrier fails to exercise extraordinary diligence if it
will not comply with basic traffic rules. The Civil Code
provides for a presumption of negligence in case the
accident occurs while the operator of the motor vehicle
is violating traffic rules.
In cases involving breach of contract of carriage, proof of
violation of traffic rules confirms that the carrier failed to
exercise extraordinary diligence.
Case: Mallari Sr and Jr vs. CA
- The rule is settled that a driver abandoning his proper
lane for the purpose of overtaking another vehicle in an
ordinary situation has the duty to see to it that the road
is clear and not to proceed if he cannot do so in safety
C. DUTY TO INSPECT
- There is no unbending duty to inspect each and every
package or baggage that is being brought inside the
bus or jeepney. The carrier is duty bound to conduct
such inspection depending on the circumstances.
Case: Nocum vs. Laguna Tayabas Bus Company
- While it is true the passengers of appellants bus should
not be made to suffer for something over which they
had no control, fairness demands that in measuring a
common carriers duty towards its passengers,
allowance must be given to the reliance that should be
reposed on the sense of responsibility of all the
passengers in regard to their common safety.
- It is to be presumed that a passenger will not take with
him anything dangerous to the lives and limbs of his
co-passengers not to speak of his own.
- Not to be lightly considered is the right to privacy to
which each passenger is entitled
- In other words, inquiry may be verbally made as to the
nature of a passengers baggage when such is not
outwardly perceptible, but beyond this, constitutional
boundaries are already in danger of being transgressed
- SC held that carrier has succeeded in rebutting the
presumption of negligence by showing that it has
exercised extraordinary diligence for the safety of its
passenger, according to the circumstances of each
case
Note: although overland transportation are not bound nor
empowered to make an examination on the contents of
packages or bags particularly those hand carried by passengers,
such is different with regards to an airline company.
VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR
- The aircraft must be in such a condition that it must be
able to withstand the rigors of flight.
Airworthiness An aircraft, its engines propellers, and other
components and accessories, are of proper design and
construction, and are safe for air navigation purposes, such
design and construction being consistent with accepted
engineering practice and in accordance with aerodynamic laws
and aircraft science.

Proof of airworthiness is not by itself sufficient to prove exercise
of extraordinary diligence.
Case: Japan Airlines vs. CA
- The fact that the flight was cancelled due to fortuitous
event does not mean that the carriers duty already
ended. The carrier is still obligated to look after the
convenience and comfort of the passenger
- Thus the carrier was obligated to make the necessary
arrangements to transport the passenger on the first
available flight.
A. INSPECTION
- It is the duty of the carrier to make inquiry as to the
general nature of the articles shipped and of their value
before it consents to carry them; and its failure to do so
cannot defeat the shippers right to recovery of full
value of the package if lost, in the absence of showing
of fraud or deceit on the part of the shipper.
Where a common carrier has reasonable ground to suspect that
the offered goods are of a dangerous character, the carrier has
the right to know the character of such goods and to insist
inspection, if reasonable and practical under the circumstances,
as a condition of receiving and transporting such goods. To be
subjected to unusual search, other than the routinary inspection
procedure customarily undertaken, there must exist proof that
would justify cause for apprehension that the baggage is
dangerous as to warrant exhaustive inspection, or even refusal
to accept carriage of the same.
Case: Northwest Airlines vs. Laya
- The fact that the plaintiff was greatly inconvenienced
by the fact that his attach case was subjected to
further inspection does not warrant imposition of
liability because he was not singled out and
discriminated by the employees of the carrier
- Protection of passengers must take precedence over
convenience
- Nevertheless, the implementation of security measures
must be attended by basic courtesies
CHAPTER 4
BILL OF LADING
I. CONCEPTS, DEFINITION AND KINDS
Bill of Lading (BOL)
- a written acknowledgement, signed by the master of a
vessel or other authorized agent of the carrier, that he
has received the described goods from the shipper, to
be transported on the expressed terms to be described
the place of destination, and to be delivered to the
designated consignees of the parties.
- It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a
DOCUMENT OF TITLE.
A BOL is not necessary for the perfection of a contract of
carriage. Thus, the obligation to exercise extraordinary
diligence by the carrier is still required even if there is no bill of
lading.
In the absence of the bill of lading, disputes shall be determined
on the basis of the provisions in the New Civil Code and
suppletory by the Code of Commerce.
KINDS of BILL of LADING:
1. Clean Bill Does not contain any notation indicating
of Lading any defect in the goods.
APRIL LYNN L. URSAL Page 13
2. Foul Bill of One that contains the abovementioned
Lading notation.
3. Spent Bill The goods are already delivered but the bill
of Lading of lading was not yet returned (upon
delivery, the carrier is supposed to retrieve
the covering bill of the goods)
4. Through Issued by a carrier who is obliged to use the
Bill of Lading facilities of other carriers as well as his own
facilities for the purpose of transporting the
goods from the city of the seller to the city
of the buyer, which BOL is honored by the
second and other interested carriers who
dont issue their own BOL.
5. On Board -states that the goods have been received
Bill on board the vessel which is to carry the
goods.
-apparently guarantees the certainty of
shipping as well as the seaworthiness of the
vessel to carry the goods.
-basically means that the goods are already
inside the vessel
6. Received -states that the goods have been received
for for shipment with or without specifying the
Shipment Bill vessel by which the goods are to be
shipped.
-issued when conditions are not normal and
there is insufficiency of shipping space.
7. Custody The goods are already receied by the carrier
Bill of Lading but the vessel indicated therein has not yet
arrived in the port.
8. Port Bill of The vessel indicated in the BOL that will
Lading transport the goods is already in the port.
Note: A party to a maritime contract would require an on board
bill of lading because of its apparent guaranty of certainty of
shipping as well as the seaworthiness of the vessel which is to
carry the goods.
Effectivity of BOL
- upon its delivery to and acceptance by the shipper.
- The acceptance of the bill without dissent raises the
presumption that all the terms therein were brought to
the knowledge of the shipper and agreed to by him,
and in the absence of fraud or mistake, he is stopped
thereafter from denying that he assented to such
claims (whether he reads the bill or not)
THE 3-FOLD NATURE OF THE BILL OF LADING
- The three fold nature of a bill of lading is obviously
applicable only to carriage of goods
- As receipt and document of title: issued for goods
- As contract: applies to tickets issued to passengers
I. RECEIPT
- As comprehending all methods of transportation, a
BOL may be defined as a written acknowledgement of
the receipt of goods and an agreement to transport and
to deliver them at a specified place to a person named
or on his order.
- Other terms, shipping receipts, forwarders receipts,
and receipts for transportation.
- (SC) the designation however is not material, and
neither is the form of the instrument. If it contains an
acknowledgement by the carrier of the receipt of goods
for transportation it is, in legal effect a BOL.
- The issuance of a bill of lading carries the presumption
that the goods were delivered to the carrier issuing the
bill, for immediate shipment, and it is nowhere
questioned that a bill of lading is prima facie evidence
of the receipt of the goods by the carrier
II. CONTRACT
- It expresses the terms and conditions of the agreement
between the parties; names the parties; includes
consignees etc. It is the law between the parties bound
by its terms and conditions.
Contracts of Adhesion
- It is to be construed liberally in favor of the shipper who
adhered to such bill as it is a contract of adhesion. The
only participation of the party is the signing of his
signature or his adhesion thereto.
- The shipper or passenger is bound by the terms and
conditions if there is no occasion to speak of
ambiguities or obscurities
- If the words appear to be contrary to the evident
intention of the parties, the latter shall prevail over the
former
ART. 24 (NCC). In all contractual property or other relations,
when one of the parties is at a disadvanatge on account of his
moral dependence, ignorance indigence, mental weakness,
tender age and other handicap, the court must be vigilant for
his protection.
Parole Evidence Rule
- BOL is covered by the parol evidence rule, that the
terms of the contract are conclusive upon the parties
and evidence aliunde is not admissible to vary or
contradict a complete enforceable agreement, subject
to well defined exceptions
- The mistake contemplated as an exception to the parol
evidence rule is one which is a mistake of fact mutual
to the parties.
- Note that if such is not raised inceptively in the
complaint or in the answer, a party cannot later on be
permitted to introduce parol evidence thereon
Bill of Lading as Evidence
- The BOL is the legal evidence of the contract and the
entries thereof constitutes prima facie evidence of the
contract.
- All the essential elements of a valid contract (cause,
consent, object) are present when such bill are issued.
III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE
- In a contractual obligation, the bill of lading can be
categorized as an actionable document under the Rules
of Court. Hence, the bill of lading must be properly
pleaded either as causes of action or defenses
- ART 1507 (NCC). A document of title in which it is
stated that the goods referred to therein will be
delivered to the bearer or to the order of any person
named in such document is a negotiable document of
title.
- If the document of title contains the required words of
negotiability to make the instrument negotiable under
Article 1507 of the NCC, the document remains to be
negotiable even if the words not negotiable or non
negotiable are places thereon
o a. Bearer document- negotiated by delivery
o b. Order document- negotiated by
indorsement of the specified person so named
- Effects of negotiation. Negotiation of the document has
the effect of manual delivery so as to constitute the
transferee the owner of the goods.
BASIC STIPULATIONS
- Provided for in the Code of Commerce
APRIL LYNN L. URSAL Page 14
- (for overland transportation, maritime commerce and
electronic documents, please refer to the textbook for
the codal pp. 203-210)
PROHIBITED AND LIMITING STIPULATION
1. Exempting the carrier from any and all liability for loss
or damage occasioned by its own negligence - INVALID
as it is contrary to public policy.
2. Parties may stipulate that the diligence to be exercised
by the carrier for the carriage of goods be less than
extraordinary diligence if it is:
a. in writing and signed by both parties
b. supported by a valuable consideration other
than the service rendered by the common
carrier
c. the stipulation is just, reasonable and not
contrary to law.
3. Providing an unqualified limitation of such liability to an
agreed valuation - INVALID
4. Limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher value
and pays a higher rate of freight- VALID and
ENFORCEABLE.
Note: the purpose of limiting stipulations in the bill of lading is to
protect th common carrier. Such stipulation obliges the
shipper/consignee to notify the common carrier of the amount
that the latter may be liable for in case of loss of the goods
Remember:
1. The parties cannot stipulate so as to totally exempt the
carrier from exercising any degree of diligence
whatsoever
2. The parties cannot stipulate that the common carrier
shall exercise diligence less than the diligence of a
good father of a family
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE
OF GOODS:
1. Inter-island - if goods arrived in damaged condition (Art.
366):
a. If damage is apparent, the shipper must file a claim
immediately (it may be oral or written);
b. If damage is not apparent, he should file a claim within 24
hours from delivery.
The filing of claim under either (1) or (2) is a condition
precedent for recovery.
If the claim is filed, but the carrier refuses to pay: enforce
carriers liability in court by filing a case:
a. within 6 year, if no bill of lading has been issued; or
b. within 10 years, if a bill of lading has been issued.
2. Overseas where goods arrived in a damaged condition from
a foreign port to a Philippine port of entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim
should be filled immediately;
b. if damage is not apparent, claim should be filled within 3
days from delivery.
Filing of claim is not a condition precedent, but an action must
be filed against the carrier within a period of 1 year from
discharge; if there is no delivery, the one-year period starts to
run from the day the vessel left port (in case of undelivered or
lost cargo), or from delivery to the arrastre (in case of damaged
cargo).
Where there was delivery to the wrong person, the prescriptive
period is 10 years because there is a violation of contract, and
the carriage of goods by sea act does not apply to misdelivery.
(Ang v. American SS Agencies (19 SCRA 631)
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
 - Applies suppletorily to the Civil Code if the goods are to
be shipped form a foreign port to the Philippines
- COGSA is applicable in international maritime
commerce. It can be applied in domestic sea
transportation if agreed upon by the parties.
(paramount clause)
- Under the Sec. 4 (5), the liability limit is set at $500 per
package unless the nature and value of such goods is
declared by the shipper. This is deemed incorporated
in the bill of lading even if not mentioned in it (Eastern
Shipping v. IAC, 150 SCRA 463).
- If by agreement, another maximum amount than that
mentioned may be fixed provided that such maximum
shall not be less than $500 and in no event shall the
carrier be liable for more than the amount of damage
actually sustained
Note that Art. 1749 of the NCC applies to inter-island trade.
Meaning of Package
- If the goods are shipped in cartons, each carton is
considered a package even if they are stored in
container vans
- When what ordinarily be considered packages are
shipped in a container supplied by the carrier and the
number of such units is disclosed in the shipping
documents, each of those units and not the container
constitutes the package.
Prescriptive periods
- Suit for loss or damage to the cargo should be brought
within one year after:
a. delivery of the goods; or
b. the date when the goods should be delivered.
(Sec. 3[6])
The one-year prescriptive period is suspended by:
1. express agreement of the parties (Universal Shipping
Lines, Inc. v. IAC, 188 SCRA 170)
2. when an action is filed in court until it is dismissed.
(Stevens & Co. v. Nordeutscher Lloyd, 6 SCRA
180)
Things to Remember:
1. Article 1757 provides that the responsibility of a
common carrier to exercise utmost diligence for the
safety of PASSENGERS CANNOT be dispensed with or
lessened by stipulation or statement on tickets or
otherwise
2. Article 1750 of the Civil Code provides that a contract
fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the
GOODS is VALID, if it is REASONABLE and JUST under
the circumstances, and has been FAIRLY AND FREELY
AGREED UPON
3. It is unfair to deny the shipper the right to declare the
actual value of his cargos and to recover such true
value in case of loss or damage
Note: it has been suggested that the signature of the
shipper in the bill of lading with regards to the
limitation applies only to reduction of diligence and not
to the stipulated amount to be paid.
4. It is unjust and contrary to public policy if the common
carriers 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
5. The common carrier may EXEMPT itself from liability if
he can prove that:
a. He observed extraordinary diligence
b. The proximate and only cause of the incident
is a fortuitous event or force majeure
APRIL LYNN L. URSAL Page 15
c. The proximate and only cause of the loss is
the character of the goods or defects in the
packing or in the containers
d. The proximate and only cause of the loss is
the order or act of competent public authority
Note: to limit its liability or at least mitigate the same,
the carrier can cite CONTRIBUTORY NEGLIGENCE of the
plaintiff and the DOCTIRNE OF AVOIDABLE
CONSEQUENCES
Case: Sea-Land Service Inc. vs. IAC
- Liability of a common carrier for loss of or damage to
goods transported by it under a contract of carriage is
governed by the laws of the country of destination
- COGSA is applicable up to the final port of destination
and that the fact that transshipment was made on an
interisland vessel did not remove the contract of
carriage of goods from the operation of said Act.
Case: Citadel Lines Inc. vs. CA
- The duty of the consignee is to prove merely that the
goods were lost. Thereafter, the burden is shifted to the
carrier to prove that it has exercised the extraordinary
diligence required by law. And, its extraordinary
responsibility lasts from the times that goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier
to the consignee or to the person who has the right to
receive them
Case: Everett Steamship Corporation vs. CA
- Considering that the shipper did not declare a higher
valuation it had itself to blame for not complying with
the situations
- The trial courts ratiocination that private respondent
could not have fairly and freely agreed to the limited
liability clause in the bill of lading because the said
conditions were printed in small letters does not make
the bill of lading invalid
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
- Applies to all international transportation of person,
baggage or goods performed by aircraft for hire.
- International transportation means any
transportation in which the place of departure and the
place of destination are situated either:
o within the territories of two High Contracting
Parties regardless of whether or not there be a
break in the transportation or transshipment,
or
o within the territory of a single High
Contracting Party, if there is an agreed
stopping place within a territory subject to the
sovereignty, mandate or authority of another
power, even though that power is not a party
to the Convention.
Transportation to be performed by several successive air carriers
shall be deemed to be one undivided transportation, if it has
been regarded by the parties as a single operation, whether it
has been agreed upon under the form of a single contract or of a
series of contracts, and it shall not lose its international
character merely because one contract or a series of contracts
is to be performed entirely within a territory subject to the
sovereignty, suzerainty, mandate, or authority of the same High
Contracting Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of Court
and all laws in the Philippines since an international law
prevails over general law.

WHEN NOT APPLICABLE:
1. If there is willful misconduct on the part of the carriers
employees. The Convention does not regulate, much
less exempt, carrier from liability for damages for
violating the rights of its passengers under the contract
of carriage (PAL v. CA, 257 SCRA 33). --- if the
damage is similarly caused by any agent of the carrier
acting within the scope of his employment
2. when it contradicts public policy;
3. if the requirements under the Convention are not
complied with.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident causing it
took place on board the aircraft or in the course of its
operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if
it took place during the carriage; (Art. 18) and
3. Delay in the transportation of passengers, luggage or
goods. (Art. 19)
NOTE: The Hague Protocol amended the Warsaw Convention by
removing the provision that if the airline took all necessary steps
to avoid the damage, it could exculpate itself completely (Art.
20(1)). (Alitalia v. IAC, 192 SCRA 9)
Remember: The said provisions merely declare the carrier
liable for damages in the enumerated cases if the conditions
therein specified are present. Neither said provisions nor others
in the aforementioned Convention regulate or exclude liability
for OTHER BREACHES of contract of carrier.
The Convention does not thus operate as an exclusive
enumeration of the instances of an airlines liability, or as an
absolute limit of the extent of that liability.
LIMIT OF LIABILITY
1. passengers - limited to 250,000 francs;
except: agreement to a higher limit
2. goods and checked-in baggage - 250 francs/kg
except: consigner declared its value and paid
a supplementary sum, carrier liable to not
more than the declared sum unless it proves
the sum is greater than its actual value.
3. hand-carry baggage - limited to 5,000 francs/passenger
An agreement relieving the carrier from liability or fixing a lower
limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is
caused by willful misconduct or default on its part. (Art. 25)
Case: China Airlines vs. Daniel Chiok
- The ticket-issuing airline acts as principal in a contract
of carriage and is thus liable for the acts and the
omissions of any errant carrier to which it may have
endorsed any sector of the entire, continuous trip.
Place of Destination- within the meaning of the Warsaw
Convention, is determined by the terms of the contract of
carriage, or specifically the ticket between the passenger and
the carrier. It is the destination and not an agreed stopping
place that controls for the purpose of ascertaining jurisdiction
under the Convention. (Case: Santos III vs. Northwest Orient
Airlines and CA)
ACTION FOR DAMAGES
1. Condition precedent
A written complaint must be made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of baggage/goods
F otherwise the action is barred except in case of fraud on the
part of the carrier. (Art. 26)
APRIL LYNN L. URSAL Page 16
2. Jurisdiction governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business through which the
contract has been made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers the action is filed
only against the carrier in which the accident or delay
occurred unless there is an agreement whereby the first
carrier assumed liability for the whole journey.
b. In case of transportation of baggage or goods
i. the consignor can file an action against the first carrier
and the carrier in which the damage occurred
ii. the consignee can file an action against the last carrier
and the carrier in which the damage occurred. These
carriers are jointly and severally liable. (Art. 30)
Nota Bene: COGSA/WARSAW applies to foreign vessels or
airplane or international travel
Code of Commerce applies to inter-island or
domestic travel.
Bill of Lading as Document of Title
Bill of lading is a document of title under the Civil Code.
It can be a negotiable document of title.
A. Negotiability
- It is negotiable if it is deliverable to the bearer, or to the order
of any person named in such document. (Art. 1507, Civil Code)
a) Effect of Stamp or Notation Non-Negotiable
the document remains to be negotiable even if the
words not-negotiable or non-negotiable are placed
thereon. - Art. 1510 (Civil Code)
B. How Negotiated
a) Bearer document (Art. 1508 and 1511)
- may be negotiated be delivery
b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- can only be negotiated through the indorsement of the
specified person so named.
- such indorsement may be in blank, to bearer or to a specified
person.
Where a negotiable document of title is transferred for
value by delivery, and the endorsement of the
transferor is essential for negotiation, the transferee
acquires a right against the transferor to compel him to
endorse the document. xxx (Art. 1515, Civil Code)
C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the
transferee the owner of the goods
- results in the transfer of ownership because transfer of
document likewise transfers control over the goods
- refer to Art. 1513
Chapter 5
Actions and Damages in Case of Breach
Cause of action of a passenger and shipper:
a) against common carrier based on culpa contractual or
culpa aquiliana
b) on the part of the driver based on either culpa delictual or
culpa aquiliana

Note: The source of obligation based on culpa contractual is
separate and distinct from quasi-delict.
Article 1903 (last paragraph) 2 things are apparent:
1. That when an injury is caused by the negligence of a
servant or employee there instantly arises a
presumption of law that there was negligence on the
part of the master or the employer either in the
selection of the servant or employee, or in supervision
over him after the selection, or both.
2. That presumption is juris tantum and not juris et de
jure (of law and of right), and consequently may be
rebutted
Note however: that Article 1903 of the Civil Code is not
applicable to acts of negligence which constitute the breach of
contract. It is applicable only to culpa contractual.
The fundamental distinction between obligation of extra-
contractual and those which arise from contract, rests upon
the fact that in cases of non-contractual obligation it is the
wrongful or negligent act or omission itself which creates
the vinculum juris, whereas in contractual relations the
vinculum (bond) exists independently of the breach of the
voluntary duty assumed by the parties when entering into
the contractual relation.
CONCURRENT CAUSES OF ACTION
- There is one action but several causes of action
- The same act that breaches the contract may also
be tort
Note: The cause of action of a passenger or shipper against the
common carrier can be culpa contractual or culpa aquiliana
while the basis of liability on the part of the driver is either culpa
delictual or culpa aquiliana. The driver of the carrier is not liable
based on contract because there is NO PRIVITY of contract
between him and the passenger or shipper.
If the negligence of third persons concurs with the breach, the
liability of the third person who was driving the vehicle and/or
his employer may be based on quasi delict. The driver alone
may be held criminally liable and civil liability may be imposed
upon him based on delict. In the latter case, the employer is
subsidiarily liable.
Remember: It does not make any difference that the liability of
one springs from the contract while that of the other arises from
quasi-delict. If the owner and driver of the other vehicle are not
impleaded, the carrier may implead them by filing a third party
complaint.
Solidary liability
- In case the negligence of the carriers driver and a third
person concurs, the liability of the parties carrier and
his driver, third person is joint and several.
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD
A. Overland Transportation of Goods and Coastwise
Shipping
a) When to file a claim with carrier
- Art. 366 constitutes a condition precedent to the
accrual of a right of action against a carrier for
damage caused to the merchandise.
Under Art. 366 of the Code of Commerce, an action for
damages is barred if the goods arrived in damaged
condition and no claim is filed by the shipper within the
following period:
1. Immediately if damage is apparent;
APRIL LYNN L. URSAL Page 17
2. within twenty four (24) hours from delivery if
damage is not apparent.
- The period does not begin to run until the consignee
has received possession of the merchandise that he
may exercise over it the ordinary control pertinent to
ownership.
- This provision applies even to transportation by sea
within the Phils. or coastwise shipping.
- Does NOT apply to misdelivery of goods.
Q: Why does it not apply to misdelivery of goods?
A: In such cases (misdelivery), there can be no question of claim
for damages suffered by the goods while in transport, since the
claim for damages arises exclusively out of the failure to make
delivery.
Case: Monica Roldan vs. Lim Ponzo and Co.
- Article 366 of the Commercial Code is limited to cases
of claims for damage to goods actually turned over by
the carrier and received by the consignee.
But the period prescribed in Art. 366 may be subject to
modification by agreement of the parties.
The validity of a contractual limitation of time for filing
the suit itself against a carrier shorter than the statutory
period thereof has generally been upheld as such
stipulation merely affects the shippers remedy and does
not affect the liability of the carrier.
b) Extinctive Prescription
- six (6) years if there is no written contract (bill of
lading)
- ten (10) years if there is written contract
This rule likewise applies to carriage of passengers for
domestic transportation.
B. International Carriage of Goods by Sea
A claim must be filed with the carrier within the following
period:
1. if the damage is apparent, the claim should be filed
immediately upon discharge of the goods; or
2. within 3 days from delivery, if damage is not
apparent.
Filing of claim is not condition precedent. Thus,
regardless of whether the notice of loss or damage has
been given, the shipper can still bring an action to recover
said loss or damage within one year after the delivery of
the goods or the date when the goods should have been
delivered
a) Prescription
Action for damages must be filed within a period of one (1)
year from discharge of the goods.
The period is not suspended by an extra-judicial demand.
(Why? Transportation of goods by sea should be decided
in as short a time as possible)
o Case: Dole Philippines Inc. vs. Maritime
Company of the Philippines - the prescriptive
period is not tolled or interrupted by a written
extra-judicial demand. Article 1155 is NOT
applicable.
The period does not apply to conversion or misdelivery.
The one (1) year period refers to loss of goods and not to
misdelivery.
- Damages arising from delay or late delivery are not the
damage or loss contemplated under the COGSA. The
goods are not actually lost or damaged. The applicable
period is ten (10) years.
 - Case: Domingo Ang vs. American Steamship Agencies
What is to be resolved in order to determine
the applicability of the prescriptive period of
one year is whether or not there was loss of
the goods subject matter of the complaint.
Loss contemplates merely a situation where
no delivery at all was made by the shipper of
the goods because the same had perished,
gone out of commerce, or disappeared in such
a way that their existence is unknown or they
cannot be recovered. (Note: It is not loss due
to misdelivery or delivery to the wrong
person.)
This rule applies in collision cases. The one (1) year
period starts not from the date of the collision but when
the goods should have been delivered, had the cargoes
been saved.
Case: Maritime Agencies and Services Inc. vs. CA
- When there is two destination of delivery, the one year
period should commence when the last item was
delivered to the consignee.
Insurance
The insurer who is exercising its right of subrogation is
also bound by the one (1) year prescriptive period.
However, it does not apply to the claim against the
insurer for the insurance proceeds. The claim against the
insurer is based on contract that expires in ten (10) years.
II. Recoverable Damages
Damages is the pecuniary compensation, recompense
or satisfaction for an injury sustained, or as otherwise
expressed, the pecuniary consequences which the law
imposes for the breach of some duty or violation of
some rights.
A. Extent of Recovery (Contractual Breach: Art. 220,
NCC)
Carrier in good faith is liable only to pay for the
damages that are the natural and probable
consequences of the breach of the obligation and
which the parties have foreseen or could have
reasonably foreseen at the time the obligation was
constituted.
Carrier in bad faith or guilty of gross negligence liable
for all damages, whether the same can be foreseen or
not. Those which may be reasonably attributed to the
non-performance of the obligation.
Note: The carrier who may be compelled to pay has the right of
recourse against the employee who committed the negligent,
willful or fraudulent act.
B. Kinds of Damages
Article 2216 provides that no proof of pecuniary loss is
necessary in order that moral, nominal, temperate, liquidated or
exemplary damages may be adjudicated. The assessment of
such damages, except liquidated ones, is left to the discretion of
the court, according to the circumstances of each case.
However, proof of pecuniary loss is necessary if actual or
compensatory damages are being claimed.
a) Actual or Compensatory Damages
- only for the pecuniary loss suffered by him as he has
duly proved
- not only the value of the loss suffered, but also that of
the profits which the obligee failed to obtain
- 2 Kinds:
APRIL LYNN L. URSAL Page 18
1. the loss of what a person already possesses (dao
emergente);
2. the failure to receive as a benefit that would have
pertained to him (lucro cesante).
- It should be proven: cannot be decided based on the
consideration of the judge; not to be based on the
perception, observation and consideration of the judge
- With respect to restorative medical procedure: to be
entitled to actual damage, you need to have an EXPERT
TESTIMONY. Without such, you cannot recover.
Damages may be recovered: Art. 2205 (Civil Code)
1) For loss or impairment of earning capacity in cases of
temporary or permanent personal injury;
2) For injury to the plaintiffs business standing or commercial
credit.
Damages cannot be presumed. The burden of proof rests
on the plaintiff who is claiming actual damages against
the carrier.
In case of goods the plaintiff is entitled to their value
at the time of destruction. The award is the sum of money
which plaintiff would have to pay in the market for
identical or essentially similar goods
For personal injury and even death the claimant is
entitled to all medical expenses as well as other
reasonable expenses that he incurred to treat his or her
relatives injuries.
In case of death the plaintiff is entitled to the amount
that he spent during the wake and funeral of the
deceased. But, expenses after the burial are not
compensable.
Read Art. 2206 (Civil Code):
death caused by a crime or quasi-
delict shall be at least P3,000; [The amount of
fixed damages is now P50,000.00]
the defendant shall be liable for the
loss of the earning capacity of the deceased;
If deceased is obliged to give support,
recipient may demand support from the
person causing the death for a period not
exceeding five years
Spouse, legitimate and illegitimate
descendant and descendants may demand
moral damages for mental anguish by reason
of the death of the deceased
1) Loss of earning capacity
Net Earning Capacity = Life Expectancy x [Gross Annual
Income less Necessary Living Expenses]
Life expectancy (2/3 x 80 age at death)
Net earnings based on the gross income of the victim
minus the necessary incidental living expenses which the
victim would have incurred if he were alive.
Amount of living expenses must be established. In the
absence of proof, it is fixed at fifty (50%) of the gross
income.
Rules on loss of earning apply when the breach of the
carrier resulted in the plaintiffs permanent incapacity.
2) Attorneys fees
- refer to Art. 2208 of the Civil Code
- attorneys fees may be awarded in an action for
breach of contract of carriage under par. 1,2,4,5,10
and 11 of Art. 2208.
- If awarded exemplary, one is entitled to attorneys
fees
 - 2 kinds: ordinary (compensation to the lawyer);
extraordinary (indemnity as a form of damages
suffered due to the breach of contract)
- You can be awarded if you show that you were forced
to litigate and when you are entitled to exemplary
damage.
- But this award is subject to the discretion of the court
(you cannot dictate usually 10%-15%)
3) Interests
12% per annum if it constitutes a loan or forbearance
of money
6% per annum if it does not constitute loan or
forbearance of money
12% - for final judgment
Note: No interest, however, shall be adjudged on unliquidated
claims for damages except when or until the demand can be
established with reasonably certainty, the interest shall begin to
run form the time the claim is made judicially or extrajudicially.
b) Moral Damages
- Includes physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injury.
- Though incapable of pecuniary computation, moral
damages may be recovered if they were the proximate
result of the defendants wrongful act or omission.
- Moral damages are not awarded to punish the defendant
but to compensate the victim
- May be recovered when there is death or there is malice or
bad faith. (in transportation of passengers)
- Refer to Art. 2219 and 2220 (enumerates cases when moral
damages may be awarded)
- Generally, no moral damages may be awarded where the
breach of contract is not malicious.
- Moral damages may be awarded if the contractual
negligence is considered gross negligence.
- Subject to three conditions in transportation law:
o Death
o Malice or bad faith (must be done in the
performance of the contract of carriage)
o Physical Injuries
- Requisites:
o There must be an injury, whether physical,
mental or psychological, clearly sustained by
the claimant
o There must be a culpable act or omission
factually established
o The wrongful act or omission of the defendant
is the proximate cause of the injury sustained
by the claimant
o The award of damages is predicated on any of
the cases stated in Art. 2219.
- Factors to consider that could affect the amount to be
recovered:
o The extent of humiliation may also determine
the amount of moral damages that can be
awarded
o The extent of pain and suffering likewise
determines the award
o Official, political, social and financial standing
of the offended party and the business and
financial position of the offender affect the
amount of damages
o The age of the claimant.
c) Nominal Damages
- Refer to Art. 2221-2223 (Civil Code)
APRIL LYNN L. URSAL Page 19
- It is adjudicated in order that the right of plaintiff may be
vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
- The assessment of nominal damages is left to the discretion
of the court according to the circumstances of the case.
- The award of nominal damages is also justified in the
absence of competent proof of the specific amounts of
actual damages suffered.
- Cannot co-exist with actual damages.
- There is no loss in nominal damages, unlike in actual and
temperate damages, loss is present which is proven and not
proven but rather ascertained by the court, respectively.
Case: Japan Airlines vs. CA
- The award of moral damages was justified because JAL
failed to make necessary arrangement to transport the
plaintiffs on the first available connecting flight to
Manila.
- Only Nominal damages were awarded in the absence of
proof of actual damages
d) Temperate or Moderate Damages
- More than nominal but less than compensatory damages.
- Art. 2224 provides:
may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be provided with certainty.
- cannot co-exist with actual damages
- Definite proof of pecuniary loss cannot be offered, although
the court is convinced that there has been such loss.
e) Liquidated Damages
- Those agreed by the parties to a contract, to be paid in
case of breach thereof.
- Ordinarily, the court cannot change the amount of
liquidated damages agreed upon by the parties.
However, Art. 2227 of the Civil Code provides that
liquidated damages, whether intended as an indemnity
or a penalty, shall be equitably reduced if they were
iniquitous or unconscionable.
f) Exemplary or Corrective Damages
- Requisites for the award of exemplary damages:
1. They may be imposed by way of example in addition to
compensatory damages, and only after the claimants
right to them has been established.
2. They cannot be recovered as a matter of right, their
determination depending upon the amount of
compensatory damages that may be awarded to the
claimant.
3. The act must be accompanied by bad faith or done in
wanton, fraudulent, oppressive or malevolent manner.
Note: If gross negligence warrants the award of exemplary
damages, with more reason is its imposition justified when the
act performed is deliberate, malicious and tainted with bad faith.
The rationale behind exemplary or corrective damage is to
provide an example or correction from public good.
The award of exemplary damages in breach of contract
of carriage is subject to the provisions under Art. 2232-
2235 of the Civil Code.
Case: Air France vs. Rafael Carrascoso and CA
- The inference of bad faith is there; it may be drawn
from the facts and circumstances set forth therein. The
contract was averred to establish the relation between
the parties.
- Deficiency in the complaint in stating that there was
bad faith, if any, was cured by the evidence.
Case: Philippine Airlines Inc. vs. CA
 - Moral damages are recoverable in a breach of contract
of carriage where the air carrier thought its agents
acted fraudulently or in bad faith.
- The contract of air carriage generates a relation
attended with a public duty. Neglect or malfeasance of
the carriers employees naturally could give ground for
an action for damages.
MARITIME LAW
A. CONCEPTS (Chapter 6)
Maritime Law is the system of laws which particularly relates
to the affairs and business of the sea, to ships, their crews and
navigation and to marine conveyance of persons and property
Governing Laws:
1. New Civil Code primary law on maritime commerce
2. Book III Code of Commerce applied suppletorily
3. Special Laws
a. Salvage Law (Act No. 2616)
b. Carriage of Goods by Sea Act (CA No. 65)
c. Ship Mortgage Decree of 1978 (PD 1521)
REAL AND HYPOTHECARY NATURE OF MARITIME LAW
Case: Philippine Shipping Company, et al. vs. Francisco Garcia
Vergara
That which distinguishes the maritime from the civil not have any right whatsoever on the salvage of the hull, but
law and even from the mercantile law in general is the
real and hypothecary nature of the former
Evidence of this real nature of maritime law: proportion of the efforts made and to the risks encountered in
o The limitation of the liability of the agents to
the actual value of the vessel and the freight
money
o The right to retain the cargo and the embargo
and detention of the vessel even cases where
the ordinary civil law would not allow more
than a personal action against the debtor or
person liable
This repeals the civil law to such extent that, in certain
cases where the mortgaged property is lost no
personal action lies against the owner or agent of the
vessel
Two reasons why it is impossible to do away with
these privileges:
o The risk to which the thing is exposed
o The real nature of maritime law, exclusively
real, according to which the liability of the
parties is limited to a thing to which is at
mercy of the waves
Case: Aboitiz Shipping Corporation vs. General Accident Fire and
Life Assurance Corporation, Ltd.
The real and hypothecary nature of maritime law
simply means that the liability of the carrier in
connection with losses related to maritime contracts is
confined to the vessel, which is hypothecated for such
obligations or which stands as the guaranty for their
settlement
Purpose: It was designed to offset such adverse
conditions and to encourage people and entities to
venture into maritime commerce despite the risks and
prohibitive cost of shipbuilding
Thus, the liability of the vessel owner and agent arising
from the operation of such vessel were confined to the
(1) vessel itself, (2) its equipment, (3) freight, (4) and
insurance if any, which limitation served to induce
APRIL LYNN L. URSAL Page 20
capitalists into effectively wagering their resources
against the consideration of the large profits attainable
in trade
Real similar to transactions over real property where to effect
against third persons, registration is necessary
Hypothecary the liability of the owner of the value of the
vessel is limited to the vessel itself
STATUTORY PROVISIONS
Article 837, 587, 590 and 643 provides for limited
liability of shipowner. (read full provision)
Art. 837: civil liability incurred by the ship owner: liability
limited to value of the vessel + appurtenances + freightage
earned during voyage
Art. 643: vessel and cargo lost by reason of capture or wreck:
all rights shall be extinguished, both as regards the crew to
demand any wages whatsoever, and as regards the ship agent
to recover the advances made
If a portion of the vessel or of the cargo, or both, should
be saved, the crew engaged on wages, including the captain,
shall retain their rights on the salvage, so far as they go, on the
remainder of the vessel as well on the amount of the freightage
of the cargo saved; but sailors who are engaged on shares shall
only the portion of the freightage saved. If they should have
worded to recover the remainder of the shipwrecked vessel they
shall be given from the amount of the salvage an award in
order to accomplish the salvage
Art. 587: ship agent may exempt himself of the civil liabilities
for the indemnities in favor of third persons by abandoning
vessel with all equipments and freight it earned during voyage
Art. 590: co-owners civilly liable in proportion to their interest
and may exempt liability by abandonment of the part of the
vessel belonging to him
Limited liability rule means that the liability of a shipowner
for damages in case of loss is limited to the value of his vessel.
No vessel, no liability.
The civil liability for collision is merely co-existent with
the interest in the vessel; if there was total loss,
liability is also extinguished.
GR: If the ship is totally lost, liability is extinguished. If the ship
or part thereof still exists, he can escape liability by abandoning
the vessel, its appurtenances and its freight.
Case: Monarch Insurance Co., Inc. vs. Court of Appeals
The total destruction of the vessel extinguishes
maritime liens because there are no longer any res to
which it can attach. This doctrine is based on the real
and hypothecary nature of maritime law.
Note: Since the Civil Code contains no provision regulating
liability of shipowners or agents in the event of total loss or
destruction of the vessel, Article 587 of the Code of Commerce
governs.
Article 837, 587 and 590 of Code of Commerce cover only:
1. Liability to third persons
2. Acts of the captain
3. Collisions
EXCEPTIONS TO THE LIMITED LIABILITY RULE
1. Where the injury or death to a passenger is due either
to the fault of the shipowner, or to the concurring
 negligence of the shipowner and the captain
(NEGLIGENCE)
GR: Shipowner is liable for the negligence of the
captain in collision cases
---- liability is limited to value of the vessel
Limited liability rule applies if the captain or the crew
caused the damage or injury as when unseaworthiness
of the vessel was caused by the negligence of the
captain or crew during the voyage
However, if the failure to maintain the seaworthiness of
the vessel can be ascribed to the shipowner alone or
the shipowner concurrently with the captain, then the
limited liability principle cannot be invoked --- LIABILITY
FOR THE DAMAGES IS TO THE FULL EXTENT (ex.
Overloading, unseaworthiness even at the time of
departure)
2. Where the vessel is insured (INSURANCE)
Limited liability rule does not apply to insurance claims
Case: Vasquez vs. CA
- The total loss of the vessel did not extinguish the
liability of the carriers insrured
- Despite the loss of the vessel, therefore, its
insurance answers for the damages that a
shipowner or agent, may be held liable for by
reason of the death of its passengers.
3. In the workmens compensation claims (WORKERS
COMPENSATION)
The provisions of the Code of Commerce have no room
in the application of the Workmens Compensation Act
which seeks to improve, and aims at the amelioration
of, the condition of laborers and employees
If an accident is compensable under the Workmens
Compensation Act, it must be compensated even when
the workmans right is not recognized by or is in
conflict with other provisions of the Civil Code or of the
Code of Commerce
Liability under the Workmens compensation Act, even
if the vessel was lost, is still enforceable against the
employer or shipowner.
4. Expenses for repairs and provisioning of the ship prior
to the departure thereof
5. The vessel is not abandoned (ABANDONMENT)
Abandonment of the vessel, its appurtenances and
the freightage is an indispensable requirement before
the shipowner or ship agent can enjoy the benefits of
the limited liability rule. If the carrier does not want to
abandon the vessel, he is still liable even beyond the
value of the vessel
The only instance where abandonment is dispensed
with is when the vessel was entirely lost. In such case,
the obligation is extinguished.
Only shipowner and ship agent can make an
abandonment
PROCEDURE FOR ENFORCEMENT
Case: Aboitiz Shipping Corporation vs. General Accident Fire and
Life Assurance Corporation, Ltd.
- Rights of the parties to claim against an agent or owner
of vessel may be compared to those of creditors
against an insolvent corporation whose assets are not
enough to satisfy the totality of claims as against it.
APRIL LYNN L. URSAL Page 21
- Creditors must limit their recovery to what is left in the
name of the corporation
- In the sinking of a vessel, the claimants or creditors are
limited in their recovery to the remaining value of
accessible assets. In the case of lost vessel, these
assets are the insurance proceeds and pending
freightage for the particular voyage
PROTESTS
- is the written statement by the master of a vessel or
any authorized officer, attested by proper officer or a
notary, to the effect that damages has been suffered
by the ship
Required under the following cases:
1. When the vessel makes an arrival under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the
captain believe that the cargo has suffered damages or
averages
4. Maritime collisions
Q: when is it not required?
A:
1. when it does not fall under the four cases mentioned
above
2. when what is not involve is not a vessel
ADMIRALTY JURISDICTION (RTC)
- Section 19 (3) of BP 129 as amended by RA 7691
(3) In all actions in admiralty and maritime
jurisdiction where the demand or claim exceeds
300, 000 or in Metro manila, where such
demand or claim exceeds 400,000.
- if less MTC
3 concepts: (they are the same)
1. real and hypothecary --- the supreme court did not explain
the literal meaning of it.
- real: refers to the risk in maritime thats why there are
privileges for the shipowner. Risks are certain to happen
- hypothecary: remember guaranty and collateral which is the
vessel. For the particular voyage, the guaranty is the vessel
wherein if the vessel is lost, the shipowner no longer has the
liability
2. limited liabililty rule --- no literal explanation
- limited: it means that the liability is limited to the value of the
vessel
-liability: assumption that the shipowner is liable for the losses.
There are no valid defenses that shipowner can invoke to escape
liability. Same concept with 1479. Difference is that there is a
fixed amount and there is qualification
-under the limited liability no fixed amount but amount is
confined on the vessel
The question here: is this a right to limit the liability?
A: admittedly it is a right that only shipowner can exercise
Q; how to exercise?
A: by way of pleading. But do not follow the way it was filed in
yangco. Here it was after judgment that the shipowner sought to
abandon the ship to abandon liability
But right now, it is a matter of procedure. To limit liability by
abandoning the vessel; IF it is a matter of procedure, you check
the rules of civil procedure
Q: so when does shipowner inform the court the right to limit
liability?
A: in a pleading and normally in an answer. IT will be raised as a
defense. If shipownver cannot allege, then that defense is
deemed waiver. Therefore you cannot seek abandonment after
judgment was been rendered.
CASES:
Yangco vs. Lacerna
- even captain was aware of the typhoon and the vessel
capsized, SC upheld limited liability
Chua Hek Kong
- there being no exceptions, the court upheld limited liability
The more critical issue is on the EXCEPTIONS in the LLRule:
1. workmens compensation (Abueg case: the repairs constitue
maritime lient)
2. insurance coverage--- if the vessel is lost in the course of
voyage and it is insured, is it automatic that the limited liability
rule does not apply?
A: No. the basis of supreme court (Vasquez vs. CA --- court
mentioned very little about insurance: if the vessel is insured,
the insurance proceeds shall answer the credit)
If the plaintiff was injured or heirs will file action from insurance
company, and since shipowner cannot avail of limited liability,
this is not advisable to the plaintiff because it has no privity of
contract with the insurance company
Q: when does insurance argument come in?
A: only when the shipowner will bring the insurance company to
the case filed by the plaintiffby way of third party complaint.
Once insurance company is impleaded then this can be used:
that the owner cannot avail of limited liability.
But no shipowner will ever implead the insurance. Because they
will be the one who will claim the insurance without telling the
plaintiffs. In the case, there is no proof that the vessel is insured.
Even if we know outside court, it is insured because in the court,
there is no proof that the vessel is insured. Court will not identify
evidence not properly identified and recoded in court.
Q: is it really an exception in its strict sense?
A: Not really (CAPANAS). What is the implication if you properly
invoke the LLRule the plaintiff cannot avail beyond the value of
the vessel.
If not apply plaintiff will recover more than the value of vessel
subject to rules on claiming of damages.
But question, if vessel if covered with insurance, does this mean
that plaintiff can recover to the amount applied? No, they can
only recover until the coverage of the insurance proceeds.
3. Negligence
- common carrier is presumed negligent if common carrier.
However, this does not apply when there is an invocation on
limited liability. (in all cases except MONARCH vs. CA) --- the rest
of the case, the court has found negligence based on the facts
presented. You cannot invoke presumption of negligence so that
limited liability rule will not apply.
Monarch _-- SC: since there is a presumption of negligence then
LLR will not apply. But SC also said that if LLR is invoked, the
initial burden to invoke negligence shifts to the shipowner. They
should prove that there is no privity or knowledge on the
negligence of the ship captain.
Q: what is the relationship of Civil Code and LLR?
A: There is none. Under 1766 in all matters not provided by Civil
Code, Code of Commerce or Special law will apply. There is no
rule in Civil Code in limited liability rule thus Code of Commerce
will apply. (but in monarch, this was not applied--- all the
negligence was related to the absence of exercising
extraordinary diligence)
APRIL LYNN L. URSAL Page 22
Note: that in the subsequent cases, Consolidated of Aboitiz
case: there were findings of facts of the negligence of Aboitiz.
The point is when it comes to LLR, the Code of Commerce apply.
You cannot invoke presumption of negligence. In order to refute,
petitioner should prove negligence.
REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not
presumption.
Loadstar case
- the shipowner is aware of the typhoon
- insufficient manning negligent
- Captain playing mahjong there was negligence. But SC said
that it was negligent because the shipowner did not prove that it
was the first. Supposedly facts are established in court
proceedings and not on presumption.
3. no vessel, no liability
- they all mean one and the same such that the liability of the
shipowner for the losses is confined to the value of the vessel
and the freight, if any.
MARITIME PROTEST (4 INSTANCES) REQUIRED (LOOK AT CODE
OF COMMERCE and above notes)
INSTANCES WHEN IT DOES NOT APPLY:
1. NOT based CODE OF COMMERCE AND BASED ON QUASI-
DELICT THEN NOT MARITIME PROTEST
2. when what was is involve is not a vessel (Lopez vs. Duruel:
the motor boat is not a vessel under maritime law, it is only
engaged in bay traffic. A vessel in maritime law, should be
engaged in transporting goods, persons, or both from one port
to another)
(But to be sure: you file maritime and allege such bahala dili
kelangan coz otherwise dismiss ang case)
Since a vessel is a personal property, it can be mortgaged
Same concept with mortgage but different rule
- PD 1521:
Q: what about process of extra judicial foreclosure of vessel?
A: chattel mortgage law should govern
Q: what to remember under PD 1521?
A: Section 4
registration, non waiver
Section17: priority of claims
Q: are there claims in maritime law over and above preferred
mortgage?
A: yes. Look at section 17.
Case: Poliand Industrial
- facts shows that the proceeds debted from hardwood was for
the modification of the vessel (extended for vessels benefit), for
crews wage
Characteristics of maritime lien:
1. maritime property
2. travels with the property--- it cannot be extinguished
3. enforceable in an action in rem--- action directed to the
property (crescent case: ang gi kiha ang vessel)
Under section 22: persons authorize to procure repairs
(presumed):
1. managing agent
2. ships husband --- agent of the vessel
If mortgagor does not pay:
1. judicial foreclosure file actual case and implead the vessel
as party defendant (served to captain or authorized person); you
can ask the court order to arrest the vessel.
2. extrajudicial
- the problem with vessel, mortgagee is not in possession of the
vessel. It is with the mortgagor, you cannot sell the property not
in your possession.
In PD 1521the order of arrest can be asked
Grounds to discharge
1. irregularly issued (mortgagee na ilad. Wala pa diay due
obligation
2. posting of a bond to discharge..the bond to be posted is
double the value of the claim.
Maritime lien on necessaries (5 requisites) brief yourself
cresent petroleum case (look at book for requisites)
B. VESSELS (Chapter 7)
1. General Concepts
A vessel or watercraft is defined under PD No. 447 as
any barge, lighter, bulk carrier, passenger ship freighter,
tanker, container ship, fishing boats, or other artificial
contrivance utilizing any source of motive power, designed
use or capable of being used as a means of transportation
operating either as a common carrier, including fishing
vessels covered under PD No. 43,
Except:
1. Those owned and/or operated by the Armed Forces of
the Philippines and by the Foreign Government for its
Military Purpose.
2. Bancas, sailboat and other waterbone contrivance of less
than three tons capacity and not motorized.
Case: Yu Con vs. Ipil
- The word vessel serves to designate every kind of craft
by whatever particular or technical name it may not be
known or which nautical advancements may give it in
the future
- The court held that a small vessel used for the
transportation of merchandise by sea and for the
making of voyages from one port to another of these
Islands, equipped and victualed for this purpose by its
owner, is a vessel, within the purview of the Code of
Commerce, for the determination of the character and
effect of the relations created between the owners of
the merchandise laden on it and its owner
When the mercantile code speaks of vessels, they refer
solely and exclusively to mercantile ships, as they do not
include warships, and furthermore, they almost always
refer to craft which are not accessory to another as in the
case of launches, lifeboats and etc.
Further, they refer exclusively to those which are
engaged in the transportation of passengers and freight
from one port to another or from one place to another
They refer to merchant vessels and in NO WAY can they
or should they be understood as referring to pleasure craft,
yachts, pontoons, health service and harbor police vessels,
etc.
Ships ought to be understood in the sense of vessel
serving the purpose of maritime navigation or seagoing
vessel, and not in the sense of vessel devoted to the
navigation of rivers
The third book of the code of commerce, dealing with
maritime commerce, was evidently intended to define laws
relative to merchant vessels and maritime shipping; and as
appears from said code, the vessel intended in that book
APRIL LYNN L. URSAL Page 23
are such run by masters having special training with
elaborate apparatus of crew and equipment indicated in
the code.
Only vessels engaged in what is ordinarily known as
maritime commerce are within the provision of law
conferring limited liability on the owner in case of maritime
disaster.
Other vessel of minor nature not engaged in maritime
commerce, such as river boats and those carrying
passengers from ship to shore, must be governed, as to
their liability to passenger, by the provision of the civil code
or other appropriate special provisions of law.
Case: Augusto Lopez vs. Juan Duruelo, et. al
- The code of commerce are not applicable to small craft
which are only subject to administrative (customs)
regulations in the matter of port service and in the
fishing industry
- Only vessels engaged in what is ordinarily known as
maritime commerce are within the provisions of law
conferring limited liability on the owner in case of
maritime disaster
- It is therefore clear that a passenger on a boat like the
Jison, in the case before use, is not required to make
protest as a condition precedent to his right of action
for the injury suffered by him in the collision described
in the complaint article 835 of the Code of Commerce
does not apply
CONSTRUCTION, EQUIPMENT AND MANNING
The Construction, equipment and manning of vessel are subject
to the rules issued by the Maritime Industry Authority (MARINA)
and consistent with Article 574 of the Code of Commerce
Article 574. Builders of vessels may employ the materials and
follow, with respect to their construction and rigging, the
systems most suitable to their interests. Ship owners and
seamen shall be subject to what the laws and regulations of the
public administration on navigation, customs, health, safety of
vessels, and other similar matters.
PERSONAL PROPERTY
Vessels are considered personal property under the Civil Law.
The Code of Commerce likewise expressly acknowledges the
special nature of a vessel as personal property.
Case: Philippine Refining Company vs. Jargue
- Vessels are personal property although occasionally
referred to as a peculiar kind of personal property
- They are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law
- The only difference between a chattel mortgage of a
vessel and a chattel mortgage of other personality is
that it is not now necessary for a chattel mortgage of a
vessel to be noted in the registry of the register of
deeds, but it is essential that a record of documents
affecting the title to a vessel be entered in the record of
the Collector of Customs at the port of entry
Case: Rubiso and Calixto vs. Rivera
- Ships or vessels, whether moved by steam or by sail,
partake, to a certain extent, of the nature and
conditions of real property, on account of their value
and importance in the world of commerce
- Transfer of vessels should be in writing and must be
recorded in the appropriate registry
2. OWNERSHIP
ACQUISITION

Vessel may be acquired or transferred by any means
recognized by laws. Thus, vessel may be sold, donated and
may even be acquired through prescription.
Under the present laws, vessels that are under the
jurisdiction of MARINA can be transferred only with notice
to said administrative agency.
A. Prescription (Code of Commerce)
Article 573. Merchant vessels constitute property which may
be acquired and transferred by any of the means recognized by
law. The acquisition of a vessel must appear in a written
instrument, which shall not produce any effect with respect to
third persons if not inscribed in the registry of vessels.
The ownership of a vessel shall likewise be acquired by
possession in good faith, continued for three years, with a just
title duly recorded.
In the absence of any of these requisites, continuous possession
for ten years shall be necessary in order to acquire ownership.
A captain may not acquire by prescription the vessel of which he
is in command.
ARTICLE 575. Co-owners of vessels shall have the right of
repurchase and redemption in sales made to strangers, but they
may exercise the same only within the nine days following the
inscription of the sale in the registry, and by depositing the price
at the same time.
B. Sale (Code of Commerce)
Article 576. In the sale of a vessel it shall always be
understood as included the rigging, masts, stores and engine of
a streamer appurtenant thereto, which at the time belongs to
the vendor.
The arms, munitions of war, provisions and fuel shall not be
considered as included in the sale.
The vendor shall be under the obligation to deliver to the
purchaser a certified copy of the record sheet of the vessel in
the registry up to the date of the sale.
Article 577. If the alienation of the vessel should be made
while it is on a voyage, the freightage which it earns from the
time it receives its last cargo shall pertain entirely to the
purchaser, and the payment of the crew and other persons who
make up its complement for the same voyage shall be for his
account.
If the sale is made after the vessel has arrived at the port of its
destination, the freightage shall pertain to the vendor, and the
payment of the crew and other individuals who make up its
complement shall be for his account, unless the contrary is
stipulated in either case.
Article 578. If the vessel being on a voyage or in a foreign port,
its owner or owners should voluntarily alienate it, either to
Filipinos or to foreigners domiciled in the capital or in a port of
another country, the bill of sale shall be executed before the
consul of the Republic of the Philippines at the port where it
APRIL LYNN L. URSAL Page 24
terminates its voyage and said instrument shall produce no
effect with respect to third persons if it is not inscribed in the
registry of the consulate. The consul shall immediately forward a
true copy of the instrument of purchase and sale of the vessel to
the registry of vessels of the port where said vessel is inscribed
and registered.
In every case the alienation of the vessel must be made to
appear with a statement of whether the vendor receives its
price in whole or in part, or whether he preserves in whole or in
part any claim on said vessel. In case the sale is made to a
Filipino, this fact shall be stated in the certificate of navigation.
When a vessel, being on a voyage, shall be rendered useless for
navigation, the captain shall apply to the competent judge on
court of the port of arrival, should it be in the Philippines; and
should it be in a foreign country, to the consul of the Republic of
the Philippines, should there be one, or, where there is none, to
the judge or court or to the local authority; and the consul, or
the judge or court, shall order an examination of the vessel to
be made.
If the consignee or the insurer should reside at said port, or
should have representatives there, they must be cited in order
that they may take part in the proceedings on behalf of whoever
may be concerned.
REGISTRATION
Vessels are now registered through MARINA. It is a long
standing rule that the person who is the registered owner
of the vessel is presumed to be the owner of the vessel.
It is a settled rule that the sale or transfer of the vessel
is not binding on the third person unless the same is
registered.
SHIP'S MANIFEST
Vessels are required to carry manifest coast-wise trade.
A manifest is a declaration of the entire cargo. The
object of a manifest is to furnish custom officers with list of
check against, to inform the revenue officers what goods
are being brought into a port of the country on a vessel.
The requirement that a vessel must carry a manifest is
not complied with even if a bill of lading can be presented.
A bill of lading is just a declaration of a specific cargo rather
than the entire cargo
Sec 906 of the Tariff and Custom Code provides that
manifest shall be required for cargo and passengers
transported from one place to another only when one or
both of such place is a port of entry.
MORTGAGE
Since the term personal property includes vessel, they
are subject to mortgage agreeably to the provisions of the
Chattel Mortgage Law.
Mortgage and other encumbrances over vessels are
governed by the provisions of presidential decree 1521
(Ship Mortgage Decree of 1978)
OTHER CODE OF COMMERCE PROVISIONS
The provisions of the Code of Commerce reproduced
hereunder are deemed modified not only by the Civil Code
 but also by special laws
SAFETY REGULATIONS
On February 23, 2000, the Maritime Industry Authority
directed all domestic shipowners and operators under
Memorandum Circular No. 154 to strictly comply with
existing Safety-Related Policies, Guidelines, Rules and
Regulations
Rules include: (read book page 488-489)
Monitoring of compliances shall be undertaken by the
Authority and its Maritime Regional Offices, together with
the needed coordination with the Philippine Coast Guard
The MARINA shall have the power to inspect vessels and all
equipment on board to ensure compliance with safety standards
C. PERSONS WHO TAKE PART IN MARITIME COMMERCE
In sum, the following are persons who take part in Maritime
Commerce:
SHIPOWNERS and SHIP AGENTS;
CAPTAINS and MASTERS OF VESSELS;
OFFICERS and CREW OF VESSELS
SHIPOWNER V. SHIP AGENT
SHIPOWNER the person who is primarily liable for damages
sustained in the operation of vessel.
Code of Commerce places the primary responsibility on the
owner of the vessel.
(Uses the term naviero which has been construed to include
shipowner, ship agent and even the charterer who is considered
as owner pro hac vice.)
SHIP AGENT (Code of Commerce) the person entrusted with
provisioning of the vessel, or who represents her in the port
in which she happens to be. There is also the intention
under the Code of Commerce to make the ship agent
solidarily liable with the owner. The solidary liability applies
both for breach of contract and extra-contractual
obligations such as tort. The ship agent, even though he is
not the owner, is liable in every way to the creditor for
losses and damages without prejudice to his right against
the owner, the vessel and its equipment and freight. But his
liability, however is subject to the LIMITED LIABILITY RULE
(Chapter 6 of the Aquino book).
CAPTAINS V. MASTERS OF VESSELS
For purposes of Maritime Commerce:
The words captain and master have the same
meaning; both being chiefs or commanders of ships. Thus,
the terms captain and master are used synonymously
in the Code of Commerce.
MARINA regulations:
MASTER the person having command of the ship. The same
term is being used both for domestic trade and international
trade.
BOAT CAPTAIN a person authorized by the MARINA to act as
officer and/or in command of a boat/ship or has the
qualification/license to act as such.
3 Distinct Roles a captain commonly performs:
(Inter-Orient Maritime case)
1. He is a GENERAL AGENT OF THE SHIPOWNER;
APRIL LYNN L. URSAL Page 25
2. He is a COMMANDER and TECHNICAL DIRECTOR of
the vessel (most important role for this has something to
do with the operation and preservation of the vessel during
its voyage and the protection of the passengers, if any, and
crew and cargo);
3. He is a REPRESENTATIVE OF THE COUNTRY under
whose flag he navigates.
Based on the first aforementioned role, the captain is regarded
as the GENERAL AGENT of the shipowner and as such, he:
a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the freight
earned;
c. Agree upon rates and decide whether to take
cargo;
d. Has legal authority to enter into contracts with
respect to the vessel and the trading of the vessel, subject
to applicable limitations established by statute, contract or
instructions and regulations of the shipowner.
All aforementioned functions verily commits to the captain the
governance, care, and management of the vessel. Clearly then,
the captain is vested with both MANAGEMENT and FIDUCIARY
functions.
POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND
THE MASTER: (See Arts. 610-612 of the Code of Commerce)
DISCRETION OF CAPTAIN AND MASTER
A ships captain must be accorded a REASONABLE
MEASURE OF DISCRETIONARY AUTHORITY to decide what the
safety of the ship and of its crew and cargo specifically requires
on a stipulated ocean voyage.
Presumption: A captain is knowledgeable as to the specific
requirements of seaworthiness and the particular risks and
perils of the voyage he is to embark upon.
Applicable Principle: The captain has control of ALL
departments of service in the vessel, and reasonable discretion
as to its navigation.
Basic Principle in Admiralty Law: In navigating the vessel,
the master must be left free to exercise his own best judgment.
Requirements of Safe Navigation: The judgment and
discretion of the captain of a vessel may be confined within a
straitjacket, even in this age of electronic communications.
PILOTAGE: Who is a pilot?
Maritime Law: a person duly qualified, and licensed, to conduct
a vessel into or out of ports, or in certain waters.
Broad sense: includes both (1) those whose duty it is to guide
vessels into or out of ports, or in particular waters; and (2) those
entrusted with the navigation of vessels on the high seas.
General understanding: a person taken on board at a particular
place for the purpose of conducting a ship through a river, road
or channel, or from a port.
COMPULSORY PILOTAGE. In compulsory pilotage, states
possessing harbors enacted laws or promulgated rules requiring
vessels approaching their ports to take on board pilots licensed
under local law. In the Philippines, compulsory pilotage is being
implemented in the Port of Manila, the latter being within the
Manila Pilotage District.
a. Master and Pilot (See Far Eastern Shipping case on
page 520 of the Aquino book for the SC discussion on the
duties of a pilot)
b. Shipowner and Pilot
GENERAL RULE: the pilot is PERSONALLY LIABLE for
damages caused by his own negligence or default to the
OWNERS of the vessel, and to THIRD PARTIES for damages
sustained in a collision. Such negligence of the pilot in the
performance of duty constitutes a MARITIME TORT.
In cases of COLLISION: the COLLIDING VESSEL is prima
facie responsible, hence, the burden of proof is upon the
party claiming benefit of the exemption from liability. Thus,
it must be shown affirmatively that the pilot was at fault,
and that there was no fault on the part of the officers or
crew, which might have been conducive to the damage.
The fact that the law compelled the master to take the pilot
does not exonerate the vessel from liability. The injured
party shall seek redress from the vessel. The owners of the
vessel are responsible to the injured party for the acts of
the pilot, and they must be left to recover the amount as
well as they can against him.
c. Pilot and his Association
The fact that the pilot is a member of an association does
not make the association jointly and severally liable. Article
2180 of the Civil Code does not apply because there is NO
EMPLOYER-EMPLOYEE Relationship.
Well-established is the rule that pilot associations are
immune to vicarious liability for the tort of their members.
They are not the employer of their members and exercise
no control over them once they take the helm of the vessel.
They are also not partnerships because the members do
not function as agents for the association or for each other.
Pilots associations are also not liable for negligently
assuring the competence of their members because as
PROFESSIONAL ASSOCIATIONS, they made no guarantee
of the professional conduct of their members to the general
public.
CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528
of the Aquino book)
OFFICERS AND CREW OF VESSELS
COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
-- all the persons on board from the captain to the cabin boy,
necessary for the management, maneuvers, and service, and
therefore, it includes the CREW, the SAILING MATES,
ENGINEERS, STOKERS, and OTHER EMPLOYEES ON BOARD not
having specific designations; but it SHALL NOT INCLUDE the
passengers or the persons whom the vessel is transporting.
REGULATION OF MERCHANT MARINE PROFESSION
The practice of marine profession is now governed by special
laws and pertinent rules issued by the:
- MARINA;
- BOARD OF MARINE DECK OFFICERS;
- BOARD OF MARINE ENGINEER OFFICERS
MINIMUM SAFE MANNING
It is not enough that the officers manning the merchant
vessel have all the qualifications imposed by the Philippine
Merchant Marine Officers Act and other special laws or
regulations. It is also required that there is sufficient
number of officers and crew that are serving in the vessel.
(Quality and Quantity)
SECURITY OF TENURE
The Labor Code provisions apply to OFFICERS and CREW of
merchant vessels in DOMESTIC Trade or COASTWISE
Shipping. Hence, matters concerning their dismissal or
disciplinary action must be in accordance with provisions of
APRIL LYNN L. URSAL Page 26
the Labor Code. For officers and crew who are working in
foreign vessels who are involved in overseas shipping, there
must be compliance with the applicable laws on overseas
employment as well as regulations issued by the Philippine
Overseas Employment Administration (POEA).
CODE OF COMMERCE PROVISIONS on Sailing Mates, Second
Mate and Marine Engineer, Crew, and Captain (See pages 552-
560 of the Aquino book).
Parties --- those provided above plus seamen, other members
of the complement including the stokers (incharge of boilers)
and supercargo (agent of the shippers who has authority to sell
goods while on voyage)
4 maritime contracts
1. charter parties
2. Botomry
3. Repondentia
4. Marine insurance (incorporated in the subject insurance)
ON PERSONS
Shipowner
- he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can
invoke the LLR? No jurisprudence. Personal opinion of
sir: distinguish on the type of charter party. If
affreightment, shipowner retains possession, command
and navigation of the vessel. If bareboat it is vested
upon the charterer.
- Jurisprudence: except for registration, the charterer is
the temporary owner of the vessel. With this, the
charterer can invoke LLR (this part no juris)
Note: there is not distinction of liability of shipowner and ship
agent. They are civilly liable
There is a situation in maritime law that shipower and agent
they are held liable for the act or omission of a third person
which is the ship captain or master.
ACTS of CAPTAIN
Case: Yucon case and Sweetlines case
- In Yucon, money was entrusted to the captain and the
money was lost. SC concluded that shipowner was
liable for the lost because the captain failed to put up
measures while in custody of the money. It may not
technically to an act but may refer to admission but
would fall under the term acts
- In sweetlines, bound for catbalogan but the captain
chose to allow the passengers to disembark in
tacloban. This time, this is the act of captain. The SC
concluded that the damages sustained by passengers
bound for catbalogan are to shouldered by the
shiponwer
Indemnities in Favor of 3rd person: OTTA devt case sited in walter
smith case
- In OTTA the owner of the pier was at the same time the
owner of the goods. SC, because there was a
relationship of owner of vessel and goods, then there is
presumption of negligence new civil code prevails
- Walter smith case: There was no relationship. Owner of
port and owner of goods are different. What was
applied by court was the law on torts. No presumption
of negligence. There should be proof of negligence. The
owner of vessel proved that he exercised ordinary
diligence (required in ports). What was presented was
the competence of shipcaptain. The shipowner proved
ordinary diligence in choosing the ship captain
Contracts entered into by shipcaptain or master

Inter orient case: one role is they are the general agent of the
shipowener. But if the obligation contracted by the captain does
not enure to the benefit of the vessel, then the shipowner has
no liability. There is no conflict bec. 586 obligations contracted
by the shipper while 1759 death or injury of passenger as result
of contract of carriage.
The case in point with the contracts entered into was the case
Wing Kee. There were supplies delivered. Shipagent was said to
be liable. SC said at the time you were still an agent you were
liable but at the time agency was terminated you are no longer
liable.
If both SO and SA are sued, being solidarily liable, the SA has
right of recourse over SO.
Shipcaptain or master
- The difference is with regard to the tonnage of the
vessel (higher: captain; lower: master; major patron
and minor patron)
- The question on the shipcaptain or master is the
exercise of discretion
- Inter orient case: captain tayong did not want to
proceed with the voyage from Singapore to Africa bec.
Of lack of oxygen and acetylene. But because of order
of management he proceeded. He was then ordered to
repatriated and then another captain took his place. He
filed for illegal dismissal. The issue was the discretion
exercised by the captain. WON he has the discretion
not to proceed bec. Of lack of supply. SC said you
should emphasize reasonable discretion--- it is the
captains duty
- Inter Orient: triple roles of the captain --- general agent,
commander and technical manager, representative of
country
Shipcaptain and harbor pilot
- Harbor pilot: distinguish if voluntary or compulsory
- Case cited by SC on proper relationship of captain and
pilot. In far eastern shipping case 521 3rd par --- ther
are occasion when the master may and should interfere
and even displace the pilot when he is obviously
incapacitate and intoxicated. (look at the book)
- In this case, there is relevance on when the captain
should interfere. If it is voluntary (pilot engaged by
shipowner) --- damages caused by pilot, shipowner is
liable. If compulsory, shipowner can escape liability
- If compulsory distinguish whether there was
circumstances that would require the shipcaptain to
interfere with the ship pilot. If there are circumstances
but captain did not interfere then shipowner is liable. If
there are circumstances and captain interfere but still
there is damage, the shipowner will not be liable.
- Cebu Port Authority --- covered by compulsory pilotage
Chiefmate or sailing mate (then there are engineers)
- 2008 case, citing the article the code of commerce
specifying the functions of chiefmate being second in
command of the vessel Chiefmate is a managerial
employee (as provided in labor code --- loss of trust and
confidence
- to it that the tanker was seaworthy)
Seaman
- On security of tenure: distinguish DOMESTIN (labor
code) abroad (POEA).. there is a standard contract
(poea prepared and drafted it and every seaman shall
comply with this --- this is to protect filipino seaman
working abroad) that will be signed by every seaman
stipulating the security of tenure, repatriation, benefits,
etc.
- Difference for abroad: bigger income but contractual
(after contract go home).. DOMEstic, you can be a
APRIL LYNN L. URSAL Page 27
regular employee in accordance with the labor code
- JumpShip scenario: it is a valid ground to terminate a
seaman
Shipcaptain should conduct preliminary investigation for crimes
conducted on board
D. CHARTER PARTIES
Charter Parties
- a contract whereby the entire ship, or some of the
principal part, is let by the owner to a merchant or other
person for a specified time or use for the conveyance of
goods, consideration of payment of freight
- it is a contract, hence, parties are free to stipulate upon
such terms and conditions that would suit their purposes
subject to the caveat that these should not be contrary to
law or public policy
Parties
1. Charterer- merchant or a person who desire s to lease ship or
vessel owned by another by transport of his or her goods for
commercial purposes or persons from one port to another
2. Shipowner (SO)
KINDS:
1. bareboat or demise charterer shipowner leases to the
charterer the whole vessel, transferring to the charterer the
entire command, possession and consequent control over the
vessels navigation, including the master and the crew, who
becomes the charterers servants
- charterer becomes an owner pro hac vice
2. Contract of affreightment charterer hires the vessel only,
either for a determinate period of time or for a single or
consecutive voyage, with the SO providing for the provision of
the ship, wages of the master and crew, and expenses for
maintenance of the vessel
a. time charter vessel is leased to a charterer for a
fixed period of time
b. voyage charter vessel is leased for a single or
particular voyage
REQUISITES OF A VALID CHARTER PARTY
1. consent of the contracting parties
2. an existing vessel which should be placed at the
disposition of the shipper
3. the freight
4. compliance with requirements of art 652 of Code of
commerce
(Aticle 652 of the Code of Commerce provides that the
charter party shall contain, among others, 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.)
Caltex v. Sulpicio Lines
There was a voyage charter; collision between MT Vector
(tanker) and Doa Paz (owned by Sulpicio) ; breach of contract
filed by the passengerss heirs against Sulpicio ; 3d party
complaint against registered owner of the tanker including
Caltex ( that they were negligent and in bad faith by not seeing
Issue: WON charterer shall be liable under Maritime Law?
Ruling: Liability cannot be attached to Caltex; the charter did not
affect the business of Sulpicio as a common carrier ; rights and
responsibilities of ownership still rested on the owner
Planters Product v CA
- time charter; Planters purchased fertilizers from the US;
voyage to the Philippines ; upon arrival, shortage in the
 cargo was discovered ; filed actions against carrier fro
damages ( breach of Contract) ; RTC ruled in favor of
the Planters; Ca reversed & absolved carrier as it was
converted from common carrier to private ;
- Ruling : It cannot become a private carrier ; bareboat
charter can become a private carrier but in contract of
affreightment remains as common carrier ( action
based on contract of carriage ; presumption of
negligence ) ; carrier was able to rebut the presumption
of negligence ( result the inherent character of the
fertilizers)
Coastwise Lighterage v. CA
- WON private carrier would convert to a common
carrier; contract of affreightment
- Ruling : reiterated Planters ruling ; but was not able to
rebut presumption of negligence ; did not exercise EO
diligence ( hired unlicensed patron)
Home Insurance v. American Steamship
- case mostly used by the common carrier as defense ;
Home Insurance is subrogee (paid SMC of loss cargo
shipped thru American Steamship ; no reference as to
what contract but there was a mention that it was in
affreightment
- Ruling : Common Carrier undertaking to carry special
cargo (chartered to special person only ) become a
private carrier and stipulation exempting owner from
liability for loss due to the negligence of its agents is
valid;
Shipowner can appoint senior officers for the vessel even if
bareboat contract. But technically it is an affreightment. Most
conflicts will occur if these various principles will have to be
mixed.
The whereabouts of the vessel is important to know the time for
loading and unloading
Policy marina
Implementing or enforcement --- Coastguard
2 conditions implied in charter party
1. seaworthiness (Caltex Phil Case) --- it need not be written in
the charter party
2. --- look at book (ala kaapas)
JURISDICTION OF ADMIRALTY CASES
- depends on the jurisdictional amount
- important element of the contract = the subject matter
of the contract (nature and character)
International Harvester v Aragon
-involves loss of cargo shipped from LA to Manila; cargo owner
filed an action against common carrier
-SC said liability of petitioner was predicated upon the contract
of carriage ; admiralty would involve all maritime contract in
whatever form and wherever made
Macondry v Delgado Brothers
- Delgado was an operator of a pier service ; WON
operator exercised its duty in loading and unloading of
cargos ; no contract of carriage ; obligation was only to
load the to the ship ; no application of admiralty
FRIEGHT OR FREIGHTAGE
- price of carriage
- shall accrue according to what is stipulated in the
contract
- should there be no stipulation or if it is ambiguous ,
rules shall be
a. freight shall begin to run from the day of
loading on the vessel
APRIL LYNN L. URSAL Page 28
b. in charters with fixed period, the freight
shall begin to run upon that very day
c. If freight is charged according o weight ,
payment shall be made according to gross weight ,
including the weight of the containers
LAST DAYS- period of time stipulated fro loading and unloading
( provided for in charter party ) ; if no lay days provided for in
the charter party, it is understood that the charterer will unload
and discharge cargoes within a reasonable time or with
reasonable diligence
Demurrage a sum of money due by express contract for
detention of the vessel in loading , beyond time allowed for that
purpose in that charter party ; sum of which is usually fixed by
the parties in the charter party ; liability for this exists only when
expressly stipulated
Deadfreight where the charterer failed to occupy the leased
portion of the vessel, he may thereby be liable by the shipowner
for the deadfreight that occurred
STIPULATION IN CHARTER PARTIES
GR: parties are free to stipulate subject to art 1744
t01754 0f NCC
Art. 1744. A stipulation between the common carrier and
the shipper or owner limiting the liability of the former
for the loss, destruction, or deterioration of the goods to
a degree less than extraordinary diligence shall be valid,
provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other
than the service rendered by the common
carrier; and
(3) Reasonable, just and not contrary to public
policy.
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 shipper;
(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 custody of the goods;
(4) That the common carrier shall exercise a
degree of diligence less than that of a good
father of a family, or of a man of ordinary
prudence in the vigilance over the movables
transported;
(5) That the common carrier shall not be
responsible for the acts or omission of his or its
employees;
 (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;
(7) That the common carrier is not responsible
for the loss, destruction, or deterioration of
goods on account of the defective condition of
the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
Art. 1746. An agreement limiting the common carrier's
liability may be annulled by the shipper or owner if the
common carrier refused to carry the goods unless the
former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the
common carrier's liability cannot be availed of in case of
the loss, destruction, or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's
liability for delay on account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a
greater value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has
been fairly and freely agreed upon.
Art. 1751. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into
consideration on the question of whether or not a
stipulation limiting the common carrier's liability is
reasonable, just and in consonance with public policy.
Art. 1752. Even when there is an agreement limiting the
liability of the common carrier in the vigilance over the
goods, the common carrier is disputably presumed to
have been negligent in case of their loss, destruction or
deterioration.
APRIL LYNN L. URSAL Page 29
Art. 1753. The law of the country to which the goods are
to be transported shall govern the liability of the
common carrier for their loss, destruction or
deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall
apply to the passenger's baggage which is not in his
personal custody or in that of his employee. As to other
baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
applicable.
ART. 653. if the cargo should be received without the charter
party having been signed, the contract shall be understood as
executed In accordance with what appears in the bill of lading,
the sole evidence of title with regard to the cargo for
determining the rights and obligations of the ship agent, captain
and charterer
- If there is charter party or bill of lading (BOL) = no contract at
all; but according to Blanco, if there is delivery and receipt of
cargo combined with the GF and mutual consent = contract
present , better than BOL
E. LOANS ON BOTTOMRY AND RESPONDENTIA
LOAN ON BOTTOMRY loan made by shipowner or ship agent
guaranteed by vessel itself and repayable upon arrival of vessel
at destination; vessel/portion
LOAN ON RESPONDENTIA loan, taken on security of the
cargo laden on a vessel, and repayable upon safe arrival of
cargo at destination; cargo/goods
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND
RESPONDENTS:
1. Exposure of security to marine peril;
2. Obligation of the debtor conditioned only upon safe arrival
of the security at the point of destination.
Requisites of a Loan on Bottomry/Respondentia:
1. Shipowner borrows money for use, equipment or
repair of vessel
2. For a definite term and with extraordinary
interest called premium
3. Secured by pledged of vessel or portion thereof
in the case on loan on Bottomry; or pledge of goods
in case of Respondentia
4. Loan repayment depends or conditioned on the
safe arrival of goods for respondentia and obligation
to repay is extinguished if pledged goods are lost
(Respondentia)
5. Obligation to repay is extinguished if vessel is
lost due to specified marine perils in the course of
voyage or within limited time (Bottomry)
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
May be executed by means of:
1. public instrument
2. policy signed by the contracting parties and the broker
taking part therein
3. private instrument (Art. 720)
GR: The captain cannot contract loans on respondentia
secured by the cargo, and should he do so, the contract
shall be void. Neither can he borrow money or Bottomry
for his own transactions.
EXCEPTIONS: which may take place in the things upon which the loans were
1. On the portion of the vessel he owns, provided no made.
money has been previously borrowed on the whole
vessel, nor exists any other kind of lien or obligation 3. In case of shipwreck, the amount for payment of the loan
chargeable against her. shall be deduced to the proceeds of the effects which have been
2. When he is permitted to do so, he must necessarily saved but only after deducting the costs of the salvage.
state what interest he has in the vessel.
CONTENTS OF THE LOAN CONTRACT: 4. If the loan should be on the vessel or any of her parts, the
1. kind, name and registry of the vessel; freight earned during the voyage for which the loan was
2. name, surname and domicile of the captain; contracted shall also be liable for its payment, as far as it may
3. names, surnames and domiciles of the borrower and the reach.
lender;
4. amount of the loan and the premium stipulated; 5. If the same vessel or cargo should be the object of the loan of
5. time for repayment; Bottomry or respondentia and maritime insurance, the value of
6. goods pledged to secure repayment; what may be saved in case of shipwreck shall be divided
7. voyage during which the risk is run (Art.721) between the lender and the insurer, in proportion to the
legitimate interest of each one, taking in consideration, for this
WHO MAY CONTRACT: purpose only, the principal with respect to the
1. Bottomry by the ship owner or ship agent; outside of the Maritime contracts include charter parties and loans on
residence of the owners, the captain. bottomry and respondentia are considered maritime contracts
2. Respondentia only the owner of the cargo Q: why do we have to study this topic? Are these relevant?
A: they are hardly used at present. However, we have to study
DISTINCTIONS: this just in case this will be asked in the bar. Especially in the
BOTTOMRY/ ORDINARY LOAN unique terms used in this topic..
RESPONDENTIA
General provisions in contracts will govern
1. Not subject to Usury Law 1. Subject to Usury Law

2. Liability of the borrower is
contingent on the safe arrival
of the vessel or cargo at
destination
3. The last lender is a
preferred creditor
2. Not subject to any Basic provision you should not forget:
contingency 1. there should be a marine risk
2. the condition that the vessel or the goods has perished then
the right of the lender to collect everything as well as stipulated
3. The first lender is a interest is extinguished
preferred creditor (not sure if there are other more.. basin ala ko kaapas)

4. Must have a collateral 4. May or may not have BOTTOMRY

collateral - It may refer to the vessel
5. Collateral is the vessel or 5. Maybe property, real or - The bottom or the hull or the kill of the vessel can be
cargo subject to maritime risk personal pledged in this case
- The whole vessel can be a subject of a security or
6. Must be in writing 6. Need not be in writing
collateral
but interest shall not be due
- PD. 1521: (is this different) --- loan is the principal,
unless expressly stipulated
mortgage is the accessory.
in writing
- The contract of bottomry is principal, the mortgage
7. To be binding on third 7. Need not be registered
under pd 1521 is merely a security
person must be recorded in
- In pd 1521 under section 4 it is a requirement that the
the registry of vessels of port
whole of the vessel must be mortgaged (no
of registry of the vessel
jurisprudence on this matter whether a part of the
8. Loss of collateral 8. Does not extinguished if vessel can be mortgaged)
extinguishes the same there is a loss of the - In bottomry the whole or the part of the vessel can be
collateral (if any) the subject
- IF the part of the vessel can be pledged, is it necessary
Consequences of loss of effects of the loans that there should be goods? No. no need for goods.
1. Effects of loans be lost due to accident of the sea during the RESPONDENTIA
time, and on the occasion of the voyage which has been - The vessel should have goods. The goods must be
designated in the contract and proven that the cargo was on laden in the vessel
board - Is it necessary that the boat is on voyage? The vessel
- lender losses the right to institute the action which must be in the actual course of voyage because this is
would pertain to him the objective of the law. Because if the vessel is docked
in the port the owner can simply obtain loans. And
Except: when the loss was besides there is no risk when the vessel is docked (but
1. caused by inherent defect of the thing no jurisprudence)
2. through fault or malice of the borrower
3. through barratry on the part of the captain Distinction of this two types of loan vs. SIMPLE LOAN (for
4. caused by damages suffered by the vessel as a purposes of the bar) --- 5 differences
consequence of being engaged in a contraband 1. with respect to form --- can you validly execute a bottomry or
5. loaded the goods on a vessel different from that respondentia verbally? You cannot. Bec under the code of
designated in the contract unless the change was commerce no judicial action can arise when the contract is not
caused by force majeure reduced in writing. But this is not the case in simple loan. But in
simple loan you take note the statute of frauds if not in writing
2. The lenders on bottomry or respondentia shall suffer in B and R, you can dismiss case due to failure to state cause of
proportion to their respective interest, the general average action.

APRIL LYNN L. URSAL Page 30


Q: why hardly used at present?
A: because of sophistication. Captains can just call up any agent
the shipowner to deliver anything for the use of the vessel to
deliver. This contract was recognized in medieval times.
F. AVERAGES AND COLLISIONS
ACCIDENTS IN MARITIME COMMERCE:
1. Averages
2. Arrival Under Stress
3. Collision
4. Shipwreck
* Averages an extra-ordinary or accidental expense incurred
during the voyage in order to preserve the cargo, vessel or both;
and all damages or deterioration suffered by the vessel from
departure to the port of destination, and to the cargo from the
port of loading to the port consignment. (Art. 806)
CLASSES OF AVERAGES:
A. Particular or Simple Average
B. Gross or General Average
A. Particular or Simple Average
Damage or expenses caused to the vessel or cargo that did
not inure to common benefit, and borne by respective owners.
(809)
The owner of the goods which gave rise to the expense or
suffered th e damage shall bear this average. (Art. 810)
res perit domino applies
if the vessel or goods are hypothecated by loan on bottomry
and respondentia, the lender shall bear the loss in proportion to
his interest
Examples: see article 809 of the code of commerce
RULES ON AVERAGES:
1. Averages is defined as damage deliberately caused or an
expense deliberately incurred due to a marine peril and
which has resulted in saving both vessel and cargo or only
the vessel or cargo.
2. Where both vessel and cargo are saved, it is general
average; where only the vessel or only the cargo is saved, it
is particular average.
3. The person whose property has been saved must contribute
to reimburse the damage caused or expense incurred if the
situation constitutes general average.
B. Gross or General Average
Damage or expenses deliberately caused in order to save the
vessel, its cargo or both from real and known risk. (Art. 811)
All the persons having an interest in the vessel and the cargo
therein at the time of the occurrence of the average shall
contribute to satisfy this average. (Art. 812)
REQUISITES:
1. common danger present
2. arising from accidents of sea, disposition of
authority
3. peril imminent and ascertained
4. part of vessel or cargo deliberately sacrificed
5. intended to save vessel or cargo
6. proper legal steps and authority taken
Common danger
- means both the ship and the cargo, after has been loaded, are
subject to the same danger, whether during the voyage, or in
the port of loading or unloading, that the danger arises from the
accidents of the sea, disposition of authority, or faults of men,
provided that circumstances producing the peril should be
APRIL LYNN L. URSAL Page 31
ascertained and imminent or may rationally be said to be
certain and imminent
- When the measure of precaution adopted solely and
exclusively for the preservation of the vessel from the danger of
seizure or capture and not for the common safety is not
considered as common danger
Deliberate Sacrifice
- voluntary sacrifice of a part for the benefit of the whole in
order to justify the average contribution
* voluntary jettison- the casting away of some portion of
the associated interests for the purpose of avoiding the
common peril from the whole to a particular portion of those
interests
- the goods on board refer to in jettison should be proven by
means of bill of lading and with regards to those belonging to
vessel by means of inventory prepared before the departure
2 cases where there can also be general averages even if
the sacrifice was not made during the voyage:
a. where the sinking of the vessel is necessary to
extinguish a fire in a port, roadstead, creek or bay
b. where cargo is transferred to lighten the ship on
account of a storm to facilitate entry into a port
Art. 816: in order that the goods jettisoned may be included in
the gross average and the owners entitled to indemnity it is
necessary that the cargos existence on board be proven by a
bill of lading; and with regard to those belonging to the vessel,
by means of an inventory prepared before departure.
Art. 817: if in lightening of a vessel on account of a storm to
facilitate its entry to a port or roadstead, part of the cargo
should be transferred to barges or lighters and be lost, the
owner of the said part is entitled to indemnity as if the loss
originated from a gross average, the amount being distributed
between the vessel and cargo from which it came.
If on the contrary the merchandise transferred should be saved
and the vessel should be lost, no liability may be demanded of
the salvage.
Art. 818: if, as a necessary measure to extinguish a fire in a
port, roadstead, creek, or bay, it should be decided to sink any
vessel, this loss shall be considered gross average, to which the
vessels saved should contribute.
Note: the loss or damage sustained by cutting away wreck or
parts of the ship which have been previously carried away or
effectively lost by accident shall not be made good as general
average
Sacrifice must be Successful
- no general contribution can be demanded if the vessel and
other cargo that are sought to be saved were in fact not saved
(art. 860)
- owners of the goods saved shall not be liable for the
indemnification of those jettisoned, lost or damaged
- hence when the sacrifice was not successful in saving the ship,
there will be no general contribution
Compliance with Legal Steps
- Procedure for recovery: (Art. 813-814)
1. There must be a resolution of the captain, adopted after a
deliberation with the other officers of the vessel and after
hearing all persons interested in the cargoes. If the latter
disagree, the decision of the captain should prevail but
they shall register their objections.
2. The resolution must be entered in the logbook, stating the
reasons and motives for the dissent, and the irresistible
and urgent causes if he acted in his own accord. It must be
signed, in the first case, by all persons present in the
hearing. In the second case, by the captain and all the
officers of the vessel.
3. The minutes must also contain a detail of all the goods
jettisoned and those injuries caused to those on board.
4. The captain shall deliver it to the maritime judicial authority
of the first port he may make, within 24 hours after his
arrival, and to ratify it immediately under oath.
- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF
JETTISON:
1. those which are on the deck, preferring the heaviest one
with the least utility and value;
2. those which are below the upper deck, beginning with the
one with greatest weight and smallest value. (Art. 815)
Examples of General Average
Read Art 811 of the Code of Commerce
By Whom Borne
- shall be borne by those who benefited from the sacrifice; the
shipowner and the owner of the cargoes that were saved
Contribution may be imposed to;
a. insurers ( Insurance Code of the Philippines)
- they are obliged to pay for the indemnification of the gross
average provided that the liability shall be limited to the
proportion of contribution attaching to his policy value where
this is less than the contributing value of the thing insured
b. lenders of bottomry and respondentia (Code of
Commerce)
-obliged to pay in proportion to their respective interest, the
general average which may take place in the goods which the
loan is made
Who is entitled to indemnity?
Owner of the goods which were sacrificed is entitled to
receive the general contribution
Except;
1. goods carried on desk unless
the rule special law or customs of the
place allow the same
2. goods that are not recorded
in the books or records of the vessel
3. fuel of the vessel if there is
more than sufficient fuel for the voyage
American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do not
exceed 5% of the interest which the claimant may have in the
vessels or cargo if it is general average, and 1% of the goods
damaged if particular average deducting in both cases the
expenses of appraisal, unless there is an agreement to the
contrary.
It is clear that the damage of the cargo is particular average
since the loss is less than 1% to the value of the cargo and there
appears to be no allegations as to any agreement defendants
and consignee of the goods to the contrary, by express
provision of law, plaintiff is barred from suing for
recovery.
Law on averages does not apply if the CC is negligent.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR
CONTRIBUTION ON AVERAGES
APRIL LYNN L. URSAL Page 32
Under the rule, deck cargo is permitted in coastwise shipping
but prohibited in overseas shipping.
1. If deck cargo is located with the consent of the
shipper on overseas trade, it must always contribute
to general average, but should the same be
jettisoned, it would not be entitled to reimbursement
because there is violation of the Y-A Rules.
2. If deck cargo is loaded with the consent of the
shipper on coastwise shipping, it must always
contribute to general average and if jettisoned would
be entitled to reimbursement.
- may also be used to solve controversies where
no provision of the code of commerce is in point
because the said rules embody the custom of
maritime states
AVERAGES
- the same concept that was existing in medieval times can be
applied at present
Relevance of averages (take note these ex. Connected to
expenses under 806)
_ under 806 --- averages are:
o Extraordinary expenses ex. If machine does
not work, you have to ask help of a tugboat
the expenses on the use of tugboat is a
question of averages. This is extraordinary
because it is not foreseen. --- assuming the
engine of the vessel was defective, can that
be considered an average? YES. (question now
if it is particular or general)
o Damages or deterioration suffered refer to
the physical feature or attribute of the goods.
- these two are different
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES
Hernandez averages are losses. If there is a loss incurred, the
loss will be shouldered on where it falls. (ex. If you have goods
transported from origin to destination but in process it was
damaged by sea water. The shipper or owner will shoulder the
loss. What will shipper do to recover loss? If insured go after
insurance. Insurance then files action against common carrier
due to negligence) --- if general average, there is special
circumstance, the loss will not be shouldered on where it falls
but wil be shouldered proportionately by persons who have
benefited the circumstance
4 reqs for general averages (see above notes) MEMORIZE;
MAGSAYSAY VS. AGAN
1. common danger TO Both vessel and cargo
2. deliberate sacrifice
3. successful saving
4. compliance with the proper steps
If no special circumstance, it is a particular or simple average ---
the owner of the vessel will be the one who will shoulder the
loss. The negligence of captain, the owner of the vessel will
shoulder. But if there is special circumstance, the loss will be
shouldered proportionately by those who benefited
Standard oil case the ship captain will not release goods to the
shipper unless the shipper will contribute their share. The issue
was the duty of the captain to liquidate he did not file for the
appropriate proceeding, you should result to legal liquidation.
Captain here failed TO INITIATE proper proceeding thus
shipowner is liable for actions of captain
Q: is the duty of captain to initiate a condition precedent?
A: no. even if ship captain does not initiate, the shipowner can
still file the appropriate proceeding in court.
COMMON DANGER both to vessel and cargo. If one invokes
general average then that person must prove what he allege. In
standard oil since ship captain invoked gen aver they should
be the one to prove. Failure to prove, they cannot ask for
contribution from owners of the goods.
It is also possible that there are no goods involved. Only
extraordinary expense Phil. Home assurance case --- discussed
also in chapter 3 --- when it exploded, vessel got burned,
another vessel came to the rescue to extinguish the fire and
towed the vessel to the nearest destination. Goods were saved
from the subject vessel. The shipowner asked for contribution to
the owner of the goods which were saved. SC said, shipowner
did not comply legal steps 813-815 thus you cannot allege
general averages.
If the averages are not general, it is particular. the shipowner
will be solely liable in the case of Magsaysay, there was no
deliberate sacrifice.
SUCCESSFUL SAVING
- Both vessel and goods must be saved
- If vessel not saved, no general averages. Even if goods
were saved
- You have to start with resolution, placing of reso in the
log book, accounting of goods thrown away starting
those on deck and to follow from those not on deck
(read 83-815)
American Home insurance (take note this case--- bar)
- Transportation of tv sets, the shipcapatain was uprised
of the typhoon. Still captain continued with the journey.
Then na abot ang typhoon captain directed that the tv
sets should be jettison. Saved vessel. Reklamo owner.
Is there general average? No. if the shipowner is
negligent, the law on general averages does not apply.
Note that examples of the two types of averages are not
exclusive. There is a word especially thus there may be other
example that may fall under this two type of averages.
YORK AND TURP RULES
- THIS CAN be stipulated in a contract that this rule will
apply in respect to averages
- In the absence of stipulation in the contract in applying
this rule, such rule is inapplicable
Q: ordinary expenses are not averages bec. They are
foreseeable, are there instance that they can be considered to
be extraordinary ave
A; if the parties agree that the averages will cover ordinary
expenses. The code of commerce does not prohibit the inclusion
of other expenses under averages.
G. COLLISIONS
Collisions - impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary
one.
3 Zones of Time in the Collision of vessels:
1. First zone all time up to the moment when risk of collision
begins;
2. Second zone time between moment when risk of collision
begins and moment it becomes a practical certainty;
3. Third zone time when collision is certain and time of
impact.
Error in Extremis - sudden movement made by a faultless
vessel during the 3rd zone of collision with another vessel which
is at fault during the 2nd zone. Even if such sudden movement
APRIL LYNN L. URSAL Page 33
is wrong, no responsibility will fall on said faultless vessel.
(Urrutia and Co. v. Baco River Plantation Co., 26 PHIL
632).
Rules on Collision of Vessels under Code of Commerce:
1. The collision may be due to the fault, negligence or lack of
skill of the captain, sailing mate, or any other member of
the complement of the vessel. The owner of the vessel at
fault be liable for losses or damage. (Art. 826)
2. The collision may be due to the fault of both vessels. Each
vessel shall suffer its own losses, but as regards the owner
of cargoes both vessels shall be jointly and severally liable.
(Art. 827)
3. If it cannot be determined which vessel is at fault. Each
vessel shall also suffer its own losses and both shall be
solidarily liable for losses o damages on the cargoes. (Art.
828)
4. The vessels may collide with each other through fortuitous
event or force majeure. In this case each shall bear its own
damage. (Art. 830)
5. Two vessels may collide with each other without their fault
by reason of a third vessel. The third vessel will be liable for
losses and damages. (Art. 831)
6. A vessel which is properly anchored and moored may
collide with those nearby reasons of storm or other cause of
force majeure. The vessel run into shall suffer its own
damage and expense. (Art. 832)
Cases covered by collision and allision:
1. One vessel at fault such vessel is liable for damage
caused to innocent vessel as well as damages suffered by
the owners of cargo of both vessels.
2. Both vessels at fault each vessel must bear its own loss,
but the shippers of both vessels may go against the ship
owners who will be solidarily liable.
3. Vessel at fault not known same as rule as (2). (Doctrine of
Inscrutable Fault)
4. Third vessel at fault same rule as (1).
5. Fortuitous event no liability. Each bears its own loss.
Prerequisite to recovery:
Protest should be made within 24 hours before the competent
authority at the point of collision or at the first port of arrival, if
in the Philippines and to the Philippine consul, if the collision
took place abroad. (Art. 835)
Injuries to persons and damage to cargo of owners not on
board on collision time need not be protested. (Art. 836)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY
NEGLIGENCE NOT APPLICABLE.
DOCTRINE OF INSCRUTABLE FAULT
In case of collision where it cannot be determined which
between the two vessels was at fault, both vessels bear their
respective damage, but both should be solidarily liable for
damage to the cargo of both vessels.
NOTE: The Doctrine of Limited Liability applies in case of
collisions, but it shall be limited only to the value of the vessel
with all its appurtenances and freightage earned during the
voyage. When the latter is not sufficient to cover all the
liabilities, the indemnity due by reason of the death or injury of
persons shall have preference. (Arts. 837 and 838)
H. ARRIVAL UNDER STRESS
* ARRIVAL UNDER STRESS arrival of a vessel at a port of
destination on account of lack of provision, well founded fear of
seizure, privateers, pirates, or accidents of sea disabling
navigation. (Art. 819)
NOTE: Captain must make a protest
Steps to be taken in the determination of the propriety
of arrival under stress
1. captain should determine during the voyage if there is
a well founded fear of seizure, privateers of other valid
grounds
2. captain shall then assemble the officers
3. captain shall summon the persons interested in the
cargo who may be present and who may attend but without
right to vote
4. the officers shall determine and agree if there is well
founded reason after examining the circumstances; Captain
shall have the deciding vote
5. agreement shall be drafter and the proper minutes
shall be signed and entered into the log book
6. objections and protests shall likewise be entered in the
minutes
- Absence of one of the steps, can still be considered
arrival under stress.
When not lawful:
1. lack of provisions due to negligence to carry according to
usage and customs;
2. risk of enemy not well known or manifest
3. defect of vessel due to improper repair; and
4. malice, negligence, want of foresight or lack of skill of
captain. (Art. 820)
Who bears expenses:
if arrival under stress is proper shipowner or ship
agent will only be liable for the expenses of the arrival
if arrival under stress is improper shipowner and ship
agent will be liable for the same expenses and, in
addition, they shall be solidarily liable for damages
caused to the cargoes by such arrival under stress
(Art. 821)
NOTE:
- After cessation of the cause of the arrival under stress,
captain should continue voyage or else he shall be
liable.
Unloading of cargoes to make repairs:
- in order to make repairs to the vessel or because there
is danger that cargo may suffer damage necessary
to unload; captain must request authorization from
competent judge or court for removal, and carry it out
w/ knowledge of the person interested in the cargo
- in a foreign port Philippine Consul
- in case of the vessel expenses shall be for the
account of the ship owner or agent
- in case of the cargo chargeable against the owners
of the merchandise for whose benefit the act was
performed
- if both expenses to be divided proportionately
between the value of the vessel and cargo
(Art. 822)
Custody of cargo:
intrusted to the captain (except in cases of force
majeure)
(Art. 823)
if entire cargo or part thereof should appear to be
damaged, or there should be imminent danger of its
being damaged
captain may request judge of competent court /
consul, the sale of all or part of the cargo
person taking cognizance shall authorize it (after
examination and declaration)
captain shall justify the legality of his conduct,
answering to the shipper for the price of the
merchandise would have brought if they had arrived in
APRIL LYNN L. URSAL Page 34
good condition
(Art. 824)
Liability of captain:
captain responsible for the damages caused by his
delay
if cause of arrival under stress ceases he should not
continue the voyage
if cause of arrival should have been the fear of enemies
deliberation and resolution (in a meeting of officers
of the vessel and persons interested in the cargo) shall
precede the departure
(Art. 825)
* Shipwreck the demolition or shattering of a vessel caused
by her driving ashore or on rocks and shoals in the midseas, or
by the violence of winds or waves in tempests
- loss of the vessel at sea as a consequence of its grounding, or
running against an object in sea or on the coast
Loss or deteriorations of vessel or cargo caused by shipwreck
or stranding individually account of the owners; part which
may be saved belonging to them, same proportion. (Art. 840)
If the wreck was due to malice, negligence or lack of skill of
the captain, the owner of the vessel may demand indemnity
from said captain. (Art. 841)
The goods saved from the wreck to be specially bound for the
payment of the expenses of the respective salvage. (Art. 842)
If several vessels sail under convoy, and any of them should
be wrecked, the cargo saved will be distributed among the rest
in proportion to the amount which each one is able to take. If
any captain should refuse, without sufficient cause, to receive
what may correspond to him, the captain of the wrecked vessel
to enter a marine protest against him. If it is not possible to
transfer to the other vessels the entire cargo of the vessel
wrecked, the goods of the highest value and smallest volume to
be saved first. Designation to be made by the captain with
concurrence of his officers. (Art. 843)
The captain taking on-board the goods saved from the wreck
to continue his course to the port of destination and upon arrival
he should deposit the goods for disposal to their owners. In
case the captain changes his course, and if he can unload them
at the port of which they were consigned, he may make said
port if the shippers or supercargoes present and the officers and
passengers of the vessel consent thereto. But he is not required
to do so even if he has the consent during time of war or when
the port is difficult and dangerous to make. The owners of the
cargo to defray all the expenses of this arrival and the payment
of the freightage. (Art. 844)
If cannot be, proceed to judicial sale complying with the
formalities and on publicity. (Art. 845)
I. SALVAGE LAW (Act No. 2616)
* SALVAGE services one person renders to the owner of a ship
or goods, by his own labor, preserving the goods or the ship
which the owner or those entrusted with the care of them have
either abandoned in distress at sea, or are unable to protect or
secure.
Kinds of Salvage:
Voluntary compensation is dependent on the success.
Under contract for a per diem or per horam wage
payable at all events.
Under contract for compensation payable only in case
of success.
Claim for valid salvage:
- Provides for a reward for voluntary salvage
 - Other persons who assist in saving the vessel or its
cargo from shipwreck shall be entitled to a similar
award
Persons not entitled to salvage compensation:
1. Crew of the vessel shipwrecked or which was in danger
of shipwreck
2. He who shall have commenced the salvage in spite of
opposition of the captain or of his representatives
3. He who shall have failed to comply with the provisions
of Section 3 (Section 3. Tthe salvor who saves or picks
up a vessel or merchandise at sea, in the absence of
the ship captain, ship owner or a representative of
either of them, they being unknown, shall convey and
deliver the vessel or merchandise ASAP to the collector
of customs if the port has a collector and otherwise to
the provincial treasurer or municipal mayor.)
Requisites of compensation or salvage reward:
1. Object must have been exposed to marine peril (fire,
acts of pirate, thieves)
2. Salvage services rendered voluntarily and is not
required as an existing duty or a form of contract (See
Sec. 8)
* Pilots are not entitled to a reward (Atty.
Capanas)
3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of
the crew or shall have been abandoned (not
necessary)
* Courts will not interfere in the agreement of the parties except
but where there is no agreement or it is excessive the reward is
fixed by the RTC judge.
* Derelict a ship or cargo which is abandoned and deserted at
sea by those who were in charge of it, without any hope of
recovering it or without any intention of returning to it
- determined by ascertaining what was the intention and
expectation of those in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on the
sea without hope or intention of recovery or return by the
master or the crew, whether resulting from wreck, accident,
necessity, or voluntary abandonment
JETSAM, FLOTSAM, LIGAN:
Jetsam goods that were thrown off a ship which was
in danger
Flotsam goods that floated off the ship while ship
was in danger or when it sank
Ligan goods left as sea on the wreck or tied to a
buoy so that they can be recovered later
Basis of entitlement to salvage reward (Circumstances to
consider):
1. The labor expended by the salvors in rendering the
salvage service
2. The promptitude, skill and energy displayed in
rendering the service and saving the property
3. The value of the property employed by the salvors in
rendering the service, and danger to which such
property was exposed
4. The risk incurred by the salvors in rescuing the
property from the impending peril
5. The value of the property salved
6. The degree of danger which the property was rescued
Rights and obligations of salvors and owners:
Salvor is entitled to compensation for services
rendered. He has, under the Salvage Law, a lien upon
the property salvaged.
APRIL LYNN L. URSAL Page 35
On the other hand, the owner does not denounce his
right to the property. There is no presumption of an
intention to abandon such property rights.
Maritime Lien
A salvor, in maritime law, has an interest in the property;
called a lien, but it never goes, in the absence of a contract
expressly made, upon the idea of debt due from the owner to
the salvor but upon the principle that the service creates a
property in the thing saved.
Rule on salvage reward:
1. The reward is fixed by the RTC judge in the absence of
agreement or where the latter is excessive (Sec. 9).
2. If sold (no claim being made within 3 months from
publication), the proceeds, after deducting expenses and
the salvage claim, shall go to the owner; if the latter does
not claim it within 3 years, 50% of the said proceeds shall
go to the salvors, who shall divide it equitably, and the
other half to the government (Secs. 11-12).
3. If a vessel is the salvor, the reward shall be distributed as
follows:
a. 50% to the shipowner;
b. 25% to the captain; and
c. 25% to the officers and crew in proportion to their
salaries
SALVAGE LAW
SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR
ITS CARGO SHALL BE BEYOND THE CONTROL OF THE CREW, OR
SHALL HAVE BEEN ABANDONED BY THEM, AND PICKED UP AND
CONVEYED TO A SAFE PLACE BY OTHER PERSONS, THE LATTER
SHALL BE ENTITLED TO A REWARD FOR THE SALVAGE.
THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH,
ASSIST IN SAVING A VESSEL OR ITS CARGO FROM SHIPWRECK,
SHALL BE ENTITLED TO A LIKE REWARD.
SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON
ACTING IN HIS STEAD, IS PRESENT, NO ONE SHALL TAKE FROM
THE SEA, OR FROM THE SHORES OR COAST MERCHANDISE OR
EFFECTS PROCEEDING FROM A SHIPWRECK OR PROCEED TO
THE SALVAGE OF THE VESSEL, WITHOUT THE CONSENT OF SUCH
CAPTAIN OR PERSON ACTING IN HIS STEAD.
SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR
MERCHANDISE AT SEA, IN THE ABSENCE OF THE CAPTAIN OF
THE VESSEL, OWNER, OR A REPRESENTATIVE OF EITHER OF
THEM, THEY BEING UNKNOWN, SHALL CONVEY AND DELIVER
SUCH VESSEL OR MERCHANDISE, AS SOON AS POSSIBLE, TO
THE COLLECTOR OF CUSTOMS, IF THE PORT HAS A COLLECTOR,
AND OTHERWISE TO THE PROVINCIAL TREASURER OR
MUNICIPAL MAYOR.
SEC. 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 EXPENSES AND THE PROPER
REWARD.
THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE
OF AGREEMENT, SHALL BE DETERMINED BY THE COLLECTOR OF
CUSTOMS OR BY THE JUDGE OF THE COURT OF FIRST INSTANCE
OF THE PROVINCE IN WHICH THE THINGS SAVED MAY BE
FOUND.
SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL
TREASURER, OR MUNICIPAL MAYOR, TO WHOM A SALVAGE IS
REPORTED, SHALL ORDER:
A. THAT THE THINGS SAVED BE SAFEGUARD AND
INVENTORIED.
B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH
MAY BE IN DANGER OF IMMEDIATE LOSS OR OF THOSE
WHOSE CONSERVATION IS EVIDENTLY PREJUDICIAL TO THE
INTERESTS OF THE OWNER, WHEN NO 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 NEWS-PAPER PUBLISHED,
OF ALL THE DETAILS OF THE DISASTER, WITH A STATEMENT
OF THE MARK AND NUMBER OF THE EFFECTS REQUESTING
ALL INTERESTED PERSONS TO MAKE THEIR CLAIMS.
SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE
DISPOSITION OF THE AUTHORITIES, THE OWNER OR HIS
REPRESENTATIVE SHALL CLAIM THEM, SUCH AUTHORITIES
SHALL ORDER THEIR DELIVERY TO SUCH OWNER OR HIS
REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY
OVER THEIR VALUE, AND A BOND IS GIVEN BY THE OWNER OR
HIS REPRESENTATIVE TO SECURE THE PAYMENT OF THE
EXPENSES AND THE PROPER REWARD. OTHERWISE, THE
DELIVERY SHALL NOR BE MADE UNTIL THE MATTER IS DECIDED
BY THE COURT OF FIRST INSTANCE OF THE PROVINCE.
SEC. 7. NO CLAIM BEING PRESENTED IN THE THREE MONTHS
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 AND THE PROPER
REWARD SHALL BE DEPOSITED IN THE INSULAR TREASURY. IF
THREE YEARS SHALL PASS WITHOUT ANYONE CLAIMING IT, ONE-
HALF OF THE DEPOSIT SHALL BE ADJUDGED TO HIM WHO SAVED
THE THINGS, AND THE OTHER HALF TO THE INSULAR
GOVERNMENT.
SEC. 8. THE FOLLOWING SHALL HAVE NO RIGHT TO A REWARD
FOR SALVAGE OR ASSISTANCE:
A. THE CREW OF THE VESSEL SHIPWRECKED OR WHICH WAS IS
DANGER OF SHIPWRECK;
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 SECTION THREE.
SEC. 9. IF, DURING THE DANGER, AN AGREEMENT IS ENTERED
INTO CONCERNING THE AMOUNT OF THE REWARD FOR SALVAGE
OR ASSISTANCE, ITS VALIDITY MAY BE IMPUGNED BECAUSE IT IS
EXCESSIVE, AND IT MAY BE REQUIRED TO BE REDUCED TO AN
AMOUNT PROPORTIONATE TO THE CIRCUMSTANCES.
SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING
SECTION, AS WELL AS IN THE ABSENCE OF AN AGREEMENT, THE
REWARD FOR SALVAGE OR ASSISTANCE SHALL BE FIXED BY THE
COURT OF FIRST INSTANCE OF THE PROVINCE WHERE THE
THINGS SALVAGED ARE FOUND, TAKING INTO ACCOUNT
PRINCIPALLY THE EXPENDITURES MADE TO RECOVER OR SAVE
THE VESSEL OR THE CARGO OR BOTH, THE ZEAL
DEMONSTRATED, THE TIME EMPLOYED, THE SERVICES
RENDERED, THE EXCESSIVE EXPRESS OCCASIONED THE
NUMBER OF PERSONS WHO AIDED, THE DANGER TO WHICH
THEY AND THEIR VESSELS WERE EXPOSED AS WELL AS THAT
WHICH MENACED THE THINGS RECOVERED OR SALVAGED, AND
THE VALUE OF SUCH THINGS AFTER DEDUCTING THE EXPENSES.
SEC. 11. FROM THE PROCEEDS OF THE SALE OF THE THINGS
SAVED SHALL BE DEDUCTED, FIRST, THE EXPENSES OF THEIR
CUSTODY, CONSERVATION, ADVERTISEMENT, AND AUCTION, AS
WELL AS WHATEVER TAXES OR DUTIES THEY SHOULD PAY FOR
THEIR ENTRANCE; THEN THERE SHALL BE DEDUCTED THE
EXPENSES OF SALVAGE; AND FROM THE NET AMOUNT
REMAINING SHALL BE TAKEN THE REWARD FOR THE SALVAGE
APRIL LYNN L. URSAL Page 36
OR ASSISTANCE WHICH SHALL NOT EXCEED FIFTY PER CENT OF
SUCH AMOUNT REMAINING.
SEC. 12. IF IN THE SALVAGE OR IN THE RENDERING OF
ASSISTANCE DIFFERENT PERSONS SHALL HAVE INTERVENED THE
REWARD SHALL BE DIVIDED BETWEEN THEM IN PROPORTION TO
THE SERVICES WHICH EACH ONE MAY 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 REWARD.
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN
ASSISTED OR SAVED, ENTIRELY OR PARTIALLY, BY ANOTHER
VESSEL, THE REWARD FOR SALVAGE OR FOR ASSISTANCE SHALL
BE DIVIDED BETWEEN THE OWNER, THE CAPTAIN, AND THE
REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO
GIVE THE OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE
REMAINDER OF THE CREW THE OTHER FOURTH OF THE
REWARD, IN PROPORTION TO THEIR RESPECTIVE SALARIES, IN
THE ABSENCE OF AN AGREEMENT TO THE CONTRARY. THE
EXPRESS OF SALVAGE, AS WELL AS THE REWARD FOR SALVAGE
OR ASSISTANCE, SHALL BE A CHARGE ON THE THINGS
SALVAGED ON THEIR VALUE.
COGSA (CARRIAGE OF GOODS BY SEA ACT)
- Adopted by the Philippines on October 22, 1936
through Commonwealth Act No. 65
- New Civil Code primary law on goods that are
being transported from a foreign port to the Philippines
- COGSA remains to be a suppletory law for such type
of transportation international shipping
ART. 1753, NCC: THE LAW OF THE COUNTRY TO WHICH
THE GOODS ARE TO BE TRANSPORTED SHALL GOVERN
THE LIABILITY OF THE COMMON CARRIER FOR THEIR
LOSS, DESTRUCTION OR DETERIORATION.
* Goods includes goods, wares, merchandise, and articles of
every kinds whatsoever
- does not include live animals and cargo which by the
contract of carriage is stated as being carried on deck and is so
carried
Parties:
Carrier, and
Shipper
- They are given their respective rights and obligations under
COGSA.
- Carrier (covered by COGSA) not limited to the shipowner;
includes charterer who enters into a contract of carriage with
the shipper
- Charterer charters a vessel and conducts his own business
for his own account
after chartering the vessel, he uses the vessel to
conduct a business of transportation obtaining goods from 3 rd
persons to transport the latters goods
Duties of the carrier:
Civil Code requires international carriers to exercise
extraordinary diligence in the performance of their
contractual obligations
Section 2 of COGSA carriers obligation and liabilities
in relation to the loading, handling, stowage, carriage,
custody, care and discharge of such goods
Section 3 of COGSA responsibilities of the carrier
under COGSA
Document of title required
- evidenced by the Bill of Lading
- BOL serves as prima facie evidence of the receipt by the
carrier of the goods
Notice of claim and prescriptive period
* Notice of claim must be made within 3 days from delivery
if the damage is not apparent; not mandatory
* Prescriptive period 1 year from delivery for the filing of
the case is a condition precedent or mandatory; does not apply
to cases of misdelivery or conversion
Defenses and immunities
- provided for by Section 4 of COGSA
- Section 49(1) of COGSA carrier shall not be liable for loss
or damages arising from unseaworthiness
- New Civil Code carrier will not be liable only if it can present
proof that the unseaworthiness was caused exclusively by any
of the circumstances specified in Art. 1734 of the NCC
APRIL LYNN L. URSAL Page 37
Waiver
- The shipowner and the ship agent may waive the benefit of
any of the defenses in its favor provided not only under COGSA
but also under other laws
Limiting provision
- COGSA contains a provision that allows the shipper to recover
only US$500 per package unless there is a special declaration
unless there the real value of the goods is declared
- declaration made by the shipper stating an amount bigger
than $500 per package will make the carrier liable for such
bigger amount but only if the amount so declared is the real
value of the goods
Right to discharge dangerous cargo
- COGSA allows the carrier to discharge the good of the carrier
discovers that the goods are dangerous, inflammable or are
explosives