Sec. 13(b)
I. General Considerations
The term "public service" includes every person
A. Public Utilities that now or hereafter may own, operate, manage,
or control in the Philippines, for hire or
1987 Constitution, Article XII compensation, with general or limited clientele,
whether permanent, occasional or accidental, and
Section 11 done for general business purposes, any common
carrier, railroad, street railway, traction railway,
sub-way motor vehicle, either for freight or
No franchise, certificate, or any other form of
passenger, or both with or without fixed route and
authorization for the operation of a public utility
whether may be its classification, freight or carrier
shall be granted except to citizens of the
service of any class, express service, steamboat or
Philippines or to corporations or associations
steamship line, pontines, ferries, and water craft,
organized under the laws of the Philippines, at least
engaged in the transportation of passengers or
sixty per centum of whose capital is owned by such
freight or both, shipyard, marine railways, marine
citizens; nor shall such franchise, certificate, or
repair shop, [warehouse] wharf or dock, ice plant,
authorization be exclusive in character or for a
ice-refrigeration plant, canal, irrigation system,
longer period than fifty years. Neither shall any
gas, electric light, heat and power water supply and
such franchise or right be granted except under the
power, petroleum, sewerage system, wire or
condition that it shall be subject to amendment,
wireless communications system, wire or wireless
alteration, or repeal by the Congress when the
broadcasting stations and other similar public
common good so requires. The State shall
services: Provided, however, That a person
encourage equity participation in public utilities by
engaged in agriculture, not otherwise a public
the general public. The participation of foreign
service, who owns a motor vehicle and uses it
investors in the governing body of any public utility
personally and/or enters into a special contract
enterprise shall be limited to their proportionate
whereby said motor vehicle is offered for hire or
share in its capital, and all the executive and
compensation to a third party or third parties
managing officers of such corporation or
engaged in agriculture, not itself or themselves a
association must be citizens of the Philippines.
public service, for operation by the latter for a
limited time and for a specific purpose directly
Section 17 connected with the cultivation of his or their farm,
the transportation, processing, and marketing of
In times of national emergency, when the public agricultural products of such third party or third
interest so requires, the State may, during the parties shall not be considered as operating a
emergency and under reasonable terms prescribed public service for the purposes of this Act.
by it, temporarily take over or direct the operation
of any privately-owned public utility or business WHAT IS A PUBLIC UTILITY?
affected with public interest.
Kilusang Mayo Uno Labor Center v. Garcia
Agan, Jr. vs. PIATCO, 402 SCRA 612 (2003) (1994)
The Constitution envisions a situation wherein the Public utilities are privately owned and operated
exigencies of the times necessitated the businesses whose services are essential to the
government to temporarily take over or direct the general public. They are enterprises which specially
operation of any privately owned public utility or cater to the needs of the public and conduce to
business affected with public interest. Since the their comfort and convenience. As such, public
State, in this case, is merely exercising its police utility services are impressed with public interest
power, such exercise must not be unreasonably and concern. When, therefore, one devotes his
hampered nor can it be a source of obligation, in property to a use in which the public has an
the absence of damage due to arbitrariness. Also, interest, he, in effect grants to the public an
requiring, the government pay reasonable interest in that use, and must submit to the control
compensation for the reasonable use of the by the public for the common good, to the extent
property pursuant to the operation of the business of the interest he has thus created.
contravenes the Constitution.
Albano v. Reyes (1989)
Section 18 Franchises issued by Congress are not required
before each and every public utility may operate.
The State may, in the interest of national welfare A public utility is a business or service engaged in
or defense, establish and operate vital industries regularly supplying the public with some
and, upon payment of just compensation, transfer commodity or service of public consequence, such
to public ownership utilities and other private as electricity, gas, water, transportation, telephone
enterprises to be operated by the Government. or telegraph services. Apart from statutes which
define public utilities that are within the purview of
Section 19 such statutes, it would be difficult to construct a
definition of a public utility which would fit every
conceivable case. As its name indicates, however,
The State shall regulate or prohibit monopolies the term public utility implies a public use and
when the public interest so requires. No service to the public.
combinations in restraint of trade or unfair
competition shall be allowed.
WHEN IS A BUSINESS A PUBLIC UTILITY? conducted for that purpose. The object and
When it involves a commodity or service of purpose of such procedure, among other things, is
public consequence. to look out for, and protect, the interests of both
the public and the existing transport operators.
2 CONCEPTS OF PUBLIC UTILITY UNDER THE 1987
CONSTITUTION: Albano v. Reyes (1989)
1. A public utility is a partly nationalized business Franchises issued by Congress are not
endeavor required before each and every public utility may
2. It is a business affected with the public interest. operate.
(national emergency; general welfare; A public utility is a business or service
common good) engaged in regularly supplying the public with
some commodity or service of public consequence,
2 TESTS FOR DETERMINING PUBLIC UTILITY: such as electricity, gas, water, transportation,
1. Is it engaged in regularly supplying the public telephone or telegraph services. Apart from
with some commodity or service (per definition statutes which define public utilities that are within
in Albano v. Reyes below) the purview of such statutes, it would be difficult to
2. If #1 is uncertain, is it a public service as construct a definition of a public utility which would
defined in the Public Service Law under CA 146 fit every conceivable case. As its name indicates,
Sec 13(b)? If it falls under any one of the however, the term public utility implies a public use
examples given under CA 146 Sec 13(b), then it and service to the public.
is a public utility. Tatad v Garcia
What constitutes a public utility is not their
WHAT DOES REGULARLY SUPPLYING THE PUBLIC ownership but their use to serve the public.
MEAN?
The utility must hold itself out to the public as a PAL v. Civil Aeronautics Board (1997)
public utility by demand and as a matter of right, WON certificates of Public Convenience and
and not by permission. To determine what Necessity (franchise required) as used in RA 776
constitutes regularity, look at it from the to authorize the Board is different from
perspective of the public, and not the operator. Certificates of Public Convenience (no franchise
It is a service or a readiness to serve an indefinite required)? No
portion of the population subject only to the There is no authoritative basis in
limitations of the service as given by the grant such distinguishing a Certificate of Public Convenience
that [the utility] incurs a liability as a violation of and Necessity (franchise required) and a Certificate
its duty if it refuses, such that the availment of the of Public Convenience (no franchise required)
service has become, through time, a matter of based only on the use of the words convenience
right and not of mere privilege. (also in US v. Tan and necessity. The use of the word necessity in
Piaco) conjunction with public convenience in a
certificate of authorization to a public service entity
ARE ALL PUBLIC UTILITIES COMMODITIES OR SERVICE OF to operate, does not in any way modify the nature
PUBLIC CONSEQUENCE? of such certification, or the requirements for the
Yes. All public utilities have a public consequence. issuance of the same. It is the law which
But not all businesses bearing public consequence determines the requisites for the issuance of such
are public utilities. This is because almost all types certification, and not the title indicating the
of business have some form of regulation from the certificate.
State.
WHAT IS THE DIFFERENCE BETWEEN A
TO WHOM DOES PUBLIC REFER TO? IS THE WORD PUBLIC UTILITY AND A PUBLIC SERVICE?
PUBLIC IN PUBLIC UTILITY THE SAME IN PUBLIC
SERVICE? For all intents and purposes, they are the
There are three senses of the word public in same and are used interchangeably.
Transportation Law: a) public utility; b) public However, public utility is a broader concept
service; and c) definition of a common carrier that embraces public service. A public service is
under Art. 1732 of the Civil Code. necessarily a public utility, but not all public utilities
To determine a public utility, the two tests above & are public services.
the definition under Albano v. Reyes apply.
WHEN IS A PUBLIC UTILITY NOT A PUBLIC
WHAT IS A PUBLIC SERVICE? SERVICE?
Kilusang Mayo Uno Labor Center v. Garcia Jr. If it is not included in the enumeration in the
(1994) Public Service Act (CA 146 Sec. 13(b)) and Albano
In determining public need, the presumption v. Reyes.
of need for a service shall be deemed in favor of
the applicant. The burden of proving that there is HOW DO THEY DIFFER IN CONSTITUTIONAL
no need for a proposed service shall be with the RESTRICTIONS AND REQUIREMENTS?
oppositor(s).
Public convenience and necessity exists when If a business is a public utility, then it is
the proposed facility or service meets a reasonable subject to the limitations and restrictions provided
want of the public and supply a need which the for in the 1987 Constitution (Art 12 Secs.
existing facilities do not adequately supply. The 11,17,18,19) Since a public service is necessarily a
existence or nonexistence of public convenience public utility, therefore public services are subject
and necessity is therefore a question of fact that to the same Constitutional limitations and
must be established by evidence, real and/or restrictions.
testimonial; empirical data; statistics and such
other means necessary, in a public hearing
If a public utility is not a public service, it is and shall be appointed by the President of the
still subject to the same Constitutional limitations Philippines, with the consent of the Commission on
and restrictions. Appointments of the Congress of the Philippines:
Provided, however, That the present Commissioner
Therefore, public utility = Constitution and the personnel of the Commission shall continue
public service = Constitution + Public in office without the necessity of re-appointment.
Service Act The Commissioners shall have the rank and
privilege of retirement of Judges of the Courts of
B. Transportation First Instance. (As amended by Republic Act Nos.
DEFINITION 178 and 2677)
The movement of goods or persons from one
place to another, by a carrier. (Blacks Law SECTION 3
Dictionary)
A contract of transportation is one whereby a The Commissioner and Associate Commissioners
certain person or association of persons obligate shall hold office until they reach the age of seventy
themselves to transport persons, things, news from years, or until removed in accordance with the
one place to another for a fixed price. It is the procedures prescribed in section one hundred and
removal of goods or persons from one place to seventy-three of Act Numbered Twenty-seven
another. hundred and eleven, known as the Revised
Administrative Code: Provided, however, That upon
NOTE: retirement any Commissioner of Associate
Art. 1766 In all matters not regulated by this Commissioner shall be entitled to all retirement
Code, the rights and obligations of common carriers benefits and privileges for Judges of the Courts of
shall be governed by the Code of Commerce and by First Instance or under the retirement law to which
special laws. he may be entitled on the date of his retirement. In
case of the absence, for any reason, of the Public
PUBLIC NATURE Service Commissioner, the Associate Commissioner
It is for public use, which means that the with seniority of appointment shall act as
use is not confined to privileged individuals, but is Commissioner. If on account of absence, illness, or
instead open to an indefinite public. It is this incapacity of any of three Commissioners, or
indefinite or unrestricted quality that gives it its whenever by reason of temporary disability of any
public character. The true criterion by which to Commissioner or of a vacancy occurring therein,
judge the character of the use is whether the public the requisite number of Commissioners necessary
may enjoy it by right or by permission. There must to render a decision or issue an order in any case is
be, in general, a right under the law which compels not present, or in the event of a tie vote among the
the owner to give the service for the general public. Commissioners, the Secretary of Justice may
designate such number of Judges of the Courts of
PUBLIC SERVICE ACT First Instance, or such number of attorneys of the
legal division of the Commission, as may be
THE PUBLIC SERVICE LAW (CA 146) necessary to sit temporarily as Commissioners in
the Public Service Commission.
during the vacation months. (As amended by (c) The word "person" includes every individual,
Republic Act Nos. 176 and 3792) co-partnership, joint-stock company or corporation,
whether domestic or foreign, their lessees,
SECTION 11 trustees, or receivers, as well as any municipality,
province, city, government-owned or controlled
corporation, or agency of the Government of the
The Commission shall have the power to make
Philippines, and whatever other persons or entities
needful rules for its Government and other
that may own or possess or operate public
proceedings not inconsistent with this Act and shall
services. (As amended by Com. Act 454 and RA No.
adopt a common seal, and judicial notice shall be
2677)
taken for such seal. True copies of said rules and
other amendments shall be promptly furnished to
the Bureau of Printing and shall be forthwith SECTION 14
published in the Official Gazette.
The following are exempted from the provisions of
SECTION 13 the preceding section:
of public services, and to authorizations to renew observed, and followed thereafter by any public
and increase equipment and properties. service.
(a) To issue certificates which shall be known as (f) To establish reasonable rules, regulations,
certificates of public convenience, authorizing the instructions, specifications, and standards, to
operation of public service within the Philippines secure the accuracy of all meters and appliances
whenever the Commission finds that the operation for measurements.
of the public service proposed and the
authorization to do business will promote the public (g) To compel any public service to furnish safe,
interest in a proper and suitable manner. Provided, adequate, and proper service as regards the
That thereafter, certificates of public convenience manner of furnishing the same as well as the
and certificates of public convenience and necessity maintenance of the necessary material and
will be granted only to citizens of the Philippines or equipment.
of the United States or to corporations, co-
partnerships, associations or joint-stock companies (h) To require any public service to establish,
constituted and organized under the laws of the construct, maintain, and operate any reasonable
Philippines; Provided, That sixty per centum of the extension of its existing facilities, where in the
stock or paid-up capital of any such corporations, judgment of said Commission, such extension is
co-partnership, association or joint-stock company reasonable and practicable and will furnish
must belong entirely to citizens of the Philippines or sufficient business to justify the construction and
of the United States: Provided, further, That no maintenance of the same and when the financial
such certificates shall be issued for a period of condition of the said public service reasonably
more than fifty years. warrants the original expenditure required in
making and operating such extension.
(b) To approve, subject to constitutional limitations
any franchise or privilege granted under the (i) To direct any railroad, street railway or traction
provisions of Act No. Six Hundred and Sixty-seven, company to establish and maintain at any junction
as amended by Act No. One Thousand and twenty- or point of connection or intersection with any
two, by any political subdivision of the Philippines other line of said road or track, or with any other
when, in the judgment of the Commission, such line of any other railroad, street railway or traction
franchise or privilege will properly conserve the to promote, such just and reasonable connection as
public interests, and the Commission shall in so shall be necessary to promote the convenience of
approving impose such conditions as to shippers of property, or of passengers, and in like
construction, equipment, maintenance, service, or manner direct any railroad, street railway, or
operation as the public interests and convenience traction company engaged in carrying
may reasonably require, and to issue certificates of merchandise, to construct, maintain and operate,
public convenience and necessity when such is upon reasonable terms, a switch connection with
required or provided by any law or franchise. any private sidetrack which may be constructed by
any shipper to connect with the railroad, street
(c) To fix and determine individual or joint rates, railway or traction company line where, in the
tolls, charges, classifications, or schedules thereof, judgment of the Commission, such connection is
as well as commutation, mileage, kilometrage, and reasonable and practicable and can be out in with
other special rates which shall be imposed safety and will furnish sufficient business to justify
observed and followed thereafter by any public the construction and maintenance of the same.
service: Provided, That the Commission may, in its
discretion, approve rates proposed by public (j) To authorize, in its discretion, any railroad,
services provisionally and without necessity of any street railway or traction company to lay its tracks
hearing; but it shall call a hearing thereon within across the tracks of any other railroad, street
thirty days, thereafter, upon publication and notice railway or traction company or across any public
to the concerns operating in the territory affected: highway.
Provided, further, That in case the public service
equipment of an operator is used principally or
(k) To direct any railroad or street railway
secondarily for the promotion of a private business,
company to install such safety devices or about
the net profits of said private business shall be
such other reasonable measures as may in the
considered in relation with the public service of
judgment of the Commission be necessary for the
such operator for the purpose of fixing the rates.
protection of the public are passing grade crossing
of (1) public highways and railroads, (2) public
(d) To fix just and reasonable standards, highways and streets railway, or (3) railways and
classifications, regulations, practices, street railways.
measurement, or service to be furnished, imposed,
20
(l) To fix and determine proper and adequate rates
The powers of the Public Service Commission of depreciation of the property of any public service
were asked in 1993. which will be observed in a proper and adequate
reduction to less than sixty per centum of the produce the immediate cancellation of the
capital stock belonging to Philippine citizens. Such certificate without the necessity of any express
sale, alienation or transfer shall be void and of no action on the part of the Commission.
effect and shall be sufficient cause for ordering the
cancellation of the certificate. A CPC is any authorization to operate a public
service issued by the PSC (now DOTC).
Y Transit v. NLRC
The sale, alienation or other encumbrance of a
It is an authorization issued by the
public service operators properties requires the
Commission for the operation of public services for
previous approval and authorization of the
which no franchise, either municipal or
Commission.
legislative, is required by law) e.g. motor
NOTE: The Public Service Commission does not vehicles
exist anymore. It is now the Department of
Transportation and Communications. It constitutes neither a franchise nor a
contract, it does not confer property rights, and is a
THE CERTIFICATE OF PUBLIC CONVENIENCE (CPC); THE mere license or privilege. (Pantranco v. PSC) Such
CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY privilege is forfeited when the grantee fails to
(CPCN) AND THE PRIOR OPERATOR RULE comply with his commitments to serve the public
and public necessity. However, these certificates
Does the sale of a CPC, CPCN or other properties of represent property rights to the extent that if the
the public utility have to be approved before it is rights which any public utility is exercising pursuant
sold to a third person? to the lawful orders of the PSC (now DOTC) has
No. The approval of the sale of CPCs, CPCNs or been invaded by another public utility, in
other properties does not affect the validity appropriate cases, actions may be maintained by
(perfection) of the sale between the parties as long the complainant public utility.
as all the elements of a contract are met. This only
affectes the relation of the parties to the DOTC or
to 3rd parties. If there is no approval, then the sale Which public utilities are exempted from getting a
does not bind the DOTC or 3rd parties. The CPC?
controlling factor therefore is the registration.
The Public Service Law, Sec. 14
If a stockholder of a public utility transfers his
stock to the 3rd person, is there a need to obtain The following are exempted from the provisions of
the approval of the DOTC? the preceding section:
Before or after the execution of the contract. (c) Airships within the Philippines except as
regards the fixing of their maximum rates on
freight and passengers;
What if the transferree is an alien?
Is a franchise enough in order to operate? The prior operator rule is inapplicable where
the corporate existence of the prior operator has
expired.
No. All public utilities require either a CPC or
CPCN to operate. Those public utilities for which
franchises have been granted still require a CPCN Regular operators are preferred over irregular
in order to operate. Those public utilities that did operators.
not require a franchise for there creation still
require a CPC in order to operate. The Commission cannot grant a CPC or CPCN
that comprises a larger territory than that applied
Raymundo v. Luneta Motor Corporation for.
(1933)
The Public Service Law, Act No. 3108, as How do you know whether there is ruinous
amended, authorizes certificates of public competition enough for the prior operator rule to
convenience to be secured by public service take effect?
operators from the PSC. A CPC granted to the
owner or operator of public service motor vehicles Ruinous competition means that there is
grants a right in the nature of a limited franchise. actual ruin of the business of the operator; that the
The Code of Civil Procedure establishes the existing operator will not gain enough profits if
general rule that "property, both real and personal, another person is allowed to enter the business;
or any interest therein of the judgment debtor, not that which will result in the deprivation of sufficient
exempt by law, and all property and rights of gain in respect of reasonable return of investment,
property seized and held under attachment in the therefore the oppositor, alleging this, must show
action, shall be liable to execution." The statutory that he will be deprived of a reasonable return on
exemptions do not include franchises or his investment.
certificates; of public convenience. The word
"property" as used in section 450 of the Code of
The mere possibility of reduction in the
Civil Procedure comprehends every species of title,
earnings of the business or the deterioration in the
inchoate or complete, legal or equitable. The TEST
income of his business is not sufficient to prove
to determine whether or not property can be
ruinous competition. It must be shown that the
attached and sold upon execution is whether the
business would not have sufficient gains to pay a
judgment debtor has such a beneficial interest
fair rate of interest on his capital investments.
therein that he can sell or otherwise dispose of it
for value.
Now the Public Service Law permits the PSC to Does the prior operator rule create a monopoly?
approve the sale, alienation, mortgaging,
encumbering, or leasing of property, franchises, Legally speaking, there cannot be a monopoly
privileges, or rights or any part thereof (sec. 16 when a property is operated as a public utility. The
[h]), and in practice the purchase and sale of prior operator rule does not encourage a monopoly
certificates of public convenience has been because the theory is that one operator keeps the
permitted by the PSC. If the holder of a CPC can prices low.
sell it voluntarily, there is no valid reason why the
same certificate cannot be taken and sold Batangas Transportation Co. v. Cayetano
involuntarily pursuant to court process. Orlanes (1928)
CPCs secured by public service operators are liable
to execution, and the Public Service Commission is So long as the 1st licensee keeps and performs
authorized to approve the transfer of the the terms and conditions of its license and complies
certificates of public convenience to the execution with the reasonable rules and regulations of the
creditor. Commission and meets the demands of the public,
it should have more or less of a bested and
preferential right over a person who seeks to
acquire another and a later license over same
route. Otherwise, the first licensee would not have
protection on his investment and would be subject
to ruinous competition and this defeat the very Thus, The rule is established by the weight of
purpose and intent for the PSC was created. authority that the owner or operator of an
automobile owes the duty to an invited guest to
San Pablo v. Pantranco (1987) exercise reasonable care in its operation, and not
unreasonably to expose him to danger and injury
by increasing the hazard of travel. Valencia
Before private respondent may be issued a
therefore is only required to observe ordinary care,
franchise or CPC for the operation of the said
and is not in duty bound to exercise extraordinary
service as a common carrier, it must comply with
diligence as required of a common carrier by our
the usual requirements of filing an application,
law (Art. 1755 & 1756, new CC)
payment of the fees, publication, adducing
evidence at a hearing and affording the oppositors
ARISING FROM A TRANSPORTATION CONTRACT
the opportunity to be heard, among others, as
provided by law. Considering the environmental
Contract of transportation, defined;
circumstances of the case, the conveyance of
A contract of transportation is one whereby
passengers, trucks and cargo from Matnog to Allen
a certain person or association of persons obligate
is certainly not a ferry boat service but a coastwise
themselves to transport persons, things, or news
or interisland shipping service. Under no
from one to another for a fixed price.
circumstance can the sea between Matnog and
Allen be considered a continuation of the highway,
Contract of transportation, elements;
Matnog and Allen are separated by an open sea. Its
Parties to the contract:
CPC as a bus transportation cannot be merely
Shipper - one who gives rise to the contract of
amended to include this water service under the
transportation by agreeing to deliver the things or
guise that it is a mere private ferry service.
news to be transported, or to present his own
person or those of other or others in the case of
transportation of passengers
What is an example of the kabit system?21 Carrier or conductor - one who binds himself to
A, a grantee of a CPC from the LTFRB, is given transport person, things, or news, as the case may
the authority to operate 10 units of taxis. B, a non- be, or one employed in or engaged in the business
grantee, wishes to operate as a common carried of carrying good for others for hire
and kabits with the CPC of A who will obtain Consignee - the party to whom the carrier is to
approval from the LTFRB to operate another taxi. deliver the things being transported; to whom the
The taxi will be registered in the name of A, who carrier may lawfulyy make delivery in accordance
will be paid by B. with its contract of carriage. The shipper and the
Assume that A executed a deed of sale in consignee may be the same person.
favor of B in case B decides not to go on with the
arrangement, in order to safeguard the rights of B.
However, in case of injury to a passenger of the
taxi actually operated by B (and previously sold to
B as well) it is still A who will be liable. The illegal
contract of sale between A & B cannot be put up as
a defense.
A does not have a cause of action against B
either. They are in pari delicto.
21
This was asked in 2005. Know the definition of the
Kabit System and the liability of the party.
D. Contract of Carriage
III. Code of Commerce Provisions on 1. BILL OF LADING
Overland Transportation
DEFINITION, SUBJECT MATTER
(unless otherwise indicated, reference is to Code of
Commerce) ARTICLE 352
Bills of lading or tickets in the case of
What does the Code of Commerce cover? transportation of passengers may be different, one
It governs over overland transporation and for persons and another for baggage, but all of
maritime admiralty. It governs only commercial them shall contain the name of the carrier, the
contracts. date of shipment, the points of departure and
arrival, the price, and with regard to baggage, the
Commercial contracts involving common carriers number and weight of the packages, with any other
refer first to the Civil Code, then to the Code of indications which may be considered necessary in
Commerce order to easily identify them.
What is overland transport? Each bill of lading is a contract in itself and the
Overland transport applies to transport on land and parties are bound by its terms. A bill of lading is
on small bodies of water, waterways, both natural also a receipt, and it is likewise a symbol of the
and artificial, including transport on rivers which goods covered by it. It is also a document of title.
are not very large. (If it is transport at sea, then it
is admiralty)
Who are the parties to a bill of lading?
ARTICLE 364
ARTICLE 369
If the effect of the damage referred to in Article
Should the consignee be not found at the domicile
361 should be only a reduction in the value of the
indicated in the bill of lading, or should refuse to
goods, the obligation of the carrier shall be reduced
pay the transportation charges and expenses, or to
to the payment of the amount of said reduction in
receive the goods, the deposit of said goods shall
value, after appraisal by experts.
be ordered by the municipal judge, where there is
no judge of first instance, to be placed at the
disposal of the shipper or sender, without prejudice
to a person having a better right, this deposit COMPLIANCE WITH ADMINISTRATIVE REGULATIONS
having all the effects of a delivery.
ARTICLE 377
Art. 1752 The carrier shall be liable for all the consequences
arising from noncompliance on his part with the
Even when there is an agreement limiting the formalities prescribed by the laws and regulations
liability of the common carrier in the vigilance over of the public administration during the entire
the goods, the common carrier is disputably course of the trip and on the arrival at the point of
presumed to have been negligent in case of their destination, except when his omission arises from
loss, destruction or deterioration. his having been induced into error by false
statements of the shipper in the declaration of the
merchandise.
WHEN TO BE MADE
If the carrier has acted in accordance with a formal
order received from the shipper or consignee of the
ARTICLE 370 merchandise both shall incur liability.
If a period has been fixed for the delivery of the
goods, it must be made within the same, and
otherwise the carrier shall pay the indemnity
agreed upon in the bill of lading, neither the F. Rights and Obligations of Shipper and/or
shipper nor consignee being entitled to anything Consignee
else.
Should no indemnity have been agreed upon and
the delay exceeds the time fixed in the bill of 1. RIGHTS TO DAMAGES
lading, the carrier shall be liable for the damages
which may have been caused by the delay. CONDITION IMPOSED ON RIGHT
ARTICLE 353
OBLIGATION TO KEEP REGISTRY The legal basis of the contract between the shipper
and the carrier shall be the bills of lading, by the
ARTICLE 378 contents of which all disputes which may arise with
Transportation agents shall be obliged to keep a regard to their execution and fulfillment shall be
special registry, with the formalities required by decided without admission of other exceptions than
Article 36, in which there shall be entered, in forgery or material errors in the drafting thereof.
progressive order of numbers and dates, all the After the contract has been complied with the bill of
goods the transportation of which is undertaken, lading issued by the carrier shall be returned to
stating the circumstances required by Articles 350 him, and by virtue of the exchange of this
et seq. for the responsive bills of lading. certificate for the article transported, the respective
obligations and actions shall be considered as
canceled, unless in the same act the claims which
the contracting parties desired to reserve are
reduced to writing, exception being made of the
provisions of Article 366.
If in case of loss or for any other reason transported on the day and at the place where the
whatsoever, the consignee can not return upon delivery was to have been made. The same
receiving the merchandise the bill of lading provision shall be observed in all cases where this
subscribed by the carrier, he shall give said carrier indemnity is due.
a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill ARTICLE 360
of lading. The shipper may, without changing the place where
the delivery is to be made, change the
AMOUNT OF DAMAGES FOR LOSS consignment of the goods delivered to the carrier,
and the latter shall comply with his orders,
provided that at the time of making the change of
ARTICLE 372
the consignee the bill of lading subscribed by the
The appraisement of the goods which the carrier
carrier be returned to him, if one were issued,
must pay in case of their being lost or mislaid shall
exchanging it for another containing the novation
be fixed in accordance with what is stated in the bill
of the contract.
of lading, no proofs being allowed on the part of
The expenses arising from the change of
the shipper that there were among the goods
consignment shall be defrayed by the shipper.
declared therein articles of greater value, and
money.
ARTICLE 363
Horses, vehicles, vessels, equipment, and all the
With the exception of the cases prescribed in the
other principal and accessory means of
second paragraph of Article 361, the carrier shall
transportation, shall be especially obligated in favor
be obliged to deliver the goods transported in the
of the shipper, although with relation to railroads
same condition in which, according to the bill of
said obligation shall be subordinated to the
lading, they were at the time of their receipt,
provisions of the laws of concession with regard to
without any detriment or impairment, and should
property and to those of this Code with regard to
he not do so, he shall be obliged to pay the value
the manner and form of making attachments and
of the goods not delivered at the point where they
retentions against the said companies.
should have been and at the time the delivery
should have taken place.
Art. 1744 If part of the goods transported should be delivered
the consignee may refuse to receive them, when he
A stipulation between the common carrier and the proves that he can not make use thereof without
shipper or owner limiting the liability of the former the others.
for the loss, destruction, or deterioration of the
goods to a degree less than extraordinary diligence ARTICLE 365
shall be valid, provided it be: If, on account of the damage, the goods are
rendered useless for purposes of sale or
(1) In writing, signed by the shipper or owner; consumption in the use for which they are properly
destined the consignee shall not be bound to
receive them, and may leave them on the hands of
(2) Supported by a valuable consideration other the carrier, demanding payment therefor at current
than the service rendered by the common carrier; market prices.
and If among the goods damaged there should be some
in good condition and without any defect
(3) Reasonable, just and not contrary to public whatsoever, the foregoing provision shall be
policy. applicable with regard to the damaged ones, and
the consignee shall receive those which are sound,
AMOUNT OF DAMAGES FOR DELAY this separation being made by distinct and separate
articles, no object being divided for the purpose,
unless the consignee proves the impossibility of
ARTICLE 371(3).
conveniently making use thereof in this form.
Should the abandonment not occur the indemnity
The same provision shall be applied to merchandise
for loss and damages on account of the delays can
in bales or packages, with distinction of the
not exceed the current price of the goods
packages which appear sound.
transported on the day and at the place where the
delivery was to have been made. The same
provision shall be observed in all cases where this
3. RIGHT TO CHANGE CONSIGNMENT
indemnity is due.
ARTICLE 360
The shipper may, without changing the place where
the delivery is to be made, change the
2. RIGHT TO ABANDON
consignment of the goods delivered to the carrier,
ARTICLE 371
and the latter shall comply with his orders,
In cases of delay on account of the fault of the
provided that at the time of making the change of
carrier, referred to in the foregoing articles, the
the consignee the bill of lading subscribed by the
consignee may leave the goods transported on the
carrier be returned to him, if one were issued,
hands of the carrier, informing him thereof in
exchanging it for another containing the novation
writing before the arrival of the same at the point
of the contract.
of destination.
The expenses arising from the change of
When this abandonment occurs, the carrier shall
consignment shall be defrayed by the shipper.
satisfy the total value of the goods, as if they had
been lost or mislaid. aisadc
Should the abandonment not occur the indemnity
for loss and damages on account of the delays can
not exceed the current price of the goods
(9) Credits for transportation, upon the goods Jurisdiction in civil cases. Regional Trial Courts
carried, for the price of the contract and incidental shall exercise exclusive original jurisdiction:
expenses, until their delivery and for thirty days
thereafter;
(3) In all actions in admiralty and maritime
jurisdiction where he demand or claim exceeds One
hundred thousand pesos (P100,000.00) or , in
Metro Manila, where such demand or claim exceeds
5. OBLIGATION TO RETURN BILL OF Two hundred thousand pesos (200,000.00);
LADING
ARTICLE 353. (2) (3) Section 33. Jurisdiction of Metropolitan Trial Courts,
After the contract has been complied with the bill of Municipal Trial Courts and Municipal Circuit Trial
lading issued by the carrier shall be returned to Courts in civil cases. Metropolitan Trial Courts,
him, and by virtue of the exchange of this Municipal Trial Courts, and Municipal Circuit Trial
certificate for the article transported, the respective Courts shall exercise:
obligations and actions shall be considered as
canceled, unless in the same act the claims which
the contracting parties desired to reserve are (1) Exclusive original jurisdiction over civil actions
reduced to writing, exception being made of the and probate proceedings, testate and intestate,
provisions of Article 366. including the grant of provisional remedies in
If in case of loss or for any other reason proper cases, where the value of the personal
whatsoever, the consignee can not return upon property, estate, or amount of the demand does
receiving the merchandise the bill of lading not exceed One hundred thousand pesos
subscribed by the carrier, he shall give said carrier (P100,000.00) or, in Metro Manila where such
a receipt for the goods delivered, this receipt personal property, estate, or amount of the
producing the same effects as the return of the bill demand does not exceed Two hundred thousand
of lading. pesos (P200,000.00) exclusive of interest damages
of whatever kind, attorney's fees, litigation
expenses, and costs, the amount of which must be
G. Applicability of Provisions
specifically alleged: Provided, That where there are
ARTICLE 379 several claims or causes of action between the
The provisions contained in Articles 349 et seq. same or different parties, embodied in the same
shall also be understood as relating to persons complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, D. Persons Participating in Maritime
irrespective of whether the causes of action arose Commerce
out of the same or different transactions;
fund, for the results of the acts of the captain, If the interest of the petitioners should be the
referred to in Article 587. same, and there should be a tie, the matter shall
Each part owner may exempt himself from this be decided by lot.
liability by the abandonment before a notary of the
part of the vessel belonging to him. ARTICLE 597
The agent shall select and come to an agreement
ARTICLE 591 with the captain, and shall contract in the name of
All the part owners shall be liable, in proportion to the owners, who shall be bound in all that refers to
their respective ownership, for the expenses of repairs, details of equipment, armament,
repairs to the vessel, and for other expenses which provisions, fuel, and freight of the vessel, and, in
are incurred by virtue of a resolution of the general, in all that relates to the requirements of
majority. navigation.
They shall likewise be liable in the same proportion
for the expenses of maintenance, equipment, and ARTICLE 598
provisioning of the vessel, necessary for The agent can not order a new voyage, nor make
navigation. contracts for a new charter, nor insure the vessel,
without the authority of her owner or by virtue of a
ARTICLE 592 resolution of the majority of the co-owners, unless
The resolutions of the majority with regard to the these privileges were granted him in the certificate
repair, equipment, and provisioning of the vessel in of his appointment.
the port of departure shall bind the majority unless If he should insure the vessel without authority
the partners in the minority renounce their therefor he shall be secondarily liable for the
participation therein, which must be acquired by solvency of the underwriter.
the other part owners after a judicial appraisement
of the value of the portion or portions assigned. ARTICLE 599
The resolutions of the majority relating to the The managing agent of an association, shall give
dissolution of the association and sale of the vessel his co-owners an account of the results of each
shall also be binding on the minority. voyage of the vessel, without prejudice to always
The sale of the vessel must take place at a public having the books and correspondence relating to
auction, subject to the provisions of the law of civil the vessel and to its voyages at the disposal of the
procedure unless the part owners unanimously same.
agree otherwise, the right of option to purchase
and to withdraw mentioned in Article 575 being ARTICLE 600
always reserved in favor of said part owners. After the account of the managing agent has been
approved by a relative majority, the co-owners
ARTICLE 593 shall satisfy the expenses in proportion to their
The owners of a vessel shall have preference in her interest, without prejudice to the civil or criminal
charter to other persons, offering equal conditions actions which the minority may deem fit to institute
and price. If two or more of the former should afterwards.
claim said right the one having greater interest In order to enforce the payment, the managing
shall be preferred, and should they have an equal agent shall have a right of action to secure
interest it shall be decided by lot. execution, which shall be instituted by virtue of a
resolution of the majority, and without further
ARTICLE 594 proceedings than the acknowledgment of the
The part owners shall elect the manager who is to signatures of the persons who voted the resolution.
represent them in the capacity of agent.
The appointment of director or agent shall be ARTICLE 601
revocable at the will of the members. Should there be any profits, the co-owners may
demand of the managing agent the amount due
ARTICLE 595 them, by means of an executory action without
The agent, be he at the same time an owner of a further requisites than the acknowledgment of the
vessel or a manager for an owner or for an signatures of the instrument approving the
association of co-owners, must be qualified to trade account.
and must be recorded in the merchant's registry of
the province. ARTICLE 602
The agent shall represent the ownership of the The agent shall indemnify the captain for all the
vessel, and may in his own name and in such expenses he may have incurred from his own funds
capacity take judicial and extrajudicial steps in all or from those of other persons, for the benefit of
that relates to commerce. the vessel.
ARTICLE 603
Before a vessel goes out to sea the agent shall
have at his discretion, a right to discharge the
ARTICLE 596 captain and members of the crew whose contract
The agent may discharge the duties of captain of did not state a definite period nor a definite
the vessel, subject, in every case, to the provisions voyage, paying them the salaries earned according
contained in Article 609. to their contracts, and without any indemnity
If two or more co-owners request the position of whatsoever, unless there is a special and specific
captain, the disagreement shall be decided by a agreement in respect thereto.
vote of the members; and if the vote should result
in a tie, the position shall be given to the part ARTICLE 604
owner having the larger interest in the vessel. If the captain or any other member of the crew
should be discharged during the voyage, they shall
receive their salary until the return to the place
where the contract was made, unless there are with the shippers or supercargoes who may be on
good reasons for the discharge, all in accordance board.
with Articles 636 et seq. of this Code. No exception whatsoever shall exempt him
from this obligation.
ARTICLE 605 7. For those arising by reason of his
If the contracts of the captain and members of the voluntarily entering a port other than his
crew with the agent should be for a definite period destination, with the exception of the cases or
or voyage, they can not be discharged until the without the formalities referred to in Article 612.
fulfillment of their contracts, except for reasons of 8. For those arising by reason of the non-
insubordination in serious matters, robbery, theft, observance of the provisions contained in the
habitual drunkenness, and damage caused to the regulations for lights and evolutions for the purpose
vessel or to its cargo by malice or manifest or of preventing collisions.
proven negligence.
ARTICLE 606
If the captain should be a part owner in the vessel,
Standard Oil v. Castelo (1921)
he can not be discharged without the agent
returning him the amount of his interest therein,
which, in the absence of an agreement between the In considering the question now before us it is
parties, shall be appraised by experts appointed in important to remember that the owner of the ship
the manner established in the law of civil ordinarily has vastly more capital embarked upon a
procedure. voyage than has any individual shipper of cargo.
Moreover, the owner of the ship, in the person of
ARTICLE 607 the captain, has complete and exclusive control of
If the captain who is a part owner should have the crew and of the navigation of the ship, as well
obtained the command of the vessel by virtue of a as of the disposition of the cargo at the end of the
special agreement contained in the articles of co- voyage. It is therefore proper that any person
partnership, he can not be deprived thereof except whose property may have been cast overboard by
for the reasons mentioned in Article 605. order of the captain should have a right of action
directly against the ship's owner for the breach of
ARTICLE 608 any duty which the law may have imposed on the
In case of the voluntary sale of the vessel, all captain with respect to such cargo. To adopt the
contracts between the agent and captain shall interpretation of the law for which the appellant
terminate, the right to proper indemnity being contends would place the shipowner in a position to
reserved in favor of the captain, according to the escape all responsibility for a general average of
agreements made with the agent. this character by means of the delinquency of his
They vessel sold shall remain subject to the own captain. This cannot be permitted. The evident
security of the payment of said indemnity if, after intention of the Code, taken in all of its provisions,
the action against the vendor has been instituted, is to place the primary liability upon the person
the latter should be insolvent. who has actual control over the conduct of the
voyage and who has most capital embarked in the
venture, namely, the owner of the ship, leaving
him to obtain recourse, as it is very easy to do,
from other individuals who have been drawn into
ARTICLE 618 the venture as shippers.
The captain shall be civilly liable to the agent, and
the latter to the third persons who may have made
contracts with the former
1. For all the damages suffered by the vessel
and his cargo by reason of want of skill or RESPONSIBILITIES AND LIABILITIES
negligence on his part. If a misdemeanor or crime
has been committed he shall be liable in Yu Con v. Ipil (1916)
accordance with the Penal Code. cda
2. For all the thefts committed by the crew, As to the shipowner: Estasen, makes the
reserving his right of action against the guilty following remarks: It is well and good that the
parties. shipowner be not held criminally liable for such
3. For the losses, fines, and confiscations crimes or quasi crimes; but the cannot be excused
imposed an account of violation of the laws and from liability for the damage and harm which, in
regulations of customs, police, health, and consequence of those acts, may be suffered by the
navigation. third parties who contracted with the captain, in his
4. For the losses and damages caused by double capacity of agent and subordinate of the
mutinies on board the vessel, or by reason of faults shipowner himself. In maritime commerce, the
committed by the crew in the service and defense shippers and passengers in making contracts with
of the same, if he does not prove that he made full the captain do so through the confidence they have
use of his authority to prevent or avoid them. in the shipowner who appointed him; they presume
5. For those arising by reason of an undue use that the owner made a most careful investigation
of powers and non-fulfillment of the obligations before appointing him, and, above all, they
which are his in accordance with Articles 610 and themselves are unable to make such an
612. investigation, and even though they should do so,
6. For those arising by reason of his going out they could not obtain complete security, inasmuch
of his course or taking a course which he should as the shipowner can, whenever he sees fir,
not have taken without sufficient cause, in the appoint another captain instead.
opinion of the officers of the vessel, at a meeting
DOCTRINE OF LIMITED LIABILITY AND EXCEPTIONS23 conditions and encourage shipbuilding and
maritime commerce, it was deemed necessary to
ARTICLE 587 confine the liability of the owner or agent arising
The agent shall also be civilly liable for the from the operation of a ship to the vessel,
indemnities in favor of third persons which arise equipment, and freight, or insurance, if any, so
from the conduct of the captain in the care of the that if the shipowner or agent abandoned the ship,
goods which the vessel carried; but he may exempt equipment, and freight, his liability was
himself therefrom by abandoning the vessel with all extinguished.
her equipments and the freight he may have If an accident is compensable under the Workmen's
earned during the voyage. Compensation Act, it must be compensated even
when the workman's right is not recognized by or is
ARTICLE 590 in conflict with other provisions of the Civil Code or
The owners of a vessel shall be civilly liable in the the Code of Commerce. The reason behind this
proportion of their contribution to the common principle is that the Workmen's Compensation Act
fund, for the results of the acts of the captain, was enacted by the Legislature in abrogation of the
referred to in Article 587. other existing laws.
Each part owner may exempt himself from this
liability by the abandonment before a notary of the
part of the vessel belonging to him. SPECIFIC RIGHTS AND PREROGATIVES
ARTICLE 583
If the ship being on a voyage the captain should DUTIES AND LIABILITIES
find it necessary to contract one or more of the
obligations mentioned in Nos. 8 and 9 of Article ARTICLE 635
580, he shall apply to the judge or court if he is in A sailor who has been contracted to serve on a
Spanish * territory, and otherwise to the consul of vessel can not rescind his contract nor fail to
1. A declaration of war or interdiction of attendance and cure shall be defrayed from the
commerce with the power to whose territory the common funds, in the form of a loan.
vessel was bound. If the sickness should be caused by an injury
2. The blockade of the port of destination or received in the service or defense of the vessel the
the breaking out of an epidemic after the sailor shall be attended and cured from the
agreement. common funds, there being deducted before
3. The prohibition to receive in said port the anything else from the proceeds of the freight, the
goods which make up the cargo of the vessel. cost of the attendance and cure.
4. The detention or embargo of the same by
order of the Government, or for any other reason
independent of the will of the agent.
5. The inability of the vessel to navigate. ARTICLE 645
If a sailor should die during the voyage his heir
ARTICLE 641 shall be given the wages earned and not received,
If, after a voyage has been begun, any of the first according to his engagement and the reason for his
three causes mentioned in the foregoing article death, namely
should occur, the sailors shall be paid at the port If he should have died a natural death and should
the captain may deem it advisable to make for the have been engaged on wages there shall be paid
benefit of the vessel and cargo, according to the what may have been earned up to the date of his
time they may have served thereon; but if the death.
vessel is to continue the voyage, the captain and If the engagement had been made for a fixed sum
the crew may mutually demand the enforcement of for the whole voyage there shall be paid half the
the contract. amount earned if the sailor died on the voyage out,
In case of the occurrence of the fourth cause, the and the whole amount if he died on the return
crew shall continue to be paid half wages, if the voyage.
agreement is by month but if the detention should And if the engagement had been made on shares
exceed three months, the engagement shall be and the death should have occurred after the
rescinded and the crew shall be paid what they voyage was begun, the heirs shall be paid the
should have earned, according to the contract, if entire portion due the sailor; but should the latter
the voyage had been made. And if the agreement have died before the departure of the vessel from
had been made for a fixed sum for the voyage, the the port, the heirs shall not be entitled to claim
contract must be complied within the terms agreed anything.
upon. If the death should have occurred in the defense of
In the fifth case, the crew shall not have any other the vessel, the sailor shall be considered as living,
right than be entitled to recover the wages earned; and his heirs shall be paid, at the end of the
but if the disability of the vessel should have been voyage, the full amount of wages or the full part of
caused by the negligence or lack of skill of the the profits due him as to the others of his grade.
captain, engineer, or sailing mate, they shall The sailor shall likewise be considered as present in
indemnify the crew for the loss suffered, always the event of his capture when defending the vessel,
reserving the criminal liability which may be in order to enjoy the same benefits as the rest; but
proper. should he have been captured on account of
carelessness or other accident not related to the
ARTICLE 642 service, he shall only receive the wages due up to
If the crew has been engaged to work on shares the day of his capture.
they shall not be entitled, by reason of the
revocation, delay, or greater extension of the ARTICLE 646
voyage, to anything but the proportionate part of The vessel with her engines, rigging, equipment,
the indemnity paid into the common funds of the and freights shall be liable for the wages earned by
vessel by the persons liable for said occurrences. the crew engaged per month or for the trip, the
liquidation and payment ought to take place
ARTICLE 643 between one voyage and the other.
If the vessel and her freight should be totally lost, After a new voyage has been undertaken, credits
by reason of capture or wreck, all rights of the crew such as the former shall lose their right of
to demand any wages whatsoever shall be preference.
extinguished, as well as that of the agent for the
recovery of the advances made. ARTICLE 647
If a portion of the vessel or freight should be The officers and the crew of the vessel shall be
saved, or part of either, the crew engaged on exempted from all obligations contracted, if they
wages, including the captain, shall retain their deem it proper, in the following cases:
rights on the salvage, so far as they go, on the 1. If, before the beginning of the voyage, the
remainder of the vessel as well as value of the captain attempts to change it, or there occurs a
freightage or the cargo saved; but sailors who are naval war with the power to which the vessel was
engaged on shares shall not have any right destined.
whatsoever to the salvage of the hull, but only on 2. If a disease should break out and be
the portion of the freightage saved. If they should officially declared epidemic in the port of
have worked to collect the remainder of the ship- destination.
wrecked vessel, they shall be given an award in 3. If the vessel should change owner or
proportion to the efforts made and to the risks captain.
encountered in order to accomplish the salvage.
ARTICLE 644
A sailor who falls sick shall not lose his right to
wages during the voyage, unless the sickness is the
result of his own fault. At any rate, the costs of the
(a) Defined
(b) Essential Requisites
ARTICLE 811
General or gross averages shall be, as a general ARTICLE 813
rule, all the damages and expenses which are In order to incur the expenses and cause the
deliberately caused in order to save the vessel, her damages corresponding to gross average, a
cargo, or both at the same time, from a real and previous resolution of the captain, adopted after
known risk, and particularly the following: deliberation with the sailing mate and other officers
1. The goods or cash invested in the of the vessel, and with a hearing of the persons
redemption of the vessel or cargo captured by interested in the cargo who may be present, shall
enemies, privateers, or pirates, and the provisions, be required.
wages, and expenses of the vessel detained during If the latter shall object, and the captain and
the time the arrangement or redemption is taking officers, or a majority, or the captain, if opposed to
place. the majority, should consider certain measures
2. The goods jettisoned to lighten the vessel, necessary, they may be executed under his
whether they belong to the vessel, to the cargo, or liability, without prejudice to the freighters
to the crew, and the damage suffered through said exercising their rights against the captain before
act by the goods kept. the judge or court of competent jurisdiction, if they
3. The cables and masts which are cut or can prove that he acted with malice, lack of skill, or
rendered useless, the anchors and the chains which negligence.
are abandoned in order to save the cargo, the If the persons interested in the cargo, being on the
vessel, or both. vessel, should not be heard, they shall not
4. The expenses of removing or transferring a contribute to the gross average, which contribution
portion of the cargo in order to lighten the vessel shall be paid by the captain, unless the urgency of
and place her in condition to enter a port or the case should be such that the time necessary for
roadstead, and the damage resulting therefrom to previous deliberation was lacking.
the goods removed or transferred.
5. The damage suffered by the goods of the ARTICLE 814
cargo through the opening made in the vessel in The resolution adopted to cause the damages
order to drain her and prevent her sinking. which constitute a general average must
6. The expenses caused through floating a necessarily be entered in the log book, stating the
vessel intentionally stranded for the purpose of motives and reasons therefor, the votes against it,
saving her. and the reasons for the disagreement should there
7. The damage caused to the vessel which it be any, and the irresistible and urgent causes
is necessary to break open, scuttle, or smash in which moved the captain if he acted of his own
order to save the cargo. accord.
8. The expenses of curing and maintaining the In the first case the minutes shall be signed by all
members of the crew who may have been wounded the persons present who could do so before taking
or crippled in defending or saving the vessel. action if possible, and if not at the first opportunity;
9. The wages of any member of the crew in the second case by the captain and by the
detained as hostage by enemies, privateers, or officers of the vessel.
pirates, and the necessary expenses which he may In the minutes and after the resolution there shall
incur in his imprisonment, until he is returned to be stated in detail all the goods cast away, and
the vessel or to his domicile, should he prefer it. mention shall be made of the injuries caused to
10. The wages and victuals of the crew of a those kept on board. The captain shall be obliged
vessel chartered by the month during the time it to deliver one copy of these minutes to the
should be embargoed or detained by force majeure maritime judicial authority of the first port he may
or by order of the Government, or in order to repair make within twenty-four hours after his arrival, and
the damage caused for the common good. to ratify it immediately by an oath.
11. The loss suffered in the value of the goods
sold at arrivals under stress in order to repair the ARTICLE 860
vessel because of gross average. If, notwithstanding the jettison of the merchandise,
12. The expenses of the liquidation of the breakage of masts, ropes, and equipment, the
average. vessel should be lost running said risk, no
contribution whatsoever by reason of gross
ARTICLE 817 average shall be proper.
If in lightening a vessel on account of a storm, in The owners of the goods saved shall not be liable
order to facilitate her entry into a port or for the indemnity of those jettisoned, lost, or
roadstead, part of her cargo should be transferred damaged.
to lighters or barges and be lost, the owner of said
part shall be entitled to indemnity, as if the loss MAGSAYSAY INC. vs AGAN (1955)
has originated from a gross average, the amount REQUISITES FOR GENERAL AVERAGE:
thereof being distributed between the entire vessel 1. There must be a common danger. This
and cargo which caused the same. means, that both the ship and the cargo, after it
If, on the contrary, the merchandise transferred has been loaded, are subject to the same danger,
should be saved and the vessel should be lost, no whether during the voyage, or in the port of
liability can be demanded of the salvage. loading or unloading; that the danger arises from
the accidents of the sea, dispositions of the
ARTICLE 818 authority, or faults of men, provided that the
If, as a necessary measure to extinguish a fire in a circumstances producing the peril should be
port; roadstead; creek, or bay, it should be decided ascertained and imminent or may rationally be said
to sink any vessel, this loss shall be considered to be certain and imminent. This last requirement
gross average, to which the vessels saved shall exclude measures undertaken against a distant
contribute. peril.
2. That for the common safety, part of the The persons interested in the proof and liquidation
vessel or of the cargo or both is sacrificed of averages may mutually agree and bind
deliberately. themselves at any time with regard to the liability,
3. That from the expenses or damages caused liquidation, and payment thereof. cdt
follows the successful saving of the vessel and In the absence of agreements, the following rules
cargo. shall be observed:
4. That the expenses or damages should have 1. The proof of the average shall take place in
been incurred or inflicted after taking proper legal the port where the repairs are made, should any be
steps and authority necessary, or in the port of unloading.
2. The liquidation shall take place in the port
(c) Effects of unloading should it be a Spanish * port.
3. Should the average have occurred outside
ARTICLE 812 of the waters under the jurisdiction of the
In order to satisfy the amount of the gross or Philippines or the cargo should have been sold in a
general averages, all the persons having an foreign port by reason of an arrival under stress,
interest in the vessel and cargo therein at the time the liquidations shall be made in the port of
of the occurrence of the average shall contribute. arrival.
4. If the average should have occurred near
(d) Jettison the port of destination, so that said port can be
made, the proceedings treated of in Rules 1 and 2
ARTICLE 815 shall be held there.
The captain shall supervise the jettison, and shall
order the goods cast overboard in the following ARTICLE 847
order: In case of making the liquidation of the averages
1. Those which are on deck, beginning with privately by virtue of agreement, as well as when a
those which embarrass the handling of the vessel judicial authority takes part therein at the request
or damage her, preferring, if possible, the heaviest of any of the parties interested who do not agree
ones and those of least utility and value. cda thereto, all of them shall be cited and heard, should
2. Those in the hold, always beginning with they not have renounced this right.
those of the greatest weight and smallest value, to Should they not be present or not have a legitimate
the amount and number absolutely indispensable. representative, the liquidation shall be made by the
consul in a foreign port, and where there is none,
ARTICLE 816 by the judge or court of competent jurisdiction,
In order that the goods jettisoned may be included according to the laws of the country, and for the
in the gross average and the owners thereof be account of the proper person.
entitled to indemnity, it shall be necessary in so far When the representative is a person well known in
as the cargo is concerned that their existence on the place where the liquidation takes place, his
board be proven by means of the bill of lading; and intervention shall be admitted and produce legal
with regard to those belonging to the vessel, by effects, even though he be authorized only by a
means of the inventory made up before the letter of the shipowner, freighter, or underwriter.
departure, in accordance with the first paragraph of
Article 612. ARTICLE 848
Claims for averages shall not be admitted if they do
not exceed 5 per cent of the interest which the
(e) Jason Clauses (York - Antwerp Rules, claimant may have in the vessel or cargo if it is
Rule D) gross average, and 1 per cent of the goods
damaged if particular average, deducting in both
Rights to contribution in general average shall not cases the expenses of appraisal, unless there is an
be affected, though the event which gave rise to agreement to the contrary.
the sacrifice or expenditure may have been due to
the fault of one of the parties to the adventure; but ii. Appraisal of general average
this shall not prejudice any remedies which may be
open against that party for such fault. ARTICLE 850
If by reason of one or more accidents of the sea
What are the York-Antwerp Rules and the particular and gross averages of the vessel or the
Jason Clause? cargo, or of both, should take place on the same
The York-Antwerp Rules is an international system voyage, the expenses and damages corresponding
of rules (they are not law or international treaties, to each one shall be determined separately in the
but are just widely in use) for the liquidation and port where the repairs are made or where the
payment of average to avoid the problem of cargo is discharged, or sold, or the merchandise is
characterization. benefited.
For this purpose the captains shall be obliged to
The Jason Clause is a standard provision in demand of the expert appraisers and of the
maritime contracts. It provides for uniform rules on contractors making the repairs, as well as of those
adjustment, proof and liquidation of avergaes in appraising and taking part in the unloading, repair,
maritime accidents to address various systems of sale, or the benefiting of the merchandise, that
determining the same. they separate and detail exactly in their
appraisements or estimates and accounts all the
PROOF AND LIQUIDATION OF AVERAGES expenses and damages belonging to each average,
and in those of each average those corresponding
i. Modes to the vessel and to the cargo, stating also
separately whether there are or not any damages
ARTICLE 846 proceeding from the nature of the goods, and not
by reason of a sea accident; and in case there
should be expenses common to the different shall be fixed by the purchase price, including the
averages and to the vessel and her cargo, there expenses until they are put on board, excluding the
must be calculated the amount corresponding to insurance premium.
each and stated distinctly. 3. If the merchandise should be damaged, it
shall be appraised at its true value.
SECTION II 4. If the voyage should be interrupted, the
Liquidation of Gross Averages merchandise having been sold in a foreign port and
ARTICLE 851 the average can not be estimated, there shall be
At the instance of the captain, the adjustment, taken as the contributing capital the value of the
liquidation, and distribution of gross averages shall merchandise in the port of arrival, or the net
be held privately, with the consent of all the parties proceeds obtained at the sale thereof.
in interest. 5. Merchandise lost, which should constitute
For this purpose, within forty-eight hours following the gross average, shall be appraised at the value
the arrival of the vessel at the port, the captain merchandise of its kind may have in the port of
shall call all the persons interested, in order that unloading, provided its kind and quality appears in
they may decide as to whether the adjustment or the bill of lading; and should this not be the case,
liquidation of the gross average is to be made by the invoices of the purchase issued in the port of
experts and liquidators appointed by themselves, in shipment shall be taken as a basis, adding to its
which case this shall be done should the persons value the expenses and freights subsequently
interested agree. arising. cd
Should an agreement not be possible, the captain 6. The masts cut down, the sails, cables, and
shall apply to the judge or court of competent other equipment of the vessel rendered useless for
jurisdiction, who shall be the one of the port where the purpose of saving her, shall be appraised at the
these proceedings are to be held in accordance current value, deducting one-third by reason of the
with the provisions of this Code, or to the consul of difference between new and old.
Spain, * should there be one, and otherwise to the This deduction shall not be made in regard
local authority when they are to be held in a to anchors and chains.
foreign port. cdta 7. The vessel shall be appraised at her real
value in her condition at the time.
8. The freights shall represent 50 per cent by
ARTICLE 852 way of contributing capital.
If the captain should not comply with the provisions ARTICLE 855
contained in the foregoing article, the shipowner or The merchandise loaded on the upper deck of the
agent or the freighters shall demand the vessel shall contribute to the gross average should
liquidation, without prejudice to the action they it be saved; but there shall be no right to indemnity
may bring to demand indemnity from him. if it should be lost by reason of being jettisoned for
general safety, except when the marine ordinances
ARTICLE 853 allow its shipment in this manner in coastwise
After the experts have been appointed by the navigation.
persons interested, or by the judge or court, before The same shall take place with that which is on
the acceptance, an examination of the vessel and board and is not included in the bills of lading or
of the repairs required shall be made, as well as an inventories, according to the cases.
estimate of their cost, separating these losses and In any case the shipowner and the captain shall be
damages from those arising from the natural vice liable to freighters for the loss of the jettison, if the
of the thing. storage on the upper deck took place without the
The experts shall also declare whether the repairs consent of the latter.
can be made immediately, or whether it is
necessary to unload the vessel to examine and ARTICLE 857
repair her. After the appraisement of the goods saved has
With regard to the merchandise, if the average been concluded by the experts, as well as that of
should be visible at a mere glance, the examination the goods lost which constitute the gross average,
thereof must be made before it is delivered. Should and after the repairs have been made to the
it not be visible at the time of unloading, said vessel, should any have to be made, and in such
examination may be held after the delivery case after the approval of the accounts of the same
provided it is done within forty-eight hours from by the persons interested or by the judge or court,
the unloading and without prejudice to the other the entire record shall be turned over to the
proofs which the experts may deem necessary. liquidator appointed, in order that he may proceed
with the distribution of the average.
ARTICLE 854
The appraisement of the goods which are to iii. Liquidation of general averages
contribute to the gross average, and that of those
which constitute the average, shall conform to the ARTICLE 858
following rules: In order to effect the liquidation the liquidator shall
1. The merchandise saved which is to examine the sworn statement of the captain,
contribute to the payment of the gross average comparing it, if necessary, with the log book and all
shall be valued at the current price thereof at the the contracts which may have been made between
port of unloading, deducting the freights, customs the persons interested in the average, the
duties, and charges for unloading, as may appear appraisements, expert examinations, and accounts
from a material inspection of the same, not taking of repairs made. If, as a result of this examination,
into consideration the bills of lading, unless there is he should find any defect in this procedure which
an agreement to the contrary. might injure the rights of the persons interested or
2. If the liquidation is to take place in the port affect the liability of the captain, he shall call
of sailing, the value of the merchandise loaded attention thereto in order that it be corrected, if
possible, and otherwise he shall include it in the If the captain during the navigation should believe
preliminaries of the liquidation. that the vessel can not continue the voyage to the
Immediately thereafter he shall proceed with the port of destination on account of the lack of
distribution of the amount of the average, for which provisions, well founded fear of seizure, privateers
purpose he shall fix: or pirates, or by reason of any accident of the sea
1. The contributing capital, which he shall disabling her to navigate, he shall assemble the
determine by the value of the cargo, in accordance officers and shall call the persons interested in the
with the rules established in Article 854. cargo who may be present, and who may attend
2. That of the vessel in her actual condition, the meeting without the right to vote; and if, after
according to a statement of experts. examining the circumstances of the case, the
3. The 50 per cent of the amount of the reasons should be considered well founded, it shall
freight, deducting the remaining 50 per cent for be decided to make the nearest and most
wages and maintenance of the crew. convenient port drafting and entering in the log
After the amount of the gross average has been book the proper minutes, which shall be signed by
determined in accordance with the provisions of all.
this Code, it shall be distributed pro rata among the The captain shall have the deciding vote and the
goods which are to cover the same. persons interested in the cargo may make the
objections and protests they may deem proper,
ARTICLE 865 which shall be entered in the minutes in order that
The distribution of the gross average shall not be they may make use thereof in the manner they
final until it has been agreed to, or in the absence may consider advisable.
thereof, until it has been approved by the judge or
court after an examination of the liquidation and a ARTICLE 820
hearing of the persons interested who may be The arrival under stress shall not be considered
present, or of their representatives. legal in the following cases:
1. If the lack of provisions should arise from
ARTICLE 866 the failure to take the necessary provisions for the
After the liquidation has been approved it shall be voyage, according to usage and custom, or if they
the duty of the captain to collect the amount of the should have been rendered useless or lost through
distribution, and he shall be liable to the owners of bad stowage or negligence in their care.
the goods averaged for the losses they suffer 2. If the risk of enemies, privateers, or pirates
through his delay or negligence. should not have been well known, manifest, and
based on positive and justifiable facts.
ARTICLE 867 3. If the injury to the vessel should have been
If the contributors should not pay the amount of caused by reason of her not being repaired, rigged,
the assessment within the third day after having equipped, and arranged in a convenient manner for
been requested to do so, the goods saved shall be the voyage, or by reason of some erroneous order
attached, at the request of the captain, and shall of the captain.
be sold to cover the payment. 4. Whenever malice, negligence, want of
foresight, or lack of skill on the part of the captain
ARTICLE 868 is the reason for the act causing the damage.
If the persons interested in receiving the goods
saved should not give security sufficient to answer FORMALITIES
for the amount corresponding to the gross average,
the captain may defer the delivery thereof until ARTICLE 819
payment has been made. aisadc If the captain during the navigation should believe
that the vessel can not continue the voyage to the
SECTION III port of destination on account of the lack of
Liquidation of Ordinary Averages provisions, well founded fear of seizure, privateers
or pirates, or by reason of any accident of the sea
ARTICLE 869 disabling her to navigate, he shall assemble the
The experts which the judge or court or the officers and shall call the persons interested in the
persons interested may appoint, according to the cargo who may be present, and who may attend
cases, shall proceed with the appraisement and the meeting without the right to vote; and if, after
examination of the averages in the manner examining the circumstances of the case, the
prescribed in Article 853 and in Article 854, Rules 2 reasons should be considered well founded, it shall
to 7, in so far as they are applicable. be decided to make the nearest and most
convenient port drafting and entering in the log
iv. Liquidation of particular average book the proper minutes, which shall be signed by
all.
ARTICLE 869 The captain shall have the deciding vote and the
The experts which the judge or court or the persons interested in the cargo may make the
persons interested may appoint, according to the objections and protests they may deem proper,
cases, shall proceed with the appraisement and which shall be entered in the minutes in order that
examination of the averages in the manner they may make use thereof in the manner they
prescribed in Article 853 and in Article 854, Rules 2 may consider advisable.
to 7, in so far as they are applicable.
ARTICLE 822
2. ARRIVALS UNDER STRESS If in order to make repairs to the vessel or because
there should be danger of the cargo suffering
CAUSES damage it should be necessary to unload, the
captain must request authorization of the judge or
ARTICLE 819 court of competent jurisdiction to lighten the
vessel, and do so with the knowledge of the person
EXPENSES 3. COLLISIONS
The charter parties executed with the intervention faith and mutual consent with which they have
of a broker, who certifies to the authenticity of the been made, should be a better substitute for the
signatures of the contracting parties made in his chater party than the bill of lading which is nothing
presence, shall be full evidence in court; and if said more than proof of such delivery.
signatures should not agree the ones identical with
the signatures the broker must keep in his registry, What is primage?
if kept in accordance to law, shall be final. It was formerly a small allowance or compensation
The contracts shall also be admitted as evidence, payable to the master and marines of a ship, to the
even though a broker has not taken part therein, if former for the use of his cables and ropes to
the contracting parties acknowledge the signatures discharge the goods of the merchant; to the latter
to be the same as their own. for the lading and unlading in any port of haven.
Should no broker have taken part in the charter Today, it is no longer a gratuity but is included in
party and should the signatures not have been the freight rate.
acknowledged, doubts shall be decided by what is
provided for in the bill of lading, and in the absence What is demurrage?
thereof by the proofs submitted by the parties. It is the sum fixed by the contract of carriage, or
which is allowed, as remuneration to the owner of a
ARTICLE 655 ship for the detention of his vessel beyond the
Charter parties executed by the captain in the number of days allowed by the charter party for
absence of the agent shall be valid and efficient, loading and unloading of for sailing. It is an
even though in executing them he should have extended freight or reward to the vessel in
acted in violation of the orders and instructions of compensation for the earnings she is improperly
the agent or shipowner; but the latter shall have a caused to lose.
right of action against the captain to recover
damages. What are lay days?
Lay days are days allowed to charter parties for
ARTICLE 656 loading and unloading the cargo.
If in the charter party the time in which the loading
and unloading is to take place is not stated, the RIGHTS AND OBLIGATIONS OF SHIPOWNERS
customs of the port where these acts take place
shall be observed. After the period stipulated or the 2. Rights and Obligations of Owners
customary one has passed, and should there not be ARTICLE 669
in the freight contract an express clause fixing the The owners or the captain shall observe in charter
indemnification for the delay, the captain shall be parties the capacity of the vessel or that expressly
entitled to demand demurrage for the usual and designated in the registry of the same, a difference
extra lay days which may have elapsed in loading greater than 2 per cent between that stated and
and unloading. her true capacity not being permissible.
If the owners or the captain should contract to
ARTICLE 657 carry a greater amount of cargo than the vessel
If during the voyage the vessel should be rendered can hold, in view of her tonnage, they shall
unseaworthy the captain shall be obliged to charter indemnify the freighters whose contracts they do
another one at his expense, in good condition, to not fulfill for the losses they may have caused them
take the cargo to its destination, for which purpose by reason of their default, according to the cases,
he shall be obliged to look for a vessel not only at viz:
the port of arrival but in the other ports within a If the vessel has been chartered by one freighter
distance of 150 kilometers. only, and there should appear to be an error or
If the captain should not furnish a vessel to take fraud in her capacity, and the charterer should not
the cargo to its destination, either through wish to rescind the contract, when he has a right to
indolence or malice, the freighters, after a demand do so, the charter should be reduced in proportion
of the captain to charter a vessel within an to the cargo the vessel can not receive, the person
unextendible period, may charter one and apply to from whom the vessel is chartered being
the judicial authority requesting that the charter furthermore obliged to indemnify the charterer for
party which may have been made be immediately the losses he may have caused.
approved. If, on the contrary, there should be several charter
The same authority shall judicially compel the parties, and by reason of the want of space all the
captain to confirm the charter made by the cargo contracted for can not be received, and none
shippers for his account and under his of the charterers desires to rescind the contract,
responsibility. preference shall be given to the person who has
If the captain, notwithstanding his efforts, should already loaded and arranged the freight in the
not find a vessel to charter, he shall deposit the vessel, and the rest shall take the place
cargo at the disposal of the freighters, to whom he corresponding to them in the order of the dates of
shall communicate the facts on the first opportunity their contracts.
presenting itself, the charter being regulated in Should there be no priority, the charterers may
such cases by the distance covered by the vessel, load, if they wish, pro rata of the amounts of
there being no right to any indemnification weight or space they may have engaged, and the
whatsoever. person from whom the vessel was chartered shall
be obliged to indemnify them for the loss and
Is there a valid contract if there was no damage.
charter party and bill of lading?
If we take Art. 653 literally, no. However, if we ARTICLE 670
take into account the fact that delivery of the cargo If the person from whom the vessel is chartered,
does not constitute the making of a contract but after receiving a part of the freight, should not find
rather the partial performance thereof, the mere sufficient to make up at least three-fifths of the
fact of delivery and receipt of such cargo, the good amount which the vessel can hold, at the price he
may have fixed, he may substitute for the Should the captain not receive an answer within
transportation another vessel inspected and the time necessary therefor, he shall make efforts
declared suitable for the same voyage, the to find freight; and should he not find any after the
expenses of transfer being defrayed by him, as well lay days and extra lay days have elapsed, he shall
as the increase, should there be any, in the price of make a protest and return to the port where the
the charter. Should he not be able to make this charter was made.
change, the voyage shall be undertaken at the time The charterer shall pay the freightage in full,
agreed upon; and should no time have been fixed, discounting that which may have been earned on
within fifteen days from the time of beginning to the merchandise which may have been carried on
load, should nothing to the contrary have been the voyage out or on the return trip, if carried for
stipulated. the account of third persons.
If the owner of the part of the freight already The same shall be done if a vessel, having been
loaded should procure some more at the same chartered for the round trip, should not be given
price and under similar or proportionate conditions any cargo for her return.
to those accepted for the freight received, the
person from whom the vessel is chartered or the ARTICLE 676
captain can not refuse to accept the rest of the The captain shall lose the freightage and shall
cargo; and should he do so, the freighter shall have indemnify the charterers if the latter should prove,
a right to demand that the vessel put to sea with even against the certificate of inspection, should
the cargo she may have on board. one have taken place at the port of departure, that
the vessel was not in a condition to navigate at the
ARTICLE 671 time of receiving the cargo.
After three-fifths of the vessel is loaded, the person
from whom she is chartered can not, without the ARTICLE 677
consent of the charterers or freighters substitute The charter party shall be enforced if the captain
the vessel designated in the charter party by should not have any instructions from the
another one, under the penalty of making himself charterer, and a declaration of war or a blockade
thereby liable for all the losses and damages should take place during the voyage.
occurring during the voyage to the cargo of the In such case the captain shall be obliged to make
person who did not consent to the change. the nearest safe and neutral port, and request and
await orders from the freighter; and the expenses
ARTICLE 672 incurred and salaries earned during the detention
If the vessel has been chartered in whole, the shall be paid as general average.
captain can not, without the consent of the person If, by orders of the freighter, the cargo should be
chartering her, accept freight from any other discharged at the port of arrival, the freight for the
person; and should he do so, said charterer may voyage out shall be paid in full.
oblige him to unload it and require him to
indemnify him for the losses suffered thereby. ARTICLE 678
If the time necessary, in the opinion of the judge or
ARTICLE 673 court, in which to receive orders from the freighters
The person from whom the vessel is chartered shall should have elapsed without the captain having
be liable for all the losses caused the charterer by received any instructions, the cargo shall be
reason of the voluntary delay of the captain in deposited, and it shall be liable for the payment of
putting to sea, according to the rules prescribed, the freight and expenses incurred by reason of the
provided he has been requested to put to sea at delay which shall be paid from the proceeds of the
the proper time through a notary or judicially. part first sold.
1. A declaration of war or interdiction of definite term, and pledges the ship as a security for
commerce with the power to whose ports the its repayment, with maritime or extraordinary
vessel was going to sail. interest on account of the maritime risks to be
2. A condition of blockade of the port of borne by the lender, it being stipultaed that if the
destination of said vessel, or the breaking out of an ship be lost in the course of the specific voyage or
epidemic after the contract was executed. during the limited time, by any of the perils
3. The prohibition to receive the merchandise enumerated in the contract, the lender shall also
of the vessel at the said port. lose his money.
4. An indefinite detention, by reason of an
embargo of the vessel by order of the government LOAN ON RESPONDENTIA, DEFINED
or for any other reason independent of the will of It is a contract made on the goods laden on board
the agent. the hsip, and which are to be sold or exchanged in
5. The impossibility of the vessel to navigate, the course of the voyage, the borrowers personal
without fault of the captain or agent. responsibility being deemed the principal security
The unloading shall be made for the account of the for the performance of the contract. The lender
charterer. must be paid his principal and interest, though the
ARTICLE 691 ship perishes, provided that the goods are saved.
If the vessel can not put to sea on account of the
closing of the port of departure, or any other CHARACTER OF LOAN, ART. 719
temporary cause, the charter shall be in force
without any of the contracting parties having a ARTICLE 719
right to claim damages. A loan on bottomry or respondentia shall be
The subsistence and wages of the crew shall be considered that which the repayment of the sum
considered as general average. loaned and the premium stipulated, under any
During the interruption the charterer may, at the condition whatsoever, depends on the safe arrival
proper time and for his own account, unload and in port of the goods on which it is made, or of their
load the merchandise, paying demurrage if the value in case of accident.
reloading should continue after the reason for the
detention has ceased. FORMS AND REQUISITES
3. The names, surnames, and domicile of the provision the vessel, and should not do so within
person giving and of the person receiving the loan. twenty-four hours, the interest which the parties in
4. The amount of the loan and the premium default may have in the vessel shall be liable for
stipulated. the loan in the proper proportion.
5. The time for repayment. Outside of the residence of the owners the captain
6. The goods pledged to secure repayment. may contract loans in accordance with the
7. The voyage for which the risk is run. provisions of Articles 583 and 611.
consignee or freighter; and those possessed by the increased price of passage, but his living expenses
captain or agent signed by the freighter shall be during the delay shall be for his own account.
proof against the freighter or consignee in favor of In case the departure of the vessel is delayed the
the captain or agent. passengers have a right to remain on board and to
be furnished with food for the account of the
vessel, unless the delay is due to an accidental
H. Passengers on Sea Voyage cause or to force majeure. If the delay should
exceed ten days, the passengers who request it
1. NATURE OF CONTRACT shall be entitled to the return of the passage; and if
it were due exclusively to the captain or agent they
ARTICLE 695 may furthermore demand indemnity for losses and
The right to passage, if issued to a specified damages.
person, can not be transferred without the consent A vessel which is exclusively destined to the
of the captain or of the consignee. transportation of passengers must take them
directly to the port or ports of destination, no
2. OBLIGATIONS OF PASSENGERS matter what the number of passengers may be,
making all the stops indicated in her itinerary.
ARTICLE 693
Should the passage price not have been agreed 4. RESPONSIBILITIES OF CAPTAIN
upon, the judge or court shall summarily fix it,
after a statement of experts. ARTICLE 701
The convenience or the interest of the passengers
ARTICLE 699 shall not obligate nor empower the captain to stand
After the contract has been rescinded, before or in shore or enter places which may take the vessel
after the commencement of the voyage, the out of her course, nor to remain in the ports he
captain shall have a right to claim payment for must or is under the necessity of touching for a
what he may have furnished the passengers. period longer than that required for the business of
the navigation.
ARTICLE 704
The captain, in order to collect the price of the ARTICLE 702
passage and expenses of maintenance, may retain In the absence of an agreement to the contrary, it
the goods belonging to the passenger, and in case shall be understood that the maintenance of the
of the sale of the same he shall be given preference passengers during the voyage is included in the
over the other creditors, acting in the same way as price of the passage; but should said maintenance
in the collection of freight. be for the account of the latter, the captain shall be
under the obligation, in case of necessity, to
ARTICLE 694 furnish them the victuals at a reasonable price
Should the passenger not arrive on board at the necessary for their maintenance.
time fixed, or should leave the vessel without
permission from the captain, when the latter is ARTICLE 703
ready to leave the port, the captain may continue A passenger shall be looked upon as a shipper in so
the voyage and demand the full passage price. far as the goods he carries on board are concerned,
and the captain shall not be liable for what said
ARTICLE 700 passenger may preserve under his immediate and
In all that relates to the preservation of order and special custody unless the damage arises from an
police on board the vessel the passengers shall act of the captain or of the crew.
conform to the orders given by the captain, without
any distinction whatsoever. ARTICLE 705
In case of the death of a passenger during the
3. RIGHTS OF PASSENGERS voyage the captain is authorized, with regard to
the body, to take the steps required by the
ARTICLE 697 circumstances, and shall carefully take care of the
If before beginning the voyage it should be papers and goods there may be on board belonging
suspended through the sole fault of the captain or to the passenger, observing the provisions of Case
agent, the passengers shall be entitled to have No. 10 of Article 612 with regard to members of
their passage refunded and to recover for losses the crew.
and damages; but if the suspension was due to an
accidental cause, or to force majeure, or to any ARTICLE 612
other cause beyond the control of the captain or The following obligations are inherent in the office
agent, the passengers shall only be entitled to the of captain:
return of the passage money. 1. To have on board before starting on a
voyage a detailed inventory of the hull, engines,
ARTICLE 698 rigging, tackle, stores, and other equipments of
In case a voyage already begun should be the vessel; the navigation certificate; the roll of the
interrupted the passengers shall be obliged only to persons who make up the crew of the vessel, and
pay the passage in proportion to the distance the contracts entered into with the crew; the list of
covered, and shall not be entitled to recover for passengers; the health certificate; the certificate of
losses and damages if the interruption is due to an the registry proving the ownership of the vessel,
accidental cause or to force majeure, but have a and all the obligations which encumber the same
right to indemnity if the interruption should have up to that date; the charters or authenticated
been caused by the captain exclusively. If the copies thereof; the invoices or manifest of the
interruption should be by reason of the disability of cargo, and the instrument of the expert visit or
the vessel, and the passenger should agree to inspection, should it have been made at the port of
await her repair, he can not be required to pay any departure.
2. To have a copy of this Code on board. the favorable season it takes place, he allows
3. To have three folioed and stamped books, merchandise to be carried on deck, he must hear
placing at the beginning of each one a note of the the opinion of the officers of the vessel, and have
number of folios it contains, signed by the maritime the consent of the shippers and of the agent.
official, and in his absence by the competent 6. To demand a pilot at the expense of the
authority. vessel whenever required by navigation, and
In the first book, which shall be called "log book," principally when a port, canal, or river, or a
he shall enter every day the condition of the roadstead or anchoring place is to be entered with
atmosphere, the prevailing winds, the course which neither he, the officers nor the crew are
sailed, the rigging carried, the horsepower of the acquainted.
engines, the distance covered, the maneuvers 7. To be on deck at the time of sighting land
executed, and other incidents of navigation. He and to take command on entering and leaving
shall also enter the damage suffered by the vessel ports, canals, roadsteads, and rivers, unless there
in her hull, engines, rigging, and tackle, no matter is a pilot on board discharging his duties. He shall
what is its cause, as well as the imperfections and not spend the night away from the vessel except
averages of the cargo, and the effects and for serious causes or by reason of official business.
consequence of the jettison, should there be any; cdtai
and in cases of grave resolutions which require the 8. To present himself, when making a port in
advice or a meeting of the officers of the vessel, or distress, to the maritime authority if in Spain * and
even of the passengers and crew, he shall record to the Spanish * consul if in a foreign country,
the decision adopted. For the informations before twenty-four hours have elapsed, and make
indicated he shall make use of the binnacle book, a statement of the name, registry, and port of
and of the steam or engine book kept by the departure of the vessel, of its cargo, and reason of
engineer. arrival, which declaration shall be vised by the
In the second book, called the "accounting book," authority or by the consul if after examining the
he shall enter all the amounts collected and paid same it is found to be acceptable, giving the
for the account of the vessel, entering specifically captain the proper certificate in order to show his
article by article, the sources of the collection, and arrival under stress and the reasons therefor. In
the amounts invested in provisions, repairs, the absence of marine officials or of the consul, the
acquisition of rigging or goods, fuel, outfits, wages, declaration must be made before the local
and all other expenses. He shall furthermore enter authority.
therein a list of all the members of the crew, 9. To take the steps necessary before the
stating their domiciles, their wages and salaries, competent authority in order to enter in the
and the amounts they may have received on certificate of the Commercial Registry of the vessel
account, either directly or by delivery to their the obligations which he may contract in
families. accordance with Article 583.
In the third book, called "freight book," he shall 10. To put in a safe place and keep all the
record the entry and exit of all the goods, stating papers and belongings of any members of the crew
their marks and packages, names of the shippers who might die on the vessel, drawing up a detailed
and of the consignees, ports of loading and inventory, in the presence of passengers as
unloading, and the freight earned. In the same witnesses, and, in their absence, of members of
book he shall record the names and places of the crew.
sailing of the passengers and the number of 11. To conduct himself according to the rules
packages of which their baggage consists, and the and precepts contained in the instructions of the
price of the passage. agent, being liable for all that he may do in
4. To make, before receiving the freight, with violation thereof.
the officers of the crew, and the two experts, if 12. To give an account to the agent from the
required by the shippers and passengers, an port where the vessel arrives, of the reason
examination of the vessel, in order to ascertain thereof, taking advantage of the semaphore,
whether she is watertight, and whether the rigging telegraph, mail, etc., according to the cases; notify
and engines are in good condition; and if she has him the freight he may have received, stating the
the equipment required for good navigation, name and domicile of the shippers, freight earned,
preserving a certificate of the memorandum of this and amounts borrowed on bottomry bond, advise
inspection, signed by all the persons who may have him of his departure, and give him any information
taken part therein, under their liability. and data which may be of interest.
The experts shall be appointed one by the captain 13. To observe the rules on the situation of
of the vessel and the other one by the persons who lights and evolutions to prevent collisions.
request the examination, and in case of 14. To remain on board in case of danger to
disagreement a third shall be appointed by the the vessel, until all hope to save her is lost, and
marine authority of the port. before abandoning her to hear the officers of the
5. To remain constantly on board the vessel crew, abiding by the decision of the majority; and if
with the crew during the time the freight is taken he should have to take a boat he shall take with
on board and carefully watch the stowage thereof; him, before anything else, the books and papers,
not to consent to any merchandise or goods of a and then the articles of most value, being obliged
dangerous character to be taken on, such as to prove in case of the loss of the books and papers
inflammable or explosive substances, without the that he did all he could to save them.
precautions which are recommended for their 15. In case of wreck he shall make the proper
packing, management and isolation; not to permit protest in due form at the first port reached, before
that any freight be carried on deck which by reason the competent authority or the Spanish * consul,
of its disposition, volume, or weight makes the within twenty-four hours, stating therein all the
work of the sailors difficult, and which might incidents of the wreck, in accordance with case 8 of
endanger the safety of the vessel; and if, on this article.
account of the nature of the merchandise, the
special character of the shipment, and principally
16. To comply with the obligations imposed by Be it enacted by the Senate and House of
the laws and rules of navigation, customs, health, Representatives of the United States of America in
and others. Congress assembled, That every bill of landing or
similar document of title which is evidence of a
I. Carriage of Goods by Sea Act contract for the carriage of goods by sea to or from
(Commonwealth Act No. 65; Public Act No. 65; ports of the United States, in foreign trade, shall
Public Act 521, 74th US Congress) have effect subject to the provisions of the Act.
An Act Relating to the Carriage of Goods by Sea. (b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling Said notice of loss or damage maybe endorsed
chambers, and all other parts of the ship in which upon the receipt for the goods given by the person
goods are carried, fit and safe for their reception taking delivery thereof.
carriage and preservation.
The notice in writing need not be given if the state
(2) The carrier shall properly and carefully load, of the goods has at the time of their receipt been
handle, stow, carry, keep, care for, and discharge the subject of joint survey or inspection.
the goods carried.
In any event the carrier and the ship shall be
(3) After receiving the goods into his charge the discharged from all liability in respect of loss or
carrier, or the master or agent of the carrier, shall, damage unless suit is brought within one year after
on demand of the shipper, issue to the shipper a delivery of the goods or the date when the goods
bill of lading showing among other things should have been delivered: Provided, That if a
notice of loss or damage, either apparent or
(a) The leading marks necessary for identification concealed, is not given as provided for in this
of the goods as the same are furnished in writing section, that fact shall not affect or prejudice the
by the shipper before the loading of such goods right of the shipper to bring suit within one year
starts, provided such marks are stamped or after the delivery of the goods or the date when
otherwise shown clearly upon the goods if the goods should have been delivered
uncovered, or on the cases or coverings in which
such goods are contained, in such a manner as In the case of any actual or apprehended loss or
should ordinarily remain legible until the end of the damage the carrier and the receiver shall give all
voyage. reasonable facilities to each other for inspecting
and tallying the goods.
(b) Either the number of packages or pieces, or the
quantity or weight, as the case may be, as (7) After the goods are loaded the bill of lading to
furnished in writing by the shipper. be issued by the carrier, master, or agent of the
carrier to the shipper shall, if the shipper so
(c) The apparent order and condition of the goods: demands, be a "shipped" bill of lading Provided,
Provided, That no carrier, master, or agent of the That if the shipper shall have previously taken up
carrier, shall be bound to state or show in the bill of any document of title to such goods, he shall
lading any marks, number, quantity, or weight surrender the same as against the issue of the
which he has reasonable ground for suspecting not "shipped" bill of lading, but at the option of the
accurately to represent the goods actually received, carrier such document of title may be noted at the
or which he has had no reasonable means of port of shipment by the carrier, master, or agent
checking. with name or name the names of the ship or ships
upon which the goods have been shipped and the
date or dates of shipment, and when so noted the
(4) Such a bill of lading shall be prima facie
same shall for the purpose of this section be
evidence of the receipt by the carrier of the goods
deemed to constitute a "shipped" bill of lading.
as therein described in accordance with paragraphs
(3) (a), (b), and (c) of this section: Provided, That
nothing in this Act shall be construed as repealing (8) Any clause, covenant, or agreement in a
or limiting the application of any part of the Act, as contract of carriage relieving the carrier or the ship
amended, entitled "An Act relating to bills of lading from liability for loss or damage to or in connection
in interstate and foreign commerce," approved with the goods, arising from negligence, fault, or
August 29, 1916 (U. S. C. title 49, secs. 81-124), failure in the duties and obligations provided in this
commonly known as the "Pomerene Bills of Lading section, or lessening such liability otherwise than
Act." as provided in this Act, shall be null and void and of
no effect. A benefit of insurance in favor of the
carrier, or similar clause, shall be deemed to be a
(5) The shipper shall be deemed to have
clause relieving the carrier from liability.
guaranteed to the carrier the accuracy at the time
of shipment of the marks, number, quantity, and
weight, as furnished by him; and the shipper shall
indemnify the carrier against all loss damages, and
expenses arising or resulting from inaccuracies in RIGHTS AND IMMUNITIES
such particulars. The right of the carrier to such
indemnity shall in no way limit his responsibility Section 4
and liability under the contract of carriage or to any
person other than the shipper.
(1) Neither the carrier nor the ship shall be liable
for loss or damage arising or resulting from
(6) Unless notice of loss or damage and the general unseaworthiness unless caused by want of due
nature of such loss or damage be given in writing diligence on the part of the carrier to make the ship
to the carrier or his agent at the port of discharge seaworthy, and to secure that the ship is properly
before or at the time of the removal of the goods manned, equipped, and supplied, and to make to
into the custody of the person entitled to delivery the holds, refrigerating and cool chambers, and all
thereof under the contract of carriage, such other parts of the ship in which goods are carried
removal shall be prima facie evidence of the fit and safe for their reception, carriage, and
delivery by the carrier of the goods as described in preservation in accordance with the provisions of
the bill of lading. If the loss or damage is not paragraph (1) of section 3. Whenever loss or
apparent, the notice must be given within three damage has resulted from unseaworthiness, the
days of the delivery. burden of proving the exercise of due diligence
shall be on the carrier or other persons claiming (4) Any deviation in saving or attempting to save
exemption under the section. life or property at sea, or any reasonable deviation
shall not be deemed to be an infringement or
(2) Neither the carrier nor the ship shall be breach of this Act or of the contract of carriage,
responsible for loss or damage arising or resulting and the carrier shall not be liable for any loss or
from damage resulting therefrom: Provided, however,
That if the deviation is for the purpose of loading
cargo or unloading cargo or passengers it shall,
(a) Act, neglect, or default of the master, mariner,
prima facie, be regarded as unreasonable.
pilot, or the servants of the carrier in the
navigation or in the management of the ship;
(5) Neither the carrier nor the ship shall in any
event be or become liable for any loss or damage
(b) Fire, unless caused by the actual fault or privity
to or in connection with the transportation of goods
of the carrier;
in an amount exceeding $600 per package lawful
money of the United States, or in case of goods not
(c) Perils, dangers, and accidents of the sea or shipped in packages, per customary freight unit, or
other navigable waters; the equivalent of that sum in other currency,
unless the nature and value of such goods have
(d) Act of God; been declared by the shipper before shipment and
inserted in the bill of lading. This declaration, if
(e) Act of war, embodied in the bill of lading, shall be prima facie
evidence, but shall not be conclusive on the carrier.
port of the United States or its possessions, and PUBLIC ACT 521 CARRIAGE OF
any other port of the United States or its GOODS BY SEA ACT
possession: Provided, however, That any bill of
lading or similar document of title which is evidence Section 1
of a contract for the carriage of goods by sea That the provisions of Public Act No. 521 of the 7th
between such ports, containing an express Congress of the United States, approved on April
statement that it shall be subject to the provisions 16, 1936, be accepted, as it is hereby accepted to
of this Act, shall be subjected hereto as fully as if be made applicable to all contracts for the carriage
subject hereto as fully as if subject hereto by the of goods by sea to and from Philippine ports in
express provisions of this Act: Provided, further, foreign trade: Provided, that nothing in this Act
That every bill of lading or similar document of title shall be construed as repealing any existing
which is evidence of a contract for the carriage of provision of the Code of Commerce which is now in
goods by sea from ports of the United States, in force, or as limiting its application. .
foreign trade, shall contain a statement that it shall
have effect subject to the provisions of this Act. Sec. 2
This Act shall take effect upon its approval.
Section 14 (Approved October 22, 1936).
TITLE I
Upon the certification of the Secretary of
Sec. 1
Commerce that the foreign commerce of the United
When used in this Act .
States in its competition with that of foreign
(a) The term "carrier" includes the owner or
nations is prejudiced the provisions, or any of
the charterer who enters into a contract of carriage
them, of Title I of this Act, or by the laws of any
with a shipper.
foreign country or countries relating to the carriage
(b) The term "contract of carriage" applies only
of goods by sea, the President of the United States,
to contracts of carriage by covered by a bill of
may, from time to time, by proclamation, suspend
lading or any similar document of title, insofar as
any or all provisions of Title I of this Act for such
such document relates to the carriage of goods by
periods of time or indefinitely as may be
sea, including any bill of lading or any similar
designated in the proclamation. The President may
document as aforesaid issued under or pursuant to
at any time rescind such suspension of Title I
a character party from the moment at which such
hereof, and any provisions thereof which may have
bill of lading or similar document of title regulates
been suspended shall thereby be reinstated and
the relations between a carrier and a holder of the
again apply to contracts thereafter made for the
same. .
carriage of goods by sea. Any proclamation of
(c) The term "goods" includes goods, wares,
suspension or rescission of any such suspension
merchandise, and articles of every kind
shall take effect on a date named therein, which
whatsoever, except live animals and cargo which
date shall be not less than ten days from the issue
by the contract of carriage is stated as being
of the proclamation.
carried on deck and is so carried..
(d) The term "ship" means any vessel used for
Any contract for the carriage of goods by sea, the carriage of goods by sea..
subject to the provisions of this Act, effective (e) The term "carriage of goods" covers the
during any period when title I hereof, or any part period from the time when the goods are loaded to
thereof, is suspended, shall be subject to all the time when they are discharged from the ship.
provisions of law now or hereafter applicable to
that part of Title I which may have thus been RISKS
suspended. Sec. 2
Subject to the provisions of Section 6, under every
Section 15 contract of carriage of goods by sea, the carrier in
relation to the loading, handling, stowage, carriage,
This Act shall take effect ninety days after the date custody, care, and discharge of such goods shall be
of its approval; but nothing in this Act shall apply subject to the responsibilities and liabilities and
during a period not to exceed one year following its entitled to the rights and immunities hereinafter set
approval to any contract for the carriage of goods forth..
by sea, made before the date on which this Act is
approved, nor to any bill of lading or similar RESPONSIBILITIES AND LIABILITIES
document of title issued, whether before or after Sec. 3
such date of approval in pursuance of any such (1) The carrier shall be bound before and at the
contract as aforesaid. beginning of the voyage to exercise due diligence
to
(a) Make the ship seaworthy;
Section 16 (b) Properly man,equip, and supply the ship;
(c) Make the holds, refrigerating and cooling
This Act may be cited as the "Carriage of Goods by chambers, and all other parts of the ship in which
Sea Act." goods are carried, fit and safe for their reception,
carriage, and preservation.
Approved, April 16, 1936. (2) The carrier shall properly and carefully
load, handle, stow, carry, keep, care for,and
discharge the goods carried.
(3) After receiving the goods into his carrier, or
the master or agent of the carrier, shall, on
demand of the shipper, issue to the shipper a bill of
lading showing among other things .
(a) The loading marks necessary for carrier such document of title may be noted at the
identification of the goods as the same are port of shipment by the carrier, master, or agent
furnished in writing by the shipper before the with the name or names of the ship or ships upon
loading of such goods starts, provided such which the goods have been shipped and the date or
marksare stamped or otherwise shown clearly upon dates of shipment, and when so noted the same
the goods if uncovered,in such a manner as should shall for the purpose of this section be deemed to
ordinarily remain legible until the end of the constitute a "shipped" bill of lading.
voyage.. (8) Any clause, covenant, or agreement in a
(b) Either the number of packages or pieces, or contract of carriage relieving the carrier of the ship
the quantity or weight, as the casemay be, as from liability for loss or damage to or in connection
furnished in writing by the shipper. with the goods, arising from negligence, fault, or
(c) The apparent order and conditions of the failure in the duties and obligations provide in this
goods: Provided, that no carrier, master, or agent section or lessening such liability otherwise than as
of the carrier, shall be bound to state or show in provided in this Act, shall be null and void and of
the bill of lading any marks, number, quantity, or no effect. A benefit of insurance in favor of the
weight which he has reasonable ground for carrier, or similar clause, shall be deemed to be a
suspecting not accurately to represent the good clause relieving the carrier from liability.
actually received or which he has had no
reasonable means of checking.. RIGHTS AND IMMUNITIES
(4) Such a bill of lading shall be prima facie Sec. 4
evidence of the receipt by the carrier of the goods (1) Neither the carrier nor the ship shall be liable
as therein described in accordance with paragraphs for loss or damage arising or resulting from
(3) (a), (b), and (c), of this section: (The rest of unseaworthiness unless caused by want of due
the provision is not applicable to the Philippines). diligence on the part of the carrier to make the ship
(5) The shipper shall be deemed to have seaworthy and to secure that the ship is properly
guaranteed to the carrier the accuracy at the time manned, equipped, and supplied, and to make the
of shipment of the marks, number, quantity, and holds, refrigerating and cooling chambers, and all
weight, as furnished by him; and the shipper shall other parts of the ship in which goods are carried
indemnify the carrier against all loss, damages, and fit and safe for their reception, carriage, and
expenses arising or resulting from inaccuracies in preservation, in accordance with the provisions of
such particulars. The right of the carrier to such paragraph (1) of Section (3). Whenever loss or
indemnity shall in no way limit his responsibility damage has resulted from unseaworthiness, the
and liability under the contract of carriage to any burden of proving the exercise of due diligence
person other than the shipper.. shall be on the carrier or other person claiming
(6) Unless notice or loss or damage and the exemption under this section..
general nature of such loss or damage by given in (2) Neither the carrier nor the ship shall be
writing to the carrier or his agent at the port of responsible for loss or damage arising or resulting
discharge or at the time of the removal of the from
goods into the custody of the person entitled to (a) Act, neglect, or default of the master,
delivery thereof under the contract of carriage, mariner, pilot, or the servants of the carrier in the
such removal shall be prima facie evidence of the navigation or in the management of the ship;
delivery by the carrier of the goods as described in (b) Fire, unless caused by the actual fault or
the bill of lading. If the loss or damage is not privity of the carrier;.
apparent, the notice must be given within three (c) Perils, dangers, and accidents of the sea or
days of the delivery.. other navigable water;.
Said notice of loss or damage may be endorsed (d) Act of God;.
upon the receipt for the goods given by the person (e) Act of war;.
taking delivery thereof. (f) Act of public enemies;
The notice in writing need not be given if the state (g) Arrest or restraint of princes, rulers, or
of the goods has at the time of their receipt been people, or seizure under legal process;
the subject of joint survey or inspection. (h) Quarantine restrictions;.
In any event the carrier and the ship shall be (i) Act or omission of the shipper or owner of
discharged from all liability in respect of loss or the goods, his agent or representative;.
damage unless suit is brought within one year after (j) Strikes or lockouts or stoppage or restraint
delivery of the goods or the date when the goods of labor from whatever cause, whether partial or
should have been delivered: Provided, that, if a general: Provided, that nothing herein contained
notice of loss or damage, either apparent or shall be construed to relieve a carrier from
concealed, is not given as provided for in this responsibility for the carrier's own acts;.
section, that fact shall not affect or prejudice the (k) Riotsand civil commotions;.
right of the shipper to bring suit within one year (l) Saving or attempting to save life or
after the delivery of the goods or the date when property at sea;.
the goods should have been delivered. (m) Wastage in bulk or weight or any other loss
In the case of any actual or apprehended loss or or damage arising from inherent defect, quality, or
damage, the carrier and the receiver shall give all vice of the goods;
reasonable facilities to each other for inspecting (n) Insufficiency or packing;
and tallying the goods.. (o) Insufficiency or inadequacy of marks;.
(7) After the goods are loaded the bill of lading (p) Latent defects not discoverable by due
to be issued by the carrier, master, or agent of the diligence; and.
carrier to the shipper shall if the shipper so (q) Any other cause arising without the actual
demands, be a "shipped" bill of lading: Provided, fault and privity of the carrier and without the fault
that if the shipper shall have previously taken up or neglect of the agents or servants of the carrier,
any document of title to such goods, he shall but the burden of proof shall be on the person
surrender the same as against the issue of the claiming the benefit of this exception to show that
"shipped" bill of lading, but at the option of the neither the actual fault or privity of the carrier nor
weight ascertained or accepted by a third party This Act shall take effect ninety days after the date
other than the carrier or the shipper and the fact of its approval; but nothing in this Act shall apply
that the weight as ascertained or accepted is stated during a period not to exceed one year following its
in the bill of lading, then notwithstanding anything approval to any contract for the carriage of goods
in this Act, the bill of lading shall not be deemed to by sea, made before the date on which this Act is
be prima facie evidence against the carrier of the approved nor to any bill of lading or similar
receipt of goods of the weight so inserted in the document of title issued, whether before or after
bills of lading, and the accuracy thereof at the time such date of approval in pursuance of any such
of shipment shall not be deemed to have been contract as aforesaid..
guaranteed by the shipper..
Sec. 16
Sec. 12 This Act may be cited as the "Carriage of Goods by
(Not applicable to the Philippines.). Sea Act.".
and not on the per metric ton price declared V. INTERNATIONAL AIR TRANSPORT
in the Letter of Credit.
A. The Warsaw Convention
On Notice of Claim/On Prescription of Action:
First, the provision of COGSA provides that the
notice of claim need not be given if the state of the
goods, at the time of their receipt, has been the Chapter III - Liability of the Carrier
subject of a joint inspection or survey. Prior to
unloading the cargo, an Inspection Report as to the Article 17
condition of the goods was prepared and signed by The carrier is liable for damage sustained in the
representatives of both parties. Second, as stated event of the death or wounding of a passenger or
in the same provision, a failure to file a notice of any other bodily injury suffered by a passenger, if
claim within three days will not bar recovery if it is the accident which caused the damage so sustained
nonetheless filed within one year. This one-year took place on board the aircraft or in the course of
prescriptive period also applies to the shipper, the any of the operations of embarking or
consignee, the insurer of the goods or any legal disembarking.
holder of the bill of lading. "Inasmuch as the
neither the Civil Code nor the Code of Commerce Article 18
states a specific prescriptive period on the matter, 1. The carrier is liable for damage sustained in the
the Carriage of Goods by Sea Act (COGSA)--which event of the destruction or loss of, or of damage to,
provides for a one-year period of limitation on any registered luggage or any goods, if the
claims for loss of, or damage to, cargoes sustained occurrence which caused the damage so sustained
during transit--may be applied suppletorily to the took place during the carriage by air.
case at bar." In the present case, the cargo was 2. The carriage by air within the meaning of the
discharged on July 31, 1990, while the Complaint preceding paragraph comprises the period during
was filed by respondent on July 25, 1991, within which the luggage or goods are in charge of the
the one-year prescriptive period. carrier, whether in an aerodrome or on board an
aircraft, or, in the case of a landing outside an
3. NOTICE OF LOSS OF CLAIM aerodrome, in any place whatsoever.
3. The period of the carriage by air does not extend
4. PRESCRIPTION OF ACTION to any carriage by land, by sea or by river
performed outside an aerodrome. If, however, such
a carriage takes place in the performance of a
Filipino Merchants Insurance, Inc. v. contract for carriage by air, for the purpose of
Alejandro (1986) loading, delivery or transshipment, any damage is
Clearly, the coverage of the Act includes the presumed, subject to proof to the contrary, to have
insurer of the goods. Otherwise, what the Act been the result of an event which took place during
intends to prohibit after the lapse of the one-year the carriage by air.
prescriptive period can be done indirectly by the
shipper or owner of the goods by simply filing a Article 19
claim against the insurer even after the lapse of The carrier is liable for damage occasioned by delay
one year. in the carriage by air of passengers, luggage or
goods.
Maritime Agencies & Services, Inc. v. CA
The period for filing the claim is one year, in Article 20
accordance with the Carriage of Goods by Sea Act. 1. The carrier is not liable if he proves that he and
This was adopted and embodied by our legislature his agents have taken all necessary measures to
in Com. Act No. 65 which, as a special law, prevails avoid the damage or that it was impossible for him
over the general provisions of the Civil Code on or them to take such measures.
prescription of actions. Section 3(6) of that Act 2. In the carriage of goods and luggage the carrier
provides as follows: In any event, the carrier and is not liable if he proves that the damage was
the ship shall be discharged from all liability in occasioned by negligent pilotage or negligence in
respect of loss or damage unless suit is brought the handling of the aircraft or in navigation and
within one year after delivery of the goods or the that, in all other respects, he and his agents have
date when the goods should have been delivered; taken all necessary measures to avoid the damage.
Provided, that if a notice of loss for damage; either
apparent or concealed, is not given as provided for Article 21
in this section, that fact shall not effect or prejudice If the carrier proves that the damage was caused
the right of the shipper to bring suit within one by or contributed to by the negligence of the
year after the delivery of the goods or the date injured person the Court may, in accordance with
when the goods should have been delivered. the provisions of its own law, exonerate the carrier
wholly or partly from his liability.
5. WAIVER UNDER COGSA
Article 22
1. In the carriage of passengers the liability of the
carrier for each passenger is limited to the sum of
125,000 francs. Where, in accordance with the law
of the Court seised of the case, damages may be
awarded in the form of periodical payments, the
equivalent capital value of the said payments shall
not exceed 125,000 francs. Nevertheless, by
special contract, the carrier and the passenger may
agree to a higher limit of liability.
2. In the carriage of registered luggage and of
goods, the liability of the carrier is limited to a sum In the case of the death of the person liable, an
of 250 francs per kilogram, unless the consignor action for damages lies in accordance with the
has made, at the time when the package was terms of this Convention against those legally
handed over to the carrier, a special declaration of representing his estate.
the value at delivery and has paid a supplementary
sum if the case so requires. In that case the carrier Article 28
will be liable to pay a sum not exceeding the 1. An action for damages must be brought, at the
declared sum, unless he proves that that sum is option of the plaintiff, in the territory of one of the
greater than the actual value to the consignor at High Contracting Parties, either before the Court
delivery. having jurisdiction where the carrier is ordinarily
3. As regards objects of which the passenger takes resident, or has his principal place of business, or
charge himself the liability of the carrier is limited has an establishment by which the contract has
to 5,000 francs per passenger. been made or before the Court having jurisdiction
4. The sums mentioned above shall be deemed to at the place of destination.
refer to the French franc consisting of 65 2. Questions of procedure shall be governed by the
milligrams gold of millesimal fineness 900. These law of the Court seised of the case.
sums may be converted into any national currency
in round figures. Article 29
1. The right to damages shall be extinguished if an
Article 23 action is not brought within two years, reckoned
Any provision tending to relieve the carrier of from the date of arrival at the destination, or from
liability or to fix a lower limit than that which is laid the date on which the aircraft ought to have
down in this Convention shall be null and void, but arrived, or from the date on which the carriage
the nullity of any such provision does not involve stopped.
the nullity of the whole contract, which shall remain 2. The method of calculating the period of
subject to the provisions of this Convention. limitation shall be determined by the law of the
Court seised of the case.
Article 24
1. In the cases covered by Articles 18 and 19 any Article 30
action for damages, however founded, can only be 1. In the case of carriage to be performed by
brought subject to the conditions and limits set out various successive carriers and falling within the
in this Convention. definition set out in the third paragraph of Article 1,
2. In the cases covered by Article 17 the provisions each carrier who accepts passengers, luggage or
of the preceding paragraph also apply, without goods is subjected to the rules set out in this
prejudice to the questions as to who are the Convention, and is deemed to be one of the
persons who have the right to bring suit and what contracting parties to the contract of carriage in so
are their respective rights. far as the contract deals with that part of the
carriage which is performed under his supervision.
Article 25 2. In the case of carriage of this nature, the
1. The carrier shall not be entitled to avail himself passenger or his representative can take action
of the provisions of this Convention which exclude only against the carrier who performed the carriage
or limit his liability, if the damage is caused by his during which the accident or the delay occurred,
wilful misconduct or by such default on his part as, save in the case where, by express agreement, the
in accordance with the law of the Court seised of first carrier has assumed liability for the whole
the case, is considered to be equivalent to wilful journey.
misconduct. 3. As regards luggage or goods, the passenger or
2. Similarly the carrier shall not be entitled to avail consignor will have a right of action against the
himself of the said provisions, if the damage is first carrier, and the passenger or consignee who is
caused as aforesaid by any agent of the carrier entitled to delivery will have a right of action
acting within the scope of his employment. against the last carrier, and further, each may take
action against the carrier who performed the
Article 26 carriage during which the destruction, loss, damage
1. Receipt by the person entitled to delivery of or delay took place. These carriers will be jointly
luggage or goods without complaint is prima facie and severally liable to the passenger or to the
evidence that the same have been delivered in consignor or consignee.
good condition and in accordance with the
document of carriage. B. Applicability; meaning of international
2. In the case of damage, the person entitled to transportation
delivery must complain to the carrier forthwith
after the discovery of the damage, and, at the International air transportation is
latest, within three days from the date of receipt in transportation by air between points of contact of
the case of luggage and seven days from the date two high contracting parties, or those countries
of receipt in the case of goods. In the case of delay that have acceded to the Convention.
the complaint must be made at the latest within
fourteen days from the date on which the luggage
C. Liabilities under the Convention
or goods have been placed at his disposal.
3. Every complaint must be made in writing upon
the document of carriage or by separate notice in The enumeration of causes of action in the
writing despatched within the times aforesaid. Warsaw Convention is not an exclusive list. You can
4. Failing complaint within the times aforesaid, no have a cause of action even if it is not: a) death or
action shall lie against the carrier, save in the case wounding of the passenger; b) damage or loss or
of fraud on his part. destruction of checked baggage, or c) delay in the
transportation of passengers, luggage and goods.
Article 27
Note however, that the limitations of liability in the care contributed to his death or injury, the
Convention favor the carrier. compensation shall be equitably reduced. AND
NORTHWEST AIRLINES, INC., vs. CUENCA under 1712 If a fellow worker's intentional
(1965) malicious act is the only cause of the death or
The Articles merely declare the carrier liable for injury, the employer shall not be answerable
damages in the enumerated cases, if the conditions
therein specified are present. Neither said PAL vs. CA, DR. JOSEFINO MIRANDA and
provisions nor others in the aforementioned LUISA MIRANDA (1996)
Convention regulate or exclude liability for other The appellees do not seek payment for loss of any
breaches of contract by the carrier. Under baggage. They are claiming damages arising from
petitioner's theory, an air carrier would be exempt the discriminatory off-loading of their baggage.
from any liability for damages in the event of its That cannot be limited by the printed conditions in
absolute refusal, in bad faith, to comply with a the tickets and baggage checks. Neither can the
contract of carriage, which is absurd. Warsaw Convention exclude nor regulate the
liability for other breaches of contract by air
ALITALIA vs IAC (1990) carriers. A recognition of the Warsaw Convention
Under the Warsaw Convention, an air does not preclude the operation of our Civil Code
carrier is made liable for damages for: and related laws in determining the extent of
1. the death, wounding or other bodily injury liability of common carriers in breach of contract of
of a passenger if the accident causing it took place carriage, particularly for willful misconduct of their
on board the aircraft or in the course of its employees. Said convention does not operate as an
operations of embarking/disembarking exclusive enumeration of the instances for
2. the destruction or loss of, or damage to, declaring a carrier liable for breach of contract of
any registered luggage or goods, if the occurrence carriage or as an absolute limit of the extent of that
causing it took place during the carriage by air liability. The Warsaw Convention declares the
3. delay in the transportation by air of carrier liable in the enumerated cases and under
passengers, luggage or goods. certain limitations. However, it must not be
In these cases, the Convention provides construed to preclude the operation of the Civil
that the action for damages, however founded, Code and pertinent laws. It does not regulate,
can only be brought subject to the conditions and much less exempt, the carrier from liability for
limits set out therein. damages for violating the rights of its passengers
The Warsaw Convention however denies to under the contract of carriage, especially if willful
the carrier availment of the provisions w/c exclude misconduct on the part of the carrier's employees
or limit his liability, if the damage is caused by his is found or established, which is the case before
willful misconduct or by such default on his part as, Us.
in accordance w/ the law of the court seized of the
case, is considered to be equivalent to willful
misconduct, or if the damage is similarly caused by E. When Limitations Unavailable
any agent of the carrier acting w/n the scope of his
employment. TWA v. CA and Vinluan (1988)
The Convention does not operate as an
exclusive enumeration of the instances of an
airlines liability, or as an absolute limit of the The petitioners contention that it is not liable is
extent of that liability. devoid of merit. Private respondent had a first
Moreover, it should be deemed a limit of class ticket for Flight No. 41 of petitioner from New
liability only in those cases where the cause of the York to San Francisco on April 20, 1979. It was
death or injury to person, or destruction, loss or twice confirmed and yet respondent
damage to property or delay in its transport is not unceremoniously told him that there was no first
attributable to or attended by any willful class seat available for him and that he had to be
misconduct, bad faith, recklessness, or otherwise downgraded to the economy class. As he protested,
improper conduct on the part of any official or he was arrogantly threatened by one Mr. Braam.
employee for which the carrier is responsible, and Worst still, while he was waiting for the flight, he
there is otherwise no special or extraordinary form saw that several Caucasians who arrived much
of resulting injury. later were accommodated in first class seats when
The Convention has invariably been held the other passengers did not show up. The
inapplicable, or as not restrictive of the carriers discrimination is obvious and the humiliation to
liability, where there was satisfactory evidence of which private respondent was subjected is
malice or bad faith attributable to its officers and undeniable. Consequently, the award of moral and
employees. exemplary damages by the respondent court is in
order.
Note: Liability of carrier in case of loss of luggage is
limited to a sum of $USD 20 per kilo or $USD 9.07 At the time of this unfortunate incident, the private
per pound unless a higher value is declared in respondent was a practicing lawyer, a senior
advance and additional charges are paid. partner of a big law firm in Manila. He was a
director of several companies and was active in
civic and social organizations in the Philippines.
D. Limitations on Liability Considering the circumstances of this case and the
social standing of private respondent in the
community, he is entitled to the award of moral
PAL INC. v CA and JESUS SAMSON (1981)
and exemplary damages. However, the moral
Ratio: The limitation of their liability under 1711 of
damages should be reduced to P300,000.00, and
NCC: If the mishap was due to the employee's own
the exemplary damages should be reduced to
notorious negligence, or voluntary act, or
P200,000.00. This award should be reasonably
drunkenness, the employer shall not be liable for
sufficient to indemnify private respondent for the
compensation. When the employee's lack of due
F. Conditions on Liability
HELD: