LAW ON TRANSPORTATION AND PUBLIC UTILITIES the transportation of goods for persons generally as a business and

not as a casual occupation.

Contract of Transportation – person obligates himself to transport persons or 2. He must undertake to carry good of the kind to which his business is
property from one place to another for a consideration. confined.
3. He must undertake to carry by the method by which his business is
2 KINDS: conducted and over his established roads.
1. CARRIAGE OF PASSENGERS 4. Transportation must be for hire.

Parties: common carrier & passenger (carried gratuitously or not) Characteristics of Common carriers (CC):
Passenger – one who travels in a public conveyance by virtue of contract,  no distinction between one whose principal business is the
express or implied, with the carrier as to the payment of fare or that which is transportation of persons/goods and one who does such as an
accepted as an equivalent thereof ancillary business (sideline)
 no distinction between regular or scheduled basis and one offering
Perfection: such service on an occasional, episodic or unscheduled business
 still a CC even if services offered to a limited clientele (between the
2 types of contracts of carriage of PASSENGERS: general public and a narrow segment of the general population)
> contract to carry (agreement to carry the passenger at some future date) –  Still considered a CC even if he did not secure a Certificate of Public
consensual contract and perfected by mere consent Convenience
 No distinction as to the means of transporting, as long as it is by
* AIRCRAFT – perfected even without issuance of ticket as long as there was land, water or air
already meeting of minds with respect to the subject matter and consideration  The Civil Code does not provide that the transportation should be by
motor vehicle
> Contract of Carriage  Still a CC even if he has no fixed and publicly know route, maintains
– real contract; not until the facilities of the carrier are actually used can the no terminals, and issues no tickets
carrier be said to have assumed the obligation of the carrier; perfected by  pipeline operators are CCs – not necessarily motor vehicles (Case:
actual use. First Philippine Industrial Corp. vs. CA)

* AIRCRAFT – perfected if it was established that the passenger had checked in Case: Jose Mendoza vs. Philippine Airlines Inc
at the departure counter, passed through customs and immigration, boarded - The test of whether one is a common carrier by air is whether he
the shuttle bus and proceeded to the ramp of the aircraft and baggage already holds out that he will carry for hire, so long as he has room, goods of
loaded to the aircraft. everyone bringing goods to him for carriage, not whether he is
carrying as a public employment or whether he carries to a fixed
* Public Utility Bus or Jeepneys or Street Cars – once it stops it is in effect place
making a continuous offer to riders; perfected when passenger is already
attempting to board the vehicle CHARTER PARTY:
- Contract by which an entire ship or some principal part thereof is let
* TRAINS – perfected when a person: by the owner to another person for a specified time or use.
a. purchased a ticket/ possess sufficient fare with which to pay for
his passage Q: What is the effect of charter party?
b. presented himself at the proper place and in a proper manner to A: It may transform a common carrier into a private carrier. However, it must be
be transported a bareboat or demise charter where the charterer mans the vessel with his own
c. has a bona fide intention to use facilities of the carrier people and becomes, in effect, the owner for the voyage or service stipulated

2. CARRIAGE OF GOODS 2 types:

Parties: shipper & carrier
1. Contract of Affreightment
Shipper – the person who delivers the goods to the carrier for transportation; - involves the use of shipping space on vessels leased by
pays the consideration or on whose behalf payment is made the owner in part or as a whole, to carry goods for
another
Consignee – person to whom the goods are to be delivered. May be the shipper - CC = observe extraordinary diligence; in case of loss,
himself or a third person who is not actually a party to the contract deterioration or destruction of goods of goods, CCs are
presumed to be at fault or have acted negligently
Perfection: - 2 types
> contract to carry goods – consensual i. Time charter: vessel is leased to the charterer
> contract of carriage - act of delivery of goods ( goods are unconditionally for a fixed period of time
placed in the possession and control of the carrier and upon their receipt by the ii. Voyage charter: ship is leased for a single
carrier for transportation) voyage

CARRIER: 2. Charter by demise/ Bareboat Charter

Common carriers (CC) (1732) - whole vessel is let to the charterer with a transfer to him
– persons, corporations, firms or associations engaged in the business of its entire command and possession and consequent
of carrying or transporting passengers or goods or both, by land, control over its navigation including the master and the
water, or air, for compensation, offering their services to the public. crew who are his servants.
(NOT the means of transportation) - charter includes both vessel and crew—CC becomes
– one that holds itself out as ready to engage in the transportation of private carrier (PC) insofar as that particular voyage is
goods for hire as a public employment and not as a casual concerned
occupation. - if it is already a PC- ordinary diligence in the carriage of
goods will suffice
Tests for determining WON a party is a common carrier of goods: - PC = undertaking is a single transaction, not a part of the
1. He must be engaged in the business of carrying goods for others as a general business or occupation, although involving the
public employment, and must hold himself out as ready to engage in 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 o Receive, handle, care for, and deliver all merchandise
cause was the negligence of the carrier. imported and exported, upon or passing over
Government-owned wharves and piers in the port
Distinction between Common Carriers and Private Carriers o Record or check all merchandise which may be delivered
COMMON CARRIER PRIVATE CARRIER to said port ant shipside
Extraordinary diligence in the Ordinary diligence in the carriage of o Furnish light, and water services and other incidental
vigilance over the goods they carry goods will suffice service in order to undertake its arrastre service
In case of loss, destruction, or No such presumption applies to - Such service is in face, no different from those of a depositary or
deterioration of goods, they are private carriers, for whosoever alleges warehouseman
presumed to have been at fault or to damage to or deterioration n of the
have acted negligently; burden of goods carried has the onus of proving Stevedoring
proving otherwise rests on them that the cause was the negligence of - involves the loading and unloading of coastwise vessels calling at
the carrier the port.
Cannot stipulate that it is exempt May validly enter into such stipulation >>> Common carriers are public utilities, impressed with public interest and
from liability for the negligence of its concern subject to regulation by the state.
agents or employees
GOVERNING LAWS
Factors to be considered whether a carrier is common/private: - read summary of rules on page 40 of book
 Law applicable
o Common  Civil Code Article 1766 (Civil Code). In all matters not regulated by this Code, the
o Private  contract rights and obligations of common carriers shall be governed by the Code
 Diligence required of Commerce and by special laws.
o Common  extraordinary diligence
o Private  diligence of a good father of a family NATURE OF BUSINESS
 Burden of proof in relation to negligence - Common Carriers exercise a sort of public office
o Common – the carrier - Consequently, common carriers are subject to regulation by the
o Private – on the party having a claim against the carrier State

Case: Planters Products, Inc. vs. CA REGISTERED OWNER RULE/REGISTRATION LAWS

- It is therefore imperative that a public carrier shall remain as such, - Governed by the Land Transportation and Traffic Code and
notwithstanding the charter of the whole or portion of a vessel by administered by the Land Transportation Office
one or more persons, provided the charter is limited to the ship only, - The registered owner of a vehicle is liable fro any damage caused by
as in the case of a time-charter or voyage-charter. It is only when the the negligent operation of the vehicle although the same was
charter includes both the vessel and its crew that a common carrier already sold or conveyed to another person at the time of the
becomes private accident.
- The registered owner is liable to the injured party subject to his right
True Test of Common Carrier Is the carriage of passengers or goods, provided it of recourse against the transferee or the buyer
has space, for all who opt to avail themselves of its transportation service for a - Applicable in case of lease
fee - Registered owner not liable if vehicle was taken form him without
his knowledge and consent.
Generally, private carriage is undertaken by spcial agreement and the carrier
does not hold hiself out to carry goods for the general public Q: what is the purpose of such law?
A: The main aim of motor vehicle registration is to identify the owner so that if
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International any accident happens, or that any damage or injury is caused by the vehicle on
- By definition, a contract of carriage is one whereby a certain person the public highways, responsibility therefor can be fixed on a definite individual
or association of persons obligate themselves to transport person, – the registered owner.
thing or new from one place to another for a fixed price
- It is obvious from the above definition that respondent is not an KABIT SYSTEM
entity engaged in the business of transporting either passengers or - The “registered owner” rule is applicable to people involved on a “kabit
goods and is therefore, neither a private nor a common carrier. Its system”
covenant with its customers is simply to make travel arrangements - arrangement whereby a person who has been granted a certificate of
in their behalf. public convenience allows other persons who own motor vehicles to
- It is in this sense that the contract between the parties in this case operate them under his license, sometimes for a fee or percentage of the
was an ordinary one for services and not one of carriage; it is thus earnings --- contrary to public policy (thus VOID and INEXISTENT)
not bound under the law to observe extraordinary diligence in the - parties to the “kabit system” cannot invoke the same as against each
performance of its obligation. other either to enforce their illegal agreement or to invoke the same to
escape liability --- pari delicto rule
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING - having entered into an illegal contract, neither can seek relief from the
courts and each must bear the consequences of his acts
Towage - also applicable to aircrafts and vessels – basic rule that no person can
- A vessel is hired to bring another vessel to another place operate a common carrier without securing a certificate of public
- e.g. a tugboat may be hired by CC to bring the vessel to a port convenience and necessity.
(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 Case: Dizon vs. Octavio
- Arrastre operator’s functions has nothing to do with the trade and - the primary factors considered in the granting of a certificate of
business of navigation nor to the use or operation of vessels public convenience for the business of public transportation is the
- Services are not maritime financial capacity of the holder of the license, so that liabilities
- Functions of arrastre operator: arising from accidents may be duly compensated
- Thus, for the safety of passengers and the public who may have been
wronged and deceived through the baneful kabit system, the
 registered owner of the vehicle is not allowed to prove that another the presence of witnesses, with the shipper and consignee in attendance. If
person has become the owner so that he may be thereby relived of declaration of shipper is true, expenses occasioned by the examination and of
responsibility repacking the packages shall be for the account of the carrier

CHAPTER 2 Even if the cause of the loss, destruction or deterioration of the goods should
OBLIGATIONS OF THE PARTIES be caused by the character of the goods, or the faulty nature of the packing or
of the containers, the common carrier must exercise due diligence to forestall
I. Obligations of the carrier or lessen the loss.

A. DUTY TO ACCEPT B. DUTY TO DELIVER THE GOODS

- A common carrier granted a certificate of public convenience is duty  Time of Delivery
bound to accept passengers or cargo without any discrimination. - Where a carrier has made an express contract, the goods must be
- It is illegal for domestic ship operators to refuse to accept or carry delivered within a specified time otherwise he is liable for any delay
passengers or cargo without just cause. (Section 16, RA 9295) (indemnity for damages).
- In the absence of any agreement, goods must be delivered at its
Note: In air transportation, passengers with confirmed tickets who were not destination within a reasonable time (depending on the attending
allowed to board are provided with denied boarding compensation and priority circumstances, nature of the goods; expected date of arrival in the BOL
boarding rules. may be considered).
No compensation for refusal if it is because of: - In the absence of a special contract, a carrier is NOT an insurer against
1. government requisition of the space delay in transportation of goods
2. substitution of equipment of lesser capacity when required by
operational and or safety and/or other causes beyond the control of  Consequences/Effects of Delay
the carrier, and - Excusable delays in carriage suspend, but do not generally terminate, the
3. if arrangements have been made for the passenger to take another contract of carriage; when the cause is removed, the master must proceed
flight in a comparable air transportation which will arrive not later with the voyage and make delivery.
than three hours after the time of flight on which the confirmed - During the detention or delay, vessel continues to be liable as a common
space is held is supposed to arrive. (Civil Aeronautics Board carrier, not a warehouseman, and remains duty bound to exercise
Economic Regulation) extraordinary diligence.

Grounds for Valid Refusal to Accept Goods Article 1740 (NCC). If common carrier negligently delays in transporting the
- GR: common carriers cannot lawfully decline to accept a particular class goods, a natural disaster shall not free it from responsibility.
of goods
- EXC: it appears that for some sufficient reason the discrimination Article 1747 (NCC). If common carrier delays , without just cause, in
against the traffic in such goods is reasonable and necessary: transporting the goods or changes the stipulated or usual route, the contract
i. dangerous objects or substances including dynamites and limiting its liability cannot be availed of in case of the loss, destruction, or
other explosives deterioration of the goods.
ii. goods are unfit for transportation
iii. acceptance would result in overloading Note: read page 72 of book for other provisions.
iv. contrabands or illegal goods
v. goods injurious to health (1) Abandonment
vi. goods will be exposed to untoward danger like flood, - In case of delay through the fault of the carrier, the consignee may
capture by enemies and the like refuse to accept the goods or may leave the goods in the hands of
vii. goods like livestock will be exposed to diseases the carrier. It must be communicated to the carrier in writing.
viii. strike - This right must be exercised between the time of delay and before
ix. failure to tender goods on time the arrival of the goods at its destination.
- The carrier must pay the full value of the goods as if they had been
Case: Fisher v. Yangco lost or mislaid.
- factors in determining reasonable discrimination include:
i. suitability to the vessel for the transportation of such products; Note: If abandonment is not made, indemnification for the losses and damages
ii. reasonable possibility of danger or disaster resulting from their by reason of the delay cannot exceed the current price which the goods would
transportation in the form and under the conditions in which they have on the day and at the place they are to be delivered.
are offered for carriage; and
iii. the general nature of the business done by the carrier. 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.
(1) Hazardous and Dangerous Substances
- Carrier not properly equipped to transport dangerous chemicals or Consignee must not defer the payment of the expenses and transportation
explosives may validly refuse to accept the same for transport. charges of the goods otherwise carrier may demand the judicial sale of the
- Those which are not authorized by the Maritime Industry Authority goods.
to carry such goods may also validly refuse the same for transport.
- There must be a Special Permit to Carry from the MARINA. (accept
only if the said cargoes are covered by the necessary clearance from
appropriate government agencies) Case: Magellan Mfg. Marketing Corp. vs. CA
- Abandonment may also be made by virtue of stipulation or
(2) Unfit for Transport agreement between parties
- Carriers may refuse to accept goods that are unfit for transportation
- These goods may by nature be unfit for transportation or are unfit (2) Rights of Passengers in Case of Delay
because of improper packaging or defect in their containers. - As to the rights and duties of the parties strictly arising out of delay,
- However, carriers may accept the goods and limit its liability by the Civil Code is silent. However, the Code of Commerce provides for
stipulation. such a situation:

If by reason of well-founded suspicion of falsity in the declaration as to the ARTICLE 698. In case a voyage already begun should be interrupted, the
contents of the package carrier should decide to examine and investigate it in 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 - Duration of Duty:
interruption should have been caused by the captain exclusively. If the
interruption should be caused by the disability of the vessel and a passenger (1) Carriage of Goods
should agree to await the repairs, he may not be required to pay any increased - Due diligence should be exercised the moment the goods are
price of passage, but his living expenses during the stay shall be for his own delivered to the carrier.
account. - Goods are deemed delivered to the carrier when the goods are
Note: the carrier is liable for any loss or damage, including any pecuniary loss or ready for and have been placed in the exclusive possession,
loss of profit, which the passenger may have suffered by reason thereof. custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted them
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 ARTICLE 1736. The extraordinary responsibility of the common carrier lasts
refund service fee from the authorized issuing/ticketing office. 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
 Where and to Whom Delivered or constructively, by the carrier to the consignee or to the person who has a
a. Place – Goods should be delivered to the consignee in the place right to receive them…
agreed upon by the parties.
ARTICLE 1737. The common carrier’s duty to observe extraordinary diligence
The shipper may change the consignment of the goods provided that at the over the goods remains in full force and effect even when they are temporarily
time of ordering the change of the consignee the bill of lading signed by the unloaded or stored in transit, unless the shipper or owner has made use of the
carrier be returned to him, in exchange for another wherein the novation of the right of stoppage in transitu. (common carrier becomes a warehouseman –
contract appears. The expenses occasioned by the change shall be for the ordinary diligence)
account of the shipper.
ARTICLE 1738. The extraordinary liability of the common carrier continues to be
b. Consignee – Delivery must generally be made to the owner or operative even during the time the goods are stored in a warehouse of the
consignee or to someone lawfully authorized by him to receive the carrier at the place if destination, until the consignee has been advised of the
goods for his account or to the holder of the negotiable instrument. arrival of the goods and has had reasonable opportunity thereafter to remove
them or otherwise dispose of them.
c. Delay to Transport Passengers – A carrier is duty bound to transport
the passenger with reasonable dispatch (2) Carriage of Passengers

Effects of ‘delayed and unfinished voyage’ in inter-island vessels: By trains – the extraordinary responsibility of common carrier commences the
 vessel cannot continue or complete her voyage for any cause – moment the person who purchases the ticket (or a ‘token’ or ‘card’) from the
carrier is under obligation to transport the passenger to his/her carrier presents himself at the proper place and in a proper manner to be
destination at the expense of the carrier including free meals and transported with a bona fide intent to ride the coach.
lodging before the passenger is transported to his/her destination;
the passenger may opt to have his/her ticket refunded in full if the * Mere purchase of a ticket does not of itself create the relation of carrier and
cause of the unfinished voyage is due to the negligence of the carrier passenger but it is an element in the inception of the relation.
or to an amount that will suffice to defray transportation cost at the
shortest possible route if the cause of the unfinished voyage is * A proper person who enters upon the carrier’s premises (station, ticketing
fortuitous event. office, or waiting room) with the intention of becoming a passenger will
 vessel is delayed in arrival at the port of destination – free meals ordinarily be viewed as assuming the status of a passenger.
during mealtime
 delay in departure at the point of origin due to carrier’s negligence; * One who goes to the railroad station to inquire as to the possibility of securing
fortuitous event - free meals during mealtime; carrier not obliged to passage on a freight train, which he knows, by the rules of the company, is not
serve free meals allowed to carry passengers, and to secure passage thereon if possible, is not
 carrier is not obliged to inform passengers of sailing schedule of the entitled to the rights of a passenger but is a mere trespasser.
vessel
* One who rides upon any part of the vehicle or conveyance which is unsuitable
C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE or dangerous, or which he knows is not intended for passengers, is not
- Goods should be delivered in the same condition that they were presumed to be a passenger.
received and to transport the passengers without encountering any
harm or loss. * One who secures free passage by fraud or stealth is precluded from recovery
- Read page 79-80 for provisions for injuries sustained through the negligence of the carrier, for he has not
assumed the status of a passenger.
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 * A person riding on a freight train, on a driver’s pass or similar arrangement, to
cautious persons, with a due regard for all the circumstances. (Civil Code) look after livestock being transported and as incident to such transportation is,
generally regarded as a passenger for hire.
- Presumption of Negligence
- Two conditions for the birth of the presumption of negligence: Motor vehicles like jeepneys and buses – are duty bound to stop their
1. there exists a contract between the passenger or the shipper and the conveyances for a reasonable length of time in order to afford passengers an
common carrier opportunity to board and enter, and they are liable for injuries suffered by
2. the loss, deterioration, injury or death took place during the boarding passengers resulting from the sudden starting up or jerking of their
existence of the contract conveyances while they do so. Once a public utility bus or jeepney stops, it is
making a continuous offer to bus riders.
Doctrine of Proximate Cause – there is presumption of negligence
If the goods are lost, destroyed or deteriorated, common carriers are presumed Case: Dangwa Transportation Company vs. CA
to have acted negligently, unless they prove that they observed extraordinary - When the bus is not in motion there is no necessity for a person who
diligence. In case of death of or injuries to passengers, common carriers are wants to ride the same to signal his intention to board. A public utility
presumed to have been at fault or to have acted negligently, unless they prove bus, once it stops, is in effect making a continuous offer to bus riders
that they observed extraordinary diligence.
 - The premature acceleration of the bus in this case was a breach of such (breakage of a faulty drag-link spring, fracture of the vehicle’s right steering
duty knuckle, defective breaks)
- One of the reason why carrier is made liable despite the presence
Case: La Mallorca vs. CA of mechanical defect is the absence of privity between the
- Duty to exercise utmost diligence with respect to passengers will not passenger and the manufacturer
ordinarily terminate until the passenger has, after reaching his
destination, safely alighted from the carrier’s conveyance or had a Case: Juntilla v. Fontanar
reasonable opportunity to leave the carriers premises. And what is - “Tire-blowouts” was not considered as fortuitous event although it was
reasonable time or a reasonable delay within this rule is to be alleged that the tires were in good condition; no evidence was presented
determined from all the circumstances. to show that the evidence were due to adverse road conditions – the
Case: Aboitiz Shipping Corporation vs. CA carrier must prove all angles.
- Same ruling with La Mallorca vs. CA - The explosion could have been caused by too much air pressure injected
- That reasonableness of time should be made to depend on the into the tires and the fact that the jeepney was overloaded and speeding
attending circumstances of the case, such as the kind of common at the time of the accident.
carrier, the nature of its business, the customs of the place, and so
forth, and therefore precludes a consideration of the time element per OTHER INVALID DEFENSES
se without taking into account such other factors 1. Damage to cargo due to EXPLOSION of another cargo – not
- The primary factor to be considered is the existence of a reasonable attributable to peril of the seas or accidents of navigation.
cause as will justify the presence of the victim on or near the 2. Damage by WORMS and RATS resulting to damage to cargoes –
petitioner’s vessel. We believe there exists such a justifiable cause can’t be cited as an excuse by the carrier.
(baggage were left) 3. Damage by WATER through a port which had been left open or
insufficiently fastened on sailing.
DEFENSES OF COMMON CARRIERS 4. Carrier cannot escape liabilities to third persons if damage was
caused by BARRATRY – where the master or crew of the ship
Article 1734 (No other defense may be raised: exclusive or closed list) committed unlawful acts contrary to their duties – includes theft and
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity fraudulently running the ship ashore.
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods Cases:
4. The character of the goods or defects in the packing or in the containers 1. Problem: A carrier bus on its way to its destination encountered an
5. Order or act of competent public authority engine failure, thus, it has to be repaired for 2 days. And while in the
6. Exercise of extraordinary diligence repair shop, a typhoon came resulting to the spoilage of cargoes.
Answer: A typhoon although a natural disaster, is not a valid defense
Fortuitous Event – to be a valid defense must be established to be the if it is shown that it was not the only cause of the loss. Especially
proximate cause of the loss when the facts indicate that the typhoon was foreseeable and could
have been detected through the exercise of reasonable care.
Note: Since common carrier is presumed is to be negligent, it has been Cargoes should have been secured while the bus was being repaired
observed that the DOCTRINE of PROXIMATE CAUSE is INAPPLICABLE to a for 2 days.
contract of carriage. The injured passenger or owner of goods need not prove
causation to establish his case. 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
The absence of causal connection is only a matter of defense. which he is seated near) to watch for the bag while he is asleep.

Requisites of Fortuitous Event: (a) There have been incidents of throwing of stones at passing
1. The cause of the unforeseen and the unexpected occurrence, or of the vehicles in the North Express Way. While the bus was
failure of the debtor to comply with his obligation, must be traversing the super highway, a stone hurled from the overpass
independent of the human will and hit the passenger resulting to injuries. Can the passenger
2. It must be impossible to foresee the event which constitutes the caso hold the bus liable for damages?
fortuito, or if it can be foreseen, it must be impossible to avoid Answer: Yes. The incident was foreseeable due the prior
3. The occurrence must be such as to render it impossible for the debtor incidents of stone hurling. The bus should have exercised
to fulfill his obligation in a normal manner utmost diligence and employed adequate precautionary
4. The obligor (debtor) must be free from any participation in or the measures to secure safety of passengers since the incident was
aggravation of the injury resulting to the creditor foreseeable. .
HOWEVER, if the stone throwing was entirely unforeseeable
In order for the common carrier to be exempted from responsibility, the natural and the carrier exercised the utmost diligence, then, the bus
disaster must have been the proximate and only cause of the loss. However, the can’t be held liable.
common carrier must exercise due diligence to prevent or minimize loss Nonetheless, the burden of proof is on the carrier to prove
before, during and after the occurrence of flood, storm or other natural disaster such exercise of diligence. It is up to the carrier to overthrow
in order that the common carrier may be exempted from liability for the loss, the presumption of negligence.
destruction, or deterioration of the goods. 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
Fire – not considered as a natural calamity or disaster suffered injuries while on board the bus.

Fire caused by lightning – a natural calamity (b) Supposing that there were armed men who staged a hold-up
while the bus was speeding along the highway. One of them
Hijacking – does not fall under the categories of exempting causes; the common stole the passenger’s bag and wallet while pointing a gun him.
carrier is presumed to be at fault or to have acted negligently unless there is a Is the bus liable?
proof of extraordinary diligence on its part Answer: No. Hand-carried luggages are governed by necessary
deposit. Besides, theft with use of arms or through irresistible
Mechanical defects – damage or injury resulting from mechanical defects is not force is a force majeure which exempts carriers from liability.
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 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, Character of the goods and defects in the packaging or in the containers are
there were 4 employers while there were only 2 hijackers and only defenses available to the common carrier. Similarly, the Carriage of Good by Sea
one of them was armed with bladed weapon. Act provides that carrier shall not liable for:
ON THE OTHER HAND, a hijacking by 3 armed men is an event which 1. Wastage in bulk or weight or any damages arising form the inherent
is considered to be beyond the control of the carrier. Thus, the defect, quality or vice of goods;
carrier may be adjudged from liability if it can be proven that the 2. Insufficiency of packing;
hijacking was unforeseeable. 3. Insufficiency or inadequacy of the marks, or
4. Latent defects no discoverable by due diligence.
Case: Philippine American General Insurance Co. vs. MCG
- Even in cases where a natural disaster is the proximate and only However, NCC likewise provides:
cause of the loss, a common carrier is still required to exercise due Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
diligence to prevent or minimize loss before, during and after the caused by the character of the goods, or the faulty nature of the packing or
occurrence of the natural disaster, for it to be exempt from liability the containers, the common carrier must exercise due diligence to forestall or
under the law for the loss of the goods lessen the loss.

Case: Pilapil vs. CA Thus, if the carrier accepted the goods knowing the fact of improper packing or
- Facts: a bystander alongside national highway hurled a stone at the even if the carrier does not know but the defect was nonetheless apparent
left side of the bus, hitting petition above his left eye which resulted upon ordinary observation, it is not relived from liability for loss or injury to
to partial loss of the left eye’s vision goods resulting therefrom.
- 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 Cases:
perform certain duties to the public as the law imposes, and holds 1. Problem: A carrier knowing that some of a cargo of sacks of rice had
itself liable for any breach thereof. big holes and others had openings just loosely tied with strings
- The law does not make the carrier an insurer of the absolute safety resulting to the spillage of rice during the trip. Thus, there was
of its passengers shortage in the delivery of the cargoes. When sued due to the
- Article 1763: A common carrier is responsible for injuries suffered by shortage, the carrier interposed a defense that it was not liable since
a passenger on account of the willful acts or negligence of other the shortage was due to the defective condition of the sacks. Decide.
passengers or of strangers, if the common carrier’s employees Answer: Carrier must still exercise extraordinary diligence if the fact
through the exercise of the diligence of a good father of a family of improper packing is known to the carrier or its servants, or
could have prevented or stopped the act or omission apparent upon ordinary observation. If the carrier accepted the
o Clearly, a tort committed by a stranger which causes cargo without protests or exception notwithstanding such condition,
injury to a passenger does not accord the latter a cause of he is not relived of liability for damage resulting therefrom. Apply
action against the carrier. The negligence for which a Article 1742.
common carrier is held responsible is the negligent
omission by the carrier’s employees to prevent the tort ORDER OF PUBLIC AUTHORITY
from being committed when the same could have been
foreseen and prevented by them Art. 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible, provided said
Case: Franklin Gacal vs. PAL public authority had power to issue order.
- It is therefore not enough that the event should not have been
foreseen or anticipated, as is commonly believed, but it must be one Cases:
impossible to foresee or to avoid. 1. Carrier was not excused from liability since the order of an acting
- The mere difficulty to foresee the happening is not the impossibility mayor was not considered as a valid order of a public authority. It is
to foresee the same required that public authority who issued the order must be duly
authorized to issue the order.
PUBLIC ENEMY 2. Carriage of Goods by Sea Act – provides that carrier shall not
responsible for loss or damage resulting from “arrest or restraint of
- Presupposes a state of war and refers to the government of a foreign princes, rulers, or people, or seizure under legal process” and from
nation at war with the country to which the carrier belongs, though not “quarantine restrictions”.
necessarily with that to which the owner of the gods owes allegiance.
- Thieves, rioter, and insurrectionists are not included. They are merely DEFENSES IN CARRIAGE OF PASSENGERS
private depredators for whose acts a carrier is answerable.
- Rebels in insurrection against their own government are generally not - Primary defense of carrier is exercise of extraordinary diligence in
embraced in the definition of public enemy. However, if the rebels hold a transporting passengers. Even if there is a fortuitous event, the carriers must
portion of territory, they have declared their impendence, cast off their also present proof of exercise of extraordinary diligence.
allegiance and has organized armed hostility to the government, and the
authority of the latter is at the time overthrown, such an uprising may Art. 1759. Common carriers are liable for the death of or injuries to
take on the dignity of a civil war, and so matured and magnified, the passengers through the negligence or willful acts of the carrier’s employees,
parties are belligerent and are entitled to belligerent rights. although such employees may have acted beyond the scope of their authority
- Depredation by pirates (which are enemy of all civilized nation) excuses or in violation of the orders of the common carriers.
the carrier from liability. The liability does not cease even upon proof that they exercised diligence in
- Common carriers may be exempted from responsibility only if the act of the selection and supervision of their employees.
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 Art. 1763. Carrier is responsible for injuries suffered by a passenger on
the loss before, during and after the performance of the act of the public account of the willful acts or negligence of other passengers or of strangers, if
enemy in order that the carrier may be exempted from liability for the the common carrier’s employees through the exercise of the diligence of a
loss, destruction, or deterioration of the goods. good father of a family could have prevented or stopped the act or omission.

IMPROPER PACKING a. Employees

- Carrier is liable for the acts of its employees. It can’t escape liability
by claiming that it exercised due diligence in supervision and
selection of its employees (unlike in quasi-delicts).
 the servants or employees of the keepers of hotels or inns as well as
Reasons for the rule: strangers; but not that which may proceed from any force majeure. The fact
1. Undertaking of the carrier requires that its passenger that full that travellers are constrained to rely on the vigilance of the keeper of the
measure of protection afforded by the exercise of high degree of hotels or inns shall be considered in determining the degree of care required
care prescribed by law, inter alia from violence and insults at the of him. (1784a)
hands of strangers and other passengers, but above all, from the acts
of the carrier’s own servants.
Art. 2001. The act of a thief or robber, who has entered the hotel is not
2. The liability of the carrier for the servant’s violation of duty to
deemed force majeure, unless it is done with the use of arms or through an
performance of his contract to safely transport the passenger,
irresistible force. (n)
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 Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to
risk of wrongful acts or negligence of the carrier’s employees against the acts of the guest, his family, servants or visitors, or if the loss arises from
passenger, since it, and not the passenger, has the power to select the character of the things brought into the hotel. (n)
and remove them.
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting
Rationale: On the other hand, if the ship owner derives profits from notices to the effect that he is not liable for the articles brought by the guest.
the results of the choice of the captain and the crew, when the choice Any stipulation between the hotel-keeper and the guest whereby the
turns out successful, it is also just that he should suffer the responsibility of the former as set forth in articles 1998 to 2001 is suppressed
consequences of an unsuccessful appointment, by application of the or diminished shall be void. (n)
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 Cases:
1. Despite the fact that the carrier gave notice that it shall not be liable
- Note: Willful acts of the employees include theft for baggage brought in by passengers, the carrier is still liable for lost
hand-carried luggage since it is governed by rules on necessary
b. Other Passengers and Third Persons deposits. Under Art. 20000, the responsibility of the depositary
includes the loss of property of the guest caused by strangers but
- With respect to acts of strangers and other passengers resulting in not that which may proceed from force majeure. Moreover, article
injury to a passenger, the availability of such defense is also subject 2001 considers theft as force majeure if it is done with use of arms
to the exercise of a carrier of due diligence to prevent or stop the act or through irresistible force.
or omission. 2. Even if the passenger did not declare his baggage nor pay its charges
- Negligence of the carrier need not be the sole cause of the damage contrary to the regulations of the bus company, the carrier is still
or injury to the passenger or the goods. The carrier would still be liable in case of loss of the baggage. Since, it has the duty to exercise
liable even if the contractual breach concurs with the negligent act extraordinary diligence over the baggage that was turned over to the
or omission of another person. carrier or placed in the baggage compartment of the bus. The non-
payment of the charges is immaterial as long as the baggage was
Remember: the negligence of the other river in a collision is NOT a received by the carrier for transportation.
prejudicial question to an action against the carrier’s company.
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER
Article 1759. Common carriers are liable for the death of or injuries to
passenger through the negligence or willful acts of the former’s employees, A. NEGLIGENCE OF SHIPPER OR PASSENGER
although such employees may have acted beyond the scope of their authority
or in violation of the orders of the common carriers. - 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 carrier’s liability; it is not a total
PASSENGER’S BAGGAGES excuse.
- The term baggage has been defined to include whatever articles a - However, if the negligence of the shipper/ passenger is the
passenger usually takes with him for his own personal use, comfort and proximate and only cause of the loss, then, the carrier shall not be
convenience liable. The carrier may overcome the presumption of negligence
- Rules that are applicable to goods that are being shipped are also and may be able to prove that it exercised extraordinary diligence in
applicable to baggage delivered to the custody of the carrier. Arts. handling the goods or in transporting the passenger.
1733. 1734 and 1736 of Civil Code are applicable.
- However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall The carrier may be able to prove that the only cause of the loss of the
apply. goods is any of the following:
1. Failure of the shipper to disclose the nature of the goods;
Distinction: W/N the baggage is in the personal custody of the passenger. 2. Improper marking or direction as to the destination;
 if yes, hand carried baggage 3. Improper loading when he assumes such responsibility.
 if no, checked-in baggage
The shipper must likewise see to it that the goods are properly
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall packed; otherwise, liability of the carrier may either be mitigated or
also be regarded as necessary. The keepers of hotels or inns shall be barred depending on the circumstances.
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 Art. 1741. If the shipper or owner merely contributed to the loss,
part of the latter, they take the precautions which said hotel-keepers or their destruction or deterioration of the goods, the proximate cause thereof
substitutes advised relative to the care and vigilance of their effects. (1783) being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.

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 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 - Since he opted to sit on the open platform between the coaches of
of damages for his death or injuries, if the proximate cause thereof is the the train, he should have held tightly and tenaciously on the upright
negligence of the common carrier, but the amount of damages shall be metal bar found at the side of said platform to avoid falling off from
equitably reduced. the speeding train

B. FREIGHT
a. Last Clear Chance
a. Amount to be Paid
A negligent carrier is liable to a negligent passenger in placing himself in peril, if
the carrier was aware of the passenger’s peril, or should have been aware of it The regulation of rates is founded upon the valid exercise of the Police Power of
in the reasonable exercise of due care, had in fact an opportunity later than that the state in order to protect the public from arbitrary and excessive rates while
of the passenger to avoid an accident. maintaining the efficiency and quality of services rendered. The fixing of just
and reasonable rates involves a balancing of investor and the consumer
Last clear chance applies in a suit between the owners and drivers of colliding interest.
vehicles. It does not arise where a passenger demands responsibility from the
carrier to enforce its contractual obligations. For it would be inequitable to Although the consideration that should be paid to the carrier is still subject to
exempt the negligent driver of the carrier and its owner on the ground that the the agreement between parties, what can be agreed upon should not be
other driver was likewise guilty of negligence. beyond the maximum amount fixed by appropriate government agency.

b. Who will pay

b. Assumption of Risk
Although either of the shipper or the consignor may pay the freight before or at
Passengers must take such risks incident to the mode of travel. Carriers are not time the goods are delivered to the carrier for shipment, nonetheless, it is the
insurers of the lives of their passengers. Thus, in air travel, adverse weather consignor (whom the contract of carriage is made) who is primarily liable for the
conditions or extreme climatic changes are some of the perils involved in air payment of freight whether or not he is the owner of the goods. The obligation
travel, the consequence of which the passenger must assume or expect. to pay is implied from the mere fact that the consignor has placed the goods
with the carrier for the purpose of transportation.
However, there is no assumption of risk in a case wherein a passenger boarded c. Time to pay
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. 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
Note: there is also no assumption of risk by the mere fact that the carrier delivery.
posted notices against such liability
Article 374. The consignees to whom the shipment was made may not defer
Problem: Although, there is a sign in the bus that says: “do not talk to the driver the payment of the expenses and transportation charges of the goods they
while the bus is in motion, otherwise, the company would not assume receive after the lapse of twenty-four hours following their delivery; and in case
responsibility for any accident:. Nonetheless, the passengers dared the driver to of delay in this payment, the carrier may demand the judicial sale of the goods
race with another bus, as the bus speeds up in the attempt to overtake the transported in an amount necessary to cover the cost of transportation and the
other bus, it failed to slow down. As a result, the bus turns turtle causing the expenses incurred.
death and injuries to passengers. Is the bus company liable?
Answer: Yes. The bus company is obligated to exercise utmost diligence in (1) Carriage of Passengers by Sea
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 With respect to carriage of goods by sea, the tickets are purchased in advance.
injured when he urged the driver to accept the dare. At most, the passengers Carriers are not supposed to allow passengers without tickets --- the carrier is
can only be said to be guilty of contributory negligence which would mitigate bound to observe a “No Ticket, No Boarding Policy”. The carrier shall collect/
the liability of the driver, since the proximate cause of the accident was the inspect the passenger’s ticket within one hour from vessel’s departure as not to
driver’s willful and reckless act in running the race with the other bus. disrupt resting or sleeping passengers.
Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc. If the vessel is not able to depart on time and the delay is unreasonable, the
- Where a carrier’s employee is confronted with a sudden emergency, passenger may opt to have his/ her ticket refunded without refund service fee.
the fact that he is obliged to act quickly and without a chance for Delayed voyage means “late departure of the vessel from its port of origin and/
deliberation must be taken into account, and he is not led to the or late arrival of the vessel to its port of destination”. Unreasonable delay
same degree of care that he would otherwise be required to exercise means “the period of time that has lapsed without just cause and is solely
in the absence of such emergency but must exercise only such care attributable to the carrier which has prejudiced the transportation of the
as any ordinary prudent person would exercise under like passenger and/ or cargoes to their port of destination.
circumstances and conditions, and the failure on his part to exercise
the best judgment the case renders possible does no establish lack A passenger who failed to board the vessel can refund or revalidate the ticket
of care and skill on his part which renders the company liable. subject to surcharges. Revalidation means “the accreditation of the ticket that
is not used and intended to be used for another voyage.
Case: Compania Maritima vs. CA and Vicente Concepcion
- While the act of private respondent in furnishing petitioner with an (2) Carrier’s Lien
inaccurate with of the payloader cannot successfully be used as an
excuse by petitioner to avoid liability to the damage thus caused, If consignor or the consignee fails to pay the consideration for the
said act constitutes a CONTRIBUTORY CIRCUMSTANCE to the transportation of goods, the carrier may exercise his lien in accordance with Art.
damage caused on the payloader, which mitigates the liability for 375 of Code of Commerce:
damages of petitioner in accordance with Article 1741.
ARTICLE 375. The goods transported shall be especially bound to answer for
Case: Philippine National Railways vs. CA the cost of transportation and for the expenses and fees incurred for them
- While petitioner failed to exercise extraordinary diligence as during their conveyance and until the moment of their delivery.
required by law, it appears that the deceased was chargeable with This special right shall prescribe eight days after the delivery has been made,
contributory negligence.
and once prescribed, the carrier shall have no other action than that
corresponding to him as an ordinary creditor. B. PASSENGERS
- There can be no stipulation lessening the utmost diligence that is
DEMURRAGE owed to passengers.

Demurrage is the compensation provided for the contract of affreightment for Art. 1757. The responsibility of a common carrier for the safety of
the detention of the vessel beyond the time agreed on for loading and passengers as required in Arts. 1733 and 1755 cannot be dispensed
unloading. It is the claim for damages for failure to accept delivery. In broad with or lessened by stipulation, by the posting of notices, by
sense, very improper detention of a vessel may be considered a demurrage. statements on tickets, or otherwise. (Note: Absolute; extraordinary at
Technically, liability for demurrage exists only when expressly stipulated in the all times.)
contract.
Gratuitous passenger – A stipulation limiting the common carrier’s liability for
Using the term in broader sense, damages in the nature of demurrage are negligence is valid, but not for willful acts of gross negligence. The reduction of
recoverable for a breach of the implied obligation to load or unload the cargo fare does not justify any limitation.
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 Case: Lara vs. Valencia
vessels or conveyances, or their placement for purposes of unloading is often a - Diligence owed to accommodation passengers is only ordinary
condition precedent to the right to collect demurrage charges. diligence
- However, this case is not controlling with respect to common
CHAPTER 3 carriers because the defendant in the said case was not a common
EXTRAORDINARY DILIGENCE carrier

I. RATIONALE IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA

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 A. SEAWORTHINESS
persons, with due regard for all circumstances.
a. Warranty of Seaworthiness of Ship
Extraordinary diligence: Calculated to protect the passengers from - This is the first step that should be undertaken
the tragic mishaps that frequently occur in connection with rapid modern - Extraordinary diligence requires that the ship which will
transportation. transport the passengers and goods is seaworthy.
- Seaworthiness of the vessel is impliedly warranted.
II. HOW DUTY IS COMPLIED WITH - The carrier shall be bound before and at the beginning of the
- There is no hard and fast rule in the exercise of extraordinary voyage to exercise due diligence to make the ship seaworthy.
diligence
- Common carrier binds itself to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of b. No duty to inquire
a very cautious person, with due regard for all the circumstances. - Because of the implied warranty of seaworthiness, shippers of
- The duty even extends to the members of the crew or complement goods, when transacting with common carriers, are not
operating the carrier expected to inquire into the vessels seaworthiness,
genuineness of its licenses and compliance with all maritime
Case: Kapalaran Bus Lines vs. Coronado laws. Passengers cannot be expected to inquire everytime they
- If common carriers carefully observed the statutory standard of board a common carrier, whether the carrier possesses the
extraordinary diligence in respect of their own passengers, they necessary papers or that all the carrier’s employees are
cannot help but simultaneously benefit pedestrians and the owners qualified.
and passengers of other vehicles who are equally entitled to the safe - It is the carrier that carries such burden of proving that the ship
and convenient use of our roads and highways is seaworthy.
- Sufficient evidence must be submitted and the presentation of
A reasonable man or a good father of a family in the position of the carrier must certificates of seaworthiness is not sufficient to overcome the
exercise extraordinary diligence in the performance of his contractual presumption of negligence.
obligation.
- Generally, what should be determines is whether or not a c. Meaning of Seaworthiness
reasonable man, exercising extraordinary diligence, could have - A vessel must have such degree of fitness which an owner who
foreseen and prevented the damage or loss that occurred. is exercising extraordinary diligence would require his vessel to
have at the commencement of the voyage, having regard to all
III. EFFECT OF STIPULATION the probable circumstances of it. This includes fitness of the
vessel itself to withstand the rigors of voyage, fitness of the
A. GOODS vessel to store the cargoes and accommodate passengers to be
- The parties cannot stipulate that the carrier will NOT exercise ANY transported and that it is adequately equipped and properly
diligence in the custody of goods manned.
- The law allows a stipulation whereby the carrier will exercise a - Seaworthiness is that strength, durability and engineering skill
degree of diligence which is less than extraordinary with respect to made a part of a ship’s construction and continued
goods. maintenance, together with a competent and sufficient crew,
which would withstand the vicissitudes and dangers of the
Art. 1744. A stipulation between the common carrier and the shipper elements which might reasonably be expected or encountered
owner limiting the liability of the former for the loss, destruction, or during her voyage without loss or damage to her particular
deterioration of the goods to a degree less than extraordinary cargo
diligence shall be valid, provided it be:
Example: The carrier was able to establish that the ship itself was seaworthy
1. In writing, signed by the shipper/owner; because the records reveal that the vessel was dry-docked and inspected by the
2. Supported by a valuable consideration other than the service Phil. Coast Guard before its first destination.
rendered by the common carrier (Note: Typically fare/freight); and
3. Reasonable, just and contrary to public policy.
A warranty of seaworthiness requires that it be properly laden, and provided and crew, because the latter is covered by the Limited Liability Rule
with a competent master, a sufficient number of competent officers and (liability of the shipowner may be limited to the value of the vessel).
seamen, and the requisite appurtenances and equipment. - If the negligence of the captain and crew can be traced to the fact
The carrier shall be bound before and at the beginning of the voyage to exercise that they are really incompetent, the Limited Liability Rule cannot be
due diligence to: invoked because the shipowner may be deemed negligent.
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship; Rules on passenger safety
3. Make all parts of the ship in which goods are carried, fit and safe - Negligence on the part of the captain and crew as well as the
for their reception, carriage, and preservation. operator includes failure to comply with the regulation issued by the
Maritime Industry Authority (MARINA) on the safety of the
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, passengers
and discharge the goods carried. - Memorandum Circular No. 112 : passengers do not merely contract
for transportation because they have the right to be treated by the
Note: Seaworthiness is relative it its construction and its application depends on carrier and its employees with kindness, respect, courtesy and due
the facts of a particular case (ex. Length and nature of the voyage) consideration. They are entitled to be protected against personal
conduct, injurious language, indignities and abuses from the said
Fitness of the Vessel Itself carrier and its employees
- It is necessary that the vessel can be expected to meet the normal - Read Memorandum Circular No. 114: p. 204
hazards of the journey
- General Test of Seaworthiness: Whether the ship and its Case: Planters Products Inc. vs. CA
appurtenances are reasonably fit to perform the service undertaken. - The period during which private respondent was to observe the
degree of diligence required of it as a public carrier began from the
The ship must be “cargoworthy” time the cargo was unconditionally placed in its charge after the
- Even if the vessel was properly maintained and is free from defect, vessel’s holds were duly inspected and passed scrutiny by the
the carrier must not accept the goods that cannot properly be shipper, up to and until the vessel reached its destination and its hull
transported in the ship was re-examined by the consignee, but prior to unloading
- The ship must be efficiently strong and equipped to carry the - A ship owner is liable for damage to the cargo resulting from
particular kind of cargo which she has contracted to carry and her improper stowage ONLY when the stowing si done by stevedores
cargo must be so loaded that it is safe for her to proceed on her employed by him, and therefore under his control and supervision,
voyage. not when the same is done by the consignee or stevedores under
the employ of the latter

E. DEVIATION AND TRANSSHIPMENT

The vessel must be adequately equipped and properly manned.
- On top of regular maintenance and inspection, Captains, masters or 1. Deviation
patrons of vessels must prove the skill, capacity, and qualifications - If there is an agreement between the shipper and the carrier as to
necessary to command and direct the vessel. the road over which the conveyance is to be made (subject to the
- If the owner of a vessel desires to be the captain without having the approval by the Maritime Industry Authority), the carrier may not
legal qualifications, he shall limit himself to the financial change the route, unless it be by reason of force majeure. Without
administration of the vessel and shall entrust the navigation to a this cause, he shall be liable for all the losses which the goods may
qualified person. suffer, aside from paying the sum stipulated for that case.
- When on account of the force majeure, the carrier had to take
Note: It is not an excuse that the carrier cannot afford the salaries of competent another route which resulted to an increase in transportation
and licensed crew or that latter is unavailable. charges, he shall be reimbursed upon formal proof.

Adequate Equipment Note: With respect to carriers by sea, the routes are subject to approval by
- With respect to vessels that carries passengers, the Maritime MARINA and the same cannot generally be changed without the authorization
Industry Authority prescribes rules which provide for indispensable from said administrative agency
equipment and facilities
- ex. Exit doors, life boats, live vests 2. Transshipment
- The act of taking cargo out of one ship and loading it into another; to
B. OVERLOADING transfer goods from the vessel stipulated in the contract of
affreightment to another vessel before the place of destination
- Duty to exercise due diligence likewise includes the duty to take named in the contract has been reached.
passengers or cargoes that are within the carrying capacity of the - Transshipment of freight without legal excuse is a violation of the
vessel. contract and subjects the carrier to liability if the freight is lost even
by a cause otherwise excepted.
C. PROPER STORAGE
Note: there is transshipment whether or not the same person, firm or entity
- The vessel itself may be suitable for the cargo but this is not enough owns the vessels (what matters is the actual physical transfer of cargo from one
because the cargo must also be properly stored. vessel to another)

Cargo must generally not be placed on deck. The carrying of deck cargo raises V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
the presumption of unseaworthiness unless it can be shown that the deck cargo
will not interfere with the proper management of the ship. A. CONDITION OF VEHICLE
- Common carriers that offer transportation by land are similarly
D. NEGLIGENCE OF CAPTAIN AND CREW required to make sure that the vehicles that they are using are in
good order and condition.
- Failure on the part of the carrier to provide competent captain and
crew should be distinguished from the negligence of the said captain 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 - Thus the carrier was obligated to make the necessary arrangements
cannot escape liability by claiming that the accident that resulted because of a to transport the passenger on the first available flight.
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 A. INSPECTION
to exercise extraordinary diligence requires the carrier to purchase and use - It is the duty of the carrier to make inquiry as to the general nature
vehicle parts that are not defective. of the articles shipped and of their value before it consents to carry
them; and its failure to do so cannot defeat the shipper’s right to
B. TRAFFIC RULES recovery of full value of the package if lost, in the absence of
- The carrier fails to exercise extraordinary diligence if it will not showing of fraud or deceit on the part of the shipper.
comply with basic traffic rules. The Civil Code provides for a
presumption of negligence in case the accident occurs while the Where a common carrier has reasonable ground to suspect that the offered
operator of the motor vehicle is violating traffic rules. 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
In cases involving breach of contract of carriage, proof of violation of traffic under the circumstances, as a condition of receiving and transporting such
rules confirms that the carrier failed to exercise extraordinary diligence. goods. To be subjected to unusual search, other than the routinary inspection
procedure customarily undertaken, there must exist proof that would justify
Case: Mallari Sr and Jr vs. CA cause for apprehension that the baggage is dangerous as to warrant exhaustive
- The rule is settled that a driver abandoning his proper lane for the inspection, or even refusal to accept carriage of the same.
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 Case: Northwest Airlines vs. Laya
cannot do so in safety - The fact that the plaintiff was greatly inconvenienced by the fact that
his attaché case was subjected to further inspection does not
C. DUTY TO INSPECT warrant imposition of liability because he was not singled out and
- There is no unbending duty to inspect each and every package or discriminated by the employees of the carrier
baggage that is being brought inside the bus or jeepney. The carrier - Protection of passengers must take precedence over convenience
is duty bound to conduct such inspection depending on the - Nevertheless, the implementation of security measures must be
circumstances. attended by basic courtesies

Case: Nocum vs. Laguna Tayabas Bus Company

- While it is true the passengers of appellant’s bus should not be made
to suffer for something over which they had no control, fairness CHAPTER 4
demands that in measuring a common carrier’s duty towards its BILL OF LADING
passengers, allowance must be given to the reliance that should be
reposed on the sense of responsibility of all the passengers in regard I. CONCEPTS, DEFINITION AND KINDS
to their common safety.
- It is to be presumed that a passenger will not take with him anything Bill of Lading (BOL)
dangerous to the lives and limbs of his co-passengers not to speak of - a written acknowledgement, signed by the master of a vessel or
his own. other authorized agent of the carrier, that he has received the
- Not to be lightly considered is the right to privacy to which each described goods from the shipper, to be transported on the
passenger is entitled expressed terms to be described the place of destination, and to be
- In other words, inquiry may be verbally made as to the nature of a delivered to the designated consignees of the parties.
passenger’s baggage when such is not outwardly perceptible, but - It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT
beyond this, constitutional boundaries are already in danger of being OF TITLE.
transgressed
- SC held that carrier has succeeded in rebutting the presumption of A BOL is not necessary for the perfection of a contract of carriage. Thus, the
negligence by showing that it has exercised extraordinary diligence obligation to exercise extraordinary diligence by the carrier is still required even
for the safety of its passenger, according to the circumstances of if there is no bill of lading.
each case
In the absence of the bill of lading, disputes shall be determined on the basis of
Note: although overland transportation are not bound nor empowered to make the provisions in the New Civil Code and suppletory by the Code of Commerce.
an examination on the contents of packages or bags particularly those hand
carried by passengers, such is different with regards to an airline company. KINDS of BILL of LADING:

VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR 1. Clean Bill of Does not contain any notation indicating any defect in
- The aircraft must be in such a condition that it must be able to Lading the goods.
withstand the rigors of flight. 2. Foul Bill of One that contains the abovementioned notation.
Lading
Airworthiness – An aircraft, its engines propellers, and other components and 3. Spent Bill of The goods are already delivered but the bill of lading
accessories, are of proper design and construction, and are safe for air Lading was not yet returned (upon delivery, the carrier is
navigation purposes, such design and construction being consistent with supposed to retrieve the covering bill of the goods)
accepted engineering practice and in accordance with aerodynamic laws and
aircraft science.
4. Through Bill Issued by a carrier who is obliged to use the facilities of
of Lading other carriers as well as his own facilities for the
Proof of airworthiness is not by itself sufficient to prove exercise of
purpose of transporting the goods from the city of the
extraordinary diligence.
seller to the city of the buyer, which BOL is honored by
the second and other interested carriers who don’t
Case: Japan Airlines vs. CA
issue their own BOL.
- The fact that the flight was cancelled due to fortuitous event does
not mean that the carrier’s duty already ended. The carrier is still
obligated to look after the convenience and comfort of the
passenger
5. On Board Bill -states that the goods have been received on board Parole Evidence Rule
the vessel which is to carry the goods. - BOL is covered by the parol evidence rule, that the terms of the
-apparently guarantees the certainty of shipping as contract are conclusive upon the parties and evidence aliunde is not
well as the seaworthiness of the vessel to carry the admissible to vary or contradict a complete enforceable agreement,
goods. subject to well defined exceptions
-basically means that the goods are already inside the - The mistake contemplated as an exception to the parol evidence rule
vessel is one which is a mistake of fact mutual to the parties.
6. Received for -states that the goods have been received for shipment - Note that if such is not raised inceptively in the complaint or in the
Shipment Bill with or without specifying the vessel by which the answer, a party cannot later on be permitted to introduce parol
goods are to be shipped. evidence thereon
-issued when conditions are not normal and there is
insufficiency of shipping space. Bill of Lading as Evidence
- The BOL is the legal evidence of the contract and the entries thereof
7. Custody Bill The goods are already receied by the carrier but the constitutes prima facie evidence of the contract.
of Lading vessel indicated therein has not yet arrived in the port. - All the essential elements of a valid contract (cause, consent, object)
are present when such bill are issued.
8. Port Bill of The vessel indicated in the BOL that will transport the
Lading goods is already in the port. 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
Note: A party to a maritime contract would require an on board bill of lading lading must be properly pleaded either as causes of action or
because of its apparent guaranty of certainty of shipping as well as the defenses
seaworthiness of the vessel which is to carry the goods. - 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
Effectivity of BOL order of any person named in such document is a negotiable
- upon its delivery to and acceptance by the shipper. document of title.
- The acceptance of the bill without dissent raises the presumption
that all the terms therein were brought to the knowledge of the - If the document of title contains the required words of negotiability
shipper and agreed to by him, and in the absence of fraud or to make the instrument negotiable under Article 1507 of the NCC,
mistake, he is stopped thereafter from denying that he assented to the document remains to be negotiable even if the words “not
such claims (whether he reads the bill or not) negotiable” or non negotiable are places thereon

THE 3-FOLD NATURE OF THE BILL OF LADING o a. Bearer document- negotiated by delivery
- The three fold nature of a bill of lading is obviously applicable only to o b. Order document- negotiated by indorsement of the
carriage of goods specified person so named
- As receipt and document of title: issued for goods
- As contract: applies to tickets issued to passengers - Effects of negotiation. Negotiation of the document has the effect of
manual delivery so as to constitute the transferee the owner of the
I. RECEIPT goods.
- As comprehending all methods of transportation, a BOL may be
defined as a written acknowledgement of the receipt of goods and BASIC STIPULATIONS
an agreement to transport and to deliver them at a specified place to - Provided for in the Code of Commerce
a person named or on his order. - (for overland transportation, maritime commerce and electronic
- Other terms, “shipping receipts”, “forwarders receipts”, and documents, please refer to the textbook for the codal pp. 203-210)
“receipts for transportation”.
- (SC) the designation however is not material, and neither is the form PROHIBITED AND LIMITING STIPULATION
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. 1. Exempting the carrier from any and all liability for loss or damage
- The issuance of a bill of lading carries the presumption that the occasioned by its own negligence - INVALID as it is contrary to public
goods were delivered to the carrier issuing the bill, for immediate policy.
shipment, and it is nowhere questioned that a bill of lading is prima 2. Parties may stipulate that the diligence to be exercised by the carrier
facie evidence of the receipt of the goods by the carrier for the carriage of goods be less than extraordinary diligence if it is:
a. in writing and signed by both parties
II. CONTRACT b. supported by a valuable consideration other than the
- It expresses the terms and conditions of the agreement between the service rendered by the common carrier
parties; names the parties; includes consignees etc. It is the law c. the stipulation is just, reasonable and not contrary to
between the parties bound by its terms and conditions. law.
3. Providing an unqualified limitation of such liability to an agreed
Contracts of Adhesion valuation - INVALID
- It is to be construed liberally in favor of the shipper who adhered to 4. Limiting the liability of the carrier to an agreed valuation unless the
such bill as it is a contract of adhesion. The only participation of the shipper declares a higher value and pays a higher rate of freight-
party is the signing of his signature or his adhesion thereto. VALID and ENFORCEABLE.
- The shipper or passenger is bound by the terms and conditions if
there is no occasion to speak of ambiguities or obscurities Note: the purpose of limiting stipulations in the bill of lading is to protect th
- If the words appear to be contrary to the evident intention of the common carrier. Such stipulation obliges the shipper/consignee to notify the
parties, the latter shall prevail over the former common carrier of the amount that the latter may be liable for in case of loss of
the goods
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 Remember:
indigence, mental weakness, tender age and other handicap, the court must be 1. The parties cannot stipulate so as to totally exempt the carrier from
vigilant for his protection. exercising any degree of diligence whatsoever
 2. The parties cannot stipulate that the common carrier shall exercise dispensed with or lessened by stipulation or statement on tickets or
diligence less than the diligence of a good father of a family otherwise
2. Article 1750 of the Civil Code provides that a contract fixing the sum
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS: that may be recovered by the owner or shipper for the loss,
1. Inter-island - if goods arrived in damaged condition (Art. 366): destruction, or deterioration of the GOODS is VALID, if it is
a. If damage is apparent, the shipper must file a claim immediately (it may be REASONABLE and JUST under the circumstances, and has been
oral or written); FAIRLY AND FREELY AGREED UPON
b. If damage is not apparent, he should file a claim within 24 hours from 3. It is unfair to deny the shipper the right to declare the actual value of
delivery. his cargos and to recover such true value in case of loss or damage
The filing of claim under either (1) or (2) is a condition precedent for recovery. Note: it has been suggested that the signature of the shipper in the
If the claim is filed, but the carrier refuses to pay: enforce carrier’s liability in bill of lading with regards to the limitation applies only to reduction
court by filing a case: of diligence and not to the stipulated amount to be paid.
a. within 6 year, if no bill of lading has been issued; or 4. It is unjust and contrary to public policy if the common carrier’s
b. within 10 years, if a bill of lading has been issued. liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with
2. Overseas –where goods arrived in a damaged condition from a foreign port or diminished
to a Philippine port of entry: (COGSA) 5. The common carrier may EXEMPT itself from liability if he can prove
a. upon discharge of goods, if the damage is apparent, claim should be filled that:
immediately; a. He observed extraordinary diligence
b. if damage is not apparent, claim should be filled within 3 days from delivery. b. The proximate and only cause of the incident is a
fortuitous event or force majeure
Filing of claim is not a condition precedent, but an action must be filed against c. The proximate and only cause of the loss is the character
the carrier within a period of 1 year from discharge; if there is no delivery, the of the goods or defects in the packing or in the containers
one-year period starts to run from the day the vessel left port (in case of d. The proximate and only cause of the loss is the order or
undelivered or lost cargo), or from delivery to the arrastre (in case of damaged act of competent public authority
cargo). Note: to limit its liability or at least mitigate the same, the carrier can
Where there was delivery to the wrong person, the prescriptive period is 10 cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the DOCTIRNE
years because there is a violation of contract, and the carriage of goods by sea OF AVOIDABLE CONSEQUENCES
act does not apply to misdelivery. (Ang v. American SS Agencies (19 SCRA 631)
Case: Sea-Land Service Inc. vs. IAC
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65) - 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
- Applies suppletorily to the Civil Code if the goods are to be shipped of the country of destination
form a foreign port to the Philippines - COGSA is applicable up to the final port of destination and that the
- COGSA is applicable in international maritime commerce. It can be fact that transshipment was made on an interisland vessel did not
applied in domestic sea transportation if agreed upon by the parties. remove the contract of carriage of goods from the operation of said
(paramount clause) Act.
- 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. Case: Citadel Lines Inc. vs. CA
This is deemed incorporated in the bill of lading even if not - The duty of the consignee is to prove merely that the goods were
mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463). lost. Thereafter, the burden is shifted to the carrier to prove that it
- If by agreement, another maximum amount than that mentioned has exercised the extraordinary diligence required by law. And, its
may be fixed provided that such maximum shall not be less than extraordinary responsibility lasts from the times that goods are
$500 and in no event shall the carrier be liable for more than the unconditionally placed in the possession of, and received by the
amount of damage actually sustained carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person who
Note that Art. 1749 of the NCC applies to inter-island trade. has the right to receive them

Meaning of Package Case: Everett Steamship Corporation vs. CA

- If the goods are shipped in cartons, each carton is considered a - Considering that the shipper did not declare a higher valuation it had
package even if they are stored in container vans itself to blame for not complying with the situations
- When what ordinarily be considered packages are shipped in a - The trial court’s ratiocination that private respondent could not have
container supplied by the carrier and the number of such units is “fairly and freely” agreed to the limited liability clause in the bill of
disclosed in the shipping documents, each of those units and not the lading because the said conditions were printed in small letters does
container constitutes the package. not make the bill of lading invalid

Prescriptive periods WARSAW CONVENTION of 1929

- Suit for loss or damage to the cargo should be brought within one
year after: WHEN APPLICABLE:
a. delivery of the goods; or - Applies to all international transportation of person, baggage or
b. the date when the goods should be delivered. (Sec. 3[6]) goods performed by aircraft for hire.
- “International transportation” means any transportation in which
The one-year prescriptive period is suspended by: the place of departure and the place of destination are situated
1. express agreement of the parties (Universal Shipping Lines, Inc. v. either:
IAC, 188 SCRA 170) o within the territories of two High Contracting Parties
2. when an action is filed in court until it is dismissed. (Stevens & Co. v. regardless of whether or not there be a break in the
Nordeutscher Lloyd, 6 SCRA 180) transportation or transshipment, or
o within the territory of a single High Contracting Party, if
Things to Remember: there is an agreed stopping place within a territory
1. Article 1757 provides that the responsibility of a common carrier to subject to the sovereignty, mandate or authority of
exercise utmost diligence for the safety of PASSENGERS CANNOT be another power, even though that power is not a party to
the Convention.
 - 7 days from receipt of goods
Transportation to be performed by several successive air carriers shall be - in case of delay, 14 days from receipt of baggage/goods
deemed to be one undivided transportation, if it has been regarded by the F otherwise the action is barred except in case of fraud on the part of the
parties as a single operation, whether it has been agreed upon under the form carrier. (Art. 26)
of a single contract or of a series of contracts, and it shall not lose its 2. Jurisdiction – governed by domestic law
international character merely because one contract or a series of contracts is 3. Venue – at the option of the plaintiff:
to be performed entirely within a territory subject to the sovereignty, a. court of domicile of the carrier;
suzerainty, mandate, or authority of the same High Contracting Party. (Art. 1) b. court of its principal place of business;
c. court where it has a place of business through which the contract has
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in been made;
the Philippines since an international law prevails over general law. d. court of the place of destination. (Art. 28)
4. Prescriptive period – 2 years from:
WHEN NOT APPLICABLE: a. date of arrival at the destination
1. If there is willful misconduct on the part of the carrier’s employees. b. date of expected arrival
The Convention does not regulate, much less exempt, carrier from c. date on which the transportation stopped. (Art. 29)
liability for damages for violating the rights of its passengers under 5. Rule in case of various successive carriers,
the contract of carriage (PAL v. CA, 257 SCRA 33). --- if the damage is a. In case of transportation of passengers – the action is filed only against
similarly caused by any agent of the carrier acting within the scope the carrier in which the accident or delay occurred unless there is an
of his employment agreement whereby the first carrier assumed liability for the whole
2. when it contradicts public policy; journey.
3. if the requirements under the Convention are not complied with. b. In case of transportation of baggage or goods
LIABILITY OF CARRIER FOR DAMAGES: i. the consignor can file an action against the first carrier and the
1. Death or injury of a passenger if the accident causing it took place on carrier in which the damage occurred
board the aircraft or in the course of its operations; (Art. 17) ii. the consignee can file an action against the last carrier and the carrier
2. Destruction, loss or damage to any luggage or goods, if it took place in which the damage occurred. These carriers are jointly and
during the carriage; (Art. 18) and severally liable. (Art. 30)
3. Delay in the transportation of passengers, luggage or goods. (Art. 19)
Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or
NOTE: The Hague Protocol amended the Warsaw Convention by removing the international travel
provision that if the airline took all necessary steps to avoid the damage, it Code of Commerce applies to inter-island or domestic travel.
could exculpate itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)
Bill of Lading as Document of Title
Remember: The said provisions merely declare the carrier liable for damages in
the enumerated cases if the conditions therein specified are present. Neither  Bill of lading is a document of title under the Civil Code. It can be a
said provisions nor others in the aforementioned Convention regulate or negotiable document of title.
exclude liability for OTHER BREACHES of contract of carrier.
A. Negotiability
The Convention does not thus operate as an exclusive enumeration of the - It is negotiable if it is deliverable to the bearer, or to the order of any person
instances of an airline’s liability, or as an absolute limit of the extent of that named in such document. (Art. 1507, Civil Code)
liability.
a) Effect of Stamp or Notation “Non-Negotiable”
LIMIT OF LIABILITY  the document remains to be negotiable even if the words “not-
1. passengers - limited to 250,000 francs; negotiable” or “non-negotiable” are placed thereon. - Art. 1510 (Civil
 except: agreement to a higher limit Code)
2. goods and checked-in baggage - 250 francs/kg
 except: consigner declared its value and paid a B. How Negotiated
supplementary sum, carrier liable to not more than the a) Bearer document (Art. 1508 and 1511)
declared sum unless it proves the sum is greater than its - may be negotiated be delivery
actual value.
3. hand-carry baggage - limited to 5,000 francs/passenger b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- can only be negotiated through the indorsement of the specified person so
An agreement relieving the carrier from liability or fixing a lower limit is null and named.
void. (Art. 23) - such indorsement may be in blank, to bearer or to a specified person.
Carrier not entitled to the foregoing limit if the damage is caused by willful
misconduct or default on its part. (Art. 25)  Where a negotiable document of title is transferred for value by
delivery, and the endorsement of the transferor is essential for
Case: China Airlines vs. Daniel Chiok negotiation, the transferee acquires a right against the transferor to
- The ticket-issuing airline acts as principal in a contract of carriage compel him to endorse the document. xxx (Art. 1515, Civil Code)
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 C. Effects of Negotiation
trip. - has the effect of manual delivery so as to constitute the transferee the owner
of the goods
Place of Destination- within the meaning of the Warsaw Convention, is - results in the transfer of ownership because transfer of document likewise
determined by the terms of the contract of carriage, or specifically the ticket transfers control over the goods
between the passenger and the carrier. It is the destination and not an agreed - refer to Art. 1513
stopping place that controls for the purpose of ascertaining jurisdiction under
the Convention. (Case: Santos III vs. Northwest Orient Airlines and CA) Chapter 5
Actions and Damages in Case of Breach
ACTION FOR DAMAGES
1. Condition precedent  Cause of action of a passenger and shipper:
A written complaint must be made within: a) against common carrier – based on culpa contractual or culpa aquiliana
- 3 days from receipt of baggage b) on the part of the driver – based on either culpa delictual or culpa aquiliana
 A: In such cases (misdelivery), there can be no question of claim for damages
Note: The source of obligation based on culpa contractual is separate and suffered by the goods while in transport, since the claim for damages arises
distinct from quasi-delict. exclusively out of the failure to make delivery.

Article 1903 (last paragraph) – 2 things are apparent: Case: Monica Roldan vs. Lim Ponzo and Co.
1. That when an injury is caused by the negligence of a servant or - Article 366 of the Commercial Code is limited to cases of claims for
employee there instantly arises a presumption of law that there was damage to goods actually turned over by the carrier and received by
negligence on the part of the master or the employer either in the the consignee.
selection of the servant or employee, or in supervision over him
after the selection, or both.  But the period prescribed in Art. 366 may be subject to modification by
2. That presumption is juris tantum and not juris et de jure (of law and agreement of the parties.
of right), and consequently may be rebutted  The validity of a contractual limitation of time for filing the suit itself
against a carrier shorter than the statutory period thereof has generally
Note however: that Article 1903 of the Civil Code is not applicable to acts of been upheld as such stipulation merely affects the shipper’s remedy
negligence which constitute the breach of contract. It is applicable only to culpa and does not affect the liability of the carrier.
contractual.
 The fundamental distinction between obligation of extra-contractual and b) Extinctive Prescription
those which arise from contract, rests upon the fact that in cases of non- - six (6) years if there is no written contract (bill of lading)
contractual obligation it is the wrongful or negligent act or omission itself - ten (10) years if there is written contract
which creates the vinculum juris, whereas in contractual relations the
vinculum (bond) exists independently of the breach of the voluntary duty  This rule likewise applies to carriage of passengers for domestic
assumed by the parties when entering into the contractual relation. transportation.

CONCURRENT CAUSES OF ACTION B. International Carriage of Goods by Sea

- There is one action but several causes of action  A claim must be filed with the carrier within the following period:
- The same act that breaches the contract may also be tort 1. if the damage is apparent, the claim should be filed immediately
upon discharge of the goods; or
Note: The cause of action of a passenger or shipper against the common carrier 2. within 3 days from delivery, if damage is not apparent.
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  Filing of claim is not condition precedent. Thus, regardless of whether
carrier is not liable based on contract because there is NO PRIVITY of contract the notice of loss or damage has been given, the shipper can still bring
between him and the passenger or shipper. 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
If the negligence of third persons concurs with the breach, the liability of the delivered
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 a) Prescription
be imposed upon him based on delict. In the latter case, the employer is  Action for damages must be filed within a period of one (1) year from
subsidiarily liable. discharge of the goods.
 The period is not suspended by an extra-judicial demand. (Why?
Remember: It does not make any difference that the liability of one springs Transportation of goods by sea should be decided in as short a time as
from the contract while that of the other arises from quasi-delict. If the owner possible)
and driver of the other vehicle are not impleaded, the carrier may implead them o Case: Dole Philippines Inc. vs. Maritime Company of the
by filing a third party complaint. Philippines - the prescriptive period is not tolled or
interrupted by a written extra-judicial demand. Article
 Solidary liability 1155 is NOT applicable.
- In case the negligence of the carrier’s driver and a third person  The period does not apply to conversion or misdelivery.
concurs, the liability of the parties – carrier and his driver, third  The one (1) year period refers to loss of goods and not to misdelivery.
person – is joint and several.
- Damages arising from delay or late delivery are not the damage or
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD loss contemplated under the COGSA. The goods are not actually lost
or damaged. The applicable period is ten (10) years.
A. Overland Transportation of Goods and Coastwise Shipping - Case: Domingo Ang vs. American Steamship Agencies
a) When to file a claim with carrier  What is to be resolved – in order to determine the
- Art. 366 constitutes a condition precedent to the accrual of a applicability of the prescriptive period of one year – is
right of action against a carrier for damage caused to the whether or not there was loss of the goods subject
merchandise. matter of the complaint.
 Loss contemplates merely a situation where no delivery
 Under Art. 366 of the Code of Commerce, an action for damages is at all was made by the shipper of the goods because the
barred if the goods arrived in damaged condition and no claim is filed same had perished, gone out of commerce, or
by the shipper within the following period: disappeared in such a way that their existence is
1. Immediately if damage is apparent; unknown or they cannot be recovered. (Note: It is not
2. within twenty four (24) hours from delivery if damage is not loss due to misdelivery or delivery to the wrong person.)
apparent.
 This rule applies in collision cases. The one (1) year period starts not
- The period does not begin to run until the consignee has received from the date of the collision but when the goods should have been
possession of the merchandise that he may exercise over it the delivered, had the cargoes been saved.
ordinary control pertinent to ownership.
- This provision applies even to transportation by sea within the Phils. Case: Maritime Agencies and Services Inc. vs. CA
or coastwise shipping. - When there is two destination of delivery, the one year period
- Does NOT apply to misdelivery of goods. should commence when the last item was delivered to the
consignee.
Q: Why does it not apply to misdelivery of goods?
 Insurance  If deceased is obliged to give support, recipient may
 The insurer who is exercising its right of subrogation is also bound by demand support from the person causing the death for a
the one (1) year prescriptive period. period not exceeding five years
 However, it does not apply to the claim against the insurer for the  Spouse, legitimate and illegitimate descendant and
insurance proceeds. The claim against the insurer is based on contract descendants may demand moral damages for mental
that expires in ten (10) years. anguish by reason of the death of the deceased

II. Recoverable Damages

 Damages – is the pecuniary compensation, recompense or 1) Loss of earning capacity
satisfaction for an injury sustained, or as otherwise expressed, the
pecuniary consequences which the law imposes for the breach of Net Earning Capacity = Life Expectancy x [Gross Annual Income less Necessary
some duty or violation of some rights. Living Expenses]

A. Extent of Recovery (Contractual Breach: Art. 220, NCC)  Life expectancy – (2/3 x 80 – age at death)
 Carrier in good faith – is liable only to pay for the damages that are  Net earnings – based on the gross income of the victim minus the
the natural and probable consequences of the breach of the necessary incidental living expenses which the victim would have
obligation and which the parties have foreseen or could have incurred if he were alive.
reasonably foreseen at the time the obligation was constituted.  Amount of living expenses must be established. In the absence of proof,
 Carrier in bad faith or guilty of gross negligence – liable for all it is fixed at fifty (50%) of the gross income.
damages, whether the same can be foreseen or not. Those which may  Rules on loss of earning apply when the breach of the carrier resulted in
be reasonably attributed to the non-performance of the obligation. the plaintiff’s permanent incapacity.

Note: The carrier who may be compelled to pay has the right of recourse 2) Attorney’s fees
against the employee who committed the negligent, willful or fraudulent act. - refer to Art. 2208 of the Civil Code
- attorney’s fees may be awarded in an action for breach of contract
B. Kinds of Damages of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.
- If awarded exemplary, one is entitled to attorney’s fees
Article 2216 provides that no proof of pecuniary loss is necessary in order that - 2 kinds: ordinary (compensation to the lawyer); extraordinary
moral, nominal, temperate, liquidated or exemplary damages may be (indemnity as a form of damages suffered due to the breach of
adjudicated. The assessment of such damages, except liquidated ones, is left to contract)
the discretion of the court, according to the circumstances of each case. - You can be awarded if you show that you were forced to litigate
However, proof of pecuniary loss is necessary if actual or compensatory and when you are entitled to exemplary damage.
damages are being claimed. - But this award is subject to the discretion of the court (you cannot
dictate – usually 10%-15%)
a) Actual or Compensatory Damages
- only for the pecuniary loss suffered by him as he has duly proved 3) Interests
- not only the value of the loss suffered, but also that of the profits  12% per annum – if it constitutes a loan or forbearance of money
which the obligee failed to obtain  6% per annum – if it does not constitute loan or forbearance of
money
- 2 Kinds:  12% - for final judgment
1. the loss of what a person already possesses (daňo emergente);
2. the failure to receive as a benefit that would have pertained to him Note: No interest, however, shall be adjudged on unliquidated claims for
(lucro cesante). damages except when or until the demand can be established with reasonably
- It should be proven: cannot be decided based on the consideration certainty, the interest shall begin to run form the time the claim is made
of the judge; not to be based on the perception, observation and judicially or extrajudicially.
consideration of the judge
- With respect to restorative medical procedure: to be entitled to b) Moral Damages
actual damage, you need to have an EXPERT TESTIMONY. Without - Includes physical suffering, mental anguish, fright, serious anxiety,
such, you cannot recover. besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injury.
 Damages may be recovered: Art. 2205 (Civil Code) - Though incapable of pecuniary computation, moral damages may be
1) For loss or impairment of earning capacity in cases of temporary or recovered if they were the proximate result of the defendant’s wrongful
permanent personal injury; act or omission.
2) For injury to the plaintiff’s business standing or commercial credit. - Moral damages are not awarded to punish the defendant but to
compensate the victim
 Damages cannot be presumed. The burden of proof rests on the - May be recovered when there is death or there is malice or bad faith. (in
plaintiff who is claiming actual damages against the carrier. transportation of passengers)
- Refer to Art. 2219 and 2220 (enumerates cases when moral damages may
 In case of goods – the plaintiff is entitled to their value at the time of be awarded)
destruction. The award is the sum of money which plaintiff would have - Generally, no moral damages may be awarded where the breach of
to pay in the market for identical or essentially similar goods contract is not malicious.
 For personal injury and even death – the claimant is entitled to all - Moral damages may be awarded if the contractual negligence is
medical expenses as well as other reasonable expenses that he incurred considered gross negligence.
to treat his or her relative’s injuries. - Subject to three conditions in transportation law:
 In case of death – the plaintiff is entitled to the amount that he spent o Death
during the wake and funeral of the deceased. But, expenses after the o Malice or bad faith (must be done in the performance of
burial are not compensable. the contract of carriage)
 Read Art. 2206 (Civil Code): o Physical Injuries
 death caused by a crime or quasi-delict shall be at least - Requisites:
P3,000; [The amount of fixed damages is now P50,000.00] o There must be an injury, whether physical, mental or
 the defendant shall be liable for the loss of the earning psychological, clearly sustained by the claimant
capacity of the deceased;
 o There must be a culpable act or omission factually
established  The award of exemplary damages in breach of contract of carriage is
o The wrongful act or omission of the defendant is the subject to the provisions under Art. 2232-2235 of the Civil Code.
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. Case: Air France vs. Rafael Carrascoso and CA
- The inference of bad faith is there; it may be drawn from the facts
- Factors to consider that could affect the amount to be recovered: and circumstances set forth therein. The contract was averred to
o The extent of humiliation may also determine the amount establish the relation between the parties.
of moral damages that can be awarded - Deficiency in the complaint in stating that there was bad faith, if any,
o The extent of pain and suffering likewise determines the was cured by the evidence.
award
o Official, political, social and financial standing of the Case: Philippine Airlines Inc. vs. CA
offended party and the business and financial position of - Moral damages are recoverable in a breach of contract of carriage
the offender affect the amount of damages where the air carrier thought its agents acted fraudulently or in bad
o The age of the claimant. faith.
- The contract of air carriage generates a relation attended with a
c) Nominal Damages public duty. Neglect or malfeasance of the carrier’s employees
- Refer to Art. 2221-2223 (Civil Code) naturally could give ground for an action for damages.
- 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 MARITIME LAW
loss suffered by him.
- The assessment of nominal damages is left to the discretion of the court A. CONCEPTS (Chapter 6)
according to the circumstances of the case.
- The award of nominal damages is also justified in the absence of Maritime Law – is the system of laws which particularly relates to the affairs
competent proof of the specific amounts of actual damages suffered. and business of the sea, to ships, their crews and navigation and to marine
- Cannot co-exist with actual damages. conveyance of persons and property
- There is no loss in nominal damages, unlike in actual and temperate
damages, loss is present which is proven and not proven but rather Governing Laws:
ascertained by the court, respectively. 1. New Civil Code – primary law on maritime commerce
2. Book III Code of Commerce – applied suppletorily
Case: Japan Airlines vs. CA 3. Special Laws
- The award of moral damages was justified because JAL failed to a. Salvage Law (Act No. 2616)
make necessary arrangement to transport the plaintiffs on the first b. Carriage of Goods by Sea Act (CA No. 65)
available connecting flight to Manila. c. Ship Mortgage Decree of 1978 (PD 1521)
- Only Nominal damages were awarded in the absence of proof of
actual damages REAL AND HYPOTHECARY NATURE OF MARITIME LAW

d) Temperate or Moderate Damages Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara
- More than nominal but less than compensatory damages.  That which distinguishes the maritime from the civil law and even
- Art. 2224 provides: from the mercantile law in general is the real and hypothecary
 may be recovered when the court finds that some pecuniary loss has nature of the former
been suffered but its amount cannot, from the nature of the case, be
provided with certainty.  Evidence of this “real “ nature of maritime law:
- cannot co-exist with actual damages o The limitation of the liability of the agents to the actual
- Definite proof of pecuniary loss cannot be offered, although the court is value of the vessel and the freight money
convinced that there has been such loss. o The right to retain the cargo and the embargo and
detention of the vessel even cases where the ordinary
e) Liquidated Damages civil law would not allow more than a personal action
- Those agreed by the parties to a contract, to be paid in case of against the debtor or person liable
breach thereof.
- Ordinarily, the court cannot change the amount of liquidated  This repeals the civil law to such extent that, in certain cases where
damages agreed upon by the parties. However, Art. 2227 of the Civil the mortgaged property is lost no personal action lies against the
Code provides that liquidated damages, whether intended as an owner or agent of the vessel
indemnity or a penalty, shall be equitably reduced if they were
iniquitous or unconscionable.  Two reasons why it is impossible to do away with these privileges:
o The risk to which the thing is exposed
f) Exemplary or Corrective Damages o The real nature of maritime law, exclusively real,
- Requisites for the award of exemplary damages: according to which the liability of the parties is limited to
1. They may be imposed by way of example in addition to a thing to which is at mercy of the waves
compensatory damages, and only after the claimant’s right to them
has been established. Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
2. They cannot be recovered as a matter of right, their determination Corporation, Ltd.
depending upon the amount of compensatory damages that may be
awarded to the claimant.  The real and hypothecary nature of maritime law simply means
3. The act must be accompanied by bad faith or done in wanton, that the liability of the carrier in connection with losses related to
fraudulent, oppressive or malevolent manner. maritime contracts is confined to the vessel, which is hypothecated
for such obligations or which stands as the guaranty for their
Note: If gross negligence warrants the award of exemplary damages, with more settlement
reason is its imposition justified when the act performed is deliberate, malicious  Purpose: It was designed to offset such adverse conditions and to
and tainted with bad faith. The rationale behind exemplary or corrective encourage people and entities to venture into maritime commerce
damage is to provide an example or correction from public good. despite the risks and prohibitive cost of shipbuilding
  Thus, the liability of the vessel owner and agent arising from the ---- liability is limited to value of the vessel
operation of such vessel were confined to the (1) vessel itself, (2) its  Limited liability rule applies if the captain or the crew caused the
equipment, (3) freight, (4) and insurance if any, which limitation damage or injury as when unseaworthiness of the vessel was caused
served to induce capitalists into effectively wagering their resources by the negligence of the captain or crew during the voyage
against the consideration of the large profits attainable in trade  However, if the failure to maintain the seaworthiness of the vessel
can be ascribed to the shipowner alone or the shipowner
Real – similar to transactions over real property where to effect against third concurrently with the captain, then the limited liability principle
persons, registration is necessary cannot be invoked --- LIABILITY FOR THE DAMAGES IS TO THE FULL
EXTENT (ex. Overloading, unseaworthiness even at the time of
Hypothecary – the liability of the owner of the value of the vessel is limited to departure)
the vessel itself
2. Where the vessel is insured (INSURANCE)
STATUTORY PROVISIONS
 Limited liability rule does not apply to insurance claims
Article 837, 587, 590 and 643 – provides for limited liability of shipowner. Case: Vasquez vs. CA
(read full provision)
- The total loss of the vessel did not extinguish the liability of the
Art. 837: civil liability incurred by the ship owner: liability limited to value of the carrier’s insrured
vessel + appurtenances + freightage earned during voyage - Despite the loss of the vessel, therefore, its insurance answers
for the damages that a shipowner or agent, may be held liable
Art. 643: vessel and cargo lost by reason of capture or wreck: all rights shall be for by reason of the death of its passengers.
extinguished, both as regards the crew to demand any wages whatsoever, and
as regards the ship agent to recover the advances made 3. In the workmen’s compensation claims (WORKER’S
If a portion of the vessel or of the cargo, or both, should be saved, COMPENSATION)
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  The provisions of the Code of Commerce have no room in the
amount of the freightage of the cargo saved; but sailors who are engaged on application of the Workmen’s Compensation Act which seeks to
shares shall not have any right whatsoever on the salvage of the hull, but only improve, and aims at the amelioration of, the condition of laborers
the portion of the freightage saved. If they should have worded to recover the and employees
remainder of the shipwrecked vessel they shall be given from the amount of the  If an accident is compensable under the Workmen’s Compensation
salvage an award in proportion of the efforts made and to the risks Act, it must be compensated even when the workman’s right is not
encountered in order to accomplish the salvage recognized by or is in conflict with other provisions of the Civil Code
or of the Code of Commerce
Art. 587: ship agent may exempt himself of the civil liabilities for the  Liability under the Workmen’s compensation Act, even if the vessel
indemnities in favor of third persons by abandoning vessel with all equipments was lost, is still enforceable against the employer or shipowner.
and freight it earned during voyage
4. Expenses for repairs and provisioning of the ship prior to the
Art. 590: co-owners civilly liable in proportion to their interest and may exempt departure thereof
liability by abandonment of the part of the vessel belonging to him
5. The vessel is not abandoned (ABANDONMENT)
Limited liability rule – means that the liability of a shipowner for damages in  Abandonment of the vessel, its appurtenances and the freightage is
case of loss is limited to the value of his vessel. an indispensable requirement before the shipowner or ship agent
 No vessel, no liability. can enjoy the benefits of the limited liability rule. If the carrier does
 The civil liability for collision is merely co-existent with the interest not want to abandon the vessel, he is still liable even beyond the
in the vessel; if there was total loss, liability is also extinguished. value of the vessel
 The only instance where abandonment is dispensed with is when the
GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof vessel was entirely lost. In such case, the obligation is extinguished.
still exists, he can escape liability by abandoning the vessel, its appurtenances  Only shipowner and ship agent can make an abandonment
and its freight.
PROCEDURE FOR ENFORCEMENT
Case: Monarch Insurance Co., Inc. vs. Court of Appeals
 The total destruction of the vessel extinguishes maritime liens Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
because there are no longer any res to which it can attach. This Corporation, Ltd.
doctrine is based on the real and hypothecary nature of maritime - Rights of the parties to claim against an agent or owner of vessel
law. may be compared to those of creditors against an insolvent
corporation whose assets are not enough to satisfy the totality of
Note: Since the Civil Code contains no provision regulating liability of claims as against it.
shipowners or agents in the event of total loss or destruction of the vessel, - Creditors must limit their recovery to what is left in the name of the
Article 587 of the Code of Commerce governs. corporation
- In the sinking of a vessel, the claimants or creditors are limited in
Article 837, 587 and 590 of Code of Commerce cover only: their recovery to the remaining value of accessible assets. In the case
1. Liability to third persons of lost vessel, these assets are the insurance proceeds and pending
2. Acts of the captain freightage for the particular voyage
3. Collisions
PROTESTS
EXCEPTIONS TO THE LIMITED LIABILITY RULE - is the written statement by the master of a vessel or any authorized
1. Where the injury or death to a passenger is due either to the fault of officer, attested by proper officer or a notary, to the effect that
the shipowner, or to the concurring negligence of the shipowner and damages has been suffered by the ship
the captain (NEGLIGENCE)

GR: Shipowner is liable for the negligence of the captain in collision Required under the following cases:
cases
 1. When the vessel makes an arrival under stress Q: when does insurance argument come in?
2. Where the vessel is shipwrecked A: only when the shipowner will bring the insurance company to the case filed
3. Where the vessel has gone through a hurricane or the captain by the plaintiff—by way of third party complaint. Once insurance company is
believe that the cargo has suffered damages or averages impleaded then this can be used: that the owner cannot avail of limited liability.
4. Maritime collisions
But no shipowner will ever implead the insurance. Because they will be the one
Q: when is it not required? who will claim the insurance without telling the plaintiffs. In the case, there is
A: no proof that the vessel is insured. Even if we know outside court, it is insured
1. when it does not fall under the four cases mentioned above because in the court, there is no proof that the vessel is insured. Court will not
2. when what is not involve is not a vessel identify evidence not properly identified and recoded in court.

ADMIRALTY JURISDICTION (RTC) Q: is it really an exception in its strict sense?

- Section 19 (3) of BP 129 as amended by RA 7691 A: Not really (CAPANAS). What is the implication if you properly invoke the
(3) In all actions in admiralty and maritime jurisdiction LLRule – the plaintiff cannot avail beyond the value of the vessel.
where the demand or claim exceeds 300, 000 or in Metro If not apply – plaintiff will recover more than the value of vessel subject to rules
manila, where such demand or claim exceeds 400,000. on claiming of damages.
- if less  MTC
But question, if vessel if covered with insurance, does this mean that plaintiff
3 concepts: (they are the same) can recover to the amount applied? No, they can only recover until the
coverage of the insurance proceeds.
1. real and hypothecary --- the supreme court did not explain the literal
meaning of it. 3. Negligence
- real: refers to the risk in maritime that’s why there are privileges for the - common carrier is presumed negligent if common carrier. However, this does
shipowner. Risks are certain to happen not apply when there is an invocation on limited liability. (in all cases except
- hypothecary: remember guaranty and collateral which is the vessel. For the MONARCH vs. CA) --- the rest of the case, the court has found negligence based
particular voyage, the guaranty is the vessel wherein if the vessel is lost, the on the facts presented. You cannot invoke presumption of negligence so that
shipowner no longer has the liability limited liability rule will not apply.

2. limited liabililty rule --- no literal explanation Monarch _-- SC: since there is a presumption of negligence then LLR will not
- limited: it means that the liability is limited to the value of the vessel apply. But SC also said that if LLR is invoked, the initial burden to invoke
-liability: assumption that the shipowner is liable for the losses. There are no negligence shifts to the shipowner. They should prove that there is no privity or
valid defenses that shipowner can invoke to escape liability. Same concept with knowledge on the negligence of the ship captain.
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 Q: what is the relationship of Civil Code and LLR?
vessel 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
The question here: is this a right to limit the liability? liability rule thus Code of Commerce will apply. (but in monarch, this was not
A: admittedly it is a right that only shipowner can exercise applied--- all the negligence was related to the absence of exercising
extraordinary diligence)
Q; how to exercise?
A: by way of pleading. But do not follow the way it was filed in yangco. Here it Note: that in the subsequent cases, Consolidated of Aboitiz case: there were
was after judgment that the shipowner sought to abandon the ship to abandon findings of facts of the negligence of Aboitiz. The point is when it comes to LLR,
liability the Code of Commerce apply. You cannot invoke presumption of negligence. In
But right now, it is a matter of procedure. To limit liability by abandoning the order to refute, petitioner should prove negligence.
vessel; IF it is a matter of procedure, you check the rules of civil procedure REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not presumption.

Q: so when does shipowner inform the court the right to limit liability? Loadstar case
A: in a pleading and normally in an answer. IT will be raised as a defense. If - the shipowner is aware of the typhoon
shipownver cannot allege, then that defense is deemed waiver. Therefore you - insufficient manning – negligent
cannot seek abandonment after judgment was been rendered. - 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
CASES: facts are established in court proceedings and not on presumption.

Yangco vs. Lacerna 3. no vessel, no liability

- even captain was aware of the typhoon and the vessel capsized, SC upheld
limited 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.
Chua Hek Kong
- there being no exceptions, the court upheld limited liability MARITIME PROTEST (4 INSTANCES) – REQUIRED (LOOK AT CODE OF
COMMERCE and above notes)
The more critical issue is on the EXCEPTIONS in the LLRule:
1. workmen’s compensation (Abueg case: the repairs constitue maritime lient) INSTANCES WHEN IT DOES NOT APPLY:
2. insurance coverage--- if the vessel is lost in the course of voyage and it is 1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN NOT
insured, is it automatic that the limited liability rule does not apply? MARITIME PROTEST
A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned very little 2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor boat is
about insurance: if the vessel is insured, the insurance proceeds shall answer not a vessel under maritime law, it is only engaged in bay traffic. A vessel in
the credit) maritime law, should be engaged in transporting goods, persons, or both from
one port to another)
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 (But to be sure: you file maritime and allege such bahala dili kelangan coz
plaintiff because it has no privity of contract with the insurance company otherwise dismiss ang case)
Since a vessel is a personal property, it can be mortgaged… for the determination of the character and effect of the relations
Same concept with mortgage but different rule created between the owners of the merchandise laden on it and its
- PD 1521: owner

Q: what about process of extra judicial foreclosure of vessel?  When the mercantile code speaks of vessels, they refer solely and
A: chattel mortgage law should govern exclusively to mercantile ships, as they do not include warships, and
furthermore, they almost always refer to craft which are not accessory to
Q: what to remember under PD 1521? another as in the case of launches, lifeboats and etc.
A: Section 4
registration, non waiver  Further, they refer exclusively to those which are engaged in the
Section17: priority of claims… transportation of passengers and freight from one port to another or
from one place to another
Q: are there claims in maritime law over and above preferred mortgage?
A: yes. Look at section 17.  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
Case: Poliand Industrial and harbor police vessels, etc.
- facts shows that the proceeds debted from hardwood was for the modification
of the vessel (extended for vessels benefit), for crews wage  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
Characteristics of maritime lien: devoted to the navigation of rivers
1. maritime property
2. travels with the property--- it cannot be extinguished  The third book of the code of commerce, dealing with maritime
3. enforceable in an action in rem--- action directed to the property (crescent commerce, was evidently intended to define laws relative to merchant
case: ang gi kiha ang vessel) vessels and maritime shipping; and as appears from said code, the vessel
intended in that book are such run by masters having special training with
Under section 22: persons authorize to procure repairs (presumed): elaborate apparatus of crew and equipment indicated in the code.
1. managing agent
2. ship’s husband --- agent of the vessel  Only vessels engaged in what is ordinarily known as maritime commerce
are within the provision of law conferring limited liability on the owner in
If mortgagor does not pay: case of maritime disaster.
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  Other vessel of minor nature not engaged in maritime commerce, such as
to arrest the vessel. river boats and those carrying passengers from ship to shore, must be
2. extrajudicial governed, as to their liability to passenger, by the provision of the civil
- the problem with vessel, mortgagee is not in possession of the vessel. It is with code or other appropriate special provisions of law.
the mortgagor, you cannot sell the property not in your possession.
Case: Augusto Lopez vs. Juan Duruelo, et. al
In PD 1521—the order of arrest can be asked - The code of commerce are not applicable to small craft which are
Grounds to discharge only subject to administrative (customs) regulations in the matter of
1. irregularly issued (mortgagee na ilad. Wala pa diay due obligation port service and in the fishing industry
2. posting of a bond to discharge..the bond to be posted is double the value of - Only vessels engaged in what is ordinarily known as maritime
the claim. commerce are within the provisions of law conferring limited liability
on the owner in case of maritime disaster
Maritime lien on necessaries (5 requisites) – brief yourself cresent petroleum - It is therefore clear that a passenger on a boat like the Jison, in the
case (look at book for requisites) 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
B. VESSELS (Chapter 7) collision described in the complaint – article 835 of the Code of
Commerce does not apply
1. General Concepts CONSTRUCTION, EQUIPMENT AND MANNING

 A vessel or watercraft is defined under PD No. 447 as any barge, lighter, The Construction, equipment and manning of vessel are subject to the rules
bulk carrier, passenger ship freighter, tanker, container ship, fishing issued by the Maritime Industry Authority (MARINA) and consistent with Article
boats, or other artificial contrivance utilizing any source of motive power, 574 of the Code of Commerce
designed use or capable of being used as a means of transportation
operating either as a common carrier, including fishing vessels covered Article 574. Builders of vessels may employ the materials and follow, with
under PD No. 43, 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
Except: regulations of the public administration on navigation, customs, health, safety
1. Those owned and/or operated by the Armed Forces of the Philippines of vessels, and other similar matters.
and by the Foreign Government for its Military Purpose.
2. Bancas, sailboat and other waterbone contrivance of less than three PERSONAL PROPERTY
tons capacity and not motorized.
Vessels are considered personal property under the Civil Law. The Code of
Commerce likewise expressly acknowledges the special nature of a vessel as
Case: Yu Con vs. Ipil personal property.
- The word vessel serves to designate every kind of craft by whatever
particular or technical name it may not be known or which nautical Case: Philippine Refining Company vs. Jargue
advancements may give it in the future - Vessels are personal property although occasionally referred to as a
- The court held that a small vessel used for the transportation of peculiar kind of personal property
merchandise by sea and for the making of voyages from one port to - They are subject to mortgage agreeably to the provisions of the
another of these Islands, equipped and victualed for this purpose by Chattel Mortgage Law
its owner, is a vessel, within the purview of the Code of Commerce, - The only difference between a chattel mortgage of a vessel and a
 chattel mortgage of other personality is that it is not now necessary sale of the vessel to the registry of vessels of the port where said vessel is
for a chattel mortgage of a vessel to be noted in the registry of the inscribed and registered.
register of deeds, but it is essential that a record of documents In every case the alienation of the vessel must be made to appear with a
affecting the title to a vessel be entered in the record of the statement of whether the vendor receives its price in whole or in part, or
Collector of Customs at the port of entry 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.
Case: Rubiso and Calixto vs. Rivera
- Ships or vessels, whether moved by steam or by sail, partake, to a When a vessel, being on a voyage, shall be rendered useless for navigation, the
certain extent, of the nature and conditions of real property, on captain shall apply to the competent judge on court of the port of arrival,
account of their value and importance in the world of commerce should it be in the Philippines; and should it be in a foreign country, to the
- Transfer of vessels should be in writing and must be recorded in the consul of the Republic of the Philippines, should there be one, or, where there
appropriate registry 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.
2. OWNERSHIP
If the consignee or the insurer should reside at said port, or should have
ACQUISITION representatives there, they must be cited in order that they may take part in
the proceedings on behalf of whoever may be concerned.
 Vessel may be acquired or transferred by any means recognized by laws.
Thus, vessel may be sold, donated and may even be acquired through REGISTRATION
prescription.  Vessels are now registered through MARINA. It is a long standing rule that
 Under the present laws, vessels that are under the jurisdiction of MARINA the person who is the registered owner of the vessel is presumed to be
can be transferred only with notice to said administrative agency. the owner of the vessel.
 It is a settled rule that the sale or transfer of the vessel is not binding on
A. Prescription (Code of Commerce) the third person unless the same is registered.

Article 573. Merchant vessels constitute property which may be acquired and SHIP'S MANIFEST
transferred by any of the means recognized by law. The acquisition of a vessel  Vessels are required to carry manifest coast-wise trade.
must appear in a written instrument, which shall not produce any effect with  A manifest is a declaration of the entire cargo. The object of a manifest is
respect to third persons if not inscribed in the registry of vessels. 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
The ownership of a vessel shall likewise be acquired by possession in good faith, vessel.
continued for three years, with a just title duly recorded.  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
In the absence of any of these requisites, continuous possession for ten years declaration of a specific cargo rather than the entire cargo
shall be necessary in order to acquire ownership.  Sec 906 of the Tariff and Custom Code provides that “manifest shall be
required for cargo and passengers transported from one place to another
A captain may not acquire by prescription the vessel of which he is in command. only when one or both of such place is a port of entry.”

ARTICLE 575. Co-owners of vessels shall have the right of repurchase and MORTGAGE
redemption in sales made to strangers, but they may exercise the same only  Since the term personal property includes vessel, they are subject to
within the nine days following the inscription of the sale in the registry, and by mortgage agreeably to the provisions of the Chattel Mortgage Law.
depositing the price at the same time.  Mortgage and other encumbrances over vessels are governed by the
provisions of presidential decree 1521 (Ship Mortgage Decree of 1978)
B. Sale (Code of Commerce)
OTHER CODE OF COMMERCE PROVISIONS
Article 576. In the sale of a vessel it shall always be understood as included the  The provisions of the Code of Commerce reproduced hereunder are
rigging, masts, stores and engine of a streamer appurtenant thereto, which at deemed modified not only by the Civil Code but also by special laws
the time belongs to the vendor.

The arms, munitions of war, provisions and fuel shall not be considered as SAFETY REGULATIONS
included in the sale.  On February 23, 2000, the Maritime Industry Authority directed all
domestic shipowners and operators under Memorandum Circular No.
The vendor shall be under the obligation to deliver to the purchaser a certified 154 to strictly comply with existing Safety-Related Policies, Guidelines,
copy of the record sheet of the vessel in the registry up to the date of the sale. Rules and Regulations
 Rules include: (read book page 488-489)
Article 577. If the alienation of the vessel should be made while it is on a
 Monitoring of compliances shall be undertaken by the Authority and its
voyage, the freightage which it earns from the time it receives its last cargo
Maritime Regional Offices, together with the needed coordination with
shall pertain entirely to the purchaser, and the payment of the crew and other
the Philippine Coast Guard
persons who make up its complement for the same voyage shall be for his
The MARINA shall have the power to inspect vessels and all equipment on
account.
board to ensure compliance with safety standards
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
C. PERSONS WHO TAKE PART IN MARITIME COMMERCE
individuals who make up its complement shall be for his account, unless the
contrary is stipulated in either case.
In sum, the following are persons who take part in Maritime Commerce:
Article 578. If the vessel being on a voyage or in a foreign port, its owner or
 SHIPOWNERS and SHIP AGENTS;
owners should voluntarily alienate it, either to Filipinos or to foreigners
 CAPTAINS and MASTERS OF VESSELS;
domiciled in the capital or in a port of another country, the bill of sale shall be
 OFFICERS and CREW OF VESSELS
executed before the consul of the Republic of the Philippines at the port where
it terminates its voyage and said instrument shall produce no effect with
SHIPOWNER V. SHIP AGENT
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
SHIPOWNER – the person who is primarily liable for damages sustained in the
operation of vessel. 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
Code of Commerce – places the primary responsibility on the owner of the communications.
vessel.
(Uses the term naviero which has been construed to include shipowner, ship PILOTAGE: Who is a pilot?
agent and even the charterer who is considered as owner pro hac vice.)
Maritime Law: a person duly qualified, and licensed, to conduct a vessel into or
SHIP AGENT (Code of Commerce) – the person entrusted with provisioning of out of ports, or in certain waters.
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 Broad sense: includes both (1) those whose duty it is to guide vessels into or out
agent solidarily liable with the owner. The solidary liability applies both for of ports, or in particular waters; and (2) those entrusted with the navigation of
breach of contract and extra-contractual obligations such as tort. The ship vessels on the high seas.
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 General understanding: a person taken on board at a particular place for the
owner, the vessel and its equipment and freight. But his liability, however purpose of conducting a ship through a river, road or channel, or from a port.
is subject to the LIMITED LIABILITY RULE (Chapter 6 of the Aquino book).
COMPULSORY PILOTAGE. In compulsory pilotage, states possessing harbors
CAPTAINS V. MASTERS OF VESSELS enacted laws or promulgated rules requiring vessels approaching their ports to
take on board pilots licensed under local law. In the Philippines, compulsory
For purposes of Maritime Commerce: pilotage is being implemented in the Port of Manila, the latter being within the
The words “captain” and “master” have the same meaning; both being Manila Pilotage District.
chiefs or commanders of ships. Thus, the terms “captain” and “master”
are used synonymously in the Code of Commerce. 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)
MARINA regulations:
MASTER – the person having command of the ship. The same term is being used b. Shipowner and Pilot
both for domestic trade and international trade.
GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused by
BOAT CAPTAIN – a person authorized by the MARINA to act as officer and/or in his own negligence or default to the OWNERS of the vessel, and to THIRD
command of a boat/ship or has the qualification/license to act as such. PARTIES for damages sustained in a collision. Such negligence of the pilot
in the performance of duty constitutes a MARITIME TORT.
3 Distinct Roles a captain commonly performs:
(Inter-Orient Maritime case) In cases of COLLISION: the COLLIDING VESSEL is prima facie responsible,
1. He is a GENERAL AGENT OF THE SHIPOWNER; hence, the burden of proof is upon the party claiming benefit of the
2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel (most exemption from liability. Thus, it must be shown affirmatively that the
important role for this has something to do with the operation and pilot was at fault, and that there was no fault on the part of the officers or
preservation of the vessel during its voyage and the protection of the crew, which might have been conducive to the damage. The fact that the
passengers, if any, and crew and cargo); law compelled the master to take the pilot does not exonerate the vessel
3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he from liability. The injured party shall seek redress from the vessel. The
navigates. 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
Based on the first aforementioned role, the captain is regarded as the GENERAL against him.
AGENT of the shipowner and as such, he:
c. Pilot and his Association
a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the freight earned; The fact that the pilot is a member of an association does not make the
c. Agree upon rates and decide whether to take cargo; association jointly and severally liable. Article 2180 of the Civil Code does
d. Has legal authority to enter into contracts with respect to the vessel and not apply because there is NO EMPLOYER-EMPLOYEE Relationship.
the trading of the vessel, subject to applicable limitations established by
statute, contract or instructions and regulations of the shipowner. Well-established is the rule that pilot associations are immune to
All aforementioned functions verily commits to the captain the governance, vicarious liability for the tort of their members. They are not the
care, and management of the vessel. Clearly then, the captain is vested with employer of their members and exercise no control over them once they
both MANAGEMENT and FIDUCIARY functions. 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.
POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND THE MASTER: (See Pilots’ associations are also not liable for negligently assuring the
Arts. 610-612 of the Code of Commerce) competence of their members because as PROFESSIONAL ASSOCIATIONS,
they made no guarantee of the professional conduct of their members to
DISCRETION OF CAPTAIN AND MASTER the general public.
A ship’s captain must be accorded a REASONABLE MEASURE OF
DISCRETIONARY AUTHORITY to decide what the safety of the ship and of its CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino
crew and cargo specifically requires on a stipulated ocean voyage. book)

Presumption: A captain is knowledgeable as to the specific requirements of OFFICERS AND CREW OF VESSELS
seaworthiness and the particular risks and perils of the voyage he is to embark
upon. COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
-- all the persons on board from the captain to the cabin boy, necessary for the
Applicable Principle: The captain has control of ALL departments of service in management, maneuvers, and service, and therefore, it includes the CREW, the
the vessel, and reasonable discretion as to its navigation. SAILING MATES, ENGINEERS, STOKERS, and OTHER EMPLOYEES ON BOARD not
having specific designations; but it SHALL NOT INCLUDE the passengers or the
Basic Principle in Admiralty Law: In navigating the vessel, the master must be persons whom the vessel is transporting.
left free to exercise his own best judgment.
REGULATION OF MERCHANT MARINE PROFESSION prevails
The practice of marine profession is now governed by special laws and pertinent - Walter smith case: There was no relationship. Owner of port and
rules issued by the: owner of goods are different. What was applied by court was the law
- MARINA; on torts. No presumption of negligence. There should be proof of
- BOARD OF MARINE DECK OFFICERS; negligence. The owner of vessel proved that he exercised ordinary
- BOARD OF MARINE ENGINEER OFFICERS diligence (required in ports). What was presented was the
competence of shipcaptain. The shipowner proved ordinary diligence
MINIMUM SAFE MANNING in choosing the ship captain
It is not enough that the officers manning the merchant vessel have all the
qualifications imposed by the Philippine Merchant Marine Officers Act and Contracts entered into by shipcaptain or master
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 Inter orient case: one role is they are the general agent of the shipowener. But
Quantity) 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
SECURITY OF TENURE obligations contracted by the shipper while 1759 death or injury of passenger as
The Labor Code provisions apply to OFFICERS and CREW of merchant result of contract of carriage.
vessels in DOMESTIC Trade or COASTWISE Shipping. Hence, matters
concerning their dismissal or disciplinary action must be in accordance The case in point with the contracts entered into was the case Wing Kee. There
with provisions of the Labor Code. For officers and crew who are working were supplies delivered. Shipagent was said to be liable. SC said at the time you
in foreign vessels who are involved in overseas shipping, there must be were still an agent you were liable but at the time agency was terminated you
compliance with the applicable laws on overseas employment as well as are no longer liable.
regulations issued by the Philippine Overseas Employment Administration
(POEA). If both SO and SA are sued, being solidarily liable, the SA has right of recourse
over SO.
CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and Marine
Engineer, Crew, and Captain (See pages 552-560 of the Aquino book). Shipcaptain or master
- The difference is with regard to the tonnage of the vessel (higher:
Parties --- those provided above… plus seamen, other members of the captain; lower: master; major patron and minor patron)
complement including the stokers (incharge of boilers) and supercargo (agent of - The question on the shipcaptain or master is the exercise of
the shippers who has authority to sell goods while on voyage) discretion
- Inter orient case: captain tayong did not want to proceed with the
4 maritime contracts voyage from Singapore to Africa bec. Of lack of oxygen and
1. charter parties acetylene. But because of order of management he proceeded. He
2. Botomry was then ordered to repatriated and then another captain took his
3. Repondentia place. He filed for illegal dismissal. The issue was the discretion
4. Marine insurance (incorporated in the subject insurance) exercised by the captain. WON he has the discretion not to proceed
bec. Of lack of supply. SC said you should emphasize reasonable
ON PERSONS discretion--- it is the captain’s duty
- Inter Orient: triple roles of the captain --- general agent, commander
Shipowner and technical manager, representative of country
- he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can invoke the LLR? Shipcaptain and harbor pilot
No jurisprudence. Personal opinion of sir: distinguish on the type of - Harbor pilot: distinguish if voluntary or compulsory
charter party. If affreightment, shipowner retains possession, - Case cited by SC on proper relationship of captain and pilot. In far
command and navigation of the vessel. If bareboat it is vested upon eastern shipping case 521 3rd par --- ther are occasion when the
the charterer. master may and should interfere and even displace the pilot when
- Jurisprudence: except for registration, the charterer is the temporary he is obviously incapacitate and intoxicated…. (look at the book)
owner of the vessel. With this, the charterer can invoke LLR (this part - In this case, there is relevance on when the captain should interfere.
no juris) If it is voluntary (pilot engaged by shipowner) --- damages caused by
pilot, shipowner is liable. If compulsory, shipowner can escape
Note: there is not distinction of liability of shipowner and ship agent. They are liability
civilly liable - If compulsory distinguish whether there was circumstances that
would require the shipcaptain to interfere with the ship pilot. If
There is a situation in maritime law that shipower and agent they are held liable there are circumstances but captain did not interfere then
for the act or omission of a third person which is the ship captain or master. shipowner is liable. If there are circumstances and captain interfere
but still there is damage, the shipowner will not be liable.
ACTS of CAPTAIN - Cebu Port Authority --- covered by compulsory pilotage
Case: Yucon case and Sweetlines case
- In Yucon, money was entrusted to the captain and the money was Chiefmate or sailing mate (then there are engineers)
lost. SC concluded that shipowner was liable for the lost because the - 2008 case, citing the article the code of commerce specifying the
captain failed to put up measures while in custody of the money. It functions of chiefmate being second in command of the vessel…
may not technically to an act but may refer to admission but would Chiefmate is a managerial employee (as provided in labor code ---
fall under the term acts loss of trust and confidence
- In sweetlines, bound for catbalogan but the captain chose to allow -
the passengers to disembark in tacloban. This time, this is the act of Seaman
captain. The SC concluded that the damages sustained by passengers - On security of tenure: distinguish DOMESTIN (labor code) abroad
bound for catbalogan are to shouldered by the shiponwer (POEA).. there is a standard contract (poea prepared and drafted it
and every seaman shall comply with this --- this is to protect filipino
Indemnities in Favor of 3rd person: OTTA devt case sited in walter smith case seaman working abroad) that will be signed by every seaman
- In OTTA the owner of the pier was at the same time the owner of the stipulating the security of tenure, repatriation, benefits, etc.
goods. SC, because there was a relationship of owner of vessel and - Difference for abroad: bigger income but contractual (after contract
goods, then there is presumption of negligence new civil code go home).. DOMEstic, you can be a regular employee in accordance
 with the labor code
- JumpShip scenario: it is a valid ground to terminate a seaman Coastwise Lighterage v. CA
- WON private carrier would convert to a common carrier; contract of
Shipcaptain should conduct preliminary investigation for crimes conducted on affreightment
board - Ruling : reiterated Planters ruling ; but was not able to rebut
presumption of negligence ; did not exercise EO diligence ( hired
D. CHARTER PARTIES unlicensed patron)

Charter Parties Home Insurance v. American Steamship

- a contract whereby the entire ship, or some of the principal part, is let by - case mostly used by the common carrier as defense ; Home
the owner to a merchant or other person for a specified time or use for Insurance is subrogee (paid SMC of loss cargo shipped thru
the conveyance of goods, consideration of payment of freight American Steamship ; no reference as to what contract but there
- it is a contract, hence, parties are free to stipulate upon such terms and was a mention that it was in affreightment
conditions that would suit their purposes subject to the caveat that these - Ruling : Common Carrier undertaking to carry special cargo
should not be contrary to law or public policy (chartered to special person only ) become a private carrier and
stipulation exempting owner from liability for loss due to the
Parties negligence of its agents is valid;
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 Shipowner can appoint senior officers for the vessel even if bareboat contract.
from one port to another But technically it is an affreightment. Most conflicts will occur if these various
2. Shipowner (SO) principles will have to be mixed.

KINDS: The whereabouts of the vessel is important to know the time for loading and
1. bareboat or demise charterer – shipowner leases to the charterer the whole unloading…
vessel, transferring to the charterer the entire command, possession and
consequent control over the vessel’s navigation, including the master and the Policy – marina
crew, who becomes the charterer’s “servants” Implementing or enforcement --- Coastguard
- charterer becomes an owner “pro hac vice”
2 conditions implied in charter party
2. Contract of affreightment – charterer hires the vessel only, either for a 1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter party
determinate period of time or for a single or consecutive voyage, with the SO 2. --- look at book (ala kaapas)
providing for the provision of the ship, wages of the master and crew, and
expenses for maintenance of the vessel JURISDICTION OF ADMIRALTY CASES
a. time charter – vessel is leased to a charterer for a fixed period of - depends on the jurisdictional amount
time - important element of the contract = the subject matter of the
b. voyage charter – vessel is leased for a single or particular voyage contract (nature and character)

REQUISITES OF A VALID CHARTER PARTY International Harvester v Aragon

1. consent of the contracting parties -involves loss of cargo shipped from LA to Manila; cargo owner filed an action
2. an existing vessel which should be placed at the disposition of the against common carrier
shipper -SC said liability of petitioner was predicated upon the contract of carriage ;
3. the freight admiralty would involve all maritime contract in whatever form and wherever
4. compliance with requirements of art 652 of Code of commerce made
(Aticle 652 of the Code of Commerce provides that the charter party Macondry v Delgado Brothers
shall contain, among others, the name, surname, and domicile of the - Delgado was an operator of a pier service ; WON operator exercised
charterer, and if he states that he is acting by commission, that of the its duty in loading and unloading of cargos ; no contract of carriage ;
person for whose account he makes the contract.) obligation was only to load the to the ship ; no application of
admiralty
Caltex v. Sulpicio Lines
There was a voyage charter; collision between MT Vector (tanker) and Doña Paz FRIEGHT OR FREIGHTAGE
(owned by Sulpicio) ; breach of contract filed by the passengers’s heirs against - price of carriage
Sulpicio ; 3d party complaint against registered owner of the tanker including - shall accrue according to what is stipulated in the contract
Caltex ( that they were negligent and in bad faith by not seeing to it that the - should there be no stipulation or if it is ambiguous , rules shall be
tanker was seaworthy) a. freight shall begin to run from the day of loading on the vessel
b. in charters with fixed period, the freight shall begin to run
Issue: WON charterer shall be liable under Maritime Law? upon that very day
c. If freight is charged according o weight , payment shall be
Ruling: Liability cannot be attached to Caltex; the charter did not affect the made according to gross weight , including the weight of the
business of Sulpicio as a common carrier ; rights and responsibilities of containers
ownership still rested on the owner
LAST DAYS- period of time stipulated fro loading and unloading ( provided for in
Planters Product v CA charter party ) ; if no lay days provided for in the charter party, it is understood
- time charter; Planters purchased fertilizers from the US; voyage to that the charterer will unload and discharge cargoes within a reasonable time or
the Philippines ; upon arrival, shortage in the cargo was discovered ; with reasonable diligence
filed actions against carrier fro damages ( breach of Contract) ; RTC
ruled in favor of the Planters; Ca reversed & absolved carrier as it Demurrage – a sum of money due by express contract for detention of the
was converted from common carrier to private ; vessel in loading , beyond time allowed for that purpose in that charter party ;
- Ruling : It cannot become a private carrier ; bareboat charter can sum of which is usually fixed by the parties in the charter party ; liability for this
become a private carrier but in contract of affreightment remains as exists only when expressly stipulated
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)
Deadfreight – where the charterer failed to occupy the leased portion of the Art. 1753. The law of the country to which the goods are to be transported
vessel, he may thereby be liable by the shipowner for the deadfreight that shall govern the liability of the common carrier for their loss, destruction or
occurred deterioration.

STIPULATION IN CHARTER PARTIES 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
GR: parties are free to stipulate subject to art 1744 t01754 0f NCC employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be applicable.
Art. 1744. A stipulation between the common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or ART. 653. if the cargo should be received without the charter party having been
deterioration of the goods to a degree less than extraordinary diligence shall signed, the contract shall be understood as executed In accordance with what
be valid, provided it be: appears in the bill of lading, the sole evidence of title with regard to the cargo
(1) In writing, signed by the shipper or owner; for determining the rights and obligations of the ship agent, captain and
(2) Supported by a valuable consideration other than the service charterer
rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy. - 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
Art. 1745. Any of the following or similar stipulations shall be considered mutual consent = contract present , better than BOL
unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or E. LOANS ON BOTTOMRY AND RESPONDENTIA
shipper;
(2) That the common carrier will not be liable for any loss, LOAN ON BOTTOMRY – loan made by shipowner or ship agent guaranteed by
destruction, or deterioration of the goods; vessel itself and repayable upon arrival of vessel at destination; vessel/portion
(3) That the common carrier need not observe any diligence in the
custody of the goods; LOAN ON RESPONDENTIA – loan, taken on security of the cargo laden on a
(4) That the common carrier shall exercise a degree of diligence less vessel, and repayable upon safe arrival of cargo at destination; cargo/goods
than that of a good father of a family, or of a man of ordinary
prudence in the vigilance over the movables transported; COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS:
(5) That the common carrier shall not be responsible for the acts or 1. Exposure of security to marine peril;
omission of his or its employees; 2. Obligation of the debtor conditioned only upon safe arrival of the security
(6) That the common carrier's liability for acts committed by at the point of destination.
thieves, or of robbers who do not act with grave or irresistible
threat, violence or force, is dispensed with or diminished; Requisites of a Loan on Bottomry/Respondentia:
(7) That the common carrier is not responsible for the loss, 1. Shipowner borrows money for use, equipment or repair of vessel
destruction, or deterioration of goods on account of the defective 2. For a definite term and with extraordinary interest called premium
condition of the car, vehicle, ship, airplane or other equipment 3. Secured by pledged of vessel or portion thereof in the case on loan on
used in the contract of carriage. Bottomry; or pledge of goods in case of Respondentia
4. Loan repayment depends or conditioned on the safe arrival of goods for
Art. 1746. An agreement limiting the common carrier's liability may be respondentia and obligation to repay is extinguished if pledged goods
annulled by the shipper or owner if the common carrier refused to carry the are lost (Respondentia)
goods unless the former agreed to such stipulation. 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)
Art. 1747. If the common carrier, without just cause, delays the transportation FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
of the goods or changes the stipulated or usual route, the contract limiting the  May be executed by means of:
common carrier's liability cannot be availed of in case of the loss, destruction, 1. public instrument
or deterioration of the goods. 2. policy signed by the contracting parties and the broker taking part therein
3. private instrument (Art. 720)
Art. 1748. An agreement limiting the common carrier's liability for delay on
account of strikes or riots is valid. 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
Art. 1749. A stipulation that the common carrier's liability is limited to the or Bottomry for his own transactions.
value of the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding. EXCEPTIONS:
1. On the portion of the vessel he owns, provided no money has been
Art. 1750. A contract fixing the sum that may be recovered. by the owner or previously borrowed on the whole vessel, nor exists any other kind of lien or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is obligation chargeable against her.
reasonable and just under the circumstances, and has been fairly and freely 2. When he is permitted to do so, he must necessarily state what interest he
agreed upon. has in the vessel.
CONTENTS OF THE LOAN CONTRACT:
Art. 1751. The fact that the common carrier has no competitor along the line 1. kind, name and registry of the vessel;
or route, or a part thereof, to which the contract refers shall be taken into 2. name, surname and domicile of the captain;
consideration on the question of whether or not a stipulation limiting the 3. names, surnames and domiciles of the borrower and the lender;
common carrier's liability is reasonable, just and in consonance with public 4. amount of the loan and the premium stipulated;
policy. 5. time for repayment;
6. goods pledged to secure repayment;
Art. 1752. Even when there is an agreement limiting the liability of the 7. voyage during which the risk is run (Art.721)
common carrier in the vigilance over the goods, the common carrier is
disputably presumed to have been negligent in case of their loss, destruction WHO MAY CONTRACT:
or deterioration.
1. Bottomry – by the ship owner or ship agent; outside of the residence of
the owners, the captain.
2. Respondentia – only the owner of the cargo
DISTINCTIONS: BOTTOMRY
BOTTOMRY/ RESPONDENTIA ORDINARY LOAN - It may refer to the vessel
- The bottom or the hull or the kill of the vessel can be pledged in this
1. Not subject to Usury Law 1. Subject to Usury Law case
- The whole vessel can be a subject of a security or collateral
2. Liability of the borrower is 2. Not subject to any contingency
- PD. 1521: (is this different) --- loan is the principal, mortgage is the
contingent on the safe arrival of the
accessory.
vessel or cargo at destination
- The contract of bottomry is principal, the mortgage under pd 1521 is
3. The last lender is a preferred 3. The first lender is a preferred
merely a security
creditor creditor
- In pd 1521 under section 4 it is a requirement that the whole of the
vessel must be mortgaged (no jurisprudence on this matter whether
4. Must have a collateral 4. May or may not have collateral a part of the vessel can be mortgaged)
5. Collateral is the vessel or cargo 5. Maybe property, real or - In bottomry the whole or the part of the vessel can be the subject
subject to maritime risk personal - IF the part of the vessel can be pledged, is it necessary that there
6. Must be in writing 6. Need not be in writing but should be goods? No. no need for goods.
interest shall not be due unless
expressly stipulated in writing RESPONDENTIA
7. To be binding on third person must 7. Need not be registered - The vessel should have goods. The goods must be laden in the vessel
be recorded in the registry of vessels - Is it necessary that the boat is on voyage? The vessel must be in the
of port of registry of the vessel actual course of voyage because this is the objective of the law.
Because if the vessel is docked in the port the owner can simply
8. Loss of collateral extinguishes the 8. Does not extinguished if there is
obtain loans. And besides there is no risk when the vessel is docked
same a loss of the collateral (if any)
(but no jurisprudence)
Consequences of loss of effects of the loans
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the bar) --
- 5 differences
1. Effects of loans be lost due to accident of the sea during the time, and on the
1. with respect to form --- can you validly execute a bottomry or respondentia
occasion of the voyage which has been designated in the contract and proven
verbally? You cannot. Bec under the code of commerce no judicial action can
that the cargo was on board
arise when the contract is not reduced in writing. But this is not the case in
- lender losses the right to institute the action which would pertain to him
simple loan. But in simple loan you take note the statute of frauds… if not in
writing B and R, you can dismiss case due to failure to state cause of action.
Except: when the loss was
1. caused by inherent defect of the thing
Q: why hardly used at present?
2. through fault or malice of the borrower
A: because of sophistication. Captains can just call up any agent the shipowner
3. through barratry on the part of the captain
to deliver anything for the use of the vessel to deliver. … This contract was
4. caused by damages suffered by the vessel as a consequence of
recognized in medieval times.
being engaged in a contraband
5. loaded the goods on a vessel different from that designated in the
contract unless the change was caused by force majeure
F. AVERAGES AND COLLISIONS
2. The lenders on bottomry or respondentia shall suffer in proportion to their
ACCIDENTS IN MARITIME COMMERCE:
respective interest, the general average which may take place in the things
1. Averages
upon which the loans were made.
2. Arrival Under Stress
3. Collision
3. In case of shipwreck, the amount for payment of the loan shall be deduced to
4. Shipwreck
the proceeds of the effects which have been saved but only after deducting the
costs of the salvage.
* Averages – an extra-ordinary or accidental expense incurred during the
voyage in order to preserve the cargo, vessel or both; and all damages or
4. If the loan should be on the vessel or any of her parts, the freight earned
deterioration suffered by the vessel from departure to the port of destination,
during the voyage for which the loan was contracted shall also be liable for its
and to the cargo from the port of loading to the port consignment. (Art. 806)
payment, as far as it may reach.
CLASSES OF AVERAGES:
5. If the same vessel or cargo should be the object of the loan of Bottomry or
A. Particular or Simple Average
respondentia and maritime insurance, the value of what may be saved in case
B. Gross or General Average
of shipwreck shall be divided between the lender and the insurer, in proportion
to the legitimate interest of each one, taking in consideration, for this purpose
A. Particular or Simple Average
only, the principal with respect to the
Damage or expenses caused to the vessel or cargo that did not inure to
Maritime contracts include charter parties… and loans on bottomry and
common benefit, and borne by respective owners. (809)
respondentia are considered maritime contracts
 The owner of the goods which gave rise to the expense or suffered th e
Q: why do we have to study this topic? Are these relevant?
damage shall bear this average. (Art. 810)
A: they are hardly used at present. However, we have to study this just in case
res perit domino applies
this will be asked in the bar. Especially in the unique terms used in this topic..
if the vessel or goods are hypothecated by loan on bottomry and
respondentia, the lender shall bear the loss in proportion to his interest
General provisions in contracts will govern
Examples: see article 809 of the code of commerce
Basic provision you should not forget:
1. there should be a marine risk
RULES ON AVERAGES:
2. the condition that the vessel or the goods has perished then the right of the
1. Averages is defined as damage deliberately caused or an expense
lender to collect everything as well as stipulated interest is extinguished
deliberately incurred due to a marine peril and which has resulted in
(not sure if there are other more.. basin ala ko kaapas)
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 Sacrifice must be Successful
the vessel or only the cargo is saved, it is particular average. - no general contribution can be demanded if the vessel and other cargo that
3. The person whose property has been saved must contribute to reimburse are sought to be saved were in fact not saved (art. 860)
the damage caused or expense incurred if the situation constitutes
general average. - owners of the goods saved shall not be liable for the indemnification of those
jettisoned, lost or damaged
B. Gross or General Average - hence when the sacrifice was not successful in saving the ship, there will be no
 Damage or expenses deliberately caused in order to save the vessel, its cargo general contribution
or both from real and known risk. (Art. 811)
 All the persons having an interest in the vessel and the cargo therein at the Compliance with Legal Steps
time of the occurrence of the average shall contribute to satisfy this average.
(Art. 812) - Procedure for recovery: (Art. 813-814)
1. There must be a resolution of the captain, adopted after a deliberation
REQUISITES: with the other officers of the vessel and after hearing all persons
1. common danger present interested in the cargoes. If the latter disagree, the decision of the captain
2. arising from accidents of sea, disposition of authority should prevail but they shall register their objections.
3. peril imminent and ascertained 2. The resolution must be entered in the logbook, stating the reasons and
4. part of vessel or cargo deliberately sacrificed motives for the dissent, and the irresistible and urgent causes if he acted
5. intended to save vessel or cargo in his own accord. It must be signed, in the first case, by all persons
6. proper legal steps and authority taken present in the hearing. In the second case, by the captain and all the
officers of the vessel.
Common danger 3. The minutes must also contain a detail of all the goods jettisoned and
- means both the ship and the cargo, after has been loaded, are subject to the those injuries caused to those on board.
same danger, whether during the voyage, or in the port of loading or unloading, 4. The captain shall deliver it to the maritime judicial authority of the first
that the danger arises from the accidents of the sea, disposition of authority, or port he may make, within 24 hours after his arrival, and to ratify it
faults of men, provided that circumstances producing the peril should be immediately under oath.
ascertained and imminent or may rationally be said to be certain and imminent
- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON:
- When the measure of precaution adopted solely and exclusively for the 1. those which are on the deck, preferring the heaviest one with the least
preservation of the vessel from the danger of seizure or capture and not for the utility and value;
common safety is not considered as common danger 2. those which are below the upper deck, beginning with the one with
greatest weight and smallest value. (Art. 815)
Deliberate Sacrifice
- voluntary sacrifice of a part for the benefit of the whole in order to justify the
average contribution Examples of General Average
Read Art 811 of the Code of Commerce
* 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 By Whom Borne
particular portion of those interests - shall be borne by those who benefited from the sacrifice; the shipowner and
the owner of the cargoes that were saved
- 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 Contribution may be imposed to;
prepared before the departure a. insurers ( Insurance Code of the Philippines)
- they are obliged to pay for the indemnification of the gross average provided
2 cases where there can also be general averages even if the sacrifice was not that the liability shall be limited to the proportion of contribution attaching to
made during the voyage: his policy value where this is less than the contributing value of the thing
a. where the sinking of the vessel is necessary to extinguish a fire in a insured
port, roadstead, creek or bay
b. where cargo is transferred to lighten the ship on account of a b. lenders of bottomry and respondentia (Code of Commerce)
storm to facilitate entry into a port -obliged to pay in proportion to their respective interest, the general average
which may take place in the goods which the loan is made
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 cargo’s Who is entitled to indemnity?
existence on board be proven by a bill of lading; and with regard to those Owner of the goods which were sacrificed is entitled to receive the general
belonging to the vessel, by means of an inventory prepared before departure. contribution
Except;
Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry 1. goods carried on desk unless the rule special law or
to a port or roadstead, part of the cargo should be transferred to barges or customs of the place allow the same
lighters and be lost, the owner of the said part is entitled to indemnity as if the 2. goods that are not recorded in the books or records of the
loss originated from a gross average, the amount being distributed between the vessel
vessel and cargo from which it came. 3. fuel of the vessel if there is more than sufficient fuel for
If on the contrary the merchandise transferred should be saved and the vessel the voyage
should be lost, no liability may be demanded of the salvage.
American Home Insurance v. CA
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, Art 848 states that claims shall not be admitted if they do not exceed 5% of the
creek, or bay, it should be decided to sink any vessel, this loss shall be interest which the claimant may have in the vessels or cargo if it is general
considered gross average, to which the vessels saved should contribute. 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.
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 It is clear that the damage of the cargo is particular average since the loss is less
be made good as general average 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 COMMON DANGER – both to vessel and cargo. If one invokes general average
express provision of law, plaintiff is barred from suing for recovery. 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
Law on averages does not apply if the CC is negligent. cannot ask for contribution from owners of the goods.

YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR CONTRIBUTION ON It is also possible that there are no goods involved. Only extraordinary expense
AVERAGES 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
 Under the rule, deck cargo is permitted in coastwise shipping but prohibited towed the vessel to the nearest destination. Goods were saved from the subject
in overseas shipping. vessel. The shipowner asked for contribution to the owner of the goods which
1. If deck cargo is located with the consent of the shipper on overseas were saved. SC said, shipowner did not comply legal steps 813-815 thus you
trade, it must always contribute to general average, but should the same cannot allege general averages.
be jettisoned, it would not be entitled to reimbursement because there
is violation of the Y-A Rules. If the averages are not general, it is particular. the shipowner will be solely
2. If deck cargo is loaded with the consent of the shipper on coastwise liable… in the case of Magsaysay, there was no deliberate sacrifice.
shipping, it must always contribute to general average and if jettisoned
would be entitled to reimbursement. SUCCESSFUL SAVING
- Both vessel and goods must be saved
- may also be used to solve controversies where no provision of the - If vessel not saved, no general averages. Even if goods were saved
code of commerce is in point because the said rules embody the - You have to start with resolution, placing of reso in the log book,
custom of maritime states accounting of goods thrown away starting those on deck and to
follow from those not on deck (read 83-815)
AVERAGES
- the same concept that was existing in medieval times can be applied at American Home insurance (take note this case--- bar)
present - Transportation of tv sets, the shipcapatain was uprised of the
typhoon. Still captain continued with the journey. Then na abot ang
Relevance of averages (take note these ex. Connected to expenses under 806) typhoon captain directed that the tv sets should be jettison. Saved
under 806 --- averages are: vessel. Reklamo owner. Is there general average? No. if the
o Extraordinary expenses – ex. If machine does not work, shipowner is negligent, the law on general averages does not apply.
you have to ask help of a tugboat… the expenses on the Note that examples of the two types of averages are not exclusive. There is a
use of tugboat is a question of averages. This is word “especially” thus there may be other example that may fall under this two
extraordinary because it is not foreseen. --- assuming the type of averages.
engine of the vessel was defective, can that be
considered an average? YES. (question now if it is YORK AND TURP RULES
particular or general) - THIS CAN be stipulated in a contract that this rule will apply in
o Damages or deterioration suffered – refer to the physical respect to averages
feature or attribute of the goods. - In the absence of stipulation in the contract in applying this rule,
- these two are different such rule is inapplicable

DISTINCTION OF PARTICULAR AND GENERAL AVERAGES Q: ordinary expenses are not averages bec. They are foreseeable, are there
instance that they can be considered to be extraordinary ave
Hernandez – averages are losses. If there is a loss incurred, the loss will be A; if the parties agree that the averages will cover ordinary expenses. The code
shouldered on where it falls. (ex. If you have goods transported from origin to of commerce does not prohibit the inclusion of other expenses under averages.
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 G. COLLISIONS
insurance. Insurance then files action against common carrier due to
negligence) --- if general average, there is special circumstance, the loss will not Collisions - impact of 2 vessels both of which are moving.
be shouldered on where it falls but wil be shouldered proportionately by Allision - impact between a moving vessel and a stationary one.
persons who have benefited the circumstance
 3 Zones of Time in the Collision of vessels:
4 reqs for general averages (see above notes) – MEMORIZE; MAGSAYSAY VS. 1. First zone – all time up to the moment when risk of collision begins;
AGAN 2. Second zone – time between moment when risk of collision begins and
1. common danger TO Both vessel and cargo moment it becomes a practical certainty;
2. deliberate sacrifice 3. Third zone – time when collision is certain and time of impact.
3. successful saving
4. compliance with the proper steps  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.
If no special circumstance, it is a particular or simple average --- the owner of Even if such sudden movement is wrong, no responsibility will fall on said
the vessel will be the one who will shoulder the loss. The negligence of captain, faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632).
the owner of the vessel will shoulder. But if there is special circumstance, the
loss will be shouldered proportionately by those who benefited  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
Standard oil case – the ship captain will not release goods to the shipper unless captain, sailing mate, or any other member of the complement of the
the shipper will contribute their share. The issue was the duty of the captain to vessel. The owner of the vessel at fault be liable for losses or damage.
liquidate – he did not file for the appropriate proceeding, you should result to (Art. 826)
legal liquidation. Captain here failed TO INITIATE proper proceeding thus 2. The collision may be due to the fault of both vessels. Each vessel shall
shipowner is liable for actions of captain suffer its own losses, but as regards the owner of cargoes both vessels
shall be jointly and severally liable. (Art. 827)
Q: is the duty of captain to initiate a condition precedent? 3. If it cannot be determined which vessel is at fault. Each vessel shall also
A: no. even if ship captain does not initiate, the shipowner can still file the suffer its own losses and both shall be solidarily liable for losses o
appropriate proceeding in court. 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) be liable for the same expenses and, in addition, they shall be
5. Two vessels may collide with each other without their fault by reason of a solidarily liable for damages caused to the cargoes by such arrival
third vessel. The third vessel will be liable for losses and damages. (Art. under stress
831) (Art. 821)
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 NOTE:
into shall suffer its own damage and expense. (Art. 832) - After cessation of the cause of the arrival under stress, captain should
continue voyage or else he shall be liable.
 Cases covered by collision and allision:
1. One vessel at fault – such vessel is liable for damage caused to innocent Unloading of cargoes to make repairs:
vessel as well as damages suffered by the owners of cargo of both vessels. - in order to make repairs to the vessel or because there is danger that
2. Both vessels at fault – each vessel must bear its own loss, but the shippers cargo may suffer damage  necessary to unload; captain must
of both vessels may go against the ship owners who will be solidarily request authorization from competent judge or court for removal,
liable. and carry it out w/ knowledge of the person interested in the cargo
3. Vessel at fault not known – same as rule as (2). (Doctrine of Inscrutable - in a foreign port  Philippine Consul
Fault) - in case of the vessel  expenses shall be for the account of the ship
4. Third vessel at fault – same rule as (1). owner or agent
5. Fortuitous event – no liability. Each bears its own loss. - in case of the cargo  chargeable against the owners of the
merchandise for whose benefit the act was performed
Prerequisite to recovery: - if both  expenses to be divided proportionately between the value
 Protest should be made within 24 hours before the competent authority at of the vessel and cargo
the point of collision or at the first port of arrival, if in the Philippines and to the (Art. 822)
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) Custody of cargo:
 intrusted to the captain (except in cases of force majeure)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT (Art. 823)
APPLICABLE.  if entire cargo or part thereof should appear to be damaged, or there
should be imminent danger of its being damaged
DOCTRINE OF “INSCRUTABLE FAULT”  captain may request judge of competent court / consul, the sale
 In case of collision where it cannot be determined which between the two of all or part of the cargo
vessels was at fault, both vessels bear their respective damage, but both should  person taking cognizance shall authorize it (after examination and
be solidarily liable for damage to the cargo of both vessels. declaration)
 captain shall justify the legality of his conduct, answering to the
NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall shipper for the price of the merchandise would have brought if they
be limited only to the value of the vessel with all its appurtenances and had arrived in good condition
freightage earned during the voyage. When the latter is not sufficient to cover (Art. 824)
all the liabilities, the indemnity due by reason of the death or injury of persons
shall have preference. (Arts. 837 and 838) Liability of captain:
 captain responsible for the damages caused by his delay
H. ARRIVAL UNDER STRESS  if cause of arrival under stress ceases  he should not continue the
voyage
* ARRIVAL UNDER STRESS – arrival of a vessel at a port of destination on  if cause of arrival should have been the fear of enemies 
account of lack of provision, well founded fear of seizure, privateers, pirates, or deliberation and resolution (in a meeting of officers of the vessel and
accidents of sea disabling navigation. (Art. 819) persons interested in the cargo) shall precede the departure
NOTE: Captain must make a protest (Art. 825)

Steps to be taken in the determination of the propriety of arrival under stress * Shipwreck – the demolition or shattering of a vessel caused by her driving
1. captain should determine during the voyage if there is a well founded fear ashore or on rocks and shoals in the midseas, or by the violence of winds or
of seizure, privateers of other valid grounds waves in tempests
2. captain shall then assemble the officers - loss of the vessel at sea as a consequence of its grounding, or running against
3. captain shall summon the persons interested in the cargo who may be an object in sea or on the coast
present and who may attend but without right to vote
4. the officers shall determine and agree if there is well founded reason  Loss or deteriorations of vessel or cargo caused by shipwreck or stranding 
after examining the circumstances; Captain shall have the deciding vote individually account of the owners; part which may be saved belonging to them,
5. agreement shall be drafter and the proper minutes shall be signed and same proportion. (Art. 840)
entered into the log book  If the wreck was due to malice, negligence or lack of skill of the captain, the
6. objections and protests shall likewise be entered in the minutes 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
- Absence of one of the steps, can still be considered arrival under stress. the expenses of the respective salvage. (Art. 842)
 If several vessels sail under convoy, and any of them should be wrecked, the
When not lawful: cargo saved will be distributed among the rest in proportion to the amount
1. lack of provisions due to negligence to carry according to usage and which each one is able to take. … If any captain should refuse, without sufficient
customs; cause, to receive what may correspond to him, the captain of the wrecked
2. risk of enemy not well known or manifest vessel to enter a marine protest against him. … If it is not possible to transfer to
3. defect of vessel due to improper repair; and the other vessels the entire cargo of the vessel wrecked, the goods of the
4. malice, negligence, want of foresight or lack of skill of captain. (Art. 820) highest value and smallest volume to be saved first. Designation to be made by
the captain with concurrence of his officers. (Art. 843)
Who bears expenses:  The captain taking on-board the goods saved from the wreck to continue his
 if arrival under stress is proper  shipowner or ship agent will only course to the port of destination and upon arrival he should deposit the goods
be liable for the expenses of the arrival for disposal to their owners. … In case the captain changes his course, and if he
 if arrival under stress is improper  shipowner and ship agent will 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 3. The value of the property employed by the salvors in rendering the
the vessel consent thereto. But he is not required to do so even if he has the service, and danger to which such property was exposed
consent during time of war or when the port is difficult and dangerous to make. 4. The risk incurred by the salvors in rescuing the property from the
… The owners of the cargo to defray all the expenses of this arrival and the impending peril
payment of the freightage. (Art. 844) 5. The value of the property salved
 If cannot be, proceed to judicial sale complying with the formalities and on 6. The degree of danger which the property was rescued
publicity. (Art. 845)
Rights and obligations of salvors and owners:
I. SALVAGE LAW (Act No. 2616)  Salvor is entitled to compensation for services rendered. He has,
under the Salvage Law, a lien upon the property salvaged.
* SALVAGE – services one person renders to the owner of a ship or goods, by his  On the other hand, the owner does not denounce his right to the
own labor, preserving the goods or the ship which the owner or those entrusted property. There is no presumption of an intention to abandon such
with the care of them have either abandoned in distress at sea, or are unable to property rights.
protect or secure.
Maritime Lien
Kinds of Salvage:  A salvor, in maritime law, has an interest in the property; called a lien, but it
 Voluntary – compensation is dependent on the success. never goes, in the absence of a contract expressly made, upon the idea of debt
 Under contract for a per diem or per horam wage – payable at all due from the owner to the salvor but upon the principle that the service creates
events. a property in the thing saved.
 Under contract for compensation – payable only in case of success.

Rule on salvage reward:

Claim for valid salvage: 1. The reward is fixed by the RTC judge in the absence of agreement or
- Provides for a reward for voluntary salvage where the latter is excessive (Sec. 9).
- Other persons who assist in saving the vessel or its cargo from 2. If sold (no claim being made within 3 months from publication), the
shipwreck shall be entitled to a similar award 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
Persons not entitled to salvage compensation: proceeds shall go to the salvors, who shall divide it equitably, and the
1. Crew of the vessel shipwrecked or which was in danger of shipwreck other half to the government (Secs. 11-12).
2. He who shall have commenced the salvage in spite of opposition of 3. If a vessel is the salvor, the reward shall be distributed as follows:
the captain or of his representatives a. 50% to the shipowner;
3. He who shall have failed to comply with the provisions of Section 3 b. 25% to the captain; and
(Section 3. Tthe salvor who saves or picks up a vessel or merchandise c. 25% to the officers and crew in proportion to their salaries
at sea, in the absence of the ship captain, ship owner or a
representative of either of them, they being unknown, shall convey SALVAGE LAW
and deliver the vessel or merchandise ASAP to the collector of
customs if the port has a collector and otherwise to the provincial SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR ITS CARGO SHALL
treasurer or municipal mayor.) 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
Requisites of compensation or salvage reward: PERSONS, THE LATTER SHALL BE ENTITLED TO A REWARD FOR THE SALVAGE.
1. Object must have been exposed to marine peril (fire, acts of pirate,
thieves) THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH, ASSIST IN
2. Salvage services rendered voluntarily and is not required as an SAVING A VESSEL OR ITS CARGO FROM SHIPWRECK, SHALL BE ENTITLED TO A
existing duty or a form of contract (See Sec. 8) LIKE REWARD.
* Pilots are not entitled to a reward – (Atty. Capanas)
3. Salvage services are successful in whole or in part SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON ACTING IN HIS STEAD,
4. Valid vessel which is shipwrecked beyond the control of the crew or IS PRESENT, NO ONE SHALL TAKE FROM THE SEA, OR FROM THE SHORES OR
shall have been abandoned (not necessary) COAST MERCHANDISE OR EFFECTS PROCEEDING FROM A SHIPWRECK OR
* Courts will not interfere in the agreement of the parties except but where PROCEED TO THE SALVAGE OF THE VESSEL, WITHOUT THE CONSENT OF SUCH
there is no agreement or it is excessive the reward is fixed by the RTC judge. CAPTAIN OR PERSON ACTING IN HIS STEAD.

* Derelict – a ship or cargo which is abandoned and deserted at sea by those SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR MERCHANDISE AT SEA, IN
who were in charge of it, without any hope of recovering it or without any THE ABSENCE OF THE CAPTAIN OF THE VESSEL, OWNER, OR A REPRESENTATIVE
intention of returning to it OF EITHER OF THEM, THEY BEING UNKNOWN, SHALL CONVEY AND DELIVER
- determined by ascertaining what was the intention and expectation of those SUCH VESSEL OR MERCHANDISE, AS SOON AS POSSIBLE, TO THE COLLECTOR OF
in charge of it when they quitted it CUSTOMS, IF THE PORT HAS A COLLECTOR, AND OTHERWISE TO THE
- boat or vessel found entirely deserted or abandoned on the sea without hope PROVINCIAL TREASURER OR MUNICIPAL MAYOR.
or intention of recovery or return by the master or the crew, whether resulting
from wreck, accident, necessity, or voluntary abandonment SEC. 4. AFTER THE SALVAGE IS ACCOMPLISHED, THE OWNER OR HIS
REPRESENTATIVE SHALL HAVE A RIGHT TO THE DELIVERY OF THE VESSEL OR
JETSAM, FLOTSAM, LIGAN: THINGS SAVED, PROVIDED THAT HE PAYS, OR GIVES A BOND TO SECURE, THE
 Jetsam – goods that were thrown off a ship which was in danger EXPENSES AND THE PROPER REWARD.
 Flotsam – goods that floated off the ship while ship was in danger or
when it sank THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE OF
 Ligan – goods left as sea on the wreck or tied to a buoy so that they AGREEMENT, SHALL BE DETERMINED BY THE COLLECTOR OF CUSTOMS OR BY
can be recovered later THE JUDGE OF THE COURT OF FIRST INSTANCE OF THE PROVINCE IN WHICH THE
THINGS SAVED MAY BE FOUND.
Basis of entitlement to salvage reward (Circumstances to consider):
1. The labor expended by the salvors in rendering the salvage service SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL TREASURER, OR MUNICIPAL
2. The promptitude, skill and energy displayed in rendering the service MAYOR, TO WHOM A SALVAGE IS REPORTED, SHALL ORDER:
and saving the property A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.
B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE BEEN EXPOSED TO THE
DANGER OF IMMEDIATE LOSS OR OF THOSE WHOSE CONSERVATION IS SAME DANGERS SHALL ALSO HAVE A RIGHT TO PARTICIPATION IN THE
EVIDENTLY PREJUDICIAL TO THE INTERESTS OF THE OWNER, WHEN NO REWARD.
OBJECTION IS MADE TO SUCH SALE.
C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED,
SALVAGE, IN ONE OF THE LOCAL NEWSPAPERS OR IN THE NEAREST NEWS- ENTIRELY OR PARTIALLY, BY ANOTHER VESSEL, THE REWARD FOR SALVAGE OR
PAPER PUBLISHED, OF ALL THE DETAILS OF THE DISASTER, WITH A FOR ASSISTANCE SHALL BE DIVIDED BETWEEN THE OWNER, THE CAPTAIN, AND
STATEMENT OF THE MARK AND NUMBER OF THE EFFECTS REQUESTING THE REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO GIVE THE
ALL INTERESTED PERSONS TO MAKE THEIR CLAIMS. OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE REMAINDER OF THE
CREW THE OTHER FOURTH OF THE REWARD, IN PROPORTION TO THEIR
SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION OF RESPECTIVE SALARIES, IN THE ABSENCE OF AN AGREEMENT TO THE CONTRARY.
THE AUTHORITIES, THE OWNER OR HIS REPRESENTATIVE SHALL CLAIM THEM, THE EXPRESS OF SALVAGE, AS WELL AS THE REWARD FOR SALVAGE OR
SUCH AUTHORITIES SHALL ORDER THEIR DELIVERY TO SUCH OWNER OR HIS ASSISTANCE, SHALL BE A CHARGE ON THE THINGS SALVAGED ON THEIR VALUE.
REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY OVER THEIR
VALUE, AND A BOND IS GIVEN BY THE OWNER OR HIS REPRESENTATIVE TO COGSA (CARRIAGE OF GOODS BY SEA ACT)
SECURE THE PAYMENT OF THE EXPENSES AND THE PROPER REWARD. - Adopted by the Philippines on October 22, 1936 through
OTHERWISE, THE DELIVERY SHALL NOR BE MADE UNTIL THE MATTER IS Commonwealth Act No. 65
DECIDED BY THE COURT OF FIRST INSTANCE OF THE PROVINCE. - New Civil Code  primary law on goods that are being transported
from a foreign port to the Philippines
SEC. 7. NO CLAIM BEING PRESENTED IN THE THREE MONTHS SUBSEQUENT TO - COGSA  remains to be a suppletory law for such type of
THE PUBLICATION OF THE ADVERTISEMENT PRESCRIBED IN SUB-SECTION (C) OF transportation – international shipping
SECTION FIVE, THE THINGS SAVE SHALL BE SOLD AT PUBLIC AUCTION, AND
THEIR PROCEEDS, AFTER DEDUCTING THE EXPENSES AND THE PROPER REWARD ART. 1753, NCC: THE LAW OF THE COUNTRY TO WHICH THE GOODS ARE TO BE
SHALL BE DEPOSITED IN THE INSULAR TREASURY. IF THREE YEARS SHALL PASS TRANSPORTED SHALL GOVERN THE LIABILITY OF THE COMMON CARRIER FOR
WITHOUT ANYONE CLAIMING IT, ONE-HALF OF THE DEPOSIT SHALL BE THEIR LOSS, DESTRUCTION OR DETERIORATION.
ADJUDGED TO HIM WHO SAVED THE THINGS, AND THE OTHER HALF TO THE
INSULAR GOVERNMENT. * Goods – includes goods, wares, merchandise, and articles of every kinds
whatsoever
SEC. 8. THE FOLLOWING SHALL HAVE NO RIGHT TO A REWARD FOR SALVAGE - does not include live animals and cargo which by the contract of
OR ASSISTANCE: carriage is stated as being carried on deck and is so carried

A. THE CREW OF THE VESSEL SHIPWRECKED OR WHICH WAS IS DANGER OF Parties:

SHIPWRECK;  Carrier, and
 Shipper
B. HE WHO SHALL HAVE COMMENCED THE SALVAGE IN SPITE OF OPPOSITION - They are given their respective rights and obligations under COGSA.
OF THE CAPTAIN OR HIS REPRESENTATIVE; AND - Carrier (covered by COGSA)  not limited to the shipowner; includes
charterer who enters into a contract of carriage with the shipper
C. HE WHO SHALL HAVE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION - Charterer  charters a vessel and conducts his own business for his own
THREE. account
 after chartering the vessel, he uses the vessel to conduct a
SEC. 9. IF, DURING THE DANGER, AN AGREEMENT IS ENTERED INTO business of transportation obtaining goods from 3rd persons to transport the
CONCERNING THE AMOUNT OF THE REWARD FOR SALVAGE OR ASSISTANCE, latter’s goods
ITS VALIDITY MAY BE IMPUGNED BECAUSE IT IS EXCESSIVE, AND IT MAY BE
REQUIRED TO BE REDUCED TO AN AMOUNT PROPORTIONATE TO THE Duties of the carrier:
CIRCUMSTANCES.  Civil Code requires international carriers to exercise extraordinary
diligence in the performance of their contractual obligations
SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING SECTION, AS WELL AS  Section 2 of COGSA  carrier’s obligation and liabilities in relation to
IN THE ABSENCE OF AN AGREEMENT, THE REWARD FOR SALVAGE OR the loading, handling, stowage, carriage, custody, care and discharge
ASSISTANCE SHALL BE FIXED BY THE COURT OF FIRST INSTANCE OF THE of such goods
PROVINCE WHERE THE THINGS SALVAGED ARE FOUND, TAKING INTO ACCOUNT  Section 3 of COGSA  responsibilities of the carrier under COGSA
PRINCIPALLY THE EXPENDITURES MADE TO RECOVER OR SAVE THE VESSEL OR
THE CARGO OR BOTH, THE ZEAL DEMONSTRATED, THE TIME EMPLOYED, THE Document of title required
SERVICES RENDERED, THE EXCESSIVE EXPRESS OCCASIONED THE NUMBER OF - evidenced by the Bill of Lading
PERSONS WHO AIDED, THE DANGER TO WHICH THEY AND THEIR VESSELS WERE - BOL serves as prima facie evidence of the receipt by the carrier of the goods
EXPOSED AS WELL AS THAT WHICH MENACED THE THINGS RECOVERED OR
SALVAGED, AND THE VALUE OF SUCH THINGS AFTER DEDUCTING THE Notice of claim and prescriptive period
EXPENSES. * Notice of claim  must be made within 3 days from delivery if the damage is
not apparent; not mandatory
SEC. 11. FROM THE PROCEEDS OF THE SALE OF THE THINGS SAVED SHALL BE * Prescriptive period  1 year from delivery for the filing of the case is a
DEDUCTED, FIRST, THE EXPENSES OF THEIR CUSTODY, CONSERVATION, condition precedent or mandatory; does not apply to cases of misdelivery or
ADVERTISEMENT, AND AUCTION, AS WELL AS WHATEVER TAXES OR DUTIES conversion
THEY SHOULD PAY FOR THEIR ENTRANCE; THEN THERE SHALL BE DEDUCTED
THE EXPENSES OF SALVAGE; AND FROM THE NET AMOUNT REMAINING SHALL Defenses and immunities
BE TAKEN THE REWARD FOR THE SALVAGE OR ASSISTANCE WHICH SHALL NOT - provided for by Section 4 of COGSA
EXCEED FIFTY PER CENT OF SUCH AMOUNT REMAINING. - Section 49(1) of COGSA – carrier shall not be liable for loss or damages arising
from unseaworthiness
SEC. 12. IF IN THE SALVAGE OR IN THE RENDERING OF ASSISTANCE DIFFERENT - New Civil Code – carrier will not be liable only if it can present proof that the
PERSONS SHALL HAVE INTERVENED THE REWARD SHALL BE DIVIDED BETWEEN unseaworthiness was caused exclusively by any of the circumstances specified
THEM IN PROPORTION TO THE SERVICES WHICH EACH ONE MAY HAVE in Art. 1734 of the NCC
RENDERED, AND, IN CASE OF DOUBT, IN EQUAL PARTS.
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